MONOSOL RX, LLC v. BIODELIVERY SCIENCES INTERNATIONAL, INC. et al

Filing 64

MEMORANDUM OPINION and ORDER that Defendants' Motion to stay this matter pending the resolution of the USPTO's inter partes reexamination of the '588 patent and ex parte reexamination of the '292 and '891 patents [dkt. entry. no. 60 ] is GRANTED; that defense counsel shall provide the Court with status updates regarding the USPTO's inter partes reexamination of the '588 patent and/or ex parte reexaminations of the '292 and '891 patents every ninety ( 90) days starting May 1, 2012; that defense counsel shall notify the Court within ten (10) days of any disposition of the USPTO's inter partes reexamination of the '588 patent and/or ex parte reexaminations of the '292 and '891 patents; that the Clerk of the Court shall administratively terminate this case. Signed by Magistrate Judge Douglas E. Arpert on 3/7/2012. (mmh)

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
MONOSOL RX, LLC,

:
:
Plaintiff,
:
:
v.
:
:
BIODELIVERY SCIENCES
:
INTERNATIONAL, INC., et al.,
:
:
Defendants.
:
___________________________________ :

Civil Action No.: 10-5695 (FLW)

MEMORANDUM OPINION
AND ORDER

ARPERT, U.S.M.J
I.

INTRODUCTION
This matter previously came before the Court on a motion by Defendants BioDelivery

Sciences International, Inc. (“BioDelivery”) and Aveva Drug Delivery Systems, Inc. (“Aveva”)
(collectively, “BA Defendants”) to stay this matter pending the resolution of the U.S. Patent and
Trademark Office’s (“USPTO”) inter partes reexamination of the ‘588 patent [dkt. entry. no. 46].
That motion was returnable October 17, 2011. Plaintiff MonoSol Rx, LLC (“Plaintiff”) filed
opposition on October 4, 2011 and BA Defendants filed a reply brief on October 11, 2011.
During a telephone status conference on October 25, 2011, the Court denied BA Defendants’
motion without prejudice based upon the fact that the USPTO had not yet taken action on
Defendants’ request for an inter partes reexamination of the ‘588 patent and that, in response to
Plaintiff’s Second Amended Complaint which added allegations of infringement with respect to
the ‘292 patent and the ‘891 patent, BA Defendants expressed this intention to request ex parte
reexaminations of the ‘292 and ‘891 patents. See dkt. entry no. 56. Subsequently, during a

telephone status conference on January 5, 2012, based upon BA Defendants’ representation that
they had filed requests for ex parte reexaminations of the ‘292 and ‘891 patents and that the
USPTO had granted their request for an inter partes reexamination of the ‘588 patent, the Court
granted BA Defendants leave to renew their motion to stay this matter and hereby incorporates
the arguments previously made by counsel with respect to the original motion to stay. Presently,
this matter comes before the Court on a Motion by Defendants to stay this matter pending the
resolution of the USPTO’s inter partes reexamination of the ‘588 patent and ex parte
reexaminations of the ‘292 and ‘891 patents [dkt. entry. no. 60], returnable February 21, 2012.
Plaintiff filed opposition on February 6, 2012. BA Defendants filed a reply brief on February 14,
2012. Defendant Meda Pharmaceuticals Inc. (“Meda”) joined BA Defendants’ Motion on
February 21, 2012. See Meda’s Letter dated February 21, 2012, dkt. entry no. 63. For the
reasons stated herein, Defendants’ Motion is GRANTED.
II.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY
On November 2, 2010, Plaintiff filed a Complaint against Defendants BioDelivery, Meda,

and Aveva (collectively, “Defendants”) alleging infringement of U.S. Patent No. 7,824,588
(“‘588 patent”) entitled “Method of Making Self-Supporting Therapeutic Active-Containing
Film”. See Pl.’s Comp., dkt. entry no. 1 at 1-3. Plaintiff asserts that Defendants “make, use,
offer to sell, and/or sell certain pharmaceutical films under the Onsolis™ name [and that the]
Onsolis™ film products are manufactured in a manner that infringes one or more claims of the
‘588 patent”. Id. at 4. On January 14, 2011, Plaintiff filed an Amended Complaint which added
an allegation of false marking of U.S. Patent No. 5,800,832 (“‘832 patent”) entitled “Bioerodable
Film for Delivery of Pharmaceutical Compounds to Mucosal Surfaces”. See Pl.’s Am. Comp.,
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dkt. entry no. 5 at 4-9. Plaintiff alleges that Defendants “have marked and continue to mark the
Onsolis™ film products with the ‘832 patent” in an attempt to have “recipients of Onsolis™ film
products believe that the Onsolis™ film products are covered by the ‘832 patent” when in fact
they are not. Id. at 4-5. On September 27, 2011, Plaintiff filed a Second Amended Complaint
which added allegations of infringement of U.S. Patent number 7,357,891 (“‘891 patent”)
entitled “Process for Making an Ingestible Film” – which was assigned to Plaintiff on April 15,
2008 – and U.S. Patent number 7,425,292 (“‘292 patent”) entitled “Non-Self-Aggregating
Uniform Heterogeneity and Drug Delivery Systems Made Therefore” – which was assigned to
Plaintiff on September 16, 2008. See Pl.’s Second Am. Comp., dkt. entry no. 48 at 2-10.
Plaintiff alleges that “Onsolis™ film products are manufactured in a manner that infringes one or
more claims of the ‘292, ‘891 and ‘588 patents.” Id. at 4.
On September 12, 2011, BA Defendants filed a request for inter partes reexamination of
the ‘588 patent with the USPTO asserting that “[e]ach of the claims of the ‘588 patent is
demonstrated to be anticipated and/or obvious in view of eight prior art references, four of which
were not...considered by the [Patent] Examiner during prosecution of the patent”. See Def.’s Br.,
dkt. entry no. 46-1 at 4-5. On November 10, 2011, the USPTO issued its initial Office Action
and granted BA Defendants’ request for inter partes reexamination of claims 1-191 of the ‘588
patent. See Def.’s Decl. of Scott S. Christie (“Christie”), dkt. entry no. 60-2 at Ex. B. Similarly,
on January 20, 2012, BA Defendants filed separate requests for ex parte reexaminations of the
‘292 and ‘891 patents. See Def.’s Br., dkt. entry no. 60-1 at 3. On February 16, 2012, the
USPTO issued its initial Office Action and granted BA Defendants’ request for ex parte
reexamination of claims 1-22 of the ‘292 patent. See BA Def.’s Letter dated February 17, 2012.
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On March 1, 2012, the USPTO issued its initial Office Action and granted BA Defendants’
request for ex parte reexamination of claims 1-9 of the ‘891 patent. See BA Def.’s Letter dated
March 2, 2012.
III.

ARGUMENT
A.

Defendants’ Arguments in Support of the Motion to Stay
1.

A stay of this action is warranted pending the conclusion of the
reexamination proceedings.

Defendants argue that “[t]he Court should immediately stay this suit pending resolution
of the...reexamination requests”. See Def.’s Br., dkt. entry no. 60-1 at 9. Citing Abbott Diabetes
Care, Inc. v. Dexcom, Inc., 2007 U.S. Dist. LEXIS 73198, at *12 (D. Del. 2007), Cost Bros., Inc.
v. Travelers Indem. Co., 760 F. 2d 58, 60 (3d Cir. 1985), Ethicon, Inc. v. Quigg, 849 F.2d 1422,
1426-27 (Fed. Cir. 1988), Sabert Corp. v. Waddington N. Am., Inc., 2007 U.S. Dist. LEXIS
68092, at *22 (D.N.J. 2007), ASCII Corp. v. STD Entm’t USA, Inc., 844 F. Supp. 1378, 1381
(N.D. Cal. 1994), and CIMA Labs, Inc. v. Actavis Group HF, 2007 U.S. Dist. LEXIS 41516, at
*25-26 (D.N.J. 2007), Defendants note that it is “well within the Court’s discretion to stay
judicial proceedings pending the conclusion of a reexamination of a patent” and contend that
“[t]here is a liberal policy in favor of granting motions to stay proceedings pending the outcome
of reexamination proceedings...especially when a lawsuit is in its initial stages and there has been
little or no discovery”. Id. at 9-10. Pursuant to Stryker Trauma S.A. v. Synthes (USA), 2008 U.S.
Dist. LEXIS 23955, at *4 (D.N.J. 2008), Xerox Corp. v. 3Com Corp., 69 F. Supp. 2d 404, 406-07
(W.D.N.Y. 1999), and Vehicle IP, LLC v. Wal-Mart Stores, Inc., 2010 U.S. Dist. LEXIS 123493,
at *2-3 (D. Del. 2010), Defendants maintain that courts consider the following factors “[t]o

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determine whether a stay pending the resolution of a reexamination is appropriate”: “(1) whether
a stay will present undue prejudice to the patentee or a clear tactical disadvantage to the patent
challenger; (2) whether a stay will simplify the issues and streamline trial; and (3) whether
discovery is complete and a trial date has been set”. Id. at 10-11. As set forth more fully below,
Defendants argue that all of these factors weigh in favor of granting a stay. Id. at 11.
(a)

A stay will not unduly prejudice Plaintiff or provide a clear
tactical advantage to Defendants.

Citing KLA-Tencor Corp. v. Nanometrics, Inc., 2006 U.S. Dist. LEXIS 15754, at *7
(N.D. Cal. 2006), Defendants contend that “[g]ranting a stay does not cause the nonmoving party
undue prejudice when that party has not invested substantial expense and time in the litigation”.
Id. Further, citing ASCII Corp v. STD Entm’t USA, Inc., 844 F. Supp. 1378, 1381 (N.D. Cal.
1994), Eberle v. Harris, 2005 U.S. Dist. LEXIS 31885, at *5 (D.N.J. 2005), Motson v. Franklin
Covey, Co., 2005 U.S. Dist. LEXIS 34067, at *9 (D.N.J. 2005), and GPAC, Inc. v. Enterprises,
Inc., 144 F.R.D. 60, 62-63 (D.N.J. 1992), although “[b]y definition...a stay will result in an initial
delay of this matter”, Defendants argue that “[d]elay alone...is not considered to be prejudicial for
purposes of a motion to stay” and that “[c]ourts routinely grant motions to stay despite
substantial delays that occur” based in part on “a liberal policy in favor of granting motions to
stay pending the outcome of USPTO reexamination”. Id. at 11-12. “None of the litigants will
face...prejudice or disadvantage in this litigation as a result of a stay, and in fact, all of the
litigants will benefit equally from cost-savings...[while] the Court will avoid unnecessary
proceedings”. Id.
Pursuant to Brass Smith, LLC v. RPI Indus., 2010 U.S. Dist. LEXIS 116063 (D.N.J.

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2010), WABCO Holdings, Inc. v. Bendix Commer. Vehicle Sys., 2010 U.S. Dist. LEXIS 64036
(D.N.J. 2010), CIMA Labs, 2007 U.S. Dist. LEXIS 41516, at *31, Sabert Corp., 2007 U.S. Dist.
LEXIS 68092, at *23, Gioello Enters. Ltd. v. Mattel, Inc., 2001 U.S. Dist. LEXIS 26158, at *4
(D. Del. 2001), and Enhanced Sec. Research, LLC v. Juniper Networks, Inc., 2010 U.S. Dist.
LEXIS 136503 (D. Del. 2010), Defendants claim that “[o]n more than one occasion, this Court
has elected to stay patent infringement actions when the patents-in-suit were subject to
reexamination before the [US]PTO” because “although the denial of a stay can have no effect
whatsoever on past events, the grant of a stay will maximize the likelihood that neither the Court
nor the parties expend their assets addressing invalid claims”. Id. at 12-13. Given that “[t]his
case is in its early stages and there has been limited discovery, no claim construction
proceedings, and no trial preparation”, Defendants argue that “Plaintiff will not be unduly
prejudiced” by a stay. Id. at 13; see also Sabert Corp., 2007 U.S. Dist. LEXIS 68092, at *23;
Methode Elecs., Inc. v. Infineon Techs. Corp., 2000 U.S. Dist. LEXIS 20689, at *7 (N.D. Cal.
2000). “To the extent the reexaminations will present any delay”, citing 35 U.S.C. § 305, CIMA
Labs, 2007 U.S. Dist. LEXIS 41516, at *25, Ethicon, 849 F.2d at 1426, and Stryker Trauma S.A.,
2008 U.S. Dist. LEXIS 23955, at *6-7, Defendants maintain that “it will not be significant” given
that “[p]atent examiners are obligated to conduct reexamination proceedings ‘with special
dispatch’” and given that “[t]he delay inherent in the reexamination process does not, by itself,
constitute undue prejudice”. Id.
In this instance, Defendants note that the USPTO has granted the request for inter partes
reexamination as to the ‘588 patent and ex parte reexamination of the ‘292 and ‘891 patents,
therein rejecting all claims of each patent as invalid. Id.; see also BA Def.’s Letter dated
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February 17, 2012; BA Def.’s Letter dated March 2, 2012. Citing Sabert Corp., 2007 U.S. Dist.
LEXIS 68092, at *18-19, Methode Elecs., 2000 U.S. Dist. LEXIS 20689, at *7, and KLA-Tencor,
2006 U.S. Dist. LEXIS 15754, at *8, Defendants argue that “[a] stay at this stage of the case
would not present any tactical advantage to...Defendants” given that Defendants “have not
delayed in either seeking reexamination of the patents-in-suit or moving for a stay” and have not
“sought a stay for a dilatory purpose”. Id. Here, because Plaintiff “will not be prejudiced or
disadvantaged in any way as a result of a stay” and because “the Court and the parties...will all
clearly benefit from [a] stay”, Defendants argue that this factor weighs in favor of granting a stay.
Id. at 15. However, “[e]ven if the Court were to find some prejudice or disadvantage to Plaintiff,
the remaining two factors of the analysis...clearly favor a stay...and[,] therefore[,] a stay is [still]
warranted”. Id.
(b)

A stay will simplify the issues and streamline trial.

Defendants contend that “[a] stay would save resources and promote judicial economy”.
Id. at 15. Noting that the USPTO “has already made an initial determination that all claims of
the ‘588...[, ‘292, and ‘891] patent[s] are invalid”, pursuant to 35 U.S.C. § 307(a) and Broadcast
Innovation, L.L.C. v. Charter Commc’n, Inc., 2006 U.S. Dist. LEXIS 46623, at *7 (D. Colo.
2006), “[s]hould the [USPTO] determine that the reexamined claims of the patents-in-suit are
invalid”, Defendants assert that “those claims would then be unenforceable in this lawsuit”. Id.;
see also BA Def.’s Letter dated February 17, 2012; BA Def.’s Letter dated March 2, 2012. “In
89% of inter partes reexaminations, where the request to reexamine is granted, the [USPTO]
forces the patent owner to amend or cancel the claims”. Id. Separately, “the [USPTO] grants
92% of all requests for ex parte reexamination...and in 89% of those cases the [USPTO] forces
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the patent owner to amend or cancel claims”. Id. at 15-16. Thus, Defendants argue that “waiting
for the outcome of the reexaminations could eliminate entirely the need for a trial”. Id. at 16.
Citing 35 U.S.C. § 307(a), Middleton, Inc. v. Minn. Mining & Mfg. Co., 2004 U.S. Dist.
LEXIS 16812, at *13, 13 n.18 (S.D. Iowa 2004), and GPAC, Inc. v. D.W.W. Enters., Inc., 144
F.R.D. 60, 63 (D.N.J. 1992), Defendants assert that “[i]n the event some patent claims emerge
from the reexaminations, this lawsuit will likely be simplified nonetheless because claims,
arguments, and defenses can be narrowed or entirely disposed of” and, thereby, “the resources of
the parties and the court” will be preserved if a stay is granted. Id. In fact, pursuant to Canady v.
Erbe Elektromedizin GmbH, 271 F. Supp. 2d 64, 68, 78 (D.D.C. 2002), “the very purpose behind
the [US]PTO reexamination procedure is to facilitate patent holders’ enforcement of their patent
rights in the most economical manner possible”. Id. at 16-17. Citing Ethicon, 849 F. 2d at 1428
and CIMA Labs, 2007 U.S. Dist. LEXIS 41516, at *26, Defendants argue that “regardless of
whether the [USPTO] determines that the reexamined claims are unpatentable or not, staying this
lawsuit until this determination is made will simplify the issues and streamline the eventual
trial”. Id. at 17. Here, given that “staying this litigation...will result in the simplification, if not
the resolution, of the issues to be litigated in this case”, Defendants argue that this factor weighs
in favor of granting a stay. Id.
(c)

The procedural posture of this case favors a stay.

Citing Vehicle IP, 2010 U.S. Dist. LEXIS 123493, at *4 and Juniper, 2010 U.S. Dist.
LEXIS 136503, at *6, Defendants maintain that the fact that this matter “has not advanced
significantly beyond the pleading stage” – specifically, there has only been “limited discovery, no
claim construction proceedings”, and no trial date has been set – weighs in favor of a stay. Id. at
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18. Citing CIMA Labs, 2007 U.S. Dist. LEXIS 41516, at *30-31, GPAC, Inc. v. D.W.W. Enter.,
Inc., 144 F.R.D. 60, 64 (D.N.J. 1992), Sabert Corp., 2007 U.S. Dist. LEXIS 68092, at *21, KLATencor, 2006 U.S. Dist. LEXIS 15754, Target Therapeutics, Inc. v. SciMed Life Sys., Inc., 33
U.S.P.Q. 2d 2022, 2023 (N.D. Cal. 1995), and ASCII Corp., 844 F. Supp. at 1381, Defendants
note that “most often, cases have been denied a stay due to the late stage of the litigation, the fact
that discovery was or would be almost completed, or the matter had been marked for trial”. Id. at
18-19. Here, given that such circumstances are not present, Defendants argue that this factor
weighs in favor of granting a stay. Id.
B.

Plaintiff’s Arguments in Opposition to the Motion
1.

An initial rejection of claims of the ‘588 patent is not a significant
event.

Although Defendants “attribute substantial fanfare to the decision of the [USPTO] to
begin reexamination of the ‘588 patent”, Plaintiff maintains that this was not unexpected given
that “95% of all requests for in partes reexamination...are granted”. See Pl.’s Opp’n Br., dkt.
entry no. 61 at 5. Plaintiff also contends that “[a] rejection of the claims...[of the ‘588 patent] is
nothing more than standard operating procedure” given that “37 C.F.R. § 1.935 provides that ‘the
order for inter partes reexamination will usually be accompanied by the initial Office Action on
the merits of the reexamination” such that if the USPTO “was not going to initially reject the
patent claims, it would not even agree to reexamine the patent”. Id. at 6. Similary, “[g]iven that
the...[USPTO] orders ex parte reexamination for 92% of requests”, Plaintiff maintains that “it
[is] not...surprising...[that] the request[s] for the [‘292 and] ‘891 patent [were] granted” and notes
that it is “standard procedure” for the “ex parte reexamination...[to] begin with an initial rejection

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of the claims”. Id.; see also 37 C.F.R. §§ 1.515(a), 1.530, 1.535; MPEP § 2261.
2.

The balance of factors weighs against staying this litigation.

Citing Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936), Plaintiff notes that “[a]lthough
the Court’s inherent power to control its own docket includes the power to stay proceedings, the
Court ‘must weigh competing interests and maintain an even balance’ in managing its docket”
and “[t]he party moving for a stay ‘must make out a clear case of hardship or inequity in being
required to go forward...if there is even a fair possibility that the stay for which he prays will
work to damage someone else”. Id. at 7. Citing BarTex Research, LLC v. FedEx Corp., 611 F.
Supp. 2d 647, 650 (E.D. Tex. 2009) and Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427-28 (Fed.
Cir. 1988), Plaintiff argues that “[t]here is no compelling need for a stay...given that...litigation
and reexamination are not mutually exclusive alternatives for the parties to test the validity of a
patent”, given that “the results of reexamination will likely be appealed...[and will result] in
further delay in reaching a final determination”, and given that Defendants have “not made any
showing of hardship or inequity” despite the fact that there is a “strong probability that a stay will
harm [Plaintiff]”. Id. Citing eCOMSYSTEMS, Inc. v. Shared Mktg. Sers., Inc., 2011 U.S. Dist.
LEXIS 10174 (M.D. Fla. 2011) and MercExchange, L.L.C. v. eBay, Inc., 500 F. Supp. 2d 556,
563 (E.D. Va. 2007), Plaintiff notes that “[a] district court ‘is under no obligation to delay its
own proceedings by yielding to ongoing...[USPTO] patent reexaminations, regardless of their
relevancy to infringement claims which the court must analyze”. Id. at 7-8. Further, pursuant to
Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 662 (E.D. Tex. 2005), “there
is no per se rule requiring that patent cases be stayed pending reexamination because such a rule
‘would invite parties to unilaterally derail’ litigation”. Id. at 8.
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As set forth in Wyeth v. Abbott Labs., 2011 WL 380902, at *2 (D.N.J. 2011), Plaintiff
notes that courts “generally weigh three factors” when considering “whether to grant a stay
pending reexamination”: “(1) whether a stay would unduly prejudice or present a clear tactical
disadvantage to the non-moving party; (2) whether a stay will simplify the issues in question and
trial of the case; and (2) whether discovery is complete and whether a trial date has been set”. Id.
“In evaluating the potential prejudice to the plaintiff if the stay is granted and the possible
motivation of the defendant movant”, pursuant to PureChoice, Inc. v. Honeywell Int’l, Inc., 2007
WL 1189844, at *1 (E.D. Tex. 2007), Plaintiff maintains that “courts have also considered: (1)
whether the defendant is a direct competitor of the plaintiff and (2) whether the request for
reexamination was filed only after suit was filed suggesting that it may have been filed for the
purposes of delay”.

Id. at 8-9.

Plaintiff argues that “[t]hese factors favor a denial

of...[Defendants’] Motion for a stay pending reexamination”. Id. at 9.
3.

A stay of this litigation will greatly prejudice Plaintiff.

Based on the claim that Defendants are “actively ramping up their infringing activities”,
citing Oakley, Inc. v. Sunglass Hut Int’l, 316 F.3d 1331, 1345 (Fed. Cir. 2003) and CVII Beta
Ventures, Inc. v. Custom Optical Frames, Inc., 859 F. Supp. 945, 950 (D. Md. 1994), Plaintiff
maintains that it “would be unduly prejudiced should a stay be granted” given that “[i]n the
preliminary injunction context, courts have relied upon the threat of substantially increased
infringing activities as evidence of irreparable harm”. Id. In fact, if the Court grants Defendants’
Motion to stay while Defendants increase their infringing activity, Plaintiff contends that it “will
become in effect a ‘compulsory licensor’ and the essence of [its] patent rights will have been
negated”. Id. Plaintiff maintains that, as set forth in its brief and the Declaration of Timothy C.
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Bickham (“Bickham”), it “continue[s] to compete head-to-head...[with Defendants] for projects
and business in the film drug delivery sector” and “recent events...demonstrate that this is a case
where a stay will harm [Plaintiff] more than just the inherent harm in delaying final resolution”.
Id. at 9-10; see also Pl.’s Decl. of Bickham, dkt. entry no. 61-1 at Exhs. L & M.
Plaintiff maintains that “the inherent harm by delay is substantial because the potential
delay is for an indefinite period and the term of the patents-in-suit are limited”. Id. at 10.
Indeed, Defendants’ continued development of “products to introduce to the market that are
offending and harmful to [Plaintiff’s] market position” will continue “to negatively impact
[Plaintiff’s] business development activities”. Id. Citing Biax Corp. v. Fujitsu Comp. Sys.
Corp., 2007 WL 614187, at *2 (E.D. Tex. 2007) and PureChoice, 2007 WL 1189844, at *1,
Plaintiff argues that it “would be prejudiced by a stay because ex parte reexaminations take an
average of 22.6 months to complete and the appellate process for review could take an additional
24 months” such that the “potential delay...is significantly longer than the timeframe parties face
for resolution...through trial” in District Court. Id. at 10-11.
4.

Defendants’ reexamination requests are merely tactical delays.
(a)

Defendants’ timing is transparent.

Plaintiff notes that Defendants filed their request “for inter partes reexamination of the
‘588 patent...on September 12, 2011”, approximately 10 months after the Complaint was filed,
and their request for ex parte reexaminations of the ‘891 and ‘292 patents on January 20, 2012,
approximately 4 months after making the request for inter partes reexamination of the ‘588
patent and approximately 4 months after being put on notice that the ‘891 and ‘292 patents were
also at issue in this litigation. Id. at 11-12. Plaintiff argues that Defendants’ delays were “clearly
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for tactical reasons” in order to observe “how the [USPTO] acted and how [Plaintiff] responded”.
Id. at 12. Specifically, Defendants “attacked the ‘588 patent with four primary references” –
Chen, Peh, Bernstein, and Hijaya. Id. However, because “Chen and Hijaya had already been
considered during patent prosecution[,] ...[the USPTO] refused to accept...arguments that
Bernstein or Hijaya was a primary basis for rejecting the ‘588 claims”. Id. Plaintiff asserts that
“[w]ith [this] knowledge in hand, [Defendants] changed tactics when...[requesting reexamination
of] the ‘891 and ‘292 patents...[and] dropped any mention of Bernstein and Hijaya”. Id. Thus,
“[b]ut for their delay”, Plaintiff argues that Defendants “would not have known to omit Bernstein
and Hijaya when requesting reexamination of the ‘891 and ‘292 patents”. Id.
(b)

The “additional prior art” in the newly-filed reexamination
requests is merely duplicative.

Plaintiff contends that “[a]ll of the prior art that [Defendants] raised against the ‘891 and
‘292 patents was in their possession well before their requests were filed” given that “[a]ll [of]
the references cited against the ‘891 and ‘292 patents were cited in the ‘588 request” with the
only exception being “U.S. Patent No. 4,365,423, to Arter et al. (“Arter”)”. Id. However,
Plaintiff maintains that Arter “is remarkably similar in content to U.S. Patent No. 5,881,476 to
Strobush et al. (“Strobush”)”, a patent which Defendants “used against the ‘588 patent”. Id. at
12-13. Thus, given that “Arter is the only reference [Defendants] raise that the USPTO did not
already consider” in “its request for ex parte reexamination of the ‘891 patent”, Plaintiff argues
that Defendants are “trying to pull the wool over the eyes of the USPTO and this Court” when
they assert that “the reexaminations are based upon ‘new’ art”. Id. at 13-14. In fact, “Arter
provides little if any...[new] information” given that Strobush was “considered...during the

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original prosecution”. Id.
5.

Staying this litigation will not simplify the issues or promote judicial
efficiency.

Despite Defendants’ claim “that reexaminations are of great benefit to the Court because
they will ‘likely result in a narrowing and simplifying of the issues’”, Plaintiff argues that
“[r]eexamination would only significantly simplify this case if the [USPTO] finds that all claims
of the...patents-in-suit are cancelled”. Id. at 14. Given that “this happens in only 12% of
reexaminations requested by a third party”, Plaintiff maintains that “[t]he unlikelihood of such a
result favors not staying [this] case”. Id. “[I]f the Court were to adopt a rule that patent cases
should be stayed during reexamination because some of the claims may be affected”, Plaintiff
argues that “such a rule would not promote the efficient and timely resolution of patent
cases...but[,] rather[,] would invite parties such as [Defendants] unilaterally to derail timely
patent case resolution by seeking reexamination”. Id. Citing Soverain, 356 F. Supp. at 662-63,
although acknowledging that “some of the claims in the case may change due to reexamination”,
Plaintiff maintains that “the interests of justice will be better served by dealing with that
contingency when and if it occurs...rather than putting...[this] case indefinitely on hold” because
“[f]irm trial settings resolve cases and reduce litigation costs”. Id. at 14-15.
Noting that “[r]eexamination is limited to a narrow set of issues” including “whether the
patent claims are anticipated or obvious in view of patents or printed publications” pursuant to 35
U.S.C. §§ 301, 311(a), Plaintiff argues that “[t]he reexamination process is not a substitute for a
District Court proceeding” given the “other issues that are commonly raised in a patent
infringement action...[that] must still be decided by...[a] District Court” such as “infringement of

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the patents-in-suit”, “invalidity based on prior art other than patents or printed publication”,
“invalidity based on failure to satisfy the enablement, written description, definiteness or best
mode requirements...[pursuant to] 35 U.S.C. § 112”, “unenforceability”, “monetary damages”, or
“whether injunctive relief should be awarded”. Id. at 15. In this instance, Plaintiff contends that
the USPTO “will not resolve [Plaintiff’s] claims that the manufacture and sale of Onsolis
infringe the ‘588, ‘292 and ‘891 patents”, “will not calculate the monetary damages that
[Plaintiff] should be awarded...or determine [Plaintiff’s] right to injunctive relief”, will not
“resolve many of the invalidity defenses raised in [Defendants’] invalidity contentions”, and
“will not resolve [Plaintiff’s] false marking claim”. Id. at 16.
6.

The posture of this case does not mandate a stay.

Plaintiff notes that “[s]ubstantial time and resources have been committed to this
litigation” given that the parties “have exchanged initial disclosures, infringement contentions,
responses to infringement contentions, invalidity contentions, and responses to invalidity
contentions”. Id. Given the progress already made in this matter, Plaintiff contends that a stay is
not warranted.
III.

DISCUSSION
A.

Legal Standards
1.

Stay Proceedings

It is well-settled that “the power to stay proceedings is incidental to the power inherent in
every court to control the disposition of the causes on its docket with economy of time and effort
for itself, for counsel, and for litigants. How this can best be done calls for the exercise of
judgment, which must weigh competing interests and maintain an even balance.” Landis v.
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North American Co., 299 U.S. 248, 254-55 (1936)(citing Kansas City Southern Ry. Co. v. U.S.,
282 U.S. 760, 763 (1931); Enelow v. New York Life Ins. Co., 293 U.S. 379, 382 (1935)).
“Especially in cases of extraordinary public moment, the individual may be required to submit to
delay not immoderate in extent and not oppressive in its consequences if the public welfare or
convenience will thereby be promoted.” Id. at 256. Specifically, “a United States district court
has broad power to stay proceedings.” Bechtel Corp. v. Laborers’ International Union, 544 F.2d
1207, 1215 (3d. Cir. 1976). “In the exercise of its sound discretion, a court may hold one lawsuit
in abeyance to abide the outcome of another which may substantially affect it or be dispositive of
the issues.” Id.; see also American Life Ins. Co. v. Stewart, 300 U.S. 203, 215 (1937). However,
“it is well settled that before a stay may be issued, the petitioner must demonstrate ‘a clear case
of hardship or inequity’, if there is ‘even a fair possibility’ that the stay would work damage on
another party.”

Gold v. Johns-Mansville Sales Corp., 723 F.2d 1068, 1075-76 (3d Cir.

1983)(citing Landis v. North American Co., 299 U.S. 248, 255 (1936)).
With respect to patent cases, courts have “consistently recognized the inherent power of
the district courts to grant a stay pending reexamination of a patent”. P&G v. Kraft Foods
Global, Inc., 549 F.3d 842, 849 (Fed. Cir. 2008); see also Gould v. Control Laser Corp., 705
F.2d 1340, 1341 (Fed. Cir.), cert. denied, 464 U.S. 935 (1983); Ethicon, Inc. v. Quigg, 849 F.2d
1422, 1426 (Fed. Cir. 1988). However, “a stay should ordinarily not be granted unless there is a
substantial patentability issue raised” and “both a preliminary injunction and a stay ordinarily
should not be granted at the same time” because this “could subject an accused infringer to unfair
and undesirable delay in reaching a final resolution”.

P&G, 549 F.3d at 849; see also

Amazon.com v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350-51 (Fed. Cir. 2001).
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“A district court is not required to stay a proceeding pending reexamination”, although
“one purpose of the reexamination procedure is to eliminate trial of that issue (when the claim is
cancelled) or to facilitate trial of that issue by providing the district court with the expert view of
the [US]PTO (when a claim survives reexamination proceedings)”. Cross Atl. Capital Partners.,
Inc. v. Facebook, Inc., 2008 U.S. Dist. LEXIS 62869, at *2 (E.D. Pa. 2008); see also Viskase
Corp. v. Am. Nat’l Can Co., 261 F.3d 1316, 1328 (Fed. Cir. 2001). “[G]ranting a stay is
favored” and is “particularly appropriate when the reexamination result might assist the court in
making a validity determination or would eliminate the need to make an infringement
determination”. Id. at *2-3; see also Alltech, Inc. v. Cenzone Tech, Inc., 2007 U.S. Dist. LEXIS
19989 (S.D. Cal. 2007); ASCII Corp v. STD Entm’t USA, Inc., 844 F. Supp. 1378, 1381 (N.D.
Cal. 1994); In re Cygnus Telecomm. Tech., LLC Patent Litig., 385 F. Supp. 2d 1022, 1023 (N.D.
Cal. 2005). In fact, “[a]lthough every case is fact specific, almost every reported New Jersey
District Court opinion that has considered the issue has granted a stay where a reexamination
request was pending”. Brass Smith, LLC v. RPI Indus., 2010 U.S. Dist. LEXIS 116063, at *1920 (D.N.J. 2010).
However, the Court recognizes that “litigation and reexamination are not mutually
exclusive alternatives for the parties to test the validity of a patent – they may be concurrent
proceedings”. BarTex Research v. FedEx Corp., 611 F. Supp. 2d 647, 650 (E.D. Tex. 2009); see
also Ethicon, 849 F.2d 1422, 1427-28. District courts are “under no obligation to delay [their]
own proceedings by yielding to ongoing [US]PTO patent reexaminations, regardless of their
relevancy to infringement claims which the court must analyze”. MercExchange, L.L.C. v. eBay,
Inc., 500 F. Supp. 2d 556, 563 (E.D. Va. 2007). Adoption of a “per se rule that patent cases
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should be stayed during reexamination...would not promote the efficient and timely resolution of
patent cases, but would invite parties to unilaterally derail timely patent case resolution by
seeking reexamination”. Soverain Software LLC v. Amazon.com, Inc., 356 F. Supp. 2d 660, 663
(E.D. Tex. 2005).
“Courts have enumerated many advantages with respect to staying a civil action pending
[US]PTO reexamination of a patent, which include: (1) a review of all prior art presented to a
court by the [US]PTO, with its particular expertise; (2) the potential alleviation of numerous
discovery problems relating to prior art by [US]PTO examination; (3) the potential dismissal of a
civil action should invalidity of a patent be found by the [US]PTO; (4) encouragement to settle
based upon the outcome of the [US]PTO reexamination; (5) an admissible record at trial from the
[US]PTO proceedings which would reduce the complexity of the litigation; (6) a reduction of
issues, defenses and evidence during pre-trial conferences; and (7) a reduction of costs for the
parties and a court”. ICI Uniqema, Inc. v. Kobo Prods., Inc., 2009 U.S. Dist. LEXIS 108421, at
*3 (D.N.J. 2009); see also Eberle v. Harris, 2005 U.S. Dist. LEXIS 31885 (D.N.J. 2005); GPAC,
Inc. v. D.W.W. Enterprises, Inc., 144 F.R.D. 60, 63 (D.N.J. 1992). In this case, all parties
acknowledge that the following factors should be considered to determine whether a stay is
appropriate: “(1) whether a stay would unduly prejudice or present a clear tactical disadvantage
to the nonmoving party; (2) whether a stay will simplify the issues in question and trial of the
case; and (3) whether discovery is complete and whether a trial date has been set”. Cross Atl.,
2008 U.S. Dist. LEXIS 62869, at *3-4; see also In re Laughlin Prods. Inc., 265 F. Supp. 2d 525,
530-31 (E.D. Pa. 2003); Sabert Corp. v. Waddington North Am., Inc., 2007 U.S. Dist. LEXIS
68092 (D.N.J. 2007); Alltech, 2007 U.S. Dist. LEXIS 19989; Cygnus, 385 F. Supp. 2d at 1023;
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Xerox Corp. v. 3Com Corp., 69 F. Supp. 2d 404, 406 (W.D.N.Y. 1999); ASCII, 844 F. Supp. at
1380; GPAC, 144 F.R.D. at 66; ICI Uniqema, 2009 U.S. Dist. LEXIS 108421, at *4.
B.

Defendants’ Motion

Here, given that the USPTO has now granted Defendants’ separate requests for inter
partes reexamination of the ‘588 patent and ex parte reexamination of the ‘292 and ‘891 patents,
the Court finds that advancing this litigation while these reexaminations are pending may be an
exercise in futility. If claims 1-191 of the ‘588 patent, 1-22 of the ‘292 patent, and/or claims 1-9
of the ‘891 patent are invalidated, significant aspects of this lawsuit may be rendered moot and
some or all of Plaintiff’s claims may be dismissed. Further, with respect to the factors used to
determine the appropriateness of a stay, the Court finds that they also weigh in Defendants’
favor. While the Court appreciates that a stay will necessarily delay these proceedings, delay
alone is not a sufficient reason to deny a stay. See Stryker Trauma S.A. v. Synthes, 2008 U.S.
Dist. LEXIS 23955 (D.N.J. 2008); see also Sorensen v. Black and Decker Corp., 2007 U.S. Dist.
LEXIS 66712 (S.D. Cal. 2007). Similarly, while the Court appreciates Plaintiff’s contention that
Defendants are competitors that may continue selling infringing goods and eroding its market
share and goodwill during a stay, Plaintiff did not seek a preliminary injunction in this matter and
the Court declines to impose any restraints with respect to Defendants’ business activities at this
time. See WABCO Holdings, Inc. v. Bendix Commer. Vehicle Sys., 2010 U.S. Dist. LEXIS
64036, at *8-9 (D.N.J. 2010). Importantly, the Court notes that all of Plaintiff’s legal and
equitable remedies will be available when the stay is lifted; a stay does not foreclose Plaintiff
from any remedy. Given that this case is still in the early stages of discovery, a Markman hearing
has not been scheduled, and no trial date has been set, the initial decision of the USPTO rejecting
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claims 1-191 of the ‘588 patent, 1-22 of the ‘292 patent, and 1-9 of the ‘891 patent, and the
factors cited with respect to the advantages of granting a stay while the USPTO conducts the
reexaminations (see ICI Uniqema, 2009 U.S. Dist. LEXIS 108421, at *3), the Court also finds
that a stay may ultimately simplify the issues in question and the trial of this case. As set forth in
Sorensen, 2007 U.S. Dist. LEXIS 66712, at *18-19, if the USPTO does not invalidate or
otherwise alter the claims of the ‘588, ‘292, and/or ‘891 patents, Plaintiff’s legal remedies remain
unaffected. Moreover, if the claims are narrowed, the parties will have benefitted by avoiding a
needless waste of their resources in this litigation and Plaintiff will be able to pursue its claim for
monetary damages at trial.
Finally, this Cout is aware that “the Federal Circuit has recently confirmed that the
[US]PTO would not be bound in its reexamination by the determinations of [a district court]”.
Sorensen, 2007 U.S. Dist. LEXIS 66712, at *15. Therefore,
not only is plaintiff unlikely to be prejudiced in these proceedings
by a stay pending the [US]PTO reexamination, but defendants
would potentially be prejudiced by failing to enter a stay... . Not
only could the court and the [US]PTO reach conflicting
determinations, but one possible scenario could result in
irreparable harm to defendant: if this court finds that the patent is
not invalid and the defendant has infringed it, and orders defendant
to pay damages to plaintiff for such infringement, then defendant
would have no ability to recover those damages if at a later date the
[US]PTO determined that the patent is invalid.
Id.; see also Bausch & Lomb, Inc. v. Alcon Lab., Inc., 914 F. Supp. 951, 952 (W.D.N.Y. 1996).
At the same time, a USPTO decision will be beneficial to the Court by either declaring the ‘588,
‘292, and/or /891 patents “unpatentable...[and thereby] eliminating the need for...[a] trial” or by
finding the “claims to be valid...[and thereby] aid[ing] the Court when considering the claims
during litigation”. Id.; see also GPAC, 144 F.R.D. at 65-66; Gould, 705 F.2d at 1342.
IV.

CONCLUSION AND ORDER
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The Court having considered the papers submitted and opposition thereto, and for the
reasons set forth above;
IT IS on this 7th day of March, 2012,
ORDERED that Defendants’ Motion to stay this matter pending the resolution of the
USPTO’s inter partes reexamination of the ‘588 patent and ex parte reexamination of the ‘292
and ‘891 patents [dkt. entry. no. 60] is GRANTED; and it is further
ORDERED that defense counsel shall provide the Court with status updates regarding
the USPTO’s inter partes reexamination of the ‘588 patent and/or ex parte reexaminations of the
‘292 and ‘891 patents every ninety (90) days starting May 1, 2012; and it is further
ORDERED that defense counsel shall notify the Court within ten (10) days of any
disposition of the USPTO’s inter partes reexamination of the ‘588 patent and/or ex parte
reexaminations of the ‘292 and ‘891 patents; and it is further
ORDERED that the Clerk of the Court shall administratively terminate this case.
s/ Douglas E. Arpert
DOUGLAS E. ARPERT
UNITED STATES MAGISTRATE JUDGE

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