Titan Holdings LLC v. Under Armour Inc

Filing 20

ORDER granting 16 Motion to Stay Case and Administratively Closing Case. Signed by Honorable Timothy D. DeGiusti on 7/13/2012. (mb)

THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA

TITAN HOLDINGS, LLC,
Plaintiff,
vs.
UNDER ARMOUR, INC.,
Defendant.

)
)
)
)
)
)
)
)
)
)

NO. CIV-11-777-D

ORDER
Before the Court is Defendant’s motion [Doc. No. 16] to stay this action pending a
reexamination by the United States Patent and Trademark Office (“PTO”). Plaintiff timely filed an
objection to the motion to stay.
Background:
In this action, Plaintiff alleges that Defendant has infringed Plaintiff’s Patent No. 6,161,222
(“Patent”), which covers an athletic garment with protective inner thigh guards. Defendant filed an
answer denying infringement, and asserting a counterclaim alleging the Patent is invalid and
unenforceable. Defendant also filed a request with the PTO to reexamine all claims in the Patent
and, on December 2, 2011, the PTO granted the request for a reexamination.
Defendant’s claim of invalidity is based on its contention that certain prior art renders the
Patent invalid because it was “anticipated” under 28 U.S.C. § 102 and/or “obvious” under 28 U.S.C.
§ 103. According to Defendant, Plaintiff did not submit the prior art to the PTO when it applied for
the Patent. Defendant argues that, in reexamining the Patent, the PTO will consider the question of
its validity and determine whether it was properly issued in 2001. According to Defendant, a
reexamination is likely to narrow the issues in this litigation or, possibly, result in eliminating the

issues raised by Plaintiff’s claims. Defendant argues that a stay is thus in the interest of the parties
because it may result in avoiding the time and expense of this litigation, and proceeding with this
action while the reexamination is ongoing could result in inconsistent rulings and a waste of judicial
resources.
Plaintiff objects because it contends Defendant has not presented argument or authority
sufficient to justify a stay. Furthermore, it argues that it will be prejudiced if a stay issues because
of the length of time required for the reexamination.
Standards governing a motion to stay:
As a general rule, “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.’” United Steelworkers of Am. v. Or. Steel Mills, Inc., 322 F.
3d 1222, 1227 (10th Cir. 2003) (quoting Landis v. North Am. Co., 229 U.S. 248, 254 (1936)). The
granting of a stay ordinarily lies within the discretion of the district court. See Pet Milk Co. v. Ritter,
323 F. 2d 586, 588 (10th Cir. 1963). In most civil cases, a movant typically asks the Court to stay
one proceeding pending the outcome of related litigation. In such cases, “[i]n assessing the
propriety of a stay, a district court should consider: (1) whether the [movants] are likely to prevail
in the related proceedings; (2) whether, absent a stay, the [movants] will suffer irreparable harm; (3)
whether the issuance of the stay will cause substantial harm to the other parties to the proceeding;
and (4) the public interest at stake.” United Steelworkers, 322 F. 3d at 1227 (citing Battle v.
Anderson, 564 F. 2d 388, 397 (10th Cir. 1977)).
Standards governing a motion to stay pending a PTO reexamination:
Although the foregoing general rules apply in patent infringement cases, courts have

2

developed specific standards where a party seeks a stay of the infringement action pending the
PTO’s reexamination of the subject patent’s validity.1 “Although the commencement of
reexamination proceedings does not operate as an automatic stay of federal court litigation involving
identical claims, a district court retains the authority, pursuant to its inherent power to control and
manage its docket, to stay an action pending the outcome of reexamination proceedings before the
PTO.” Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed.Cir.1988); Xerox Corp. v. 3Com Corp.,
69 F.Supp.2d 404, 406 (W.D.N.Y.1999) (citing Gould v. Control Laser Corp., 705 F.2d at 1340),
appeal dismissed by 243 F.3d 554 (Fed.Cir.2000)). “A motion to stay an action pending the
resolution of a related matter in the [PTO] is directed to the sound discretion of the court.” Xerox
Corp., 69 F.Supp.2d at 406 (quoting Braintree Labs., Inc. v. Nephro-Tech., Inc., 1997 WL 94237
(D.Kan. Feb. 26, 1997) (unpublished opinion)).
“Federal courts have ‘consistently recognized the inherent power of the district courts to
grant a stay pending reexamination of a patent.’” United Pet Group, Inc. v. MiracleCorp Products,
2012 WL 2458539, at *2 (E.D. Mo. June 27, 2012) (unpublished opinion) (quoting Procter &
Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842, 849 (Fed.Cir. 2008) (citations omitted)). In
exercising that discretion, district courts “often consider the following factors: (1) whether discovery
is complete and whether a trial date has been set; (2) whether a stay of litigation will simplify the
issues in question and facilitate the trial; and (3) whether a stay would unduly prejudice or present
a clear tactical disadvantage for the non-moving party.” United Pet, 2012 WL 2458539, at * 2
(citing Interplast Group, Inc. v. Coroplast, Inc., 2009 WL 1774313, at *1 (E.D. Mo. June 23, 2009);

1

Although it appears the Tenth Circuit Court of Appeals has not addressed the propriety of a stay under these
circumstances, numerous courts have considered the question, and this Court has no reason to conclude that this Circuit
would apply a different analysis.

3

Watlow Elec. Mfg. Co. v. Ogden Mfg. Co., 2006 WL 1892546, at *1 (E.D. Mo. July 10, 2006)); see
also Middleton, Inc. v. Minnesota Mining and Mfg. Co., 2004 WL 1968669, at *3 (S.D. Iowa Aug.
24, 2004)(unpublished opinion); Xerox Corp. v. 3Com Corp., 69 F. Supp. 2d 404, 406 (W.D. N.Y.
1999).
Application:
Courts “routinely issue stays pending the outcome of reexamination proceedings,
particularly in cases where the litigants have not made substantial progress towards trial.” K.G.
Motors, Inc. v. Specialized Bicycle Components, Inc., 2009 WL 2179129, at * 2 (W.D. N.Y. July
22, 2009) (unpublished opinion) (citing Middleton, Inc. v. Minnesota Mining and Mfg. Co, 2004 WL
1968669, at *3 (S.D. Iowa Aug. 24, 2004) (unpublished opinion) and Softview Computer Prods.
Corp. v. Haworth, Inc., 2000 WL 1134471, at *2 (S.D. N.Y. Aug. 10, 2000) (unpublished opinion)).
“Because the PTO is considered to have expertise in deciding issues of patentability many courts
have preferred to postpone making final decisions on infringement until the PTO rules on issues
before it.” Bausch & Lomb, Inc. v. Alcon Laboratories, Inc., 914 F. Supp. 951, 953 (W.D. N.Y.
1996).
Courts have also recognized that the PTO reexamination procedure provides benefits to
litigants, including “settling patent validity disputes more quickly and less expensively than oftenprotracted litigation and allowing courts to rely on the PTO’s expertise.” Patlex Corp. v.
Mossinghoff, 758 F.2d 594, 602 (Fed. Cir. 1985). In this regard, courts have recognized that the
PTO’s special technical expertise is beneficial to a trial court when the validity of a patent is at issue
in the infringement litigation. Bausch & Lomb, 914 F. Supp. at 953; EchoStar Techs Corp. v. Tivo,
Inc., 2006 WL 2501494, at * 4 and *11 (E.D. Tex. July 14, 2006) (unpublished opinion).

4

Furthermore, courts have recognized that allowing litigation involving a patent’s validity to
proceed concurrently with a PTO reexamination proceeding creates a risk of inconsistent rulings
regarding validity. Bausch & Lomb, 914 F. Supp. at 953. Because the PTO is not bound by a trial
court’s validity determination, that determination could be rendered moot by the PTO reexamination
proceeding, thus further complicating the litigation process. Id.
Notwithstanding the foregoing, Plaintiff in this case argues a stay is improper because there
is no guarantee that it will eliminate issues in the litigation and, more importantly, Plaintiff will be
prejudiced by the delay in awaiting the reexamination decision.

With respect to possibly

eliminating or streamlining issues, the PTO’s decision obviously cannot be predicted. However,
Defendant does not argue that such a result is guaranteed. It argues only, consistent with the
foregoing court decisions, that the outcome may eliminate the need for the trial of this litigation.
That the PTO’s decision cannot be predicted in advance does not mandate denial of the requested
stay. The Court finds no authority supporting a contention that a stay would be proper only if it
results in eliminating the issues in the pending litigation.
In support of its prejudice contention, Plaintiff argues that “PTO statistics show that median
reexamination lasts between 18.6 and 28.5 months, without appeal,” and concludes that
reexamination in this case “will take years.”

Plaintiff’s brief at p. 4. Plaintiff argues that the

resulting delay will prejudice its ability to pursue the infringement claims asserted in this lawsuit.
While Plaintiff cites several decisions holding that the delay caused by a PTO reexamination
proceeding could be prejudicial to a plaintiff asserting an infringement claim, other courts have
repeatedly held that delay alone is not sufficient to warrant denial of a motion to stay. “‘Mere delay,
without more, though, does not demonstrate undue prejudice.’” Ameras Onsite, LLC v. Digital

5

Management Solutions, Inc., 2010 WL 1268054, at * 3 (S.D. Tex. Mar. 24, 2010) (unpublished
opinion) (citing Ho Keung Tse v. Apple Inc., 2007 WL 2904279, at *4 (N.D. Cal. Oct. 4, 2007)
(unpublished opinion)). “Reexamination does not threaten protracted or indefinite delay.” Alza
Corp. v. Wyeth, 2006 WL 3500015, at *1 (E.D. Tex. Nov. 21, 2006) (unpublished opinion).
In fact, the reexamination statute provides that the PTO shall conduct “reexamination
proceedings...including any appeal to the Board of Patent Appeals and Interferences...with special
dispatch.” 35 U.S.C. § 305 (emphasis added). More specifically, where a patent is involved in
litigation, the reexamination proceeding will “have priority over all other cases.” Cameras Onsite,
2010 WL 1268054, at *3 (quoting Manual of Patent Examining Procedures § 2261). The Court
finds that delay, without more, is not sufficient to establish the prejudice necessary to deny the
requested stay.
Nor does the record suggest that granting the stay would result in a tactical advantage to
Defendant or a disadvantage to Plaintiff. The issues to be resolved in the PTO reexamination
proceeding are set out in the PTO orders and attachments submitted as Defendant’s Exhibit 1. These
describe, inter alia, the materials to be considered as well as the Plaintiff’s opportunity to respond
to the issues raised in the reexamination. The Court does not find the reexamination proceedings
create a particular advantage for Defendant or a disadvantage for Plaintiff in this litigation.
In addition to the foregoing considerations, the Court must also consider the current status
of the litigation. Typically, it is more appropriate to grant a stay during the early stages of a lawsuit.
See, e.g., Cima Labs, Inc. v. Actavis Group HF, 2007 WL 1672229, at *10 (D. N.J. June 7,
2007)(unpublished opinion).

As the parties in this case acknowledge, no status or scheduling

conference has been conducted in this case, there are no pretrial deadlines, and no trial date has been

6

set. There is no suggestion that the parties have engaged in discovery or otherwise expended
resources in this case. As a result, this factor weighs in favor of granting the stay.
Conclusion:
For the foregoing reasons, the Court concludes that this action should be stayed and
administratively closed until such time as the PTO completes its reexamination proceeding.
Accordingly, the motion to stay [Doc. No. 16] is GRANTED. This action is stayed until the PTO
reexamination proceeding is completed. The action is administratively closed without prejudice to
the rights of the parties to seek to reopen it during the period of administrative closure for any
meritorious purpose. The parties are directed to jointly file a notice with the Court to advise of the
progress of the PTO proceeding. No later than 14 days after the completion of the PTO proceeding,
the parties are directed to notify the Court of the resulting decision. At that time, either party may
seek to reopen this proceeding to request further action by the Court in light of the PTO decision.
IT IS SO ORDERED this 13th day of July, 2012.

7