Interwoven moved to stay all proceedings pending the outcome of an ex parte reexamination of the two patents-in-suit. Interwoven asserted that a stay was warranted because the defendant appeared unprepared to litigate and a reexamination would likely modify the issues in the case, with no undue burden to the defendant. The defendant, Vertical, opposed the motion, arguing that a stay would impose an unreasonable delay and that the stay request was a dilatory tactic that would prejudice the defendant, as the alleged infringement would continue while the stay was in effect.
Vertical had filed a patent infringement action against Microsoft Corporation in the Eastern District of Texas. After it settled with Microsoft, Vertical told Interwoven that it believed Interwoven was infringing its patents. After negotiations failed, Interwoven filed the declaratory judgment action in the Northern District of California. During the litigation, the parties began discovery, briefed claim construction issues and participated in the Markman hearing. The district court then issued its claim construction ruling, which largely rejected Interwoven’s positions. Interwoven then filed its ex parte request for reexamination and moved to stay the litigation that it had initiated.
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