Posted On: February 5, 2013 by James L. Higgins

Chief Judge Sleet stays case pending reexamination where related patent already rejected on reexamination and no direct competition between plaintiff and defendants demonstrated.

Chief Judge Gregory M. Sleet recently granted a motion to stay pending reexamination in a case involving a patent entitled “Fuel Composition for a Diesel Engine.” Neste Oil Oyj v. Dynamic Fuels, LLC, et al., C.A. No. 12-662-GMS (D. Del. Jan. 31, 2013). The Court’s balancing of the relevant factors was swayed by several considerations. First, the Court found unconvincing the plaintiff’s argument that, because the defendants are direct competitors, a stay of potentially several years would be unduly prejudicial because plaintiffs could lose market share and goodwill. The Court explained that the plaintiff offered no evidence that the defendants are in fact direct competitors in the relevant market, and that lack of evidence was consistent with the plaintiff’s decision not to move for preliminary injunctive relief. Id. at 5-6. Second, the PTO already had rejected all claims of a related patent on reexamination, and the PTO’s first office action relating to the patent-in-suit adopted the same grounds for rejection of all claims of the patent-in-suit. Id. at 9. The Court found that this weighed in favor of the conclusion that the reexamination of the patent-in-suit ultimately would simplify the issues in this case. Id. at 9-10. Finally, the case was in its earliest stages, and a scheduling order had yet to be entered. Id. at 10.

More specifically, the Court explained that where the parties are direct competitors, “there is a reasonable chance that delay in adjudicating the alleged infringement will have outsized consequences to the party asserting infringement has occurred, including the potential for loss of market share and an erosion of goodwill.” Id. at 4 (quoting SenoRx, Inc. v. Hologic, Inc., No. 12-173-LPS-CJB (D. Del. Jan. 11, 2013)) (previously discussed here). The Court found unconvincing, though, the plaintiff’s argument that the defendants are its direct competitors, and that it would therefore be unduly prejudiced by a stay, in part because the plaintiff chose not to move for a preliminary injunction when it filed suit. Id. at 5. The Court explained, “the defendants have correctly noted that the only proof of direct competition . . . offered by [plaintiff] is wholly unsupported attorney argument.” Id. (internal quotations omitted). That, combined with the facts that the plaintiff did not seek a preliminary injunction and the relevant market was comprised of a large number of firms, weighed in favor of a finding that the plaintiff would not be unduly prejudiced by a stay. Id. at 5-6.

The Court next explained that a stay pending reexamination likely would result in issue simplification because the PTO already rejected all claims of a related patent which shared the same specification as the patent-in-suit, and “the reasoning underlying the PTO’s cancellation” of the related patent “will also apply to the [patent-in-suit].” Id. at 9. This result, the Court explained, was made more likely by the PTO’s first office action, which “adopt[ed] . . . all four . . . proposed grounds for rejection and . . . reject[ed] . . . all twenty patent claims.” Id. As the Court explained, “the likelihood of claim cancellation . . . is at least distantly signaled by a preliminary PTO action.” Id. at 9 n.4.

Finally, the Court explained that two “undue prejudice” arguments frequently made by plaintiffs opposing stays pending reexamination were insignificant in the Court’s analysis in this case. Id. at 6 n.3. The Court was not significantly moved by concerns about “stale evidence, faded memories, unavailable witnesses, and lost documents” because the plaintiff provided the Court with no information about how a stay would actually threaten the availability of particular evidence or witnesses. Id. at 6. The Court also rejected the plaintiff’s argument that reexamination “represents an inadequate forum for [an] invalidity dispute.” Id.

Neste Oil Oyj v. Dynamic Fuels, LLC, et al., C.A. No. 12-662-GMS (D. Del. Jan. 31, 2013). by