Patent Law

Stayed

By Gary Odom and Jordan Kuhn

SP Technologies started an enforcement campaign for 6,784,873, claiming a graphical touch screen keyboard that automatically disappears "after the desired input is received." SP sued Samsung and HTC. Samsung settled. HTC got up on its hind legs, filed an inter partes reexamination, and motioned to stay litigation, which East Illinois district court Judge Samuel Der-Yeghiayan granted.

SP Technologies v. HTC (East Illinois 08-cv-3760)

Pursuant to 35 U.S.C. § 318 (Section 318), "[o]nce an order for inter partes reexamination of a patent has been issued . . . the patent owner may obtain a stay of any pending litigation which involves an issue of patentability of any claims of the patent which are the subject of the inter partes reexamination order, unless the court before which such litigation is pending determines that a stay would not serve the interests of justice." 35 U.S.C. § 318. Although not expressly stated in Section 318, district courts have the authority to grant a such a stay, even when the request is made by an accused patent infringer and not the patantee. See Proctor & Gamble Co. v. Kraft, Inc., 549 F.3d 842, 848 (Fed. Cir. 2008)(rejecting patantee's argument that a stay under Section 318 could not be granted when requested by an accused patent infringer). The Federal Circuit has "consistently recognized the inherent power of the district courts to grant a stay pending reexamination of a patent." Id.; see also Gould v. Control Laser Corp., 705 F.2d 1340, 1341 (Fed. Cir. 1983)(stating that "because district courts have broad discretionary powers to control their dockets, stays will not be vacated unless they are immoderate and of an indefinite duration"). Other district courts that have considered such stays under Section 318 have taken into account "the possible damage, hardship and inequities to the parties, and the relationship of the requested stay to the objective of simplifying the issues and the trial." Bacus Laboratories, Inc. v. Aperio Technologies, Inc., 2005 WL 475158, at *16 (N.D. Ill. 2005); see also Wireless Spectrum Technologies, Inc. v. Motorola Corp., 2001 WL 32852, at *1 (N.D. Ill. 2001)(stating that the courts must consider "'possible damage, hardship and inequities to the parties to the lawsuit and the relationship of the stay to the fulfillment of judicial objectives of simplification of the issues in question and trial of the case'")(quoting United Sweetener USA, Inc. v. Nutrasweet Co., 766 F. Supp. 212, 217 (D. Del. 1991)). A stay pending PTO reexamination "should ordinarily not be granted unless there is a substantial patentability issue raised in the inter partes reexamination proceeding." Proctor & Gamble, 549 F.3d at 849.

The judge bought HTC's contention to "have discovered numerous instances of prior art that were never properly considered by the PTO." SPT argued the stay premature, as the PTO hadn't agreed to reexamine the patent. The court countered that reexam was likely in this case.

More substantially:

Furthermore, SPT argues that even if the PTO does grant HTC's request for reexamination, granting a stay would result in irreparable prejudice to SPT, due in large part to the likely delay in concluding the reexamination. SPT points to studies that show that such patent reexaminations by the PTO often take several years to complete. SPT argues that granting a stay would threaten the speedy administration of justice in this case.

The judge was not swayed.

Both sides recognize that the court has discretion to grant a stay pending reexamination if such a stay best serves the interests of justice. (Mot. Stay 3); (Ans. Mot. Stay 3-4). HTC has pointed to a substantial judicial economy benefit that would result from allowing a potential reexamination to occur before proceeding further with the instant action. It is evident at this stage in the proceedings that the patentability of the '873 Patent is an issue in dispute and it would be beneficial for that issue to be resolved by the PTO. See Anascape, Ltd. v. Microsoft Corp., 475 F. Supp. 2d 612, 615 (E.D. Tex. 2007)(stating that "[c]ourts need not expend unnecessary judicial resources by attempting to resolve claims which may be amended, eliminated or lucidly narrowed by the patent reexamination process and the expertise of its officers"). Furthermore, SPT has not pointed to sufficient prejudice that might be caused by a stay pending reexamination that would outweigh the likely benefit of such a stay.

The instant action is still early in the proceedings and SPT does not contest HTC's assertion that the PTO reexamination will likely entirely resolve the issue of the validity of the '873 Patent.

Full post as published by The Patent Prospector on May 10, 2009 (boomark / email).