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District Court Declines to Stay Proceeding Pending Inter Partes Review Where Plaintiff and Defendant Were Direct Competitors

Card-Monroe Corp. (“CMC”) manufactures tufting machines and equipment. CMC holds several patents that pertain to its machines and equipment. Tuftco Corp. (“Tuftco”) is a competitor of CMC, which also engages in the manufacture and sale of tufting machines. CMC filed a patent infringement action against Tuftco, and Tuftco subsequently filed a Petition for Inter Partes Review (“IPR”) of the patent-in-suit. Tuftco then filed a Motion to Stay Pending Inter Partes Review of Proceedings.

In their briefs on the motion to stay, the parties disagreed as to whether CMC would be unduly prejudiced by a stay of these proceedings. Tuftco argued that the “only potential basis for a claim of undue prejudice is the delay inherent to any stay of proceedings,” but CMC claimed that it would be prejudiced if the district court stayed these proceedings because the parties are direct competitors.

As the district court explained, “[a]lthough a delay of proceedings is not sufficient to establish prejudice, courts take into account whether the parties at hand are direct competitors with one another. Courts are ‘reluctant to stay proceedings where the parties are direct competitors’ because patent infringement in that situation may not be compensable by money damages. See Cooper Notification, Inc. v. Twitter, Inc., 2010 WL 5149351, at *5 (D. Del. 2010).”

In opposing the motion, CMC submitted evidence that “the only significant competitors it has in the field of carpet tufting machines and equipment are Tuftco and Cobble Tufting Machine Co. Hence, the parties ‘compete in a relatively narrow market with only a handful of competitors.’ Malibu Boats, LLC, 2014 WL 3866155, at *3. As the parties are working in a narrow market, the effect of the pattern infringement has the potential to affect Plaintiff’s reputation, sales, and market share in that narrow market.”

The district court further explained: “The Court has reviewed the parties’ positions on this issue and agrees that a stay of proceedings would unduly prejudice Plaintiff because the parties are direct competitors. While Defendant argues that CMC has not been timely in enforcing its rights under Patents 505, 989, and 703, the Court does not find this argument to be persuasive considering the attempts made by the parties to resolve this matter before resorting to federal litigation. See Doc. 1 at 2. Rather than viewing this as a lack of urgency on the part of the Plaintiff, the Court considers this an attempt to ‘spare the parties . . . litigation.’ Universal Electronics, Inc., 943 F. Supp. 2d at 1034. Taking into account all of these factors, the Court finds that this factor weighs against a stay of these proceedings.”

Accordingly, after reviewing the remaining factors, the district court declined to stay the proceedings.

Card-Monroe Corp. v. Tuftco Corp., Case No. 1:14-cv-292 (E.D. Tenn. Feb. 19, 2015)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or