Judge Stark denies motion to stay pending reexamination, discusses pre-suit knowledge issues in ruling on motions to dismiss indirect and willful infringement allegations.
In a recent memorandum opinion, Judge Stark denied a motion to stay pending the conclusion of reexamination proceedings, finding that none of the three relevant factors weighed in favor of granting a stay. Softview LLC v. Apple Inc., et al., C.A. No. 10-389-LPS (D. Del. July 26, 2012). Specifically, the Court found that a stay would not result in simplification of the issues and trial, because “the scope of the issues to be resolved during litigation substantially exceeds the scope of the issues that can be resolved during the reexamination proceedings,” and the defendants were within their rights to refuse to be bound by any PTO decisions other than validity based on the particular prior art references raised during the reexamination. Id. at 3-4. The Court also found that although the litigation was still in the early stages, the parties and the Court had already expended significant resources on motions to sever, stay, and dismiss. Because the reexamination was also in its early stages, the Court found, on balance, that the “relative status of the litigation and reexamination proceedings does not favor a stay.” Id. at 7. Finally, the Court found that the plaintiff would be unduly prejudiced by a stay, because a stay would deprive the plaintiff of its chosen forum (potentially for several years), while giving the defendants a “clear and unwarranted tactical advantage.” Id. at 7-8.
The Court next considered whether the plaintiff had alleged a plausible basis for finding that the defendants had pre-suit knowledge of the patent to support a finding of willfulness or indirect infringement. The Court found that the plaintiff’s allegations of (1) an AT&T subsidiary’s knowledge of the patent; (2) AT&T’s relationship with the patent’s inventor; and (3) AT&T’s former role as exclusive seller of the patented technology raised (in the aggregate) a plausible basis for a finding of pre-suit knowledge. Id. at 9-10. The Court also found that the plaintiff alleged a plausible basis for pre-suit knowledge as to several defendants who were members of a defensive patent aggregate service ("RPX"), since RPX indisputably had knowledge of the patent. Id. at 13. The plaintiff failed, however, to adequately allege pre-suit knowledge by defendant Kyocera. The Court explained that the allegation that Kyocera had pre-suit knowledge as a result of the media’s publicity of an earlier lawsuit involving the patent was insufficient. Id. at 11.
After finding that the plaintiff failed to sufficiently allege pre-suit knowledge on the part of Kyocera, the Court considered whether the plaintiff’s indirect infringement claim could be based on post-filing conduct by Kyocera. Id. at 13. The Court noted, “[o]n this issue there is divided precedent in this District,” and agreed with the precedent finding that “the filing of a complaint is sufficient to provide knowledge of the patents-in-suit for purposes of stating a claim for indirect infringement occurring after the filing date.” Id. at 14 (citing Apple Computer, Inc. v. Unova, Inc., 2003 WL 22928034, at *5 (D. Del. Nov. 25, 2003)).
Finally, the Court considered whether an allegation of willful infringement requires pre-suit knowledge and/or a motion for a preliminary injunction to enjoin post-filing infringement. Id. at 15. The Court held that, under In re Seagate Tech, LLC, 497 F.3d 1360 (Fed. Cir. 2007), a patentee “cannot recover enhanced damages based solely on an accused infringer’s post-filing conduct whether the patentee has not sought a preliminary injunction.” Id. at 16 (emphasis in original). Because the plaintiff’s allegations against AT&T and the defendants affiliated with RPX was based also on pre-suit knowledge, the Court denied their motion to dismiss willfulness allegations. Id. at 17.