Monday, April 6, 2015

Staying Litigation Because of Request for Inter Partes Review?

Not yet.  The request is premature until the Patent Office determines whether or not to institute the Inter Partes Review ("IPR").

TAS Energy, Inc. sued Stellar Energy Americas, Inc. for patent infringement concerning U.S. RE 44,815.  TAS and Stellar are competing engineering firms that each sought to design and construct a gas turbine inlet air cooling and thermal energy storage system for Duke Energy.  TAS additionally sought a preliminary injunction to enjoin Stellar's activities, but that motion was denied.  Stellar next petitioned the U.S. Patent and Trademark Office for IPR, seeking to invalidate claims of the '815 patent.

As has become common practice, Stellar also asked the district court to stay the litigation based on Stellar's request for review.  TAS responded that the request for a stay was premature because the Patent Office had not yet decided whether or not to grant the petition.

The Court resolved the issue quickly:
Stellar argues that there is a substantial likelihood that the PTO will institute review of the patent-in suit because it already instituted review of the parents of the patent-in-suit in prior inter partes review proceedings. Stellar also argues that TAS Energy will not be unduly prejudiced because its motion for preliminary injunction was denied, which Stellar argues raises a substantial question as to the validity of the patent-in-suit. Stellar further argues that the PTO grants a majority of the petitions filed and it is likely to resolve the question regarding the validity of the patent-in-suit, which would minimize duplicative efforts and may streamline the district court’s litigation. It further argues that the stay would be “brief.”
TAS Energy opposes Stellar’s Motion and argues that this Court should deny the motion for three reasons: Stellar’s motion is premature; Stellar exaggerates the possibility that its IPR petitions—if instituted at all—will simplify this litigation; and Stellar ignores the prejudice that TAS Energy will suffer as a result of a stay. It argues that the majority of the courts in the Middle District of Florida deny motions for stay when the PTO has not yet granted a movant’s petition for inter partes review and no circumstances in this case justify a departure from that trend. Further, TAS Energy states that Stellar’s petitions challenge different claims of the ‘815 patent, and each petition challenged less than half of the ‘815 patent’s claim; therefore, the review would not simplify the issues in this case because it will not finally resolve all issues in the litigation. It further argues that when the parties are direct competitors the risk of prejudice in delaying a patent infringement suit is high, which courts in this district recognize as a basis to deny a stay.
The Court concludes that granting a stay at this stage of the inter partes review process is premature. Therefore, the Court denies the Motion without prejudice to Stellar to raise the issue if and when the PTO grants its petitions. Accord CANVS Corp. v. FLIR Sys., Inc.,2:14-CV-180-FTM-38CM, 2014 WL 6883127, at *1 (M.D. Fla. Dec. 5, 2014) (referencing defendant’s previous motion for stay which the court denied as premature without prejudice to re-file if and when the PTO granted inter partes review). See also Automatic Mfg. Sys., Inc. v. Primera Tech., Inc., No. 6:12-cv-1727-Orl-37DAB,2013 WL 1969247, at *3 (M.D. Fla. May 13, 2013) (“it seems clear that a stay of a patent infringement action is not warranted when based on nothing more than the fact that a petition for inter partes review was filed in the USPTO.”); U.S. Nutraceuticals, LLC [v. Cyanotech Corp.], 2013 WL 6050744, at *3 (explaining since it remained uncertain as to whether the petition for inter partes review would be granted, a stay would prejudice the plaintiff’s ability to prosecute its claims and present a clear tactical advantage to the defendants).

[EDITOR'S NOTE: This is a very disturbing and troubling trend to me, and it appears to me that the Middle District of Florida is handling it correctly.  Issued patents are presumed valid, and the owner of the patent is charged with policing his or her rights.  That policing is in the form of a patent infringement litigation to stop the alleged infringer from violating the patent owner's presumed-valid rights.   Congress, perceiving there is a larger problem with patent infringement activity than actually exists, created a framework for attacking the validity of patents at the Patent Office.  Under this framework, if the Patent Office agrees to analyze the validity of the patent, a Court should stay the litigation under most circumstances.  But numerous (hundreds?  more?) defendants have asked district courts to stay litigations on the basis of their requests for review alone.  These defendants usually combine their requests for a stay with outright refusals to cooperate in the litigation, forcing the plaintiff to engage in additional motion practice to compel compliance with the rules of civil procedure.  In essence, the presumption of validity has disappeared and the already daunting task of enforcing Constitutionally created property rights is even harder.  It's worthwhile to remember we are an innovation economy and patents have historically been a strong vessel for protecting and valuing that innovation.  Time will tell whether balance will return to the patent system or not.]

Motion to stay, denied as premature.
TAS Energy, Inc. v. Stellar Energy Americas, Inc., Case No. 8:14-CV-3145 (M.D. Fla. Apr. 2, 2015) (J. Moody)

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