Facebook's Motion to Stay Pending Reexamination Denied Where Plaintiff Showed It Would Suffer Undue Prejudice

November 11, 2011

In December 2010, Indacon, Inc. ("Indacon") sued Facebook, Inc. ("Facebook") for patent infringement for two patents that pertain to a system for data acquisition and perusal. The plaintiff filed a Markman brief and Facebook filed an inter partes request for reexamination. Facebook then filed a motion to stay the case pending the outcome of the reexamination.

Facebook asserted that the stay was necessary because it filed the inter partes reexamination based on recent briefing by Indacon. Facebook claimed it had filed the reexamination request based on the Markman briefing filed by Indacon, asserting that it had three invalidating prior art references that were not before the PTO. Based on the reexamination filing, Facebook argued that the district court should temporarily stay the litigation because discovery "is far from complete and a trial date has not been set" and the stay would not unduly prejudice the plaintiff.

Indacon opposed the stay by arguing that Facebook was seeking a stay for several years and that a stay was unwarranted because Indacon would suffer prejudice as a result. Indacon asserted that it had already invested significant time and resources in the case, key witnesses would likely be unavailable years later, Facebook waited until the eve of the Markman hearing to request the stay, and the reexamination would not simplify the issues because Facebook only sought reexamination of one of the two patents-in-suit.

The district court agreed with Indacon and declined to stay the case. The district court noted that discovery was not complete, but that appeared to be the only factor favoring a stay. The district court was unable to determine whether the reexamination would simplify the issues "as the Court cannot predict whether the PTO's final determination will amend or reject the claims at issue, and if so, to what extent."

The important factor noted by the district court was the prejudice to Indacon. "What is clear is that Indacon will be unduly prejudiced by an indefinite delay. Although Facebook noted that 95% of reexamination requests are granted, Facebook did not state how long the process would take. The district court also found it significant that Facebook had only challenged one of the two patents at issue in the case. "Moreover, Facebook has requested review of only one of the two patents and of five of the ten claims alleged to have been infringed upon. Delaying the entire case for up to two years based on only one of the two patents alleged to have been infringed would appear to present a clear tactical disadvantage to Indacon. Additional, ultimate resolution of the reexamination proceedings and any appeals could take several years. In the meantime, Indacon will not be able to prosecute its claims with respect to the remaining patent."

Based on these facts, the district court denied the request to stay pending the reexamination.

Indacon, Inc. v. Facebook, Inc., Case No. SA-10-CA-966-OLG (W.D. Tex. Oct. 28, 2011)

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.