Free Motion to Stay - District Court of California - California

Case 3:08-cv-00070-BTM-CAB

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Filed 03/24/2008

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1 Roger G. Perkins, Esq., CSB #86617

Rperkins(êmpp1aw.com
2 Angela Kim, Esq., CSB #216374

Akim(êmpp1aw.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(êbrinsho 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

10

Attorneys for Defendants Ryobi Technologies, Inc. and Techtronic Industries North America, Inc.
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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA
lENS ERIK SORENSEN, As Trustee of SORENSEN RESEARCH AND DEVELOPMENT TRUST,
Plaintiff,
v.

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CASE NO. 3:08-cv-00070-BTM-CAB

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RYOBI TECHNOLOGIES, INC., a Delaware corporation; TECHTRONIC INDUSTRIES NORTH AMERICA, INC., a Delaware corporation; and DOES 1-100
Defendants.

RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INDUSTRIES NORTH AMERICA INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAMINATION PROCEEDINGS

Time: 11 :00 a.il
Courtroom: 15

Date: May 16, 2008

Hon. Bar Ted Moskowitz

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NO ORAL ARGUMENT UNLESS REQUESTED BY THE COURT

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RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INDUSTRIES NORTH AMERICA, INC.'S

MEMORADUM OF POINTS AND AUTHORIIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
3:08-CV -00070-BTM -CAB

Case 3:08-cv-00070-BTM-CAB

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Filed 03/24/2008

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1 I.
2

INTRODUCTION
A.

This Case Is In Its Earliest Stages

3 On January 11, 2008, Sorensen Research Development and Trust ("SRDT") sued, Ryobi
4 Technologies, Inc. ("RTI") and Techtronic Industries North America Inc. ("TTINA") (collectively
5 referred to as "Defendants") for alleged infringement of

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

6 Defendants filed an answer on March 5,2008. There has been no other activity in this case. In fact, this
7 case is in its very early stages. In paricular, there has not been a Rule 16 conference, the paries have

8 not exchanged Rule 26 disclosures, an early neutral evaluation has not been scheduled (let alone even 9 discussed), there has not 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

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

13 reexamination"). i 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 0 f patentability 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

22
23 1 Sorensen v. Black & Decker, Case No. 06cv1572 BTM (CAB), hereinafter "Sorensen v. Black & Decker". The PTO-

stamped transmittal for the First Request for Reexamination is attached hereto as Exhibit 1 to the accompanying Declaration
24 of

2 See Mallin Decl. at Ex. 2.

Robert S. Mallin In Support of

Motion To Stay

Pending Outcome of

Reexamination Proceedings ("Mallin DecL.").

25 3 Id.
4 Request for Reexamination, dated December 21,2007. A copy of

the Request was unavailable on the PTO website at the

26 time this Motion was filed.

28 -227 6 Id.

5 Mallin DecL. at Ex. 3.

RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INDUSTRIES NORTH AMERICA, INC.'S

MEMORADUM OF POINTS AND AUTHORIIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
3 :08-CV -00070-BTM -CAB

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1 substantial new questions of patentability based on 16 references pending in the two PTO reexamination

2 proceedings.
3

C.

This Court Has Stayed Five Cases Based on the Pending Reexaminations

4 SRDT has over twenty cases presently pending before this Court. Before the fist request for
5 reexamination was ordered, notwithstanding SRDT's incorrect argument to this Court that the PTO was
6 unlikely to grant reexamiation,1 on September 10, 2007, this Court stayed SRDT's patent infringement
7 lawsuit against a group of defendants including the Black and Decker Corporation,8 concluding that

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

issues before this Court.,,9 On

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

Troy for the same
Troy cases were filed on

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

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

has not established undue prejudice, and the

15 reexamination will simplify issues for the Court and save expenses for the parties." 1 1 Most recently, on

16 March 19, 2008, this Court also granted the motions to stay in SRDT's cases against Energizer and
17 Essep1ast. 12
18 All of

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

19 avoid a contested motion, Defendants sent a letter to SRDT advising that a stay was appropriate.13
20 Defendants also inquired whether SRDT would be opposing the motion to stay, and if so, on what new
21

22
23 7See Sorensen v. Black & Decker, et al., Case No. 06CV1572 BTM (CAB), Doc. # 243, at fu. 2 (S.D. CaL. Aug. 7, 2006);

24 8 Id.

Mallin Decl. at Ex. 4.
9 Mallin Decl. at Ex. 4, pg 10.
Troy, et aI.,

25 10 Sorensen v. Giant Int'l Ltd., Case No. 07cv2l2l BTM (CAB) (S.D. CaL. Nov. 6,2007); Sorensen v. Helen of

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

28 -313 Mallin Decl. at Ex. 5.

12 Sorensen v. Energizer Holdings Inc., et al., Case No. 07cv232l BTM (CAB), Doc. # 33 (S.D. CaL. Dec. 11,2007);

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

RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INDUSTRIS NORTH AMERICA, INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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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.

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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 of a 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 LLC,

8 2006 U.S. Dist. LEXIS 3773, 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 determining 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 Litig., 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 oflitigation, 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 party; and (3) whether a stay wil 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.
20
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. The Rule 16 conference has not yet taken place,

23 the parties have yet to exchange Rule 26 disclosures, nor has this Court set a scheduling order.

24 Significantly, this case is at a much earlier stage oflitigation than the Sorensen v. Black & Decker case
25 which was stayed by this Court even before the fist request for reexamiation was ordered. Here, this

26 27
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14 Mallin Dec. at Ex. 6.

-4RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INUSTRIS NORTH AMERICA, INC.'S MEMORADUM OF POINTS AND AUTHORIIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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1 lawsuit was not even filed until after the fist request for reexamination was ordered and the second
2 request for reexamination was filed.

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

5 eliminate the need for a trial in this case. As this Court has recognized, since SRDT canot amend the
6 ' 184 patent claims, ''there is obviously a significant likelihood that the validity of

the claims at issue in

7 this action wil be affected by the reexamination process.,,15 Allowing the PTO to continue its work

8 while this case is stayed wil "avoid(J the needless waste ofresources before this Court.,,16 Broadcast
9 Innovation, L.L.c. v. Charter Commc'ns, Inc., No. 03cv2223-ABJ-BNB, 2006 U.S. Dist. LEXIS 46623,

10 at *9-10 (D. Colo. July 11, 2006). Accordingly, this factor weighs heavily in favor of a stay. See KLA11 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: does the Plaintiff 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, P1aintiffhas an adequate remedy at law, since if

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the PTO does not invalidate the

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asserted claim of

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 is 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.

RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INDUSTRIES NORTH AMERICA, INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY

PENDING OUTCOME OF REEXAINATION PROCEEDINGS
3:08-CV -00070-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 monetary damages.

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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

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U.S. Dist. LEXIS 37743, at *7; Nanometrics, Inc. v. Nova Measuring Instruments Ltd., 2007 U.S. Dist.

LEXIS 18785, at *9 (N.D. Cal. Feb. 26, 2007). In any event, an award ofprejudgment interest would
fully compensate Plaintiff for a delay in collecting any damages to which he may be entitled. Indeed,
this Court has already determined that the "general prejudice of (Sorensen) having to wait for resolution
is not a persuasive reason to deny the motion for stay.,,19 This conclusion is especially apt here where

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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 *10.

Rather than prejudicing any pary, the timeliness ofthis motion has the potential to benefit all

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paries 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

the (patent), the

the claims are narrowed, both sets of paries will 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 claim are strengthened, the

rlaintiffs' position wil be as well, and their likelihood of

increase.

monetary damages wil

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

21
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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2007). If

reexamination proceedings. In re Trans Texas Holdings Corp., 498 F.3d 1290, 1296-98 (Fed. Cir.

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.

RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INDUSTRIES NORTH AMERICA, 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

ELIMINATE NEED FOR FURTHER LITIGATION
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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

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

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the PTO (when a claim survives the reexamination

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proceedings)." 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

The record of

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

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and length of

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4.

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

18 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)).

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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 ofpatentability. See First Reexamination

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20 Mallin Decl. at Ex. 4, pg. 7.

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26 21 Defendants also attempted to preserve these resources by avoiding a contested motion to stay. In particular, Defendants advised SRDT of this Motion in advance and sought SRDT's agreement or an identification of any new bases for its 27 opposition that this Cour 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.

RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INDUSTRIES NORTH AMERICA, INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS 3:08-CV-00070-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 permtted to amend claim 1 to overcome a determation
5 that it is invalid in view of

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

6 Procedure §2250(Iii).i3 Any such determation by the PTO will 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 necessar 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 court 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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26 22 See Mallin Dec. at Ex. 4, pg 9, Statistics show the validity of all claims is confied only 29% of

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reexamination is requested by a third par. Id. That percentage may decrease in view of

the time when the Supreme Court s recent

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

RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INDUSTRIES NORTH AMERICA, INC.'S MEMORADUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
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1 Date: March 24, 2008

MORRS POLICH & PURDY, LLP

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By: sf Angela Kim

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Attorneys for Defendant RYOBI TECHNOLOGIES, INC. AND TECHTRONIC INDUSTRIES NORTH AMERICA, INC. Akim(êmpp1aw.com

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23 See Mallin Dec. at Ex. 8.

-9RYOBI TECHNOLOGIES, INC.'S AND TECHTRONIC INDUSTRIES NORTH AMERICA, INC.'S

MEMORADUM OF POINTS AN AUTHORITIES IN SUPPORT OF MOTION TO STAY PENDING OUTCOME OF REEXAINATION PROCEEDINGS
3 :08-CV -00070-BTM -CAB