Opinion
Case No. 13 C 3075
10-01-2013
BLACK & DECKER INC., et al., Plaintiffs, v. POSITEC USA, INC., et al., Defendants.
ORDER Defendants' motion to stay litigation pending inter partes review of the patent in suit [24] is granted. Parties must inform the court within 14 days of the Patent Trial and Appeal Board's ruling on the petition for inter partes review. This case is placed on the court's suspense docket pending the conclusion of proceedings before the Board. Any party may ask the court to move the case back to its active docket as further developments warrant. For details, see below.
STATEMENT
Plaintiffs Black & Decker Inc. and Black & Decker (U.S.) Inc. ("B&D") filed a claim of patent infringement against Defendants Positec, USA, Inc. and RW Direct ("Positec") on April 24, 2013. Positec answered and filed a counterclaim. The court entered a schedule for discovery and claim-construction briefing. The patent in suit is U.S. Patent No. 5,544,417 ("the '417 Patent"), entitled "Multi-Purpose Motor Mounting System for a String Trimmer." Claim 16 of the patent, the sole claim at issue, claims "[a] method for assembling an outdoor power tool."
Positec moves the court to stay this litigation pending review of the '417 Patent by the Patent Trial and Appeal Board of the United States Patent and Trademark Office ("PTO"). In 2011, Congress replaced the process of "inter partes reexamination" with a new proceeding called "inter partes review." Abbott Labs. v. Cordis Corp., 710 F.3d 1318, 1326 (Fed. Cir. 2013) (citing Leahy-Smith America Invents Act ("AIA"), Pub. L. No. 112-29, § 6(a), 125 Stat. 284, 299-304 (2011), codified at 35 U.S.C. §§ 311-319 (2013)). Inter partes review was implemented effective September 12, 2012, and is designed to be more streamlined than inter partes reexamination. Following a petition for review, the PTO has three months from the date the patent holder files a response to the petition to decide whether to institute the review proceeding. 35 U.S.C. § 314(b). The PTO will not grant review unless the petitioner has a "reasonable likelihood" of prevailing. Id. at § 314(a). Positec filed a petition for review of Claim 16 and other claims of the '417 Patent on August 9, 2013, seeking to have the claims canceled based on prior art. The PTO has not decided whether to grant the request for review.
This court has the authority to stay, at its discretion, an action pending PTO review. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988). The court considers whether a stay will (i) "unduly prejudice or tactically disadvantage the non-moving party," (ii) simplify the issues in question and streamline the trial," and (iii) "reduce the burden of litigation on the parties and on the court." Arrivalstar S.S. v. Canadian Nat'l Ry., No. 08 C 1086, 2008 WL 2940807, at *2 (N.D. Ill. July 25, 2008).
As to the first and third factors, a stay at this early stage of the litigation could significantly limit litigation expenses and streamline the proceedings, particularly should the PTO invalidate the claim at issue. If the claim is held to be valid, that too would simplify the remaining issues and might encourage settlement, because Positec will be estopped from arguing to this court that the claim is invalid. See Emhart Indus., Inc. v. Sankyo Seiki Mfg. Co., No. 85 C 7565, 1987 WL 6314, at *2 (N.D. Ill. Feb. 2, 1987) (listing benefits of staying litigation pending reexamination). Positec filed its petition for review promptly, well within one year after being served with a complaint alleging infringement, see § 314(b), and the case has made very limited progress since it was filed in April. Thus, litigation expenses to date have been limited.
B&D argues that the court should not grant a stay because the PTO has not decided whether to review the patent, and waiting for that decision will unnecessarily place the case in limbo. It argues that the standard for review under § 314(a) is more stringent than that previously used for reexamination. It offers no data, however, to support the argument that the PTO is less likely to grant review than reexamination (which was granted in the vast majority of cases), merely citing a few petitions for review that have been denied by the PTO.
B&D also points out that Positec asserts affirmative defenses of invalidity and unenforceability that are beyond the scope of PTO review. But it does not contest that Positec seeks review of the sole patent claim at issue in this case. The court evaluates whether review would simplify the issues in question, not whether it could eliminate every issue in the case. B&D further argues that Positec might bring an invalidity argument down the road, regardless of the outcome of inter partes review. This is a dubious argument, as § 314(e)(2) states that when review "results in a final written decision," a petitioner "may not assert . . . in a civil action . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review."
On the other hand, a stay will cause delay, which will inevitably prejudice B&D. The AIA requires the PTO to make a final determination in a review proceeding within one year, which may be extended up to six months on a showing of good cause. 35 U.S.C § 316(a)(11). Although lengthy, this time frame compares favorably to the average duration of over thirty-seven months of the old reexamination proceedings. See Software Rights Archive, LLC v. Facebook, Inc., Nos. C-12-3970, C-12-3971, C-12-3972, 2013 WL 5225522, at *2 (N.D. Cal. Sept. 17, 2013). And should the PTO deny review, the delay in waiting for that decision will be fairly short. Delay in itself, moreover, does not constitute undue prejudice. Davol, Inc. v. Atrium Med. Corp., No. 12-958-GMS, 2013 WL 3013343, at *2 (D. Del. June 17, 2013).
B&D argues that it will be unduly prejudiced by a stay because its patent expires in October 2014. But it does not explain why this would be particularly prejudicial. Based on the parties' planning report, a trial in this case is not anticipated to occur until early 2015. (Planning Report, ECF No. 20.)
B&D also claims that a stay is not warranted because the parties are direct competitors in the marketplace, meaning that delay in adjudicating the infringement would have heightened consequences for B&D. Courts have found that the risk of losing market share can constitute undue prejudice, especially when there are few competitors in a market. See, e.g., Davol, 2013 WL 3013343, at *3. But B&D has not explained why the nature of competition in the market for grass trimmers poses a particular risk of loss of market share, and Positec presents evidence that there are multiple competitors in the grass trimmer market, limiting the danger of a loss of market share. See Nest Oil Oyj v. Dynamic Fuels, LLC, No. 12-662-GMS, 2013 WL 424754, at *3 (D. Del. Jan. 31, 2013) ("There may be less cause for concern . . . when there are a number of active firms in the relevant market.").
The balance of factors tips in favor of granting Positec's motion for a stay. The court will stay the litigation until the PTO has made a decision on whether to grant inter partes review. The parties must inform the court within 14 days of that decision. If review of Claim 16 is granted, the court will extend the stay pending review. If review of other claims, but not Claim 16, is granted, the parties may present arguments as to whether a continued stay is warranted in light of the claims to be reviewed.
ENTER:
/s/_________
JOAN B. GOTTSCHALL
United States District Judge DATED: October 1, 2013
/em