Stay of Parallel Litigation Denied Due to Lack of Estoppel?
When implementing a patent
reexamination strategy, a threshold determination is whether or not to
initiate ex parte or inter partes patent reexamination, or
both. This decision is very straight forward for older patents (i.e.,
those patents that did not mature from an application filed on or after
November 29, 1999). This is because applications filed prior to the 1999
date are not eligible for inter partes patent reexamination.
Yet, as the years progress,
fewer and fewer patents are outside of the inter partes date
provision. So, where both options are available, which is the better option?
Like most legal inquiries, the
answer is "it depends." For those seeking a stay of a parallel litigation, the
answer will vary in accordance with the practice of the presiding judge.
As detailed previously, a
Nevada judge found that ex
parte patent reexamination pendency is controlled by the Patentee, and
determined that a stay is appropriate. The judge reasoned that any potential
delays in the ex parte proceeding could be controlled by the Patentee.
Last week, in eComSystems
Inc., v. Shared Marketing Sevices Inc., and Ace Hardware Corp (MDFL),
the judge found that the potential for an ex parte patent
reexamination to simplify issues for trial was limited compared to inter
partes patent reexamination. The judge explained that estoppel provisions
of inter partes patent reexamination would prevent a defendant from
arguing the same art in the parallel litigation.
Inter partes reexaminations provide a third party the
right to participate in the reexamination process and, thus, have a res
judicata effect on the third party requester in any subsequent or
concurrent civil action. See 35 U.S.C. §§ 314-315. . . .. Ex parte reexaminations,
on the other hand, do not bar the requestor from relitigating the exact same
issues in district court.
Accordingly, the Court does not
find that judicial economy will be served by a stay because the pending ex
parte reexaminations of the patents-in-suit would still leave Shared
Marketing and Ace free to relitigate the exact same issues before this Court.
In this case, the patents were
subject to inter partes patent reexamination; yet the defendants opted
for the lower risk, ex parte option. While the Order is silent as to
the perceived gamesmanship of this choice, the decision may be more about
this choice then the loss of estoppel. Indeed, as pointed out by the judge,
even had estoppel applied, patent reexamination will not defeat all invalidity
defenses (e.g., public use, on-sale bar, inequitable conduct).
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