IP Law Daily, PATENT—Fed. Cl.: U.S. denied stay of infringement claims for low light imaging system, (Sep 30, 2014)

By Jody Coultas, J.D.

The United States was denied a stay of patent infringement claims filed against it by CANVS Corporation by the United States Court of Federal Claims (CANVS Corporation v. United States, September 26, 2014, Campbell-Smith, P.). The motion to stay was denied without prejudice to re-filing, upon a decision by the United States Patent and Trademark Office (PTO) on the petition to institute inter partes review.

CANVS alleged that the United States infringed U.S. Patent No. 6,911,652 (the ’652 patent), which disclosed a low light imaging system useful for military applications. CANVS also sued various third parties in Florida federal court, alleging infringement of the ’652 patent through their supply of accused devices to the U.S. military.

Third party FLIR Systems, Inc. filed a petition with the PTO requesting inter partes review of the patentability of all asserted patent claims, including those claims previously invalidated by the court. The United States sought to stay the litigation pending resolution of the inter partes review petition, arguing that the Patent Trial and Appeal Board (PTAB) would invalidate the patent and render the litigation moot.

To determine whether to issue a stay, courts consider: (1) the impact of inter partes review, to include whether a stay would simplify the issues in question and streamline the trial; (2) how far the litigation has progressed, taking into account whether discovery is complete and a trial date has been set; and (3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party.

Here, if the PTAB were to cancel or narrow all claims, it would simplify the trial by narrowing the issues or render the trial moot and benefit the parties through more limited discovery, although extensive discovery had already taken place. However, most courts deny motions to stay as premature if the PTO had yet to accept review. Even if the PTO were to review all of the claims presented in this case, there were no estoppel benefits to be obtained that would ensure that a stay achieves the intended efficiencies in this circumstance because the United States was not the party that filed the inter partes review petition. A petitioner seeking review is subject to a statutory estoppel requirement that precludes the petitioner from asserting invalidity in a subsequent lawsuit. The United States was not subject to estoppel and had not agreed to be so bound. The ability to assert the same positions in a different forum defeats one of the intended benefits of inter partes review, should any claims survive.

Courts have favored stays where there is still discovery to do or significant milestones to meet, such as the completion of claim construction, expert discovery, or summary judgment. Here, the parties and court had expended considerable effort in this case and had made substantial progress. The advanced procedural posture of the case weighed against a stay, according to the court.

CANVS would be unduly prejudiced and put at a tactical disadvantage by a stay, according to the court. The United States had an opportunity to seek inter partes review earlier, but chose not to do so. Rather, the United States aggressively challenged CANVS, forcing it to expend resources. The United States sought to sit idle while a third party defended its interests, and could use the inter partes review to preview the viability of the positions it shares with FLIR. This factor, therefore, weighed against a stay.

The case is No. 10-540C.

Attorneys: Joseph J. Zito for CANVS Corporation. John A. Hudalla, U.S. Department of Justice, for the United States.

Companies: CANVS Corporation

Cases: Patent