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Motion to Stay Pending Inter Partes Review Denied without Prejudice Where Inter Partes Review Had Not Yet Been Granted

Plaintiff Automatic Manufacturing Systems, Inc. (“AMS”) manufactures and markets equipment used to print machine readable labels on glass microscope slides. Defendant Primera Technology, Inc. (“Primera”) competes against AMS in the glass-microscope-slide-printing-machine market. AMS owns U.S. Patent No. 8,013,884 (“the ‘884 patent”), The ‘884 patent is directed to a device that can print information onto the surface of a glass object and methods for doing so. On March 19, 2013, Primera filed a petition for inter partes review of the ‘884 patent with the United States Patent and Trademark office. Primera then moved to stay the case pending the outcome of the inter partes review.

As explained by the district court, “Defendant asks the Court to stay this litigation based upon the mere fact that it petitioned the USPTO to initiate an administrative proceeding called an inter partes review. This type of proceeding is relatively new. It was created by Congress in the Leahy-Smith America Invents Act (the “AIA”) in response to perceived deficiencies in an older administrative proceeding called an inter partes reexamination. See Universal Elecs., Inc., 2013 WL 1876459, at *1″

After addressing the procedural aspects of the inter partes review process, the district court then examined the scope of the review itself. “Putting aside the procedural aspects of an inter partes review, the decision of whether to stay is also affected by the scope of the review. An inter partes review is limited to only those ‘claims challenged in the petition.’ If, based on the petition and the patent owner’s preliminary response, the USPTO determines ‘that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition,’ then it may initiate a review. 35 U.S.C. § 314(a); see also 37 C.F.R. § 42.108(c). The scope of the review is indeterminate until the UPSTO’s determination, however, because the regulations that implement the AlA provide further that the USPTO may choose to review ‘all or some of the grounds of unpatentability asserted for each claim.’ 37 C.F.R. § 42.108(a). In fact, even if all the grounds in a petition are well taken, the USPTO may authorize the review to proceed on only ‘some of the challenged claims’ or on only ‘some of the grounds of unpatentability asserted for each claim.’ Id. Indeed, the USPTO can decline to conduct the review altogether if it cannot proceed with a .review within the mandated timeframe. 77 Fed. Reg. 48,689.”

After reviewing the administrative framework, the district court concluded that that a stay may not be appropriate just based on the filing of a petition for inter partes review. “[I]t seems clear that a stay of a patent infringement action is not warranted when based on nothing more than the fact that a petition for inter partes review was filed in the USPTO. All in all, a petition can be pending before the USPTO for up to six months before the agency decides to ‘initiate’ an inter partes review. This six months is a kind of limbo that requires the court and the parties to wait while the USPTO makes its decision. If it chooses not to proceed, then this action will have been left languishing on the Court’s docket with no discovery, no positioning of the parties on claim construction, and no dispositive motions. Put simply, the parties will be no closer to trial in a type of case that requires ‘early substantive disclosure’ in order to efficiently manage discovery and pretrial motion practice. See Peter S. Menell, et al., Patent Case Management Judicial Guide 2-20 (2d ed. 2012).”

The district court also found that the scope of the review, even if granted, is limited. “Even if the USPTO decides to initiate a review, the law makes clear that the review itself is limited to anticipation and obviousness, which are only two of the many, many defenses to patent infringement. The USPTO may choose to limit its review to a few claims challenged in the petition or to a grounds asserted by the petitioner. It may also choose not to proceed at all notwithstanding the merits of the petition. Thus, the scope of any such review is limited and, until a decision is made by the USPTO, indeterminate.”

As a result, the district court determined that a stay should not be issued at least until the petition was granted. “Thus, because a petition does not shed much light on the potential scope of an inter partes review, and because a stay could delay these proceedings for at least six months with little to show, the Court finds that a stay would unduly prejudice or present a clear tactical disadvantage to Plaintiff. The patent owner should be able, if it desires, to prosecute its claims, to take discovery, and to set its litigation positions, at least until such a time as the USPTO takes an interest in reviewing the challenged claims. Only at that time will the scope of the inter partes review be known. While the USPTO decides whether to initiate a review, the parties will have sufficient time to ferret out the issues involved in this action, identify the relevant claims and defenses, and solidify their claim construction positions. Then, and only then, will the Court be in a position to make an informed decision as to whether the inter partes review will simplify the issues and trial.”

Automatic Manufacturing Systems, Inc v. Primera Technology, Inc., Case No. 6:12-cv-1727-ORL-37DAB (M.D. Fla. May 13, 2013)

The authors of 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