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Kaz USA, Inc. v. E. Mishan & Sons, Inc.

United States District Court, D. Massachusetts

July 9, 2014

KAZ USA, INC., Plaintiff,
v.
E. MISHAN & SONS, INC., Defendant.

MEMORANDUM OF DECISION AND ORDER ON DEFENDANT E. MISHAN & SONS, INC'S MOTION TO STAY LITIGATION PENDING REEXAMINATION OF THE PATENT-IN-SUIT (Docket No. 31)

TIMOTHY S. HILLMAN, District Judge.

Background

Plaintiff, KAZ USA, INC. ("KAZ") filed a Complaint against E. Mishan & Sons, Inc. ("E. Mishan") alleging Patent Infringement, in violation of 35 U.S.C. ยง 271, for alleged infringement of U.S. Patent No. 5, 859, 952 (the "952 patent"). E. Mishan has filed an Answer to the Complaint; its affirmative defenses include non-infringement, invalidity and laches. E. Mishan has also filed a cross-claim seeking a declaratory judgment that it is not infringing the 952 patent (Count 1) and that the 952 patent is invalid (Count 2).

On November 19, 2013, the Court issued a Scheduling Order (Docket No. 23)("Scheduling Order"), adopting the parties' proposed deadlines. The Scheduling Order provides that all fact discovery is to be completed by October 17, 2014, that expert reports will be served by December 19, 2014, all expert discovery completed by April 24, 2015, and dispositive motion practice completed by August 14, 2015, with a hearing to follow. As to patent specific discovery: preliminary infringement disclosures were due by December 19, 2013, preliminary invalidity and non-infringement disclosures were due by February 17, 2014, proposed claim constructions would be exchanged by June 17, 2014, preliminary claim construction briefs would be filed by July 8, 2014, responsive claim construction briefs would be exchanged by July 31, 2014, a joint claim construction and prehearing statement would be filed with the Court by August 21, 2014, and thereafter, the Court will schedule a Markman hearing and additional time, if necessary for supplemental expert discovery.

On December 19, 2013, KAZ filed its preliminary infringement disclosures (Docket No. 25). On February 17, 2014, E. Mishan filed it preliminary invalidity and non-infringement disclosures (Docket No. 28). At the status conference held on April 15, 2014, E. Mishan informed the Court that it had filed a request with the United States Patent and Trademark Office ("PTO") seeking reexamination of the 952 patent and requested that the date for exchanging proposed claim constructions be extended by 30 days. That request was granted was by the Court. Accordingly, the parties would exchange their proposed claim constructions by July 17, 2014, and related deadlines would be extended by 30 days.

E. Mishan filed its request for ex parte reexamination of the 952 patent[1] with the PTO on March 11, 2014, and at the request of the PTO, resubmitted it on April 1, 2014. On May 9, 2014, the PTO granted E. Mishan's request and ordered reexamination of all claims of the 952 patent, stating that: "the references cited by [KAZ] raise a substantial new question of patentability with respect to claims 1-7 of the 952 patent. Accordingly, claims 1-7 of the 952 patent will be reexamined." See Decl. of John Zaccaria In Sup. Of Def. Em. Mishan & Sons, Inc.'s Mot. To Stay Lit. Pending Reexamination Of The Patent-In-Suit (Docket No. 33)(" Zaccaria Decl. "), at Ex. B., p. 10.

Thereafter, E. Mishan filed Defendant E. Mishan &Sons, Inc.'s Motion To Stay Litigation Pending Reexamination Of The Patent-In-Suit (Docket No. 31). For the reasons set forth below, that motion is granted.

Discussion

Standard of Review

District courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination.' In determining whether a stay is appropriate, courts must consider the following factors: (1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether a stay would simplify the issues in question and trial of the case; and (3) the stage of the litigation.
There is a liberal policy in favor of granting motions to stay proceedings pending the outcome of reexamination, especially in cases that are still in the initial stages of litigation and where there has been little or no discovery.' That policy gives full effect to a process that was intended to settle validity disputes more quickly and less expensively' than litigation, and to allow courts to refer patent validity questions to the expertise of the [PTO].'

Boston Heart Diagnostics Corp. v. Health Diagnostics Lab., Inc., CIV. 13-13111-FDS, 2014 WL 2048436 (D. Mass. May 16, 2014)(internal citations and citations to quoted cases omitted).

Put another way "[a]llowing the PTO to determine complex, re-examination-specific issues of a patent's validity may resolve disputed issues, simplify these issues for trial or obviate the need for trial altogether. On the other hand, permitting an extended stay pending reexamination may prejudice valid patent-holders by preventing them from vindicating their rights for five to seven years." ADA Solutions, Inc. v. Engineered Plastics, Inc., 826 F.Supp. 2d. 348, 350 (D. Mass. 2011)(internal citations and citations omitted).; see also Baxter Int'l, Inc. v. Fresenius Med. Care Holdings, Inc., 08 C 2389, 2008 WL 4395854 (N.D. Ill. Sept. 25, 2008)("Staying proceedings in the district court pending the resolution of a PTO reexamination may have numerous benefits for the parties and the court, including streamlining the case and simplifying the remaining issues, promoting settlement, and reducing the length and expense of litigation"). By ...


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