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Golden Rule Fasteners, Inc. v. Oatey, Co.

United States District Court, N.D. Ohio, Eastern Division

May 31, 2019

GOLDEN RULE FASTENERS, INC., Plaintiff,
v.
OATEY CO., Defendant.

          MEMORANDUM OF OPINION AND ORDER [RESOLVING ECF NO. 16]

          Benita Y. Pearson United States District Judge.

         Defendant/Counter-Claimant Oatey Co. moves the Court to stay proceedings pending the United States Patent and Trademark Office's (“USPTO”) ex parte reexamination of patent claims related to those brought in this action. ECF No. 16. Plaintiff/Counter-Defendant Golden Rule Fasteners filed a response in opposition (ECF No. 18), and Oatey replied (ECF No. 20). For the reasons stated in this Order, Oatey's motion is granted.

         I. Background

         In its initial Complaint, filed February 14, 2019, Golden Rule asserted claims based on three related patents: United States Patent Nos. 8, 141, 303 (the “'303 Patent”); 8, 534, 002 (the '002 Patent”); and 8, 464, 475 (the “'475 Patent”). ECF No. 1 at PageID#: 1. The '475 Patent application was a continuation of the '002 Patent application, which was, in turn, a continuation of the '303 Patent application. Id. at PageID#: 2.

         The three related patents describe a “pipe flashing apparatus and method, ” more specifically, a weather-proof collar that can be placed around rooftop pipes of varying diameters. ECF No. 1-1 at PageID#: 19; ECF No. 1-2 at PageID#: 28; ECF No. 1-3 at PageID#: 37. All patents describe that collar as having a “conical shape, ” the “top edge” of which is “coupled to a bottom edge, ” and a rectangular “foot” coupled to the bottom edge of the collar, to be installed on the rooftop. ECF No. 1-1 at PageID#: 19; ECF No. 1-2 at PageID#: 28, 33 (“[T]he thickness and flexibility of the foot is such that it acts as a shingle.”); ECF No. 1-3 at PageID#: 37. The patents also describe a “longitudinal opening” running the length of the device that can separate and reunite, “thereby allowing the flashing to be spread apart and placed about a pipe.” ECF No. 1-1 at PageID#: 19; see ECF No. 1-2 at PageID#: 28; ECF No. 1-3 at PageID#: 37. The interior of the described collar is lined with “elastomeric material” to seal out moisture. ECF No. 1-1 at PageID#: 24; ECF No. 1-2 at PageID#: 33; ECF No. 1-3 at PageID#: 42.

         On March 6, 2019, the USPTO granted third-party Aztec Washer Company's request for ex parte reexamination of certain of Golden Rule's patent claims. ECF Nos. 16-4; 16-5; 16-6. Specifically, the USPTO will reexamine the patentability of Claim 1 of the '303 Patent, Claims 1-8, 10, and 12-15 of the '002 Patent, and Claims 1-4 and 8-9 of the '475 Patent. ECF No. 16-5 at PageID#: 182; ECF No. 16-6 at PageID#: 195; ECF No. 16-4 at PageID#: 168.

         Subsequently, on March 27, 2019, Golden Rule filed an Amended Complaint in this litigation. ECF No. 13. In the Amended Complaint, Golden Rule dropped all allegations based on the '303 and '002 Patents and retained only the allegations based on Claims 5 and 6 of the '475 Patent. Id. It stated, however, that “[w]hen [the USPTO] examination is complete, Golden Rule will likely assert additional claims” from the '303, '202, and '475 Patents “in this case.” Id. at PageID#: 102-03 n.1.

         On May 3, 2019, prior to answering the Amended Complaint, [1] Oatey moved to stay proceedings pending the conclusion of the USPTO reexamination of the related patent claims. ECF No. 16. Golden Rule resists the motion to stay, arguing that the specific claims at issue (Claims 5 and 6 of the '475 Patent) are not themselves under reexamination, and there is therefore no reason to delay litigation. ECF No. 18.[2] Oatey observes that the district court for the Northern District of Mississippi recently stayed proceedings in a related case, concluding that the pending USPTO reexamination[3] would clarify the issues and simplify the litigation. See Golden Rule Fasteners, Inc. v. Neverleak Co., L.P., No. 3:17-cv-249-MPM-JMV, 2019 WL 384003 (N.D. Miss. Jan. 30, 2019).

         II. Analysis

         “Courts have inherent power to manage their dockets and stay proceedings.” Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (citing Landis v. N. Am. Co., 299 U.S. 248, 254 (1936)). And the House of Representatives Judiciary Committee expressly contemplated stays of court proceedings while USPTO reexaminations were underway. H.R. Rep. No. 96-1307(I), at 4 (1980) (“[S]tay provisions are unnecessary in that such power already resides with the court to prevent costly pretrial maneuvering which attempts to circumvent the reexamination procedure.”). “There is a liberal policy in favor of granting motions to stay proceedings pending the outcome of USPTO reexamination or reissuance proceedings.” ASCII Corp. v. STD Entm't, 844 F.Supp. 1378, 1381 (N.D. Cal. 1994). Whether to grant a motion for stay resides in the Court's informed discretion. Id. at 1380.

         The parties agree that the Court should consider three factors in determining whether to stay proceedings: “(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.” Progressive Cas. Ins. Co. v. Allstate Ins. Co., 2011 WL 3322767, at *2 (N.D. Ohio Aug. 2, 2011) (quoting 01 Communique Lab., Inc. v. Citrix Sys., 2008 WL 696888 (N.D. Ohio Mar. 12, 2008) (citation omitted). The Court also considers “whether the party seeking the stay has done so in good faith or for the purposes of delay.” Id.

         Golden Rule does not contend that the first and third factors weigh against a stay. ECF No. 18 at PageID#: 274 (“[T]hese factors are neutral, or at the very most marginally weigh in favor of a stay.”). Golden Rule will suffer no prejudice if in the event of a stay, and the court proceedings here are in their infancy. Additionally, Golden Rule does not suggest that Oatey has requested the stay in bad faith or for purpose of delay. Only the second factor, whether a stay will simplify the issues in question and trial of the case, merits discussion.

         Strictly, the two patent claims that remain at issue in this case (Claims 5 and 6 of the '475 Patent) are not under USPTO reexamination, and nothing more than idle speculation suggests they might be reexamined soon. Nevertheless, the USPTO reexamination of 20 closely-related claims has a discernible effect on the proceedings in this Court, both in terms of the eventual outcome of the parties' dispute and the efficiency with which the litigation is carried out.

         The second factor weighs strongly in favor of a stay. Golden Rule has already indicated its intention to persist in related litigation “in this case” after the USPTO reexamination concludes. ECF No. 13 at PageID#: 101-02 n.1. A stay will simplify the litigation because it will avoid duplicative discovery, motion practice, hearings and conferences, and related work. There is an obvious litigative economy that ...


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