Crocs, Inc. v. Cheng's Enterprises, Inc. et al

Filing 184

ORDER. ORDERED that Double Diamond Distribution, Ltd. and U.S.A. Dawgs, Inc.sAdministrative Motion to Reopen for Purpose of Hearing Their Motion to Vacate the Stay 167 and defendants Double Diamond Distribution, Ltd. and U.S.A. Dawgs, Inc.s Motion to Reopen and Vacate Stay 168 are GRANTED. ORDERED that the stay is lifted and this case shall be re-opened. Signed by Judge Philip A. Brimmer on 04/21/16.(jhawk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 06-cv-00605-PAB-KMT
CROCS, INC.,
Plaintiff,
v.
CHENG’S ENTERPRISES, INC.,
CVS CAREMARK CORP., a Delaware corporation,
DOUBLE DIAMOND DISTRIBUTION, LTD.,
EFFERVESCENT, INC.,
HOLEY SOLES HOLDINGS, LTD., and
U.S.A. DAWGS, INC.

Defendants.

ORDER

This matter is before the Court on Double Diamond Distribution, Ltd. and U.S.A.
Dawgs, Inc.’s Administrative Motion to Reopen for the Purpose of Hearing their Motion
to Vacate the Stay [Docket No. 167] and defendants Double Diamond Distribution, Ltd.
and U.S.A. Dawgs, Inc.’s Motion to Reopen and Vacate Stay [Docket No. 168]. 1
I. BACKGROUND
Plaintiff Crocs, Inc. (“Crocs”) filed this action on April 3, 2006, alleging, inter alia,
infringement of United States Patent Nos. 6,993,858 (the “’858 patent”) and D 517,789
(the “’789 patent”). Docket No. 1.

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Double Diamond Distribution, Ltd. and U.S.A. Dawgs, Inc. request oral
argument. Docket No. 182 at 10. The Court has determined that it can resolve the
issues presented in this matter without the need for oral argument.

On May 12, 2006, Effervescent, Inc., Holey Soles Holdings, LTD., and former
defendant Collective Licensing International, LLC moved to stay this case pending
proceedings under Section 337 of the Tariff Act of 1930 before the International Trade
Commission, Docket No. 26, which this Court granted on May 16, 2006. Docket No.
31. On April 27, 2012, Crocs moved to lift the stay, Docket No. 70, which the Court
granted on May 9, 2012. Docket No. 75. On August 3, 2012, Double Diamond
Distribution, Ltd. (“Double Diamond”) filed a request for inter partes reexamination of
the ’858 patent with the United States Patent and Trademark Office (“PTO”). Docket
No. 118 at 1. On August 24, 2012, U.S.A. Dawgs, Inc. (“Dawgs”) filed a request for
inter partes reexamination of the ’789 patent. Id. at 1-2. On August 31, 2012, Double
Diamond, Dawgs, and Effervescent, Inc. filed a motion to stay pending completion of
the inter partes reexaminations. Id. On September 14, 2012, the PTO granted Double
Diamond’s request for inter partes reexamination of the ’858 patent. Docket No. 127-1
at 2, 4. On October 16, 2012, the Court granted Double Diamond’s motion to stay.
Docket No. 137. On November 19, 2012, the PTO granted Dawgs’ request for inter
partes reexamination of the ’789 patent. Docket No. 168 at 8.
On December 6, 2012, the PTO reversed its decision ordering reexamination of
the ’858 patent. Docket No. 168 at 7. On April 29, 2013, the PT O rejected the sole
claim of the ’789 patent under 35 U.S.C. § 102(b) as anticipated by prior art. Docket
No. 168-2 at 12. 2

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On February 11, 2016, the PTO issued an Action Closing Prosecution in the
reexamination proceedings for the ’789 patent. Docket No. 169 at 2.
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On February 9, 2016, Double Diamond and Dawgs (collectively, “defendants”)
filed the instant motion to reopen and motion to stay. Docket Nos. 167, 168.
Defendants argue that the case should be reopened and that the stay should be
vacated “in view of the facts that have changed since the court ordered the stay.”
Docket No. 167 at 3. In particular, defendants assert that (1) “the ’858 reexamination
has been terminated, and there is therefore no longer any chance that Crocs’ claims in
this case will be resolved by the Patent Office;” (2) “the sole claim of the ’789 patent
stands rejected as unpatentable” by the PTO; (3) Dawgs “is suffering prejudice as a
result of the ongoing stay;” and (4) “new evidence has been discovered which has
raised additional issues that will not be resolved by waiting for the reexamination of the
’789 patent to be completed, and by virtue of Defendants [sic] inability to use such
evidence in this case is resulting in additional prejudice.” Docket No. 167 at 3. Crocs
opposes reopening the case for purposes of resolving defendants’ motion to vacate the
stay, but asserts that it “does not oppose a request by Defendants to reopen this matter
for purposes of Defendants first amending the counterclaims in this matter and then
setting a briefing schedule on Defendants’ motion to lift the stay in light of those claims.”
Docket No. 173 at 1, 4.
II. STANDARD OF REVIEW
When determining whether a stay should be granted pending reexamination,
courts generally apply a four-factor test:
(1) whether a stay will simplify the issues in question and streamline the
trial; (2) whether discovery is complete and whether a trial date has been
set; (3) whether a stay would unduly prejudice the nonmoving party . . .;
and (4) whether a stay will reduce the burden of litigation on the parties
and on the court.
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eSoft, Inc. v. Blue Coat Systems, Inc., 505 F. Supp. 2d 784, 787 (D. Colo. 2007) (citing
Broadcast Innovation, L.L.C. v. Charter Commc’ns, Inc., No. 03-cv-2223-ABJ-BNB,
2006 WL 1897165, at *4 (D. Colo. July 11, 2006). Courts have also applied these
factors to determine whether to lift a stay. See Xpedite Systems, LLC v. J2 Global
Communications, Inc., 2012 WL 3527313, at *1 (N.D. Ga. Aug. 13, 2012); Se-Kure
Controls, Inc. v. Sennco Solutions, Inc., 2010 WL 4823594, at 2 (N.D. Ill. Nov. 19,
2010).
III. ANALYSIS
Defendants argue that the first and fourth factors weigh in favor of lifting the stay
because the “parties and the Court will need discovery and ultimately a trial on at least
the parties’ claims and defenses related to the ’858 patent” regardless of the outcome
of the reexamination of the ’789 patent. Docket No. 168 at 12. Plaintif f contends that
the stay should be maintained until completion of the ’789 patent’s reexamination
“[b]ecause resolution of the ’789 issues will create efficiency in this matter.” Docket No.
180 at 11. Defendants respond that, “even if the Patent Office ultimately confirms the
validity of the ’789 patent based on the inf ormation it has before it, this Court will still
have to resolve the issues raised by the new information discovered by USA Dawgs.”
Docket No. 168 at 13.
At the time the Court entered the current stay, the PTO had granted Double
Diamond’s request for reexamination of the ’858 patent. Docket No. 168 at 7; see
Docket No. 139. Since then, the PTO reversed its decision to reexamine the ’858
patent. Docket No. 168 at 7. “W hen circumstances have changed such that the court’s

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reasons for imposing the stay no longer exist or are inappropriate, the court may lift the
stay.” Canady v. Erbe Elektromedizin GmbH, 271 F. Supp. 2d 64, 74 (D.D.C. 2002)
(citing Purolite Int’l, Ltd. v. Rohm & Hass Co., 24 U.S.P.Q.2d 1857 (E.D. Pa. 1992)).
The Court will need to resolve the claims relating to the ’858 patent, and, although there
would be some efficiencies in resolving those claims at the same time as the ’789
claims, a stay will not simplify the issues or reduce the burden of litigation on the ’858
claims. The Court finds that the first and fourth factors weigh in favor of lifting the stay.
Neither party addresses the second factor, regarding discovery. Discovery has
not yet begun, see Docket No. 168 at 4, and no trial date has bee n set, which typically
weigh in favor of granting a stay. See Nat’l Prods., Inc. v. Gamber-Johnson LLC, 2012
WL 3527938, at *2 (W.D. Wash. Aug. 14, 2012). However, because the ’858 patent is
not pending reexamination, this factor weighs less heavily in favor of maintaining a stay.
See id.
Regarding the third factor, Crocs argues that it would be prejudiced if the case
was reopened, but does not explain how. Docket No. 180 at 15. Defendants argue
that they are prejudiced by the stay because Dawgs and Crocs are direct competitors
and that, as a result of the protracted litigation of this case, Dawgs’ business interests
and market share have been negatively impacted. Docket No. 168 at 14; Docket No.
182 at 3. Defendants assert that they would be further prejudiced if forced to wait until
Crocs exhausted its appeals on the ’789 reexamination, which could last several more
years. Docket No. 182 at 6. The Court agrees. While delay due to the reexamination
process may “not, by itself, amount to undue prejudice,” Wall Corp. v. BondDesk

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Group, L.L.C., 2009 WL 528564, at *2 (D. Del. Feb. 24, 2009), given the age of this
case, the Court finds that maintaining the stay until Crocs exhausts its appeals on the
’789 reexamination is likely to unduly prejudice defendants. See Nat’l Prods. 2012 WL
3527938, at *1 (“Several courts have cited the long delays as a factor that weighed
heavily in their decisions to reject motions to stay.”) (citing Affinity Labs of Texas v.
Apple Inc., 2010 WL 1753206 (N.D. Cal. Apr. 29, 2010)). The Court finds that the third
factor weighs in favor of lifting the stay.
Thus, when considering the factors as a whole, the Court finds that the stay
should be lifted in this case.
IV. CONCLUSION
For the foregoing reasons it is
ORDERED that Double Diamond Distribution, Ltd. and U.S.A. Dawgs, Inc.’s
Administrative Motion to Reopen for Purpose of Hearing Their Motion to Vacate the
Stay [Docket No. 167] and defendants Double Diamond Distribution, Ltd. and U.S.A.
Dawgs, Inc.’s Motion to Reopen and Vacate Stay [Docket No. 168] are GRANTED. It is
further
ORDERED that the stay is lifted and this case shall be re-opened.

DATED April 21, 2016.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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