Free Motion to Stay - District Court of California - California

Case 3:08-cv-00060-BTM-CAB

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Filed 03/24/2008

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1 Orlando Cabanday, (SBN 168131)

o cabanday(ihgla. com
2 Hennelly & Grossfeld LLP

4640 Admialty Way
3 Suite 850

Marina Del Rey, CA 90292
4 Telephone: (310)305-2100 Fax: (310)305-2116 5

Roger G. Perkins, Esq., CSB #86617 6 Rperkins(impplaw.com

Angela Kim, Esq., CSB #216374
7 Akim(impplaw.com MORRS POLICH & PURDY LLP
8 501 West Broadway, Suite 500

San Diego, California 92101
9 Telephone: (619) 557-0404
Facsimile: (619) 557-0460

10

11 Rmallin(ibrinshofer.com
12 NBC Tower, Suite 3600

Robert S. Mallin, Ilinois Bar No. 6205051

Brins Hofer Gilson & Lione
455 North Cityfont Plaza Drive

13 Chicago, IL 60611-5599
Telephone: (312) 321-4221

14 Facsimile: (312) 321-4299
15 Attorneys for Defendants Emerson Electric Co., Ridge Tool Company, and Ridgid Inc.

16

UNITED STATES DISTRICT COURT
17

SOUTHERN DISTRICT OF CALIFORNIA
18

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JENS ERIK SORENSEN, As Trustee of SORENSEN RESEARCH AND DEVELOPMENT TRUST,
Plaintiff,

CASE NO. 3:08-cv-00060-BTM-CAB

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v.

EMERSON ELECTRIC CO. 'S, RIDGE TOOL COMPANY'S, AND RIDGID

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EMERSON ELECTRIC CO., a Missouri Corporation; ONE WORLD TECHNOLOGIES, INC., a Delaware corporation; RIDGE TOOL Date: May 16, 2008 COMP ANY, an Ohio Corporation; RIDGID, Time: 11 :00 a.m. INC., a Delaware corporation; and DOES 1-100 Courtroom: 15
Defendants.
Hon. Bar Ted Moskowitz

INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS

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NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT

EMERSON ELECTRIC CO.'S, RIGE TOOL COMPANY'S, AND RIGID INC.'S MEMORADUM
OF POINTS AN AUTHORIIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF

REEXAINATION PROCEEDINGS
3 :08-CV -00060-BTM -CAB

Case 3:08-cv-00060-BTM-CAB

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1 i.
2

INTRODUCTION
A.

This Case Is In Its Earliest Stages

3 On January 10, 2008, Sorensen Research Development and Trust ("SRDT") sued Emerson

4 Electric Co. ("EEC"), Ridge Tool Company ("RTC"), and Ridgid Inc. ("RI") (collectively
5 "EMERSON") for alleged infringement of

U.S. Patent No. 4,935,184 ("the '184 patent"). Defendants

6 filed an answer on March 5,2008. RTC also fied counterclaims concurrently with Defendants' answer.
7 SRDT filed an amended answer to RTC's counterclaims on March 12, 2008. There has been no other

8 activity in this case. In fact, this case is in its very early stages. In paricular, there has not been a Rule
9 16 conference, the paries have not exchanged Rule 26 disclosures, an early neutral evaluation has not
10 been scheduled (let alone even discussed), there has not been a scheduling conference, and there is no
11 scheduling order or trial date set.
12

B.

The '184 Patent is the Subject of Two Granted Requests For Reexamiation

13 Black & Decker filed a third pary request for ex parte reexamination 0 f the ' 184 Patent in the
14 United States Patent and Trademark Offce ("PTO") on July 30, 2007 ("the fist request for

15 reexamination"). i The fist request for reexamiation was granted on October 11, 2007.i In granting
16 the fist request for reexamiation, the PTO found 13 substantial new questions 0 f patentability based on

17 eight prior art references ("the First Reexamiation Order,,)3.

18 On December 21, 2007, a second third pary request for ex parte reexamination was fied with

19 the PTO ("the second request for reexamiation,,).4 On February 21,2008, the PTO granted the second
20 request for reexamination, raising nine substantial new questions of patentability based on ten references

21 (the "Second Reexamination Order").5 The Second Reexamination Order included eight references that

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24 i Sorensen v. Black & Decker, Case No. 06cv1572 BTM (CAB), hereinafter "Sorensen v. Black & Decker. The PTO-

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stamped transmittal for the First Request for Reexamination is attached hereto as Exhibit 1 to the accompanying Declaration Robert S. Mallin In Support of Motion To Stay Pending Outcome of Reexamination Proceedings ("Mallin Decl."). 2 See Mallin DecL. at Ex. 2.
4 Request for Reexamination, dated December 21,2007. A copy of

28 -227 time this Motion was filed.
5 Mallin Decl. at Ex. 3.

26 3 ld.

the Request was unavailable on the PTO website at the

EMERSON ELECTRIC CO.'S, RIGE TOOL COMPAN'S, AND RIGID INC.'S MEMORADUM
OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF

REEXAINATION PROCEEDINGS
3 :08-CV -00060-BTM -CAB

Case 3:08-cv-00060-BTM-CAB

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1 were not considered or relied upon in the First Reexamination Order.6 Thus, in total, there are 22
2 substantial new questions of

patentability based on 16 references pending in the two PTO reexamination

3 proceedings.

4

c.

This Court Has Stayed Five Cases Based on the Pending Reexamiations

5 SRDT has over twenty cases presently pending before this Court. Before the fist request for
6 reexamination was ordered, notwithstanding SRDT's incorrect argument to this Court that the PTO was
7 unlikely to grant reexamiation,? on September 10, 2007, this Court stayed SRDT's patent infringement
8 lawsuit against a group of defendants including the Black and Decker Corporation,8 concluding that

9 even though that lawsuit had been pending for approximately one year, a stay was appropriate "to avoid
10 the risk of unnecessary litigation and to permt the clarification of

issues before this Court.,,9 On

11 February 28,2008, this Court also stayed SRDT's actions against Giant and Helen of

Troy for the same
Troy cases were filed on

12 reasons as it stayed the Black & Decker case.IO The Giant and Helen of

13 November 6, 2007 and December 4, 2007 respectively, after the fist request for reexamiation was
14 granted. In granting those motions to stay, the Court noted "that a reasonable stay is appropriate. . .
15 because the litigation is in its early stages, Plaintiff

has not established undue prejudice, and the

16 reexamination wil simplify issues for the Court and save expenses for the paries." 1 1 Most recently, on
17 March 19, 2008, this Court also granted the motions to stay in SRDT's cases against Energizer and

18 Esseplast. 12
19 All of

the same reasons for staying those cases apply in this case also. In fact, in an attempt to
13

20 avoid a contested motion, Defendants sent a letter to SRDT advising that a stay was appropriate.

21 Defendants also inquired whether SRDT would be opposing the motion to stay, and ifso, on what new

22
23
6ld. 7See Sorensen v. Black & Decker, et a!., Case No. 06CV1572 BTM (CAB), Doc. # 243, at fu. 2 (S.D. CaL. Aug. 7, 2006);
Mallin Decl. at Ex. 4.
8 Id.

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9 Mallin Decl. at Ex. 4, pg 10.
10 Sorensen v. Giant Int'l Ltd., Case No. 07cv2l2l BTM (CAB) (S.D. CaL. Nov. 6,2007); Sorensen v. Helen of

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Case No. 07cv2278 BTM (CAB) (S.D. CaL. Dec. 4, 2007). i 1 Sorensen v. Giant Int 'i Ltd., Doc. #28, at pg 1; Sorensen v. Helen of Troy, et a!., Doc. # 26, at pg. 1. 12 Sorensen v. Energizer Holdings Inc., et a!., Case No. 07cv232l BTM (CAB), Doc. # 33 (S.D. CaL. Dec. 11, 2007);

Troy, et al.,

Sorensen v. Esseplast (USA) NC, Inc. et al., Case No. 07cv2277 BTM (RBB), Doc. # 31 (S.D. CaL. Dec. 4, 2007).

-3EMERSON ELECTRIC CO.'S, RIGE TOOL COMPANY'S, AND RIGID INC.'S MEMORADUM
OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF

REEXAINATION PROCEEDINGS
3:08-CV -00060-BTM -CAB

Case 3:08-cv-00060-BTM-CAB

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1 basis that this Court had not already considered. SRDT advised that it would oppose the motion, but did

2 not provide any basis for why it would oppose. 14

3 II.

STANDARD FOR A STAY PENDING REEXAMINATION PROCEEDINGS

4 Courts have the inherent power and discretion to stay litigation proceedings pending the

5 conclusion ofa PTO reexamiation. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988).
6 Indeed, there is a liberal policy in favor of granting motions to stay litigation pending the outcome of

7 PTO reexamiation proceedings. September 10 Stay Order, at 5; Photoflex Prods., Inc. v. Circa 3 LLe,

8 2006 U.S. Dist. LEXIS 37743, at *2-3 (N.D. CaL. May 24,2006). A stay is paricularly justified where,
9 as here, "the outcome ofthe reexamination would be likely to assist the court in determing validity
10 and, if the claims were cancelled in the reexamination, would eliminate the need to try the infringement
11 issue." In re Cygnus Telecomm. Tech., LLC Patent Litg., 385 F. Supp. 2d 1022, 1023 (N.D. CaL. 2005);

12 see also, Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983), cert denied, 464 U.S. 935

13 (1983) (reexamiation procedure serves to eliminate trial when the claim is cancelled).
14 Courts generally consider three factors in determing whether to grant a stay pending
15 reexamination by the PTO: (1) the stage of litigation, i.e., whether discovery is almost complete and

16 whether a trial date has been set; (2) whether a stay would cause undue prejudice or present a clear
17 disadvantage to the non-moving pary; and (3) whether a stay will simplify the issues in question and
18 trial of

the case. See, e.g., September 10 Stay Order, at 5; Photoflex Prods., Inc., 2006 U.S. Dist. LEXIS

19 37743, at *3. All three factors heavily favor a stay in this case.
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A.

THE LITIGATION IS IN ITS PRELIMINARY STAGES

21 The fist factor weighs strongly in favor of a stay. This case was filed less than three months
22 ago. Defendants filed their answer on March 5,2008. RTC, solely on its own behalf, filed
23 counterclaims concurrently with Defendants' answer. SRDT fied an amended answer to RTC's

24 counterclaims on March 12, 2008. The Rule 16 conference has not yet taken place, the parties have yet

25 to exchange Rule 26 disclosures, nor has this Court set a scheduling order. Significantly, this case is at a
26
27 13 Mallin Decl. at Ex. 5.
14 Mallin Dec. at Ex. 6.

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EMERSON ELECTRIC CO. 'S, RIGE TOOL COMPANY'S, AND RIGID INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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much earlier stage of litigation than the Sorensen v. Black & Decker case which was stayed by this

2 Court even before the fist request for reexamination was ordered. Here, this lawsuit was not even filed

3 until after the first request for reexamiation was ordered and the second request for reexamiation was

4 fied.
5 Now, the second request for reexamination has been ordered. The two PTO reexamiations of
6 the' 184 patent will potentially invalidate the asserted' 184 patent claims which would completely

7 eliminate the need for a trial in this case. As this Court has recognized, since SRDT canot amend the
8 '184 patent claims, "there is obviously a significant likelihood that the validity of

the claims at issue in

9 this action wil be affected by the reexamination process.,,15 Allowing the PTO to continue its work
10 while this case is stayed wil "avoid(J the needless waste of

resources before this Court.,,16 Broadcast

11 Innovation, L.L. C. v. Charter Commc 'ns, Inc., No. 03cv2223-ABJ-BNB, 2006 U.S. Dist. LEXIS 46623,

12 at *9-10 (D. Colo. July 11, 2006). Accordingly, this factor weighs heavily in favor of a stay. See KLA13 Tencor Corp. v. Nanometrics, Inc., 2006 U.S. Dist. LEXIS 15754, at *6 (N.D. CaL. Mar. 16,2006).
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B.

A STAY WOULD PREVENT, RATHER THAN CAUSE, UNDUE PREJUDICE OR DISADVANTAGE TO THE PARTIES
1.

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A Stay Will Benefit, Rather than Unduly Prejudice, the Parties.

A stay in this case will not unduly prejudice or disadvantage Plaintiff "This factor is best
summarized by one question: do the Plaintiffs have an adequate remedy at law?" See, e.g. Broadcast

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Innovation, 2006 U.S. Dist. LEXIS 46623, at *32. The resounding answer in this case is "yes". To
begin with, the' 184 Patent expired on February 5, 2008,17 and thus Plaintiff is foreclosed any injunctive
relief Additionally, Plaintiff has an adequate remedy at law, since if

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the PTO does not invalidate the

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asserted claim 0 f the' 184 Patent, Sorensen will be able to pursue monetary damages for any

infringement alleged to have occurred prior to the patent's expiration. Id. (citing Laitram Corp. v. NEC
Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998)).

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26 15 Mallin Decl. at Ex. 4, pg. 9.
27 17 The ' 184 Patent expired on Februar 5, 2008. See U.S. Patent No. 4,935,184 (continuation of abandoned application Serial No. 07/152.670, which was filed on Februar 5, 1988) and 35 U.S.c. 1 54(a)(2).

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16id.

EMERSON ELECTRIC CO.'S, RIGE TOOL COMPANY'S, AN RIGID INC.'S MEMORADUM
OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF

REEXAINATION PROCEEDINGS
3:08-CV-00060-BTM-CAB

Case 3:08-cv-00060-BTM-CAB

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Nor may Sorensen reasonably claim that a stay pending reexamiation proceedings would
unduly prejudice him by delaying an award of

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monetary damages. 18 Courts have consistently held that

such a delay does not, in and of itself, constitute undue prejudice. See, e.g., Photoflex Prods., Inc., 2006
U.S. Dist. LEXIS 37743, at *7; Nanometrics, Inc. v. Nova Measuring Instruments Ltd., 2007 U.S. Dist.

4
5

LEXIS 18785, at *9 (N.D. Cal. Feb. 26, 2007). In any event, an award of prejudgment interest would
fully compensate Plaintiff for a delay in collecting any damages to which he may be entitled. Indeed,
this Court has already determed that the "general prejudice of (Sorensen) having to wait for resolution
is not a persuasive reason to deny the motion for stay."

6 7
8

19 This conclusion is especially apt here where

9 10
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only one patent is asserted and any delay is offset by the benefit inerent in ascertaining whether there is
any need for litigation. Nanometrics, 2007 U. S. Dist. LEXIS 18785, at * 1 O.
Rather than prejudicing any pary, the timeliness of

this motion has the potential to benefit all

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parties by preventing the unnecessary expenditure of resources. As stated by the cour in Broadcast
Innovation,
If the PTO does not invalidate or otherwise alter the claims of

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Plaintiffs' legal remedy remains unaffected. . .. Moreover, if narowed, both sets of

the (patent), the

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the claims are paries will have benefited by avoiding the needless waste of resources before this Court, and again, the Plaintiffs will be able to pursue their claim for money damages at triaL. Finally, if the claims are strengthened, the
monetar damages will

Plaintiffs' position will be as well, and their likelihood of

increase.

Broadcast Innovation, 2006 U.S. Dist. LEXIS 46623, at *32-33.
2. Defendants Wil be Unduly Prejudiced if a Stay is Denied

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In contrast, Defendants face substantial prejudice if

this Court denies this motion for a stay. As

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the Federal Circuit has held, the PTO is not bound by decisions ofthis Court when conducting its
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reexamination proceedings. In re Trans Texas Holdings Corp., 498 F.3d 1290, 1296-98 (Fed. Cir.
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2007). If this case proceeds pending the reexamiations, there is a risk that Defendants may be ordered
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to pay damages for infringement of a patent that the PTO later determes is invalid.
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28 -627 19 Mallin Decl. at Ex. 4, pg. 7.

18 Reexamination proceedings take, on average, approximately 18-23 months to conclude. See Mallin Decl. at Ex. 7.

EMERSON ELECTRIC CO.'S, RIGE TOOL COMPANY'S, AND RIGID INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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Substantial prejudice could therefore result, since Defendants may not be able to recover such
damages after the PTO concludes that the asserted claim is invalid.2o Bausch & Lomb, Inc. v. Alcon

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Lab., Inc., 914 F. Supp. 951,952 (W.D.N.Y. 1996). A stay will ensure that this highly prejudicial
scenario does not occur.

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C. A STAY WILL SIMPLIFY THE ISSUES IN QUESTION AND POSSIBLY

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ELIMINATE NEED FOR FURTHER LITIGATION A stay wil significantly simplify the issues in question and ensure that any judicial and pary
resources are spent only iftrial is necessary.21 "One purpose of

the reexamination procedure is to

eliminate trial of

that issue (when the claim is cancelled) or to facilitate trial of (the issue of

invalidity)

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by providing the district court with the expert view of

the PTO (when a claim survives the

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reexamination proceeding)." Gould, 705 F.2d at 1342. Additional benefits of staying the litigation

pending the PTO's reexamination proceedings include:
1.

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Many discovery problems relating to prior ar can be alleviated by the PTO examination.
The outcome of

2.

the reexamination may encourage a settlement without the further use of

14 the Court's time and resources.
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3.
complexity and length of

The record of reexamination would likely be entered at trial, thereby reducing the
the litigation.

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4.

Issues, defenses, and evidence will be more easily limited in fial pretrial conferences

18 after a reexamination.
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5.
The cost wil

likely be reduced both for the paries and the Court. Broadcast, 2006 U.S.

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Dist. LEXIS 46623, at *9-10 (citing Emhart Indus., Inc. v. Sankyo Seiki Mfg. Co., 3 U.S.P.Q.2d 1889,
1890 (N.D. IlL. 1987)).

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In granting the fist request for reexamiation, the PTO determed that the previously
unconsidered prior ar gives rise to substantial new questions of patentability. See First Reexamination

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20 Mallin Decl. at Ex. 4, pg. 7.
advised SRDT of this Motion in advance and sought SRDT's agreement or an identification of

26 21 Defendants also attempted to preserve these resources by avoiding a contested motion to stay. In paricular, Defendants

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27 opposition that this Court has not already considered in grantig the other motions to stay. SRDT did not agree to a stay and did not identifY any new bases for opposition.

any new bases for its

EMERSON ELECTRIC CO.'S, RIGE TOOL COMPANY'S, AND RIGID INC.'S MEMORADUM OF POINTS AND AUTHORIIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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Case 3:08-cv-00060-BTM-CAB

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1 Order, at 4-14. In view of

that preliminary determnation, there is a substantial

likelihood that the

2 validity of

the asserted claims wil be affected by the reexamination process.22 With the PTO granting

3 the second request for reexamination, invalidation is now even more likely. Because the' 184 Patent

4 expired on February 5, 2008, Sorensen is not permitted to amend claim 1 to overcome a determation
5 that it is invalid in view ofthe prior art. See 37 C.F.R. §1.530(j) (2007); Manual of Patent Examining

6 Procedure §2250(Iii).23 Any such determation by the PTO wil therefore effectively invalidate the
7 asserted claim, thus eliminating the need for any discovery, pretrial proceedings, or trial in this case.
8 At a miimum, since a substantial number of

the prior art references in the reexamination

9 proceedings were not before the PTO durig the patent's original prosecution, the Court will benefit
10 from the PTO's analysis should this Court have to determe the validity of

the reexamined claims.

11 Broadcast, 2006 U.S. Dist. LEXIS 46623, at *22-23; September 10 Stay Order, at 9.

12 II.

CONCLUSION

13 When it provided for reexamiation proceedings, Congress explained that, "it is anticipated that

14 these measures provide a useful and necessary alternative for challengers and patent owners to test the
15 validity of

United States patents in an effcient and relatively inexpensive manner." H.R. REP. No. 96-

16 1307 pt. 1, at 4 (1980), reprinted in 1980 U.S.C.C.A.N. 6460-6463. There could hardly be a more
17 appropriate case than this one in which to allow this alternative process to play out. Given that this case

18 is less than three months old, a stay has the potential to prevent the unnecessary expenditure of

19 significant cour and pary resources. A stay would benefit, rather than prejudice, the paries. For the
20 foregoing reasons, this Court should order this case stayed pending completion of

the PTO's

21 reexaminations 0 f the ' 184 patent.

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22 See Mallin Dec. at Ex. 4, pg 9. Statistics show the validity of all claims is confied only 29% of 26 reexamination is requested by a third par. ld. That percentage may decrease in view of

28 -827 nonobviousness.

decision in KSR Intl Co. v. Telejlex Inc., 127 S. Ct. 1727 (2007), concerning the stadard for establishment of

the time when the Supreme Court s recent

23 See Mallin Dec. at Ex. 8.

EMERSON ELECTRIC CO.'S, RIGE TOOL COMPANY'S, AND RIGID INC.'S MEMORADUM OF POINTS AN AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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Date: March 24, 2008

MORRS POLICH & PURDY, LLP

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By: s/Angela Kim

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Attorneys for Defendant EMERSON ELECTRIC CO., RIDGE TOOL COMPANY, AND RIDGID INC. Akim(impplaw.com

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-9EMERSON ELECTRIC CO.'S, RIGE TOOL COMPANY'S, AND RIGID INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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