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Hansen Manufacturing Corp. v. Intersystems International, Inc.

United States District Court, Eighth Circuit

January 29, 2014

HANSEN MANUFACTURING CORP., Plaintiff,
v.
INTERSYSTEMS INTERNATIONAL, INC., formerly known as Enduro Systems, Inc., d/b/a Intersystems, Defendant.

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

KAREN E. SCHREIER, District Judge.

Plaintiff, Hansen Manufacturing Corp., filed suit against defendant, Intersystems International, Inc., formerly known as Enduro Systems, Inc., d/b/a Intersystems (Intersystems), alleging a patent infringement cause of action. Intersystems' motion to stay this action pending reexamination of the patent-in-suit by the Patent and Trademark Office (PTO) was granted upon reconsideration on February 6, 2012. Docket 50. The stay was lifted on April 3, 2012, after the PTO finished its reexamination. Docket 62. Intersystems now moves again to stay the proceedings pending ex parte reexamination of the patent-in-suit by the PTO. Docket 92. Hansen opposes the motion. Hansen moves to file a second supplemental and amended complaint and to amend the scheduling order. Docket 102. Because the PTO has agreed to a second reexamination of the patent-in-suit, the motion to stay is granted. Additionally, the motion to amend the complaint is granted.

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 Intersystems' RollerFLO 3i product, which Intersystem released three days before Hansen filed its complaint, infringes claims 1-3 of the 965 patent. Intersystem and Hansen are direct competitors.

The parties are currently in the discovery phase of litigation. Intersystems filed its opening claim construction brief and Hansen responded.

In granting Intersystems' second ex parte reexamination request, the PTO found substantial new questions of patentability affecting claims 2 and 19-40 of the 965 patent. Docket 101-1 at 4. The PTO noted that substantial new questions of patentability were raised in the reexamination request which had not been decided in the previous examination of the 965 patent and that there was a substantial likelihood that a reasonable examiner would consider these issues important in deciding whether or not the claims are patentable. Docket 101-1 at 7-10.

DISCUSSION

Under 35 U.S.C. § 302, "[a]ny person at any time" can request the PTO to reexamine 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]ourts 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. Intersystems has filed its opening claim construction brief and Hansen has responded. A Markman hearing has not been held. Moreover, Hansen is moving to amend its complaint and seeking an amendment of the court's scheduling order to add deadlines for filing supplemental infringement contentions and claims chart, responses to the contentions and chart, supplemental invalidity contentions and responses, and extensions of the previously scheduled deadlines for discovery and summary judgment motions. While the case has progressed more than when the first stay was granted, it is still in the early stages.

Because the parties are still in the initial stages of litigation, the first factor weighs in favor of granting the stay. See, e.g., CNS, Inc., 2004 WL 3631121, at *1 (granting a stay where the case was "in the early stages of discovery and there [were] obvious efficiencies to be gained" by waiting for the PTO's decision); cf. Middleton, 2004 WL 1968669, at *5, *10 (granting a stay even though the summary judgment motions had been fully ...


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