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Magistrate Judge Thynge recommends denial of defendant’s renewed motion to stay pending inter partes reexamination

In ImageVision.Net, Inc. v. Internet Payment Exchange, Inc., C.A. No. 12-054-GMS-MPT (D. Del. Feb. 25, 2013), Magistrate Judge Thynge issued a report recommending denial of defendant’s renewed motion to stay pending inter partes reexamination. Defendant had previously moved for a stay pending reexamination and in September 2012 Judge Thynge had recommended denial of that motion, discussed here. Chief Judge Sleet adopted that part of the recommendation. Id. at 2. At the time of this first motion to stay, the PTO had not granted the request for reexamination, but it did in December 2012 and “preliminarily rejected” all of the claims of the patent-in-suit. Id. at 2, 10. Defendant then renewed its motion to stay pending the reexamination. Id. Judge Thynge again recommended denial of defendant’s motion. Id. at 16.

Because the case was filed after the America Invents Act (“AIA”) was enacted, Judge Thynge first observed that “no mandatory stay [is] required under the AIA for grants of inter partes reexaminations, and the traditional three-part test to determine whether a stay is appropriate still applies. Nevertheless, the present analysis must address new events that have occurred since the original denial of defendant’s motion to stay, specifically the grant of the inter partes reexamination, and the effect of the new AIA standard on the application of the factors regarding a stay. ” Id. at 6-7. The AIA altered the standard for the grant of inter partes reexamination from requiring “the Director to find a substantial new question of patentability affecting any claim” to requiring a determination that there is “a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” Id. at 4 (internal citations and quotation marks omitted).

Turning to the three-part test, Judge Thynge first concluded that the status of the litigation did not favor a stay. Id. at 9. While the case was in its early phases, “the parties here [were] well into discovery, and significant deadlines [were] scheduled in the coming months.” Id. at 8-9. Additionally, the reexamination proceedings were at an early stage. Id. at 9. These factors all weighed against granting a stay. Id. As to simplification of issues, Judge Thynge concluded that “simplification weigh[ed] more strongly in favor of a stay” than when defendant filed its first motion. Id. at 10. “Moreover, reexamination was granted under the new heightened standard of the AIA, which means defendant is reasonably likely to prevail on invalidity. . . . Reexamination [would therefore] serve to simplify certain issues regarding validity. Further, because of the new standard, and since all claims of the [patent-in-suit] are found invalid on anticipation and obviousness, it may be more likely amendments to the claims of the patent will occur as a result of reexamination.” Id. at 10-11.

Finally, Judge Thynge concluded that plaintiff would be unduly prejudiced if a stay was granted, which was the “most substantial and important issue.” Id. at 11. Regarding the impact of the stage of the reexamination proceedings on the prejudice analysis, defendant argued that “the PTO is statutorily mandated to handle inter partes reexamination proceedings expeditiously and with special dispatch.” Id. at 14 (internal citations and quotation marks omitted). But Judge Thynge observed that “[i]n light of the recent passage of the AIA, it is unclear how such requirements will affect the time frame of the reexamination process.” Id. Therefore, as the reexamination process was in its early stages, this factor did not favor a stay. Id. As in the previous recommendation, Judge Thynge observed that the plaintiff and defendant were direct competitors and that this “weigh[ed] heavily against granting a stay.” Id. at 15-16.

ImageVision.Net, Inc. v. Internet Payment Exchange, Inc., C.A. No. 12-054-GMS-MPT (D. Del. Feb. 25, 2013) by

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