"No Risk For Me" Ex Parte Reexamination Sinks Motion to Stay in ED Tex

Affinity Labs of Texas, LLC v. Dice Electronics, LLC, 9-08-cv-00163 (TXED February 20, 2009, Order).

Plaintiff Affinity filed suit against the defendants on a patent directed toward systems and methods for connecting a portable audio player to an automobile sound system. This case was one of three companion cases involving the same patent. After a request for ex parte reexamination was accepted at the PTO, the defendants filed a joint motion to stay.

To get perspective on the timeline, the relevant events are as follows:

Jan. 29, 2008: patent issues.

Aug. 25, 2008: Affinity Labs files suit against Defendants.

Sept. 30 - Nov. 10, 2008: Defendants make a total of four applications for extension of time to file their Answers.

Nov. 7, 2008: attorney files a request for ex parte reexamination of the patent with the PTO on behalf of Dice Electronics, LLC.

Dec. 9, 2008: The PTO grants the request and orders reexamination of all thirty five claims of the patent.

Jan. 12, 2009: Defendants move to stay the litigation in light of the pending reexamination.

Judge Clark, ruling on the motion, had this to say:

The parties exchanged Initial Mandatory Disclosures on January 21, 2009. Affinity Labs disclosed its asserted claims, Infringement Contentions, and associated documents on February 2, 2009, and Defendants are required to disclose their Invalidity Contentions and associated documents by March 20, 2009. As discussed in more detail below, much of the discovery essential to the case has already occurred.

In denying the parties’ previous request to extend these deadlines, the court noted that despite requesting and receiving several extensions of their time to answer, “Defendants are again seeking to delay the proceedings by six weeks.” Doc. # 43 at p. 1. The theme of delay is also present in the request for ex parte reexamination, which was not made until more than two months after Affinity Labs filed suit.

The filing of a request for ex parte reexamination by only one of the twenty-four Defendants in these three cases raises a strong inference of gamesmanship. Congress’s intent when it established the inter partes reexamination procedure as part of the American Inventors Protection Act of 1999 was to “‘make reexamination a viable, less-costly alternative to patent litigation by giving third-party requesters the option of inter-partes reexamination procedures’ in which they are ‘afforded an expanded, although still limited, role in the reexamination process.’” Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1332 (Fed. Cir. 2008) (quoting Senator Orrin Hatch, 145 Cong. Rec. S13259 (Oct. 27, 1999)). No Defendant in this case has taken advantage of Congress’s hard work in offering this option. Rather, one Defendant has reached back in history to the non-binding “no risk for me” ex parte reexamination process, allowing all Defendant to lay behind the log, hoping for favorable developments with the passage of time. Instead of streamlining the process, Defendants’ choice guarantees the imposition of additional costs on Affinity Labs, and indicates a lack of desire to resolve the issues in the case in a timely manner.

* * *

It would be naive to believe that counsel for at least some of the Defendants are not coordinating mutually beneficial defense strategies. No Defendant has been confident enough to ask the PTO for a binding inter partes reexamination. All are waiting to let [reexamination counsel], on behalf of Defendant Dice Electronics, LLC, take a shot at defeating Affinity Labs. Of course, if things do not go well at the PTO, each Defendant in turn can file a request for ex parte reexamination. Defendants could then still assert the same and similar claims in this court. This is underscored by the fact that, when asked whether they were willing to be bound by the result if Affinity Labs succeeds in the ex parte reexamination, Defendants made it clear that they were not.

Based on these and other consideration, the motion for staying the case was denied.

While I'm not sure what may have happened during earlier conferences/proceedings, Judge Clark, as the saying goes, was a "skilletful of rattlesnakes" towards the defendants. It was especially interesting that "defense coordination" was such an issue - is that not to be expected when a plaintiff files suit against 24 defendents?

Read the opinion here (link) (via Docket Navigator)