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To read comments to this article, go here
Allen v. World - Strike One!
Friday, June 24 2011 @ 04:56 PM EDT

In a judicious (pun intended) move, the court has considered the motion for stay filed by the defendants seeking to stay the trial until after the USPTO completes the reexaminations of the Interval patents. Despite Interval's opposition to this motion, the court has granted the stay [PDF], and the trial will now await the outcome of the USPTO determinations.

If you will recall, the Interval patents at stake are: 6263507; 6034652; 6788314; and 6757682. In order to follow the progress and effect of these reexaminations we thought it might be helpful to use the same scorecard as we have on the Oracle patents under reexamination. Here is the Interval scorecard:

Patent No.ClaimsClaims Not Subject to ReexamClaims Subject to ReexamClaims RejectedClaims Surviving
6263507*129101280129
6034652*1899018
678831415015150
6757682*20416146
Totals1821146829153

*There is one notable difference in these reexams versus those in the Oracle case in that here the defendants are not seeking to reexamine all of the claims. Why that is the case, we do not know; however, it is likely that they simply don't believe those unrequested claims are problematic. In any case, of the 31 claims for which reexamination has been requested, the examiner has now rejected 29 of them, or 93.5%. Are we beginning to see a pattern here? Is there any wonder why many of us have such a cynical view of software patents?

Staying the case is not the only problem that Interval faces. It seems they have lost their patent counsel representing them in the reexaminations. A client of that outside counsel was acquired by one of the defendants in these cases, thus creating a conflict of interest, and the outside counsel had no choice but to withdraw. Because they now must begin their defense of their patents in the reexamination proceedings from scratch, Interval asked for a two-month extension of time in which to respond to the two non-final rejections issued to date. The USPTO, in an abundance of sympathy, granted interval a one week extension and told them they need to better manage their resources. Ouch!

**************

Order Granting Stay

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

INTERVAL LICENSING LLC,
Plaintiff,

v. AOL, INC., et al
Defendant.

CASE NO. C10-1385 MJP

ORDER GRANTING JOINT REQUEST TO STAY

This matter comes before the Court on Defendants’ joint motion to stay the case pending reexamination of the four patents by the U.S. Patent and Trademark Office. (Dkt. No. 245 (all references to the docket are to C10-1385 MJP).) Having reviewed the motion and briefing (Dkt. No. 198), the opposition (Dkt. Nos. 206, 246), the reply (Dkt. No. 211), and all related papers, the Court GRANTS the request.

Background

Interval Licensing LLC has filed suit against 11 companies for allegedly and variously infringing on four patents. A Markman hearing is set for July 22, 2011. The first trial in these consolidated cases is not set to commence until June 8, 2012. (Dkt. No. 178.) Defendants requested and have been granted reexamination of the four patents at issue by the U.S. Patent and Trademark Office. (Dkt. No. 243.)

Analysis

The court has the authority to decide whether to order a stay pending the outcome of a reexamination proceeding. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988). To determine whether to grant a stay pending reexamination by the U.S. Patent and Trademark Office, courts generally consider three factors: “(1) whether a stay will simplify the issues in question and the trial of the case; (2) whether discovery is complete and whether a trial date has been set; and (3) whether a stay will unduly prejudice or present a clear tactical disadvantage to the non-moving party.” Implicit Networks, Inc. v. Advanced Micro Devices, Inc., No. 08-184JLR, 2009 WL 357902, at *2 (W.D. Wash. Feb. 9, 2009.)

The Court finds the three factors weigh in favor of a stay in these cases. First, the reexamination of the four patents is likely to simplify some issues and claims for both trial and the Markman hearing. Defendants have presented a substantial body of prior art that they believe will reshape the four patents at issue in this litigation. The Court believes that there is a reasonable probability the PTO will simplify the issues for the Court and jury. Second, although the Markman hearing is fast approaching, discovery in this case is not particularly far along and the trial is roughly a year away. Though the Court recognizes the parties have expended substantial resources, the Court does not find the case to be so advanced as to cut against issuance of a stay. Moreover, the discovery work to date will not be wasted. Third, the Court is not able to find undue prejudice to Interval Licensing by granting the stay. Interval Licensing, a holding company, does not compete with Defendants and there is no danger it will lose customers, market share, or other intangible benefits. Rather, it can likely be compensated for damages suffered even if a stay is issued. The Court also does not believe that the stay will produce a clear tactical disadvantage to Interval Licensing.

Conclusion

Having balanced the relevant factors, the Court finds the issuance of a stay to be proper. The Court GRANTS the motion and STAYS all of these cases pending reexamination by the PTO of the four patents at issue. The Court requires the parties to file a status update regarding the PTO proceedings every 6 months from entry of this order. The Court expects to be notified immediately upon resolution of the reexamination process of each individual patent, not just at the conclusion of all four reexaminations.

The clerk is ordered to provide copies of this order to all counsel.

Dated this 16th day of June, 2011.

/s/Marsha J. Pechman
Marsha J. Pechman
United States District Judge


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