Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-00309/USCOURTS-casd-3_07-cv-00309-5/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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07cv309

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SYNTHES (U.S.A.), a Pennsylvania

partnership,

Plaintiff,

v.

G.M. DOS REIS JR. IND. COM. DE

EQUIP. MEDICO A/K/A GMREIS, a

Brazilian corporation,

Defendant.

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Civil No. 07-CV-309-L(AJB)

ORDER GRANTING

DEFENDANT’S MOTION TO STAY

ACTION PENDING PATENT

REEXAMINATION

In this patent infringement action, Defendant G.M. dos Reis Jr. Ind. Com. de Equip.

Mexico a/k/a GMReis (“GMReis”) filed a motion to stay pending inter partes reexamination by

the United States Patent and Trademark Office (“PTO”). Plaintiff Synthes (U.S.A.) (“Synthes”)

opposed the motion. For the reasons which follow, GMReis’ motion to stay is GRANTED. 

Synthes is a global medical device company which develops, produces, and markets

instruments and implants, including bone plates, for the surgical fixation, correction, and

regeneration of the human skeleton. Synthes is the assignee of United States Patent No.

7,128,744 (“Patent”), which relates to locking bone plates used to surgically secure fractured

bones. GMReis is a Brazilian corporation which designs, manufactures, and markets orthopedic

and neurological medical devices, including bone plates.

/ / / / /

Case 3:07-cv-00309-L-AJB Document 85 Filed 02/22/10 Page 1 of 7
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Synthes filed a complaint in this court alleging GMReis is infringing the Patent. GMReis

filed a counterclaim requesting declaratory judgment of non-infringement, invalidity and

unenforceability. Synthes filed a separate, unrelated action in the Eastern District of

Pennsylvania, case no. 03-0084 (“Pennsylvania Action”), against Smith & Nephew, Inc. (“Smith

& Nephew”). Smith & Nephew requested, and was granted, an inter partes reexamination of the

Patent, which is at issue in the Pennsylvania Action as well as in this action. Smith & Nephew

questions the validity of each claim of the Patent based on prior art which was not disclosed to

the PTO during the Patent application and examination process. The reexamination proceeding

is currently pending before the PTO and the Pennsylvania Action was stayed pending its

conclusion.

Because the reexamination proceeding commenced by Smith & Nephew involves the

Patent which is at issue in this case, GMReis moves to stay this case pending the conclusion of

the reexamination. Synthes opposes the stay arguing that the reexamination will not simplify the

issues in dispute in this case and that it will be unduly prejudiced by the delay.

“Congress intended the reexamination process to provide an efficient and relatively

inexpensive procedure for reviewing the validity of patents which would employ the PTO’s

expertise.” Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426 (Fed. Cir. 1988). “Any third-party

requester at any time may file a request for inter partes reexamination by the Office of a patent

on the basis of any prior art . . ..” 35 U.S.C. § 311(a). The focus of the reexamination is

essentially the same as in the initial patent examination, “at which a preponderance of the

evidence must show nonpatentability before the PTO may reject the claims of a patent

application. The intent underlying reexamination is to ‘start over’ in the PTO with respect to the

limited examination areas involved, and to re-examine the claims . . . as they would have been

considered if they had been originally examined in light of all the prior art of record in the

reexamination proceeding.” Ethicon, 849 F.2d at 1427 (internal quotation marks and citations

omitted, emphasis in original). At the conclusion of the reexamination, the PTO publishes “a

certificate canceling any claim of the patent finally determined to be unpatentable, confirming

/ / / / /

Case 3:07-cv-00309-L-AJB Document 85 Filed 02/22/10 Page 2 of 7
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any claim of the patent determined to be patentable, and incorporating in the patent any proposed

amended or new claim determined to be patentable.” 35 U.S.C. § 316(a). 

“[L]itigation and reexamination are distinct proceedings, with distinct parties, purposes,

procedures and outcomes.” Ethicon, 849 F.2d at 1427 (emphasis omitted). Accordingly, “[t]he

court is not required to stay judicial resolution in view of the reexamination[].” Viskase Corp. v.

Am. Nat’l Can Co., 261 F.3d 1316, 1328 (Fed. Cir. 2001). The stay provision for inter partes

reexaminations does not expressly provide for an automatic stay of parallel district court

proceedings. 35 U.S.C. § 318. However, “the statute in no way impacts the inherent powers of

the court to control the litigation before it, and to grant a stay in the interests of justice when so

required.” Procter & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842, 848 (Fed. Cir.

2008) (quoting with approval the district court finding). “Courts have inherent power to manage

their dockets and stay proceedings, including the authority to order a stay pending conclusion of

a PTO reexamination.” Ethicon, 849 F.2d at 1426-27 (internal citations omitted). “When

considering whether to stay patent infringement litigation pending a reexamination of the patent

in suit, courts generally examine three factors, including (1) whether a stay would unduly

prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether a stay

will simplify the issues in question and trial of the case; and (3) whether discovery is complete

and whether a trial date has been set.” Equipements de Transformation IMAC v. AnheuserBusch Co., Inc., 559 F. Supp. 2d 809, 815 (E.D. Mich. 2008) (internal quotation marks and

citations omitted), modified on other grounds, 2008 WL 3852240 (E.D. Mich. 2008).

“[A] stay should ordinarily not be granted unless there is a substantial patentability issue

raised in the inter partes reexamination proceeding.” Procter & Gamble, 549 F.3d at 849. In

this case, Smith & Nephew challenged the validity of each of the 55 claims of the Patent. By

granting the request for inter partes reexamination, the PTO necessarily found that “a substantial

new question of patentability” was raised by the request. See 35 U.S.C. § 312(a) (see also Decl.

of Matthew S. Jorgenson filed Aug. 17, 2009, Ex. A (Decision on Request for Inter Partes

Reexamination) at 2). Moreover, in the November 5, 2009 Office Action in Inter Partes

Reexamination, the PTO rejected each of the 55 claims. (Notice of New Evidence, filed Nov. 6,

Case 3:07-cv-00309-L-AJB Document 85 Filed 02/22/10 Page 3 of 7
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1 GMReis does not ship to or sell its products in the United States because they are

not approved by the Food and Drug Administration. Synthes acknowledges that GMReis’

“conduct falls short of the traditional making and selling of infringing products in the U.S.” 

(Opp’n at 1.)

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2009, Ex. A (“Office Action”) at 4.) Although the Office Action does not constitute a final

determination regarding Patent validity, see 35 U.S.C. §§ 314 & 315, it demonstrates that the

reexamination raises substantial patentability issues.

A stay is appropriate when “the outcome of the reexamination would be likely to assist

the court in determining patent validity and, if the claims are canceled in the reexamination,

would eliminate the need to try the infringement issue.” Slip Track Sys., Inc. v. Metal Life, Inc.,

159 F.3d 1337, 1341 (Fed. Cir. 1998). A PTO reexamination can provide a “simplification of

litigation that might result from the cancellation, clarification or limitation of claims, and, even if

the reexamination did not lead to claim amendment or cancellation, it could still provide

valuable analysis to the district court, which it could consider in reaching its determination.” 

Ethicon, 849 F.2d at 1428 (internal citations omitted).

In the present case, the reexamination addresses the validity of all 55 claims of the only

patent at issue. Furthermore, GMReis’ counterclaim relies on some of the same prior art which

is the subject of the reexamination. (Cf. GMReis’ Corrected Answer and Counterclaims to

Synthes’ Complaint at 6 & Office Action at 3-4 (both referencing Synthes 1997 Catalog and

Update, Titanium LC-DCP Condylar Buttress Plate).) To proceed with the case during

reexamination would needlessly duplicate the effort of the PTO and forego the benefit of its

expertise and analysis. “One purpose of the reexamination procedure is to eliminate trial of [the

patent validity] issue (when the claim is cancelled) 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). 

Synthes argues that the reexamination will not simplify the issue of infringement. It

considers central to this case the issue whether GMReis infringed the Patent under 35 U.S.C.

Section 271(a) by “using,” “offering to sell” and/or “importing,” when it brought its device from

Brazil into the Untied States and displayed it at an international trade show.1

 (See Opp’n at 1, 8-

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9.) Synthes argues that this legal issue is not yet well established in the law, and that resolving it

would likely end the case by leading to settlement. In this regard, Synthes maintains that the

validity issues pending in the reexamination proceeding will do nothing to simplify or resolve

this legal issue. The court disagrees. If the PTO cancels the relevant Patent claims, the issue

whether the Patent was infringed will be moot. Synthes concedes as much. (Opp’n at 9.) A stay

is appropriate if cancellation of patent claims in the reexamination proceeding would eliminate

the need to try the infringement issue. Slip Track Sys., 159 F.3d at 1341. Moreover, as Synthes

concedes, any such claim cancellation would also negate the need to litigate the counterclaims. 

(Opp’n at 10.) If the PTO reaffirms the Patent, the court will have the benefit of the PTO’s

analysis of the same prior art GMReis is relying on to challenge the Patent’s validity.

Synthes next contends that a determination that the Patent is valid in whole or in part

would not necessarily foreclose GMReis’ further challenges to its validity or enforceability in

this litigation. The court is mindful that a final determination after reexamination that any or all

of the Patent claims are valid would not estop anyone except Smith & Nephew from raising the

same validity challenges in court. See 35 U.S.C. § 315(c). It could therefore potentially be

possible for GMReis to continue to litigate validity issues even if Smith & Nephew’s efforts to

invalidate the Patent in reexamination are ultimately unsuccessful. Regardless of the outcome of

the reexamination, however, the court will have the benefit of the PTO’s expertise, analysis of

the Patent claims, and evaluation of the relevant prior art. See Ethicon, 849 F.2d at 1428; see

also Slip Track Sys., 159 F.3d at 1341; Gould, 705 F.2d at 1342. Accordingly, Synthes’

arguments that the reexamination will not simplify the issues in this case are rejected.

The stay also is not precluded by the stage of the litigation. Although this case was filed

in February 2007, the only discovery and briefing, including briefing on appeal, has been with

respect to the personal jurisdiction issue. Discovery, Markman hearing and trial dates have not

yet been set. The early stage of this litigation weighs in favor of granting a stay.

Synthes complains that the motion to stay is just the latest form of GMReis’ dilatory

conduct in this case. The court disagrees. Although much time has been consumed in this case

with jurisdictional discovery and personal jurisdiction briefing, this is understandable given that

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this is international litigation. The court does not see the conduct of either party in this case so

far as dilatory.

Synthes further argues that it will be unduly prejudiced by the stay because damages are

not an adequate remedy in this case. This argument is based on the premise that Synthes and

GMReis are “direct competitors” and that GMReis’ continued display of its products at trade

shows in the United States is causing Synthes “marketplace damage.” This argument is rejected

because Synthes does not offer any evidence to support it. (See Opp’n at 12-14.) Furthermore,

it appears to be contradicted by the admission that GMReis’ “conduct falls short of the

traditional making and selling of infringing products in the U.S.” (Id. at 1.)

Synthes next maintains that there is risk that key evidence will be lost during the stay. It

argues that it may not be able to secure the testimony of certain GMReis’ employees, who may

not be reachable if they leave GMReis, and that documentary evidence may be lost. (Opp’n at

11-12.) Synthes’ argument that it would not be able to take discovery from former GMReis

employees is not supported by any citation to legal authority or evidence, and is therefore

rejected. (See id.) Furthermore, the argument is undercut by the admission that “a relatively

small amount” of discovery is outstanding. (Opp’n at 17.) 

Last, Synthes argues that it will be unduly prejudiced because this case “has never been

about the recovery of money damages” but about injunctive relief. (Opp’n at 13.) It contends

that the stay will unduly delay such relief. This argument implies that Synthes requires a speedy

injunctive remedy; however, it rings hollow because in the three years since it had filed this case,

Synthes has not requested a preliminary injunction. Regardless, its right to injunctive relief,

whether preliminary or permanent, depends on the merits of the infringement claim. As

discussed above, this issue could be mooted if the Patent claims are cancelled in reexamination. 

Although an inter partes reexamination proceeding can be lengthy, see, e.g., Fresenuius USA,

Inc. v. Baxter Int’l, Inc., 582 F.3d 1288, 1305-06 (Fed. Cir. 2009) (Newman, J., concurring),

they, including any appeals to the Board of Patent Appeals and Interferences, are conducted

“with special dispatch” within the PTO. 35 U.S.C. § 314(c). Even if GMReis had not moved

for a stay, before ordering any injunctive relief to Synthes, the court would have to address

Case 3:07-cv-00309-L-AJB Document 85 Filed 02/22/10 Page 6 of 7
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GMReis’ invalidity and unenforceability claims, which would result in some delay. As

discussed above, the delay would be caused by the court having to consider many of the same

issues as the PTO in reexamination.

Based on the foregoing, GMReis’ motion to stay is GRANTED. It is hereby

ORDERED as follows:

1. All proceedings in this action are STAYED until ordered otherwise.

2. This case is TEMPORARILY CLOSED. Either party may file an ex parte

application to reopen the case. Any such application shall be filed no later than ten (10) calendar

days after the reexamination certificate is issued as provided in 35 U.S.C. Section 316(a) and

must include a copy of the certificate.

3. During the stay each party shall preserve any and all records and other evidence which

may be relevant to this case. 

IT IS SO ORDERED.

DATED: February 22, 2010

M. James Lorenz

United States District Court Judge

COPY TO: 

HON. ANTHONY J. BATTAGLIA

UNITED STATES MAGISTRATE JUDGE

ALL PARTIES/COUNSEL

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