Etagz v. Skins North America et al

Filing 22

MEMORANDUM DECISION and Ordergranting 15 Motion to Stay. Signed by Judge Ted Stewart on 10/21/2011. (tls)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

ETAGZ, INC., an Indiana corporation
Plaintiff,

MEMORANDUM DECISION AND
ORDER GRANTING MOTION TO
STAY

vs.

SKINS NORTH AMERICA, LLC, a
California limited liability company, SKINS
INTERNATIONAL TRADING AG, a Swiss
entity, SKINS USA, INC., a Delaware
corporation, SKINS USA, LLC, a Delaware
limited liability company, GATHERING
STORM HOLDING COMPANY, LLC, and
DOES 1-10,

Case No. 2:11-CV-522 TS

Defendants.

This matter is before the Court on Defendants Skins North America, LLC, Skins
International Trading AG, Skins USA, Inc., Skins USA, LLC, and Gathering Storm Holding
Company, LLC’s (collectively “Skins”) Motion to Stay.1 Skins moves the Court to stay the
instant litigation pending the outcome of certain Patent and Trademark Office (“PTO”)
proceedings.

1

Docket No. 15.

I. BACKGROUND
On June 9, 2011, Etagz filed a complaint against Skins alleging patent infringement.
Etagz’s claims centered on U.S. Patent Nos. 6,298,332 (the “’332 Patent”), 7,503,502 B2 (the
“’502 Patent”), and 7,703,686 B2 (the “’686 Patent”). Prior to the commencement of this suit,
Etagz had filed a request with the PTO for reexamination of certain claims of the ‘332 and ‘686
patents. The request was granted, and the PTO issued a final decision regarding those patents on
August 11, 2011.
In its Complaint, Etagz alleged infringement of “at least claims 1, 11, 16, and 26 of the
‘332 Patent” against Skins. In its final decision, the PTO rejected claims 11 and 16, and found
that claims 1 and 26, among others, were not subject to reexamination and were patentable.
Etagz has agreed to dismiss its infringement allegations as to claims 11 and 16.
Etagz also alleged infringement of “at least claims 1, 16, and 20 of the ’502 Patent.” The
PTO found that none of these claims were subject to reexamination and were all patentable. The
PTO confirmed that several other claims were patentable, and rejected claims 33-35. Etagz
amended claims 33-35, and they are currently submitted to the PTO for reconsideration. Skins
argues that because Etagz used the words “at least” in its allegations, it is possible that Etagz will
make infringement allegations on claims 33-35. As a result, Skins argues that resources will be
conserved and efficiency promoted if the litigation is stayed pending the results of the PTO’s
reexamination of those claims.
There are now eight claims by Etagz against Skins that are not subject to reexamination:
claims 1, 16, and 20 of the ’502 Patent; claims 1 and 26 of the ’332 Patent; and claims 1, 16 and
20 of the ’502 Patent.

II. DISCUSSION
The Federal Circuit has recognized that a district court may properly stay proceedings in a
patent case pending the PTO’s reexamination of a patent by that Office.2 This Court has the
inherent power to manage its docket and stay proceedings.3 Courts consider a number of factors
in determining whether to stay litigation proceedings pending PTO reexamination, including: (1)
whether discovery is complete and whether a trial date has been set; (2) whether a stay would
unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party;
and (3) whether a stay will simplify the issues.
A.

DISCOVERY COMPLETE AND TRIAL DATE SET
No scheduling order has been entered for this case, nor has a trial date been set.

Therefore, this factor weighs in favor of granting a stay.
B.

PREJUDICE OR TACTICAL ADVANTAGE
A stay would likely prejudice Etagz to some extent. By staying litigation until the

reexamination is complete, Skins would be able to continue its alleged infringement for an
unknown period of time. On the other hand, this is not a case where a defendant has requested
reconsideration and then gains tactical advantage from the delay inherent in that process. Here,
Plaintiff initiated the reexamination of claims 33-35. Delaying litigation until it is clear what
claims Etagz can bring against Skins may prejudice Etagz in terms of time, but it is a delay of
Etagz’s own making. Furthermore, the delay will likely be very minimal since the PTO has
already examined the claims, made recommendations on fixing them, and Etagz has complied

2

Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983).

3

Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426 (Fed. Cir. 1988).

with those recommendations.4 While any delay may be prejudicial to Etagz, the “delay inherent
in the reexamination process does not constitute, by itself, undue prejudice.”5 Therefore, this
factor weighs in favor of granting a stay.
C.

SIMPLIFICATION OF THE ISSUES
A stay will likely lead to simplification of the issues. It is undisputed that the PTO has

been asked to review claims 33-35 of the ’502 Patent as amended by Etagz. The PTO suggested
in its final decision several ways to remedy those claims in order to render them patentable.6
Etagz has complied with those suggestions.7 Thus, it is likely that the claims will be approved,
and subsequently asserted against Skins. Even if the claims are not deemed patentable, the
PTO’s analysis of the claims can provide useful guidance to the Court on Etagz’s other claims.8
Thus, this factor weighs in favor of granting a stay.
III. CONCLUSION
The Court find that the factors weigh in favor of granting the Motion. Though Etagz will
be prejudiced by a delay in resolution of its claims, the Court finds that such prejudice is
attributable to Etagz’s own actions and that any delay will likely be minimal. The Court is

4

Docket No. 19 Ex. A. at 10.

5

Pool Cover Specialists Nat’l, Inc. v. Cover-Pools Inc., 2009 WL 2999036, at *2 (D. Utah
2009) (quotation marks and citation omitted) (emphasis added).
6

Docket No. 19 Ex. A. at 10.

7

Id.

8

See Pool Cover Specialists Nat’l, Inc, 2009 WL 2999036, at *2 (noting that “even if . . .
reexamination [does] not lead to claim amendment or cancellation, it could still provide valuable
analysis to the district court”).

further persuaded that a stay will simplify the issues. Accordingly, the Court will grant the
Motion. It is therefore
ORDERED that Defendant’s Motion to Stay (Docket No. 15) is GRANTED. The Clerk
of the Court is directed to administratively close this case. The case may be re-opened upon
motion by either party.
DATED October 21, 2011.

BY THE COURT:

_____________________________________
TED STEWART
United States District Judge