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Stays Pending Reexamination and Experts Subject to a Prosecution Bar

In Interval Licensing LLC v. eBay, Inc., et. al., 2-10-cv-01385 (WAWD),  Interval Licensing (Interval) filed a motion for reconsideration of an earlier order by the Court to stay the litigation pending reexamination.  On July 12, 2011, Judge Marsha J. Pechman denied the motion.

The order states that motions for reconsideration are disfavored in that district and that the court will ordinarily deny them absent a showing of manifest error in the prior ruling or a showing of new facts or legal authority which could not have been brought to its attention with reasonable diligence.  The order found that the facts presented by Interval were not new because they could have been presented in the original opposition to the stay filed by Interval.  For example:

  • Interval chose to rely on its March 28, 2011 brief when filing its opposition motion on June 6, 2011, rather than to supplement the June 6th filing for reasons that are not clear.
  • Interval argued that it performed substantial work on briefing Markman issues and discovery, yet failed to show why this work would be lost pending the outcome of the reexamination.
  • Interval argued that the experts it retained to review source code will be prejudiced by virtue of the stay because they agreed to a patent prosecution bar until one year after resolution of the case.   But the protective order was entered on April 14, 2011 and Interval failed to point out this provision in its opposition to the motion to stay.  Also, the Court found the prejudice to the experts was not a factor.  “Presumably, the restriction to which the experts choose to submit is more than offset by the benefit of generating substantial income by rendering expert services.”
  • Interval also took issue with the Court’s statement that “Defendants have presented a substantial body of prior art that they believe will reshape the four patents at issue in this litigation.”  Interval noted that the examiner granted reexamination on fewer references than the Defendants reported.  However, since the examiner is not precluded from relying on other references, this does not show manifest error.

So what are the takeaways from all of this?

  1. If you want to oppose a motion to stay, present all of your facts in your original motion.  Be thorough.
  2. If you are going to assert that a stay is detrimental due to preparation (e.g., Markman analysis, or discovery), clearly describe how the stay is prejudicial to the case. 
  3. If you are an expert involved in a matter with a prosecution bar, consider the possibility that a stay of the matter may preclude your activities in that technology area for years if a stay pending reexamination is ordered.  Consider the possibility that your exposure to confidential material could be minor at best, yet you could be precluded for the duration of the stay (which may also end in dismissal of the case). 
Timothy Bianchi

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