Opinion
Case No. 2:04-cv-1223.
October 21, 2008
OPINION AND ORDER
This matter is before the Court for consideration of The Ohio Willow Wood Company's ("OWW" or "Plaintiff") Second Motion for Relief from Stay (Doc. # 94), ALPS South Corporation's ("ALPS" or "Defendant") Memorandum in Opposition (Doc. # 95), and OWW's Reply (Doc. # 96). For the reasons that follow, the Court GRANTS OWW's Motion.
I. Background
OWW is an Ohio corporation with its principal place of business in Mt. Sterling, Ohio. ALPS is a Florida corporation with its principal place of business in St. Petersburg, Florida. The parties are direct competitors in the prosthetic liner market.
This action, brought on December 27, 2004, is for alleged infringement of Plaintiff's patent entitled "Gel and Cushioning Devices" and numbered U.S. Patent No. 5,830,237 ("the 237 patent") and of Plaintiff's patent entitled "Open-Ended Polymeric Annular Sleeve" and numbered U.S. Patent No. 6,406,499 ("the 499 patent").
On November 16, 2005, Plaintiff filed another patent infringement action against ALPS in this district involving the patent entitled "Tube Sock-Shaped Covering" and numbered U.S. Patent No. 6,964,688 ("the 688 patent"). See The Ohio Willow Wood Co. v. ALPS South Corp., Case No.: 2:05-cv-01039. That action is pending before the Honorable Edmund A. Sargus, Jr. Both parties agree that the issues regarding the 688 patent are also at issue in this action. Defendant contends that the 688 patent is based on the same fundamental characteristics and concepts reflected in the 237 and 499 patents.
Plaintiff has also commenced suit against another entity, DAW Industries, Inc., for alleged infringement of the 237 patent (Case No. 2:04-CV-1222) and the 688 patent (Case No. 2:05-CV-1038). These cases have been consolidated and are also pending before the undersigned judge.
Defendant moved to stay the instant action and the action before Judge Sargus because it had applied to the United States Patent and Trademark Office ("PTO") for reexamination of the 237, 499, and 688 patents. Based upon the requests for ex parte reexamination, this action was stayed on November 22, 2006. On December 1, 2006, the PTO granted Defendant's first requests for ex parte reexamination of the 237, 499, and 688 patents. On February 9, 2007, Judge Sargus stayed the 688 patent infringement action.
Defendant requested second reexaminations of different claims in the 499 and 688 patents on March 28, 2008 and April 4, 2007 respectively. The PTO granted these second requests for reexamintion on both patents.
On June 21, 2007, the PTO issued an office action in the first ex parte reexamination of the 688 patent, confirming 13 of the claims and rejecting 13 of the claims, i.e., one half of the claims challenged were no longer valid. On October 26, 2007, the PTO merged the first and second ex parte reexaminations of the 688 patent. On January 2, 2008, Defendant requested a third ex parte reexamination of certain claims within the 688 patent, which was granted on February 6, 2008. On March 14, 2008, OWW moved for relief from the stay in the 688 patent case. That motion is currently at issue before Judge Sargus.
On December 6, 2007, the examiner issued an office action on the first 499 reexamination rejecting all of the claims that were before it. On June 2, 2008, the examiner merged the two requests for reexamination of the 499 patent and on July 7, 2008, the examiner issued a second office action on the merged reexamination requests. OWW responded to the office action on August 7, 2008 and August 11, 2008 with different sets of proposed amendments.
On March 7, 2008, the PTO mailed a notice of intent to issue a reexamination certificate in the reexamination of the 237 patent with amendments. On March 13, 2008, OWW filed Plaintiff's Motion for Relief from Stay (Doc. # 84), which this Court denied on June 10, 2008 (Doc. # 92).
On September 2, 2008, the PTO issued the ex parte reexamination certificate for the 237 patent, wherein Claim 1 was amended as follows:
A tube-shaped covering for enclosing an amputation stump, said covering having an open end for introduction of said stump and a closed end opposite said open end, said covering comprising fabric in the shape of a tube sock [coated on only one side] and having a coating of polymeric material residing on only an interior surface thereof [with] said polymeric material comprising a foamed or nonfoamed gel composition comprising a block copolymer and mineral oil.
NOTE: The text inside brackets was deleted during reexamination and the italicized text was added.
Also, Claim 3 of the 237 patent was also amended during reexamination:
The tube sock-shaped covering of claim 1, wherein said gel coating is [on the inside of said covering and is] arranged in a recessed achilles configuration.
NOTE: The text inside brackets was deleted during reexamination and the italicized text was added.
Finally, Claims 2, 4, 6 — 8, 12-16 and 18-23 were determined to be patentable and Claims 5, 9-11 and 17 were not reexamined.
Three days after the issuance of the reexamination certificate, September 5, 2008, ALPS filed a second request for ex parte reexamination of the 237 patent. The PTO has not yet responded to this request.
Pursuant to this Court's order staying this action, the parties informed the Court that the reexamination certificate had been issued. On September 12, 2008, the Court held a telephonic status conference and set forth the briefing schedule for OWW's renewed request to lift the stay in this action. That motion is ripe for review.
II. Analysis
35 U.S.C. § 302 provides that "[a]ny person at any time may file a request for reexamination by the [Patent and Trademark] Office of any claim of a patent on the basis of any prior art cited under the provisions of section 301 of this title." As the Federal Circuit has observed, "Congress intended the reexamination process to provide an efficient and relatively inexpensive procedure for reviewing the validity of patents which would employ the [PTO]'s expertise." Ethicon, Inc. v. Ouigg, 849 F.2d 1422, 1426 (Fed. Cir. 1988). The issue of whether to stay an action for alleged patent infringement pending the reexamination process lies within the sound discretion of the district court. Id. at 426-27.
In considering the matter, this Court has stated:
In determining whether to stay litigation pending PTO reexamination, courts generally weigh three factors: "(1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether discovery is complete and whether a trial date has been set." Xerox Corp. v. 3 Com Corp., 69 F. Supp. 2d 404, 406 (W.D.N.Y. 1999) (citations omitted). For instance, a stay is justified when the "outcome of the reexamination would be likely to assist the court in determining patent validity and, if the claims were canceled in the reexamination, would eliminate the need to try the infringement issue." Slip Track Sys. v. Metal Lite, 159 F.3d 1337, 1341 (Fed. Cir. 1998). On the other hand, a stay may not be justified when a case is nearing trial, the non-moving party already has invested heavily in the litigation, and the stay sought exceeds two years. Xerox, 69 F. Supp.2d at 407.Tdata Inc. v. Aircraft Tech. Publishers, No. 2:03-cv-264 No. 2:04-cv-1072, 2008 U.S. Dist. LEXIS 698, at *6-7 (S.D. Ohio Jan. 8, 2008) (citing Lincoln Elec. Co. v. Miller Elec. Mfg. Co., No. 1:06CV02981, 2007 WL 2670039, at *1 (N.D. Ohio Sept. 7, 2007)).
rev'd in non-relevant part, 267 F.3d 1361 (Fed. Cir. 2001), rev'd in non-relevant part, 61 Fed. Appx. 680 (Fed. Cir. 2003), rev'd in non-relevant part, 458 F.3d 1310 (Fed. Cir. 2006).
In the instant action, OWW explains how the circumstances have changed since this Court's recent denial of its request to lift the stay in this matter. First, the 237 patent just emerged from reexamination and second, OWW has offered to proceed solely on the 237 patent and to withdraw the 499 patent from this case.
With regard to the 237 patent, on September 2, 2008 the ex parte reexamination certificate issued. That certificate amended Claim 1 and Claim 3. Three days after the certificate was issued, ALPS filed a third request for reexamination. "Once a request for reexamination has been filed, the PTO must determine within three months `whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request, with or without consideration of other patents or printed publications.'" Gonnocci Revocable Living Trust v. Three M Tool Machine Inc., 68 U.S.P.Q.2d 1755, 1757 (E.D. Mich. 2003) (citing 35 U.S.C. § 303(a)). Therefore, the PTO still has about two more months to decide whether to grant the request.
Further, the current stay was granted on November 22, 2006 and the reexamination certificate was not issued until September 2, 2008. If the current request follows a similar path, it will take twenty two months after the PTO accepts the request — or approximately two more years. See also In re Cygnus Telecommc'ns. Tech. LLC Patent Litig., 385 F. Supp. 2d 1022, 1023 (N.D. Cal. 2005) (finding that reexaminations generally take from six months to three years); Xerox, 69 F. Supp.2d at 406 n. 1 (suggesting average pendency of reexamination before the PTO is 19.2 months, excluding appeals). Moreover, if any claim were ultimately rejected by the PTO, ALPS "could appeal the examiner's decision to the Board of Patent Appeals and Interferences, which decision could in turn be appealed to the Federal Circuit." Fresenius Med. Care Holdings, Inc. v. Baxter Int'l Inc., No. C 03-1431 SBA, 2007 U.S. Dist. LEXIS 44107, at *18-19 (citing 35 U.S.C. § 134(b); 35 U.S.C. § 141). In such the lengthy delay, evidence could be lost and witnesses' memories could fade. Id. (citing Alltech, Inc. v. Cenzone Tech, Inc., 2007 U.S. Dist. LEXIS 19989, 2007 WL 935516, at *2 (S.D. Cal. March 21, 2007).
Indeed, as this Court has previously noted, a stay may not be justified if the stay sought exceeds two years. See Tdata Inc., 2008 U.S. Dist. LEXIS 698, at *6-7 (citing Xerox, 69 F. Supp.2d at 407). Here, it is probable that the requested stay would meet or exceed four years. The Court finds that, on the facts presented in this action, a four year stay would unduly prejudice OWW.
Moreover, "[i]t bears mentioning that the inquiries of the PTO on reexamination and the issues before the district court in an infringement action are quite distinct." Xerox, 69 F. Supp.2d at 408.
As the Federal Circuit has recognized, "the awkwardness presumed to result if the PTO and court reach different conclusions is more apparent than real. The two forums take different approaches in determining invalidity and on the same evidence could quite correctly come to different conclusions." Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1428 (Fed. Cir. 1988).Id. (the district court and the PTO apply different evidentiary standards).
With regard to OWW's offer to proceed solely on the 237 patent in this action and to withdraw the 499 patent from this case, ALPS argues that the offer is hollow. Specifically, ALPS contends that all of the claims originally in the reexamination were rejected and that the pending amendment requests vastly amend every claim originally asserted against it on this patent and OWW is left with no viable claims against it. OWW, however, argues that because the reexamination is still before the PTO, and has two pending proposed amendments, ALPS is merely speculating as to the results of the reexamination. OWW's argument is well taken.
The Court finds that OWW's offer to withdraw the 499 patent from this case is not inconsequential. There remains the possibility that the 499 patent could emerge from reexamination with one or more claims that could be asserted against ALPS. The reexamination of the 499 patent has not yet concluded; there are two amendments pending upon which the PTO has not opined. Thus, ALPS is merely speculating when it contends that the 499 patent has no surviving viable claims.
The Court concludes that the benefits to be gained by waiting for the PTO's reexamination, if indeed one is granted, ( i.e., gaining the PTO's expertise and potentially narrowing the issues for trial) are far outweighed by the prejudice to Plaintiff that would be caused by such a lengthy delay at this stage in the proceedings — especially since OWW claims that ALPS continues to wilfully infringe the 237 patent. See Bausch Lomb Inc. v. Rexall Sundown, Inc., 554 F. Supp. 2d 386, 391 (W.D. N.Y. 2008) (granting stay and emphasizing that the defendant was "not currently selling the alleged infringing product and is willing to condition the stay on its undertaking not to do so during the pendency of the reexamination proceedings").
III. Conclusion
For the foregoing reasons, the Court GRANTS Plaintiff's Second Motion for Relief from Stay. (Doc. # 94.) A scheduling order will be issued forthwith.