Stay of Litigation Pending Inter Partes Reexamination Warranted Despite Possible Lengthy Reexam Pendency

District courts are making increasingly detailed and sophisticated decisions on motions to stay litigation pending reexamination.  One example is the analysis performed in N Spine Inc. and Synthes USA Sales, LLC v. Globus Medical Inc., (1-1–cv-00300 (DED)).  N Spine and Synthes USA Sales (Plaintiffs) sued Defendant Globus for alleged infringement of U.S. Patent No. 7,326,210 (the ‘210 patent) on April 13, 2010.  On December 16, 2010, Globus filed an inter partes reexamination request of the ‘210 patent.  The reexamination was ordered by the Patent Office on February 1, 2011.  On March 2, 2011, a motion to stay the litigation was filed by Globus.  The stay was ordered in spite of a 6 to 8 year pendency of the inter partes reexamination.

Globus argued a number of factors to justify their motion to stay:

• a stay would not disadvantage or prejudice Plaintiffs
• a stay would simplify issues in the litigation and reduce burdens of the Court and the parties in litigation;
• a stay will allow the reexamination to provide additional intrinsic evidence that the Court can consider in construing the claims; and
• a stay will conserve  judicial resources since 75% of all reexaminations from 1981 to June 30,  2009 have resulted in cancellation of all or at least some claims.

The Plaintiffs argued that the stay should not be granted because:

• they believe that the motion is a delay tactic  that will disadvantage Plaintiffs by moving the case to Defendant’s “chosen forum” — the PTO as opposed to the Court;
• the parties are direct competitors and a stay will allow Defendant to “indefinitely continue its infringing activity unchecked”;
• a stay will disadvantage Plaintiffs because only 24% of the reexaminations result in a cancellation of patent claims at issue and inter partes proceedings can take 6 to 8 years; and
• since document production has already occurred and considerable resources invested in the litigation, the stage of the litigation weighs in favor of denying a stay.

In response, Globus argued the following:

• the patent is relatively new and has significant remaining life, should it survive reexamination (citing LMT Mercer Grp., Inc. v. Maine Ornamental, L.L.C., No. 10-4615, 2011 WL 2039064 (May 24, 2011);
• that Plaintiffs do not currently make or sell any products covered by the ‘210 patent because of a product recall in 2009, so Plaintiffs’ makret share and goodwill will not be eroded by grant of a stay;
• that a recent Office Action rejected all requested claims; and
• as for discovery, no additional discovery requests have been served, no depositions have been taken or scheduled, no expert reports have been exchanged, and no dates have been set for claim construction or for trial.

Plaintiffs argued that:

• LMT Mercer is distinguishable from the present case and is not a District of Delaware case; and
• to simplify issues all claims must be cancelled, since Plaintiffs will not amend the claims of the ‘210 patent during reexamination.

The Court found no undue prejudice to Plaintiffs and no clear tactical advantage to Defendant.  That document discovery is still relatively new.  That the reexamination request made within 8 months after suit, and the present motion to stay was only 3 months later.  Therefore, the motion was brought before substantial discovery and costs and does not provide a mere tactical advantage.  The Court also recognized Congress’ intent to allow the PTO to make a determination in reexamination — Congress specifically instituted the reexamination process to shift the burden of reexamination of patent validity from the courts to the PTO.  And the Court cited precedent supporting the assertion that the delay inherent in reexamination is not, by itself, undue prejudice.  Thus 6 to 8 years of possible reexamination proceedings is not sufficient to deny a stay in this case.  The Court found that the likelihood that all claims would survive is very low and that the reexamination would likely simplify issues for any possible future litigation.  The Court also noted that the Patent Office has already granted the reexamination and issued an Office Action rejecting all claims for which reexamination was sought.

This case demonstrates how district courts are performing sophisticated stay determinations based on several factors and a growing body of case precedent.  It also defers to Congress’ intent in passing the reexamination statute and the PTO’s role in review of issued claims and ultimately assisting parallel litigation.  It shows that district courts are willing to stay patent cases despite delays of up to 6 to 8 years provided there is no undue prejudice to the non-moving party and that there are no extenuating circumstances compelling a faster determination.

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