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JAB Distributors, LLC v. London Luxury

May 11, 2010

JAB DISTRIBUTORS, LLC, PLAINTIFF,
v.
LONDON LUXURY, LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge

MEMORANDUM OPINION AND ORDER

Defendants London Luxury, LLC ("London Luxury"), American Textile Company, Inc. ("American Textile"), and Target Corporation ("Target") have filed a motion seeking a stay of this case pending the United States Patent and Trademark Office's ("PTO") reexamination of the patent-in-suit. For the following reasons, the Court grants the motion to stay.

LEGAL STANDARD

"The decision whether to stay a case pending PTO reexamination is entrusted to the Court's sound discretion." Baxter Int'l, Inc. v. Fresenius Med. Care Holdings, Inc., No. 08 C 2389, 2008 WL 4395854, at *2 (N.D. Ill. Sept. 25, 2008); see also Global Patent Holdings, LLC v. Green Bay Packers, Inc., No. 00 C 4623, 2008 WL 1848142, at *5 (N.D. Ill. Apr. 23, 2008). In deciding whether to enter a stay, courts "consider the following factors: (i) whether a stay will unduly prejudice or tactically advantage the non-moving party, (ii) whether a stay will simplify the issues in question and streamline the trial, and (iii) whether a stay will reduce the burden of litigation on the parties and on the court." Pfizer Inc. v. Apotex Inc., 640 F. Supp. 2d 1006, 1007 (N.D. Ill. 2009) (citing Tap Pharm. Prods., Inc. v. Atrix Labs., Inc., No. 03 C 7822, 2004 WL 422697, at *1 (N.D. Ill. Mar. 3, 2004)); see also Se-Kure Controls, Inc. v. Sennco Solutions, Inc., 675 F. Supp. 2d 877, 879 (N.D. Ill. 2009). "The proponent of a stay bears the burden of establishing its need." Clinton v. Jones, 520 U.S. 681, 708, 117 S.Ct. 1636, 1651 (1997).

FACTUAL BACKGROUND

Plaintiff, JAB Distributors, LLC, filed its complaint on September 18, 2009, alleging that certain products that Defendants made and/or sold infringed its Patent Number 7,552,489. (R. 1, Complaint.) Defendants filed answers that raised numerous affirmative defenses and asserted declaratory-judgment counterclaims for non-infringement and invalidity. (R. 31, London Luxury's Answer; R. 52, American Textile's Answer; R. 53, Target's Answer.) Since Plaintiff filed its complaint, it has settled with seven other defendants. (R. 85, Pl.'s Resp. Br. at 2.)

On January 13, 2010, Defendants London Luxury and American Textile filed a Request for Ex Parte Reexamination with the PTO, requesting a reexamination of all issued claims of the patent-in-suit. (R. 80-1, Request for Reexamination.) The PTO granted Defendants' request on February 22, 2010, stating that "[a] substantial new question of patentability affecting claims 1-16 of the United States Patent Number 7,552,489 is raised." (R. 80-2, Exhibit 2, PTO Order Granting Request for Ex Parte Reexamination at ¶ 1.) At the parties' request, on March 11, 2010, the Court entered an order temporarily staying all discovery in this case pending resolution of the motion to stay. (R. 82, 3/9/10 Stipulation at 1; R. 83, 3/11/10 Minute Order.)

ANALYSIS

I. Patent Reexamination

The U.S. Code provides that "[a]ny person at any time may file a request for reexamination by the [PTO] of any claim of a patent on the basis of any prior art cited under [35 U.S.C. § 301]." 35 U.S.C. § 302. "Within three months following the filing of a request for reexamination . . . , the Director will determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request." 35 U.S.C. § 303(a). If the Director determines that there is a "substantial new question of patentability affecting any claim of a patent," the PTO will re-examine the patent. 35 U.S.C. § 304. "Reexamination may entail changes in the claims, except that the claims can not be enlarged." Bloom Eng'g Co., Inc. v. N. Am. Mfg. Co., Inc., 129 F.3d 1247, 1249 (Fed. Cir. 1997). "Unless a claim granted or confirmed upon reexamination is identical to an original claim, the patent can not be enforced against infringing activity that occurred before issuance of the reexamination certificate." Id. at 1250. (noting that "'[i]dentical' does not mean verbatim, but means at most without substantive change"). The reexamination proceedings, "including any appeal to the Board of Patent Appeals and Interferences, will be conducted with special dispatch." 35 U.S.C. § 305.

"The purpose of the reexamination procedure is to permit a patentee or other interested person to obtain review and if necessary correction of the claims resulting from the initial examination of the patent." Bloom En'g, 129 F.3d at 1249; see also Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1427 (Fed. Cir. 1988) ("'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, and to examine new or amended claims, as they would have been considered if they had been originally examined in light of all of the prior art of record in the reexamination proceeding.'" (quoting In re Etter, 756 F.2d 852, 857 (Fed. Cir. 1985), with emphasis in original)). As the Federal Circuit has noted:

The [reexamination] bill's proponents foresaw three principal benefits. First, the new procedure could settle validity disputes more quickly and less expensively than the often protracted litigation involved in such cases. Second, the procedure would allow courts to refer patent validity questions to the expertise of the Patent Office. . . . Third, reexamination would reinforce "investor confidence in the certainty of patent rights" by affording the PTO a broader opportunity to review "doubtful patents".

Patlex Corp. v. Mossinghoff, 758 F.2d 594, 602 (Fed. Cir. 1985) (quoting 126 Cong. Rec. 29,895 (1980) ...


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