The defendant filed a motion to stay pending reexamination of the plaintiff's patent. The district court noted that the plaintiff and defendant are both participants in the oxygen concentrator market. Inogen filed the action on November 4, 2011 asserting infringement of two of its patents. On February 8, 2012, Inova filed a request for inter partes reexamination of both of the patents-in-suit. The PTO acknowledged receipt of the reexamination request and the district court noted that the PTO must decide whether to grant the reexamination request within three months.
After discussing the relevant case law on stays pending reexamination, the district court analyzed the stage of the litigation, simplification of issues, undue prejudice or clear tactical disadvantage to the plaintiff, With respect to the stage of the litigation, the district court noted that Imogen implicitly conceded that the case is in an early stage of litigation and that no discovery dates or trial dates would be set until mid-April. Accordingly, the district court found that this factor weighed in favor of a stay.
In terms of simplification of issues, the district court noted that "waiting for the outcome of the reexamination could eliminate the need for trial if the claims are cancelled or, if the claims survive, facilitate trial by providing the court with expert opinion of the [US]PTO and clarifying the scope of the claims." Target Therapeutics, 33 U.S.P.Q.2d at 2023. This is particularly true where, as here, a party has requested reexamination of each of the patents-in-suit, and Inogen asserts only claims for patent infringement against Inova." The district court then noted that this factor also weighed in favor of a stay: "This suggests that if Inova's requests for inter partes reexamination are granted, there is an even higher likelihood than under the prior standard that the issues in this action will be simplified by the reexamination. On the other hand, as discussed below, if the USPTO rejects Inova's requests, the stay will be relatively short. Therefore, this factor weighs in favor of a stay."
Turning to the issue of undue prejudice or clear tactical disadvantage, Inogen asserted that it would suffer undue prejudice as a result of the stay because it is a direct competitor in the emerging oxygen concentrator market and that a lengthy stay would allow Inova to gain market share at Inogen's expense. Although the district court noted that courts are more likely to find undue prejudice when the parties are direct competitors, there were several factors that undermined Inogen's assertion of undue prejudice and particularly focused on the failure to seek a preliminary injunction. "First, Inogen waited a month after filing its Complaint before serving the Complaint on Inova, and has yet to request a preliminary injunction, suggesting that monetary damages will adequately compensate Inogen should Inova be found liable for patent infringement. See Pacific Bioscience Labs., Inc. v. Pretika Corp., 760 F. Supp. 2d 1061, 1067 (W.D. Wash. 2011) (concluding that a stay would not be unduly prejudicial, in part because plaintiff had not sought any form of preliminary injunctive relief). Additionally, Inova has provided evidence that the oxygen concentrator market includes at least ten participants (Reply at 15), diluting the direct effect of Inova's sales on Inogen's market share.
"Furthermore, given the recent change to the inter partes reexamination standard, it is unclear whether the inter partes reexamination process will take as long as current statistics suggest. If the USPTO does not grant either of the requests for reexamination, the stay will be in place no longer than three months. If the USPTO grants either or both of the requests, the significance of that decision under the elevated standard for reexamination combined with the possibility of a shorter reexamination process, the early stage of this litigation, and Inogen's failure to move for preliminary injunctive relief suggest that a stay is appropriate."
Accordingly, the district court granted the motion to stay.
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The decision to grant or deny a motion to stay pending reexamination is within the discretion of the district court and some district courts are for more likely to grant such a motion than others. Accordingly, on the defense side, it is important to analyze quickly the basis upon which a district court has granted a motion to stay pending reexamination in the past and, if reexamination is to be sought, it is important to do so soon after the case is filed and to request the stay as soon as the request for reexamination is filed or after the request for reexamination is granted. On the plaintiff side, it is also important to analyze whether a district court is likely to grant such a motion as soon as the complaint is filed. In a situation where a direct competitor is accused of infringement, it will be important to evaluate whether to seek a preliminary injunction as the failure to do so at an early stage of the litigation may mean that the case will be stayed pending reexamination for a lengthy period of time.
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.