Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-00758/USCOURTS-casd-3_10-cv-00758-1/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:145 Patent Infringement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

PROTECTCONNECT, INC.,

Plaintiff,

v.

LEVITON MANUFACTURING CO., INC.

et al.,

Defendants. 

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Case No.: 10cv758 AJB (BGS)

Order Granting Motion to Stay 

Case Pending Outcome of 

Reexamination Proceedings 

[Doc. No. 121 and 130]

The Defendants and Counterclaimants, Pass & Seymour, Inc. (“Pass & Seymour”) and Cablofil,

Inc. (“Cablofil”) and Leviton Manufacturing Co. (“Leviton”) have jointly moved to stay the instant

litigation in its entirety pending the outcome of the Ex Parte Petitions for Reexamination currently

pending before the United State Patent and Trademark Office (“USPTO”). The Plaintiff filed an

opposition and the Defendants filed a reply. Denfendants’ Ex Parte Application to Seal Documents

Related to the Reply, [Doc. No. 130], is hereby GRANTED. The hearing date currently set for April 22,

2011 at 1:30 p.m. before Judge Battaglia in Courtroom 12 is hereby vacated as this motion is

appropriate for submission on the papers without oral argument pursuant to Local Rule 7.1(d)(1). For

the reasons set forth below, Defendants’ motion to stay, [Doc. No. 121], is hereby GRANTED.

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1

 The FAC added U.S. Patent No. 7,762,838.

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

American Co., 299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153, (1936); Ethicon, Inc. v. Quigg, 849 F.2d 1422,

1426–27 (Fed.Cir.1988); accord Amado v. Microsoft Corp., 517 F.3d 1353, 1358 (Fed.Cir.2008).

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Background

ProtectConnect initiated this action on April 12, 2010 and filed a First Amended Complaint

(“FAC”)1

 on February 9, 2011, [Doc. No. 117], alleging the Defendants’ infringe the following patents:

U.S. Patent No. 6,341,981, U.S. Patent No. 7,052,313 and U.S. Patent No. 7,762,838 (collectively, the

“patents in suit”). Defendants and Counterclaimants, Pass & Seymour, Inc. (“Pass & Seymour”) and

Cablofil, Inc. (“Cablofil”), have asserted counterclaims for Declaratory Judgment of Patent Invalidity

and Non-Infringement of the ‘981, ‘313 and ‘838 patents. Defendants also assert claims of Infringement

of U.S. Patent Nos. 5,594,398 and 5,510,760. Defendant and Counterclaimant, Leviton Manufacturing

Co., has asserted counterclaims seeking Declarations of Invalidity and Non-Infringement of the ‘981,

‘313 and ‘838 patents and asserts claims of Infringement of United States Patent No. 6,309,248.

Leviton initiated the ex parte petitions for reexamination on September 28, 2010 for the ‘838

patent and October 8, 2010 for the ‘981 patent. Due to objections from the USPTO, Leviton submitted

corrected ex parte petitions for reexamination for both on January 12, 2011. 

Legal Standard

 A district court has the discretion to order a stay of proceedings pending the outcome of a

reexamination of patents-in-suit by the USPTO as this is part of the Court's inherent power to manage its

docket.2

 In determining whether to grant a stay pending reexamination, courts consider: (1) whether

discovery is complete and whether a trial date has been set; (2) whether a stay will simplify the issues in

question and trial of the case; and (3) whether a stay would unduly prejudice or present a clear tactical

disadvantage to the non-moving party. See Telemac Corp. v. Teledigital, Inc., 450 F.Supp.2d 1107, 1110

(N.D.Cal.2006); Fresenius Medical Care Holdings, Inc. v. Baxter Intern., Inc., 2007 WL 1655625 at *3

(N.D.Cal.2007). There is a “liberal policy in favor of granting motions to stay proceedings pending the

outcome of USPTO reexamination or reissuance proceedings.” ASCII Corp. v. STD Entm't, 844 F.Supp.

1378, 1381 (N.D.Cal.1994).

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1. Stage of the Litigation

The early stage of a litigation weighs in favor of granting a stay pending reexamination. See

Target Therapeutics, Inc. v. SciMed Life Sys., Inc., 33 U.S.P.Q.2d 2022, 2023 (N.D.Cal.1995) (holding

that the absence of “significant discovery” or “substantial expense and time ... invested” in the litigation

weighed in favor of staying the litigation); see also ASCII Corp., 844 F.Supp. at 1381 (granting stay

where parties had undertaken little or no discovery and the case had not yet been set for trial). Here,

Plaintiffs filed their FAC, [Doc. No. 117], on February 9, 2011. The parties have not exchanged expert

reports, have conducted only one deposition, and have not filed any dispositive motions. While claim

construction briefs have been filed, the claim construction hearing is set for July 11, 2011, and no trial

date is currently set. In view of the circumstances of this case, the Court finds that the first factor

militates in favor of a stay.

2. Simplification of the Issues and Trial

The second factor examines whether a stay pending reexamination will simplify the issues and

trial of the case. As explained by the Federal Circuit: “[o]ne purpose of the reexamination procedure is

to eliminate trial of that issue (when the claim is canceled) or to facilitate trial of that issue by providing

the district court with the expert view of the PTO (when a claim survives the reexamination

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

In the instant case, the Court finds that a stay pending reexamination of these patents would

simplify the issues and trial of this case. Here, Plaintiffs' claims are only for patent infringement, and

Defendant's counterclaims consist of 1) requests for declaratory relief, asking the Court to declare that

the patents-in-suit are invalid and not infringed by Defendant; and 2) infringement of their patents.

There are no issues in the case unrelated to patent infringement for which the PTO's expertise resulting

from the reexamination would not be helpful.

In response, Plaintiffs argue that a stay is inappropriate because the reexaminations are unlikely

to cancel or modify all of the patent claims at issue. However, as Defendants point out, two of the three

patents asserted by Plaintiff and 17 of the 18 claims asserted are impacted by these reexamination

proceedings, and if the reexamination proceedings narrow any of the asserted claims of the

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3 See also In re Cygnus Telecommunications Technology, LLC Patent Litigation, 385 F.Supp.2d

1022, 1024 (N.D.Cal.2005) (“If the USPTO cancels any of the 21 claims asserted in the two patents,

infringement and validity issues that could potentially be raised ... would be resolved. For those claims

that survive the reexamination, this court may have a richer prosecution history upon which to base

necessary claim construction determinations or reconsideration.”)

4 Esco Corp. v. Berkeley Forge & Tool, Inc., 2009 WL 3078463 at *3 (N.D.Cal.2009)

(Armstrong, J.) (citing SKF Condition Monitoring, Inc. v. SAT Corp., 2008 WL 706851 at *6 (S.D.

Cal.2008)).

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patents-in-suit, the scope of the litigation may be significantly simplified.3 In sum, a stay pending final

resolution of the reexamination proceedings would simplify the issues in question and trial, weighing in

favor of a stay.

3. Prejudice and Tactical Concerns

The third factor examines whether a stay would unduly prejudice or present a clear tactical

disadvantage to the nonmoving party. It should be noted that “delay inherent in the reexamination

process does not constitute, by itself, undue prejudice.”4

 Parties having protection under the patent

statutory framework may not “complain of the rights afforded to others by that same statutory

framework.” Pegasus Dev. Corp. v. Directv, Inc., 2003 WL 21105073 at *2 (D.Del.2003). Defendant

here “is legally entitled to invoke the reexamination process,” and the PTO has already taken up the

reexaminations. See id. Because delay inherent in the reexamination process does not constitute undue

prejudice, courts also consider evidence of dilatory motives or tactics, such as when a party unduly

delays in seeking reexamination of a patent. See KLA–Tencor Corp. v. Nanometrics, Inc., 2006 WL

708661 at *3 (N.D. Cal.2006). 

Review of the record in this case does not evidence dilatory motives or tactics on behalf of

Defendants. While this action was originally filed on April 12, 2010, the Plaintiff only filed the FAC

asserting the ‘838 patent on February 9, 2011 and the corrected ex parte petitions for reexamination for

both the ‘838 and‘981 patents were filed on January 12, 2011. 

The Plaintiff also argue that when an accused infringer that is a direct competitor of the Plaintiff

patent holder, seeks a stay of proceedings, courts often find the patent holder will be prejudiced by the

stay. The Plaintiff also contends that their sales have dramatically decreased as a result of the

Defendants’ alleged infringement. The Court is not persuaded by these arguments or the non-binding

Case 3:10-cv-00758-AJB-BGS Document 133 Filed 04/22/11 Page 4 of 6
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5

 Plaintiff has reported to shareholders that it has reduced overhead and production, is pursuing

sales of existing inventory only and its exit strategy of one of intellectual property enforcement. 

Clearly, this provides an alternative and plausible explanation for the decreased sales.

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authority cited by Plaintiff as it does not appear that the parties are direct competitors.5 The Plaintiff has

failed to show, beyond the delay implicit in the reexamination process, how they would be unduly

prejudiced or tactically disadvantaged if this Court were to grant a stay. Therefore, this factor weighs in

favor of granting a stay.

Conclusion

For the reasons set forth above,

IT IS HEREBY ORDERED THAT:

1. Denfendants’ Ex Parte Application to Seal Documents Related to the Reply to

Protectconnect's Opposition to Defendants' Motion to Stay the Case and Supporting

Documents, [Doc. No. 130], is hereby GRANTED.

2. Defendant's Motion to Stay, [Doc. No. 121], is GRANTED. This action is STAYED

pending final exhaustion of the two pending reexamination proceedings, including any

appeals. While the Court orders this action stayed pending final exhaustion of the two

pending reexamination proceedings, this Order does not foreclose any party from moving

to reopen this action prior to completion of all of the reexamination proceedings upon a

showing of compelling circumstances.

3. The claim construction hearing set for July 11, 2011 is hereby VACATED and the

Clerk shall ADMINISTRATIVELY CLOSE this matter.

4. The parties are instructed to submit status reports to the Court every six months,

apprising the Court of the status of the pending reexamination proceedings. The parties

are advised that the failure to submit such status reports could result in dismissal of this

matter.

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K:\COMMON\BATTAGLI\DJ CASES\IP Cases\ProtectConnect\ProtectcConnect.Order.Grt.Stay.wpd 6 10cv758

5. Upon final exhaustion of the two pending reexamination proceedings, including any

appeals, the parties shall jointly submit to the Court, within one week, a letter indicating

that all appeals have been exhausted, and requesting that this matter be reopened and a

case management conference be scheduled.

IT IS SO ORDERED.

DATED: April 22, 2011

Hon. Anthony J. Battaglia

U.S. District Judge

Case 3:10-cv-00758-AJB-BGS Document 133 Filed 04/22/11 Page 6 of 6