Enlink Geoenergy Services Inc. v. Jackson & Sons Drilling & Pump, Inc. et al

Filing 48

ORDER by Judge Claudia Wilken denying 13 Motion to Stay (cwlc3, COURT STAFF) (Filed on 10/16/2009)

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1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants Sonic Drill Corporation, Sonic Drilling, Ltd. and Ray Roussy (Sonic Defendants) filed a motion to stay the three patent claims against them, pending the final judgment in the interference proceedings before the Board of Patent Appeals and Interference (BPAI) of the United States Patent and Trademark Office (PTO). the motion. Plaintiff Enlink Geoenergy Services, Inc. opposes v. JACKSON & SONS DRILLING & PUMP, INC., et al., Defendants. / ENLINK GEOENERGY SERVICES, INC., Plaintiff, No. C 09-03524 CW ORDER DENYING SONIC DEFENDANTS' MOTION TO STAY IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA The matter was taken under submission on the papers. Having considered all of the papers filed by the parties, the Court denies Sonic Defendants' motion. BACKGROUND Plaintiff Enlink was founded in 1995 and specializes in the development and installation of geothermal heat pumps (GHP) at commercial and institutional facilities. Howard E. Johnson Decl. 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2. Howard Johnson, Senior Vice President and Chief Technology Officer of EnLink, claims, "Sometime between 1997 and 2001, [he] conceived of the use of sonic drilling techniques to facilitate the installation of GHP systems." Id. at 5. Since 2003, Defendant Ray Roussy, President of Defendant Sonic Drill Corporation and Sonic Drilling, Ltd., has been in the business of drilling holes in the ground using sonic drilling equipment. Roussy claims that, in a telephone conversation in January, 2003 and in a live demonstration in April, 2003, he described for Johnson how Sonic's drilling technology and equipment worked. On July 3, 2003, Johnson filed the first of three patent applications relating to this case. The first application (U.S. Patent Application No. 10/613,511) was entitled, "Earth Loop Installation with Sonic Drilling," and it resulted in U.S. Patent No. 6,955,219. On October 10, 2005, Johnson filed U.S. Patent Application No. 11/247,997, entitled, "Earth Loop Installed with Sonic Apparatus," which resulted in U.S. Patent No. 7,093,657. Lastly, on August 18, 2006, Johnson filed U.S. Patent Application No. 11/506,395, also entitled, "Earth Loop Installed with Sonic Apparatus," which resulted in U.S. Patent No. 7,270,182. Kelber Decl., Exh. 1-3. Steven B. All three patents were assigned to Enlink. After learning of Johnson's initial patent application (No. 10/613,511), Roussy contacted Enlink to dispute the inventorship of the patent. It is not clear from the documents submitted by the On parties when Roussy learned of the patent and contacted Enlink. February 28, 2005, Roussy filed his own patent application (No. 11/067,225), directed to his technology entitled, "Method of 2 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Geothermal Loop Installation." the PTO. This application is pending before At some point after filing his patent application, Roussy requested Declarations of Interference from the BPAI. Interference Nos. 105,707 and 107,708. Patent The BPAI will determine whether Johnson or Roussy was the first to invent the subject matter in question. On July 23, 2009, the PTO concluded that the evidence submitted thus far by Roussy, if left unrebutted, would support a determination that he was the prior inventor. C.F.R. 41.202(d) and (e). See 37 Now that this conclusion has been made, the BPAI will conduct interference proceedings to determine the proper priority date for each inventor. On July 31, 2009, Enlink filed the instant action against Sonic Defendants, Jackson & Sons Drilling & Pump, Inc. and James D. Jackson (collectively "Jackson Defendants"). The first three causes of action are for patent infringements and are asserted against all Defendants. The fourth cause of action is for violating state contractor licensing laws and is asserted against only Jackson Defendants. In the present motion, Sonic Defendants seek to stay the first three causes of action. DISCUSSION The Federal Circuit has stated that a district court has discretion to stay its proceedings pending the outcome of parallel proceedings in the PTO. (Fed. Cir. 2003). See Medichem v. Rolabo, 353 F.3d 928, 936 The record generated by the BPAI, "particularly in light of the Board's expertise in the matter, may permit the district court to avoid a needless duplication of efforts." Id. The Federal Circuit has also noted that "a priority determination 3 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 that results in the cancellation of the interfering claims [of the relevant patents] . . . would eliminate the need for further proceedings in the district court altogether." Id. In determining whether to stay a case pending an interference proceeding, a court may consider the following factors: (1) whether discovery is complete and whether a trial date has been set; (2) whether a stay would simplify the issues in question and trial of the case; and (3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party. In re Cygnus Telecomm. Tech., LLC Patent Litig., 385 F. Supp. 2d 1022, 1023 (N.D. Cal. 2005). Discovery in this case is still in its early stages and no trial date has been set. Enlink filed its complaint less than two months ago and nothing else substantive has happened in the case. The parties have not exchanged preliminary disclosures, begun discovery or filed any other motions. favor of a stay. Staying the case will not necessarily simplify the issues in question and the trial of the case. The pending interference Thus, this factor weighs in proceedings do not cover all of the claims of the patents at issue in the present suit because those proceedings do not include claims 21 and 22 of the `219 Patent, claims 13-15 and 19 of the `657 Patent and claims 8, 9 and 11-18 of the `182 Patent. Sonic Defendants assert that they will move to add to the interference proceedings the claims not currently being considered by the BPAI. However, this does not insure that the claims will become part of the interference proceedings. Thus, all of the issues regarding the patents in question before this Court will not necessarily be 4 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 resolved in the interference proceeding. Accordingly, this Court will likely have to adjudicate the infringement and validity of at least some patent claims. Moreover, it is not clear that Sonic Defendants will prevail in the interference proceedings because the senior party, which in this case is Enlink, prevails about seventy-five percent of the time in these proceedings. See Edwards v. Strazzabosco, 58 Though this statistic is not U.S.P.Q. 2d 1836, 1840 (BPAI 2001). predictive of the merits of any issues before the Court, it informs the Court as to how often PTO proceedings actually simplify issues in a lawsuit. Finally, the Court addresses whether entering a stay in this case will unduly prejudice and present a clear tactical disadvantage to the non-moving party, Enlink. Enlink asserts that delaying this litigation until the interference proceedings are completed will harm its position in the GHP market. The BPAI attempts to complete all interference proceedings within two years. 37 C.F.R. 41.200(c) ("Patent interferences shall be administered such that pendency before the Board is normally no more than two years."). In this time frame, Enlink claims that, as long as the patents in question remain disputed, it cannot develop licensing partners and effectively expand its business. In the current economic and political climate, the demand for GHP products is expanding greatly and delaying the present litigation would harm Enlink's ability to take advantage of this expansion. On balance, the factors weigh against granting Sonic Defendants' motion to stay the proceeding. 5 1 2 3 4 5 6 7 8 9 10 United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: 10/16/09 CONCLUSION For the foregoing reasons, Sonic Defendants' motion to stay is denied (Docket No. 13). The parties shall coordinate with each The parties should other and the BPAI to streamline discovery. prioritize the discovery that is needed for the interference proceedings and cooperate so that such discovery can also be used for purposes of this case. IT IS SO ORDERED. CLAUDIA WILKEN United States District Judge 6

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