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Hansen Manufacturing Corp v. Enduro Systems

February 6, 2012

HANSEN MANUFACTURING CORP., PLAINTIFF,
v.
ENDURO SYSTEMS, INC., D/B/A INTERSYSTEMS, DEFENDANT.



The opinion of the court was delivered by: Karen E. Schreier Chief Judge

ORDER GRANTING DEFENDANT'S SECOND MOTION TO STAY PROCEEDING AND DENYING DEFENDANT'S SECOND MOTION TO AMEND

Plaintiff, Hansen Manufacturing Corp., filed suit against defendant, Enduro Systems, Inc., d/b/a Intersystems (Enduro), alleging a patent infringement cause of action. Enduro moved to stay this action pending reexamination of the patent-in-suit by the Patent and Trademark Office (PTO). Docket 32. This court referred the motion to Magistrate Judge John. E Simko for ruling. Docket 36. Magistrate Judge Simko found that the motion was premature because it was unknown whether the PTO would grant Enduro's request for reexamination, and, thus, he denied the motion without prejudice. Docket 40. The PTO granted Enduro's request for ex parte reexamination on November 14, 2011. Docket 42-1.

Enduro moves to stay this proceeding pending reexamination of the patent-in-suit by the PTO, or in the alternative, reconsideration of Magistrate Judge Simko's order denying the motion to stay. Docket 42. Hansen opposes the motion. The motion to stay is granted. Enduro also moves to amend its answer to allege an affirmative defense of inequitable conduct, or in the alternative, reconsideration of Magistrate Judge Simko's order denying Enduro's first motion to amend without prejudice. Docket 44. Hansen opposes the motion. Because of the PTO's reexamination of the patent-in-suit, the motion to amend is denied without prejudice.

BACKGROUND

Hansen's U.S. Patent No. 6,044,965 ('965 patent or patent-in-suit) is entitled "Troughing Idlers for Belt Conveyors." The patent is directed to an enclosed belt conveyor system with a horizontal shaft and cantilevered side rollers supporting a conveyor belt. The '965 patent covers Hansen's commercially-successful HiLife® conveyor system.

Hansen filed suit on February 28, 2011, alleging that Enduro's RollerFLO 3i product, which Enduro released three days before Hansen filed its complaint, infringes claims 1-3 of the '965 patent. Enduro and Hansen are direct competitors.

During the parties' planning meeting on June 20, 2011, Enduro stated its preference for trial to occur as soon as August 2012. Docket 25. The parties are currently in the discovery phase of litigation. Hansen has provided its infringement contentions, and Enduro has served its response. Enduro served its invalidity contentions on November 28, 2011, and Hansen has responded.

In granting Enduro's ex parte reexamination request,*fn1 the PTO found substantial new questions of patentability (SNQP) affecting claims 1-18 of the '965 patent. Docket 42-1 at 5. The PTO noted that because the five patents relied on in the request for reexamination were not discussed in the '965 patent, all five patents are new art or old art being viewed in a new or different light. Docket 42-1 at 7-8.

DISCUSSION

Under 35 U.S.C. § 302, "[a]ny person at any time" can request the PTO to re-examine a patent. At the conclusion of the reexamination, the PTO will issue a certificate finding one of the following three scenarios: (1) the claims are found unpatentable and are canceled; (2) the claims are found patentable and are confirmed; or (3) amendments or new claims found to be patentable can be incorporated into the patent. 35 U.S.C. § 307.

District courts have the "inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination." Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (citations omitted). Congress intended courts to liberally grant stays pending PTO reexamination. Inteplast Group, LTD v. Coroplast, Inc., No. 4:08-cv-1413, 2009 WL 1774313, at *1 (E.D. Mo. June 23, 2009) ("[S]everal courts have observed that sponsors of the patent reexamination legislation favored stays by district courts pending reexamination in order to settle disputes more quickly at a lower cost, and to provide courts with the benefits of the PTO's experience." (citing Lifeline Techs., Inc. v. Archer Daniels Midland Co., No. 4:08-cv-279, 2009 WL 995482, at *2 (E.D. Mo. Apr. 14, 2009))). Courts have followed this congressional preference and routinely grant stays when the PTO has granted reexamination. Card Tech. Corp. v. DataCard Corp., No. 05-2546, 2007 WL 2156320, at *3 (D. Minn. July 23, 2007) ("[C]courts 'routinely' grant such stays where the circumstances warrant." (citing CNS, Inc. v. Silver Eagle Labs, Inc., No. Civ. 04-968, 2004 WL 3631121, at *1 (D. Minn. Nov. 29, 2004))); see also Middleton, Inc. v. Minn. Mining & Mfg. Co., No. 4:03-cv-40493, 2004 WL 1968669, at *3 (S.D. Iowa, Aug. 24, 2004) ("Courts have routinely stayed infringement actions pending the outcome of reexamination proceedings" (citing Softview Computer Prods. Corp. v. Haworth, Inc., No. 97-civ-8815, 2000 WL 1134471, at *2 (S.D.N.Y. Aug. 10, 2000))).

Courts consider three factors in deciding whether a stay should be granted: "(1) whether discovery is complete and a trial date has been set; (2) whether a stay of litigation will simplify the issues in question and facilitate the trial of the case; and (3) whether a stay would unduly prejudice the non- moving party or would present a clear tactical disadvantage for that party." Inteplast, 2009 WL 1774313, at *1 (citing Watlow Elec. Mfg. Co. v. Ogden Mfg. Co., No. 4:05-cv-2094, 2006 WL 1892546, at *1 (E.D. Mo. July 10, 2006)). "In other words, based on these factors the Court determines whether benefits of a stay outweigh the associated costs." Middleton, 2004 WL 1968669, at *3.

1. Timing

Under the first factor, the court considers at what point in the litigation the reexamination was requested, including whether discovery is complete and whether a trial date has been set. The parties are currently in the discovery phase of litigation. They have provided their infringement contentions and invalidity contentions to one another. While Hansen has retained an expert, Dr. Gary Anderson of South Dakota State University, the deadline for expert reports and depositions is April 27, 2012, and there is no indication that Hansen has expended significant resources in preparing for expert discovery or that the parties have completed the ...


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