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 Roger G. Perkins, Esq., CSB #86617

Rperkins(fmpp1aw.com
2 Angela Kim, Esq., CSB #216374

Akim(fmpp1aw.com 3 MORRS POLICH & PURDY LLP
501 West Broadway, Suite 500
4 San Diego, California 92101

Telephone: (619) 557-0404
5 Facsimile: (619) 557-0460
6 Robert S. Mallin, Ilinois Bar No. 6205051

Rmallin(fbrinsho fer. com
7 Brins Hofer Gilson & Lione

NBC Tower, Suite 3600
8 455 North Cityfront Plaza Drive

Chicago, IL 60611-5599
9 Telephone: (312) 321-4221
Facsimile: (312) 321-4299

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Attorneys for Defendant One World Technologies, Inc.
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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

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

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

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

ONE WORLD TECHNOLOGIES, 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

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ONE WORLD TECHNOLOGIES, INC.'S MEMORAUM 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 I.
2

INTRODUCTION
A.

This Case Is In Its Earliest Stages

3 On January 10, 2008, Sorensen Research Development and Trust ("SRDT") sued One World
4 Technologies, Inc. ("OWT") for alleged infringement of

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

5 Defendant filed an answer and counterclaims on March 5,2008. SRDT responded to the counterclaims

6 on March 12, 2008. There has been no other activity in this case. In fact, this case is in its very early
7 stages. In paricular, there has not been a Rule 16 conference, the paries have not exchanged Rule 26
8 disclosures, an early neutral evaluation has not been scheduled (let alone even discussed), there has not

9 been a scheduling conference, and there is no scheduling order or trial date set.
10

B.

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

11 Black & Decker filed a third pary request for ex parte reexamination of

12 United States Patent and Trademark Offce ("PTO") on July 30, 2007 ("the fist request for

13 reexamination").! The fist request for reexamiation was granted on October 11, 2007.2 In granting
14 the fist request for reexamiation, the PTO found 13 substantial new questions ofpatentability based on

15 eight prior ar references ("the First Reexamiation Order,,)3.
16 On December 21, 2007, a second third party request for ex parte reexamination was filed with

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

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

20 were not considered or relied upon in the First Reexamination Order.6 Thus, in total, there are 22
21 substantial new questions of patentability based on 16 references pending in the two PTO reexamination
22 proceedings.

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

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.
3 Id.

26 27
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4 Request for Reexamination, dated December 21,2007. A copy of

time this Motion was filed.
5 Mallin DecL. at Ex. 3.

the Request was unavailable on the PTO website at the

6id.

-2ONE WORLD TECHNOLOGIES, INC.'S MEMORADUM OF POINTS AN AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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1

c.

This Court Has Stayed Five Cases Based on the Pending Reexaminations

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

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

issues before this Court.,,9 On

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

Troy for the same
Troy cases were filed on

9 reasons as it stayed the Black & Decker case.

10 The Giant and Helen of

10 November 6, 2007 and December 4, 2007 respectively, afer the fist request for reexamiation was
11 granted. In granting those motions to stay, the Court noted "that a reasonable stay is appropriate. . .
12 because the litigation is in its early stages, Plaintiff has not established undue prejudice, and the

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

15 Esseplast. 12
16 All of

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

17 avoid a contested motion, Defendant sent a letter to SRDT advising that a stay was appropriate.

18 Defendant also inquired whether SRDT would be opposing the motion to stay, and if so, on what new

19 basis that this Court had not already considered. SRDT advised that it would oppose the motion, but did
20 not provide any basis for why it would oppose.

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21

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7See Sorensen v. Black & Decker, et al., 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. GiantInt'l Ltd., Case No. 07cv212l BTM (CAB) (S.D. CaL. Nov. 6,2007); Sorensen v. Helen of

26 27 28

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

Sorensen v. Esseplast (USA) NC, Inc. et al., Case No. 07cv2277 BTM (RBB), Doc. # 31 (S.D. CaL. Dec. 4, 2007).
13 Mallin DecL. at Ex. 5.

14 Mallin Dec. at Ex. 6.

-3ONE WORLD TECHNOLOGIES, INC.'S MEMORADUM OF POINTS AN AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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1 II.

STANDARD FOR A STAY PENDING REEXAMINATION PROCEEDINGS

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

3 conclusion ofa PTO reexamiation. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988).
4 Indeed, there is a liberal policy in favor of granting motions to stay litigation pending the outcome of
5 PTO reexamination proceedings. September 10 Stay Order, at 5; Photoflex Prods., Inc. v. Circa 3 LLC,

6 2006 U.S. Dist. LEXIS 37743, at *2-3 (N.D. CaL. May 24,2006). A stay is paricularly justified where,
7 as here, "the outcome of

the reexamination would be likely to assist the court in determing validity

8 and, if

the claims were cancelled in the reexamination, would eliminate the need to try the infringement

9 issue." In re Cygnus Telecomm. Tech., LLC Patent Litg., 385 F. Supp. 2d 1022, 1023 (N.D. CaL. 2005);

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

11 (1983) (reexamination procedure serves to eliminate trial when the claim is cancelled).

12 Courts generally consider three factors in determing whether to grant a stay pending
13 reexamination by the PTO: (1) the stage oflitigation, i.e., whether discovery is almost complete and

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

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

17 37743, at *3. All three factors heavily favor a stay in this case.
18

A.

THE LITIGATION IS IN ITS PRELIMINARY STAGES

19 The fist factor weighs strongly in favor of a stay. This case was filed less than three months
20 ago. Defendant filed its answer and counterclaims on March 5,2008 and SRDT responded to the

21 counterclaims on March 12, 2008. The Rule 16 conference has not yet taken place, the paries have yet
22 to exchange Rule 26 disclosures, nor has this Court set a scheduling order. Significantly, this case is at a
23 much earlier stage oflitigation than the Sorensen v. Black & Decker case which was stayed by this
24 Court even before the fist request for reexamination was ordered. Here, this lawsuit was not even filed

25 until after the first request for reexamiation was ordered and the second request for reexamination was

26 fied.
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-4ONE WORLD TECHNOLOGIES, INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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1 Now, the second request for reexamination has been ordered. The two PTO reexaminations of
2 the' 184 patent will potentially invalidate the asserted' 184 patent claims which would completely

3 eliminate the need for a trial in this case. As this Court has recognized, since SRDT canot amend the
4 ' 184 patent claims, "there is obviously a significant likelihood that the validity of

the claims at issue in

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

resources before this Court.,,16 Broadcast

7 Innovation, L.L.c. v. Charter Commc'ns, Inc., No. 03cv2223-ABJ-BNB, 2006 U.S. Dist. LEXIS 46623,
8 at *9-10 (D. Colo. July 11, 2006). Accordingly, this factor weighs heavily in favor of a stay. See KLA-

9 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

16 17
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the PTO does not invalidate the

asserted claim of

the ' 184 Patent, Sorensen wil be able to pursue monetary damages for any

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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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Nor may Sorensen reasonably claim that a stay pending reexamiation proceedings would
unduly prejudice him by delaying an award of monetary damages. 18 Courts have consistently held that

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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.

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26 15 Mallin DecL. at Ex. 4, pg. 9.
16id.
27 17 The '184 Patent expired on Februar 5,2008. See U.S. Patent No. 4,935,184 (continuation of

No. 07/152.670, which was filed on February 5, 1988) and 35 U.S.c. 154(a)(2).

abandoned application Serial

28 18 Reexamination proceedings take, on average, approximately 18-23 months to conclude. See Mallin DecL. at Ex. 7.

-5ONE WORLD TECHNOLOGIES, INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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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."

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19 This conclusion is especially apt here where

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 *10.
Rather than prejudicing any pary, the timeliness of

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this motion has the potential to benefit all

parties by preventing the unnecessar expenditure of resources. As stated by the court in Broadcast

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Innovation,
If the PTO does not invalidate or otherwise alter the claims of

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Plaintiffs' legal remedy remains unaffected. . .. Moreover, ifthe claims are

the (patent), the

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narowed, both sets of paries wil have benefited by avoiding the needless waste of resources before this Court, and again, the Plaintiffs wil be able to pursue their claim for money damages at triaL. Finally, if the claims are strengthened, the
Plaintiffs' position will be as well, and their likelihood of

Increase.

monetary damages wil

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Broadcast Innovation, 2006 U.S. Dist. LEXIS 46623, at *32-33.

2. Defendant Will be Unduly Prejudiced if a Stay is Denied
16
In contrast, Defendant faces substantial prejudice if

17
the Federal Circuit has held, the PTO is not bound by decisions of

this Court denies this motion for a stay. As
this 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). Ifthis case proceeds pending the reexamiations, there is a risk that the Defendant may be
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ordered to pay damages for infringement of a patent that the PTO later determes is invalid.
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Substantial prejudice could therefore result, since Defendant may not be able to recover such
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damages after the PTO concludes that the asserted claim is invalid.20 Bausch & Lomb, Inc. v. Alcon
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Lab., Inc., 914 F. Supp. 951, 952 (W.D.N.Y. 1996). A stay wil ensure that this highly prejudicial
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scenario does not occur.

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19 Mallin DecL. at Ex. 4, pg. 7.

28 20 Mallin DecL. at Ex. 4, pg. 7.

-6ONE WORLD TECHNOLOGIES, INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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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 party
resources are spent only if trial is necessary.21 "One purpose of

the reexamination procedure is to

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eliminate trial ofthat issue (when the claim is cancelled) or to facilitate trial of (the issue of invalidity J
by providing the district court with the expert view of

the PTO (when a claim survives the

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reexamination proceeding(sJ)." Gould, 705 F.2d at 1342. Additional benefits of

staying the litigation

pending the PTO's reexamination proceedings include:
1.

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

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2.

the reexamination may encourage a settlement without the further use of

10 the Court's time and resources.
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3.
complexity

The record of reexamination would likely be entered at trial, thereby reducing the
and length of

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the litigation.

4.

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

14 after a reexamination.
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5.

The cost will

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 EmhartIndus., Inc. v. Sankyo Seiki Mfg. Co., 3 U.S.P.Q.2d 1889,
1890 (N.D. IlL. 1987)).

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

19

patentability. See First Reexamination
likelihood that the

20
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Order, at 4-14. In view of

that preliminary determination, there is a substantial

validity of

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

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

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

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advised SRDT of

this Motion in advance and sought SRDT's agreement or an identification of

any new bases for its

opposition that this Court has not already considered in grantig the other motions to stay. SRDT did not agree to a stay

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did not identify any new bases for opposition.
22 See Mallin Dec. at Ex. 4, pg 9. Statistics show the validity of all claims is confied only 29% of reexamination is requested by a third party. !d. That percentage may decrease in view of

and

decision in KSR Int 'I Co. v. Teleflex Inc., 127 S. Ct. 1727 (2007), concerning the stadard for establishment of

the time when the Supreme Court s recent

nonobviousness.

-7ONE WORLD TECHNOLOGIES, INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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1 expired on February 5,2008, Sorensen is not permitted to amend claim 1 to overcome a determination
2 that it is invalid in view of

the prior ar. See 37 C.F.R. §1.530u) (2007); Manual of Patent Examining

3 Procedure §2250Ciii).23 Any such determination by the PTO wil therefore effectively invalidate the
4 asserted claim, thus eliminating the need for any discovery, pretrial proceedings, or trial in this case.
5 At a miimum, since a substantial number of

the prior ar references in the reexamination

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

the reexamined claims.

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

9 II.

CONCLUSION

10 When it provided for reexamination proceedings, Congress explained that, "it is anticipated that

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

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

13 1307 pt. 1, at 4 (1980), reprinted in 1980 U.S.C.C.A.N. 6460-6463. There could hardly be a more
14 appropriate case than this one in which to allow this alternative process to play out. Given that this case

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

16 significant court and party resources. A stay would benefit, rather than prejudice, the parties. For the
17 foregoing reasons, this Court should order this case stayed pending completion of

the PTO's

18 reexaminations 0 f the ' 184 patent.
19 Date: March 24, 2008

MORRS POLICH & PURDY, LLP

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By: s/Angela Kim

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Attorneys for Defendant ONE WORLD TECHNOLOGIES, INC. Akim(fmpplaw.com

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28 23 See Mallin Dec. at Ex. 8.

-8ONE WORLD TECHNOLOGIES, INC.'S MEMORADUM OF POINTS AN AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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