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The Procter & Gamble Co. v. Team Technologies, Inc.

United States District Court, Sixth Circuit

September 10, 2013

THE PROCTER & GAMBLE COMPANY, Plaintiff,
v.
TEAM TECHNOLOGIES, INC., et al., Defendants.

ORDER DENYING DEFENDANTS' MOTION TO STAY PENDING INTER PARTES REVIEW (Doc. 59)

TIMOTHY S. BLACK, District Judge.

This civil action is before the Court on Defendants' Motion to Stay Pending Inter Partes Review (Doc. 59) and the parties' responsive memoranda. (Docs. 61 and 63).

I. BACKGROUND

Plaintiff alleges that Defendants are infringing three patents: U.S. Patent No. 5, 891, 453 ("the 453 Patent"), U.S. Patent No. 5, 894, 017 ("the 017 Patent"), and U.S. Patent No. 7, 122, 199 ("the 199 Patent"). This civil action was originally brought only against Defendant Team Technologies, Inc. ("Team Tech"). (Doc. 1). Defendant Clio USA, Inc. ("Clio") was added to the suit in September 2012 and Defendant Brushpoint Innovations, Inc. ("Brushpoint") was added in February 2013. (Doc. 10; Doc 42).

The inter partes review ("IPR") procedure became available on September 16, 2012 in order to provide a faster, more cost-effective alternative to challenge a patent's validity than the pre-existing inter partes reexamination ("IPX") procedure. (Doc. 59 at 2; Doc. 63 at 2). Petitions are usually granted or denied within 5 months, and in contrast to the lengthier IPX and ex parte review procedures, the IPR process is guaranteed by statute to be completed within 12 months of the petition being granted. 35 U.S.C. ยง 316(a)(11); (Doc. 59 at 3).

On July 12, 2013, Clio filed a Petition for Inter Partes Review of the 017 Patent. (Doc. 59-1 at 3-68). On July 15, 2013, Clio filed a Petition for Inter Partes Review of the 453 Patent and a Petition for Inter Partes Review of the 199 Patent. ( Id. at 69-193). Defendants now move for a stay of this civil action pending the outcome of the IPR process.

II. STANDARD OF REVIEW

A decision to stay litigation lies within the sound discretion of the Court and represents an exercise its "inherent [power] to control the disposition of the cases on its docket." Landis v. North American Co., 299 U.S. 248, 254 (1936). It is well settled that this authority extends to patent cases in which a review by the PTO has been requested. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) ("Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination").

In exercising this power, however, the Sixth Circuit has cautioned "that a court must tread carefully in granting a stay of proceedings, since a party has a right to a determination of its rights and liabilities without undue delay." Ohio Environmental Council v. United States District Court, 565 F.2d 393, 396 (6th Cir. 1977). Similarly, when a stay is sought because of co-pending PTO reexamination proceedings, district courts are not required to stay judicial resolution pending reexamination. See, e.g., Viskase Corp. v. Am. Nat'l Can Co., 261 F.3d 1316, 1328 (Fed. Cir. 2001).

In the context of pending PTO reexamination proceedings, "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." Lincoln Elec. Co. v. Miller Elec. Mfg. Co., No. 1:06CV02981, 2007 WL 2670039, at *1 (N.D. Ohio Sept. 7, 2007) (internal quotation omitted).

III. ANALYSIS

In determining whether to stay a patent action pending PTO reexamination proceedings, 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." Tdata Inc. v. Aircraft Technical Publishers, No. 2:03-cv-264, 2:04-cv-1072 (S.D. Ohio January 4, 2008); citing Xerox Corp. v. 3Com Corp., 69 F.Supp.2d 404, 406 (W.D.N.Y.1999); see also Semiconductor Energy Lab. Co. v. Chimei Innolux Corp., No. SACV 12-21-JST (JPRx), 2012 U.S. Dist. LEXIS 186322, at *3-4 & n.1 (C.D. Cal. Dec. 19, 2012). Courts are not restricted to considering just these three factors, however; the decision should be based upon the totality of the circumstances. Universal Elecs., Inc. v. Universal Remote Control, Inc., ___ F.Supp.2d ___, No. SACV 12-00329 AG, 2013 WL 1876459 at *6 (C.D. Cal. May 2, 2013).

A. Prejudice to Plaintiff

"Courts routinely deny requests for stay during the pendency of PTO proceedings where the parties are direct competitors." Everlight Elecs. Co., Ltd. v. Nichia Corp., No. 4:12-cv-11758-GAD-MKM, ECF No. 79 at 13 (E.D. Mich. April 30, 2013). Staying this case would cause undue prejudice to Plaintiff because the harm suffered may not be fully compensable by money damages. Universal Elecs., 2013 WL 1876459 at *5 ("Courts have found that infringement among competitors can cause harm in the marketplace that is not compensable by readily calculable money damages") (internal quotation omitted). Although money damages could compensate Plaintiff for lost sales, "the prospect of lost market ...


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