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Judge Sleet grants motions to stay in multi-district litigation

Chief Judge Gregory M. Sleet recently granted several defendants’ motions to stay pending inter partes reexamination in a Multidistrict Litigation (“MDL”) transferred to the District of Delaware in May 2012. In re: Bear Creek Technologies Inc. (‘722 Patent Litigation), MDL No. 12-md-2344-GMS (D. Del. Jul. 17, 2013). The plaintiff had sued defendants for patent infringement related to voice-over internet protocol products in the Eastern District of Virginia in February 2011. Id. at 2. All defendants save one had been severed for misjoinder in August 2011. Id. Around that same time, a non-party to the current MDL, Cicso, had also filed a request for inter partes reexamination of the patent-in-suit. Id. at 4. All defendants, both those who had moved to stay and those who did not oppose these motions, had agreed to be bound by the results of this reexamination if the Court stayed the litigation. Id. at 4 & n.2.

The Court concluded that the relevant factors favored the grant of a stay. Not only had the PTO preliminarily rejected all claims of the patent-in-suit, but this reexamination “also raises questions as to the effective priority date for the Patent, the determination of which could impact issues of validity and obviousness.” Id. at 6-7 n.8. The Court therefore concluded that the reexamination could simplify issues for trial and that “the court and the parties’ time and resources could be wasted” absent a stay. Id. at 7 n.8. It further noted that it was “unpersuaded by [plaintiff’s] contention that the asserted claims will be confirmed in reexamination because they have not been cancelled in two prior ex parte reexaminations.” Id.

Most of the MDL cases were in the early phases of litigation, and this fact also favored a stay. Id. The Court also stayed two actions that had progressed further. One was into claim construction and early discovery but was still “sufficiently early to be a neutral factor in the stay analysis.” Id. (internal quotation marks omitted). The other was “significantly further along” but the Court still stayed this action. Prior to the MDL transfer, the parties were well into fact and expert discovery and had participated in a Markman hearing, but this action had been stayed pending the MDL determination and “as a result, a Markman construction was not issued.” Id. Additional discovery was likely to take place “due to the ‘passage of time’ since the initial discovery, the pending Markman construction, . . . [defendant’s] modifications and updates to its telecommunications network,” and also because the parties could supplement discovery following the Court’s issuance of a Markman decision. Id. “In view of these factors and the MDL coordination of these cases, the court concludes that [this action] should be stayed along with the other actions.” Id.

Finally, the Court disagreed with plaintiff’s arguments that it would be prejudiced. Plaintiff argued that “the defendants will benefit from the inter partes reexamination in that Cisco can ‘audition’ the invalidity arguments the defendants would present at trial and learn which are successful.” Id. But the defendants’ agreement to be bound by this reexamination meant that they would be “estopped from challenging the validity of the [patent-in-suit] as obvious . . . based on the combinations of prior art presented by Cisco.” Id. “Despite [Plaintiff’s] assertion that this estoppel is too limited and does not protect its interests, the court finds the defendants’ estoppel sufficient to guard against prejudice.” Id. (internal citations omitted). The Court also disagreed that the reexamination would cause unnecessary and unfair delay. “[T]he examiner responsible for the reexamination is already familiar with the [patent] family, having previously examined the patent-in-suit and its parent . . . . Moreover, this examiner had previously decided the priority date issue that is raised in the . . . reexamination by virtue of the [parent patent] examination.” Id. at 8 n.8. Finally, the plaintiff was a non-practicing entity that could be adequately compensated by money damages. Id.

In re: Bear Creek Technologies Inc. (‘722 Patent Litigation), MDL No. 12-md-2344-GMS (D. Del. Jul. 17, 2013…

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