Often, patentees will file suit before ever talking to the accused infringers, for a number of reasons. First, obviously, that lets them control where suit is filed. If a patentee says the wrong things to an accused infringer prior to suit, they could inadvertently create declaratory judgment jurisdiction and the accused infringer could file in their home jurisdiction. Patentees don't want that.
Filing suit before speaking also shows that the patentee means business. They aren't just going to go away, and they are willing to pay at least the cost of drafting a complaint and the filing fee.
But there are other reasons as well, and today's ruling in TTI Consumer Power Tools, Inc. v. Lowe's Home Centers LLC, C.A. No. 22-673-CFC (D. Del.) shows one of them.
There, the patentee apparently reached out to the defendant long before it intended to file suit. It's not clear exactly how long before, but it was enough time for the future-defendant to inform the plaintiff of the prior art and to file a request for an ex parte reexamination, and for the PTO to grant that request—and then for six weeks to pass after that!
So it must have been no surprise to the patentee that the Court found that all of the stay factors favored a stay, and stayed the case. The theme of the patentee's arguments against a stay were that it shouldn't be penalized for taking time to resolve the issue without litigation—but the Court disagreed:
TTi does not contest that this litigation is in its infancy [which favors a stay]. It merely claims that this litigation is only in its infancy because the parties initially attempted to resolve this dispute without resorting to litigation. But explaining why this litigation is in its infancy does not change the fact that this litigation is in its infancy. Granting a stay at this early stage will advance judicial efficiency and maximize the likelihood that neither the Court nor the parties expend their resources addressing invalid claims.
The Court also noted that both sides had tried to resolve dispute pre-filing, implying that denying a stay would likewise punish the defendant:
[Plaintiff] TTi alleges that staying this case "would provide [the defendant] Lowe's an unfair tactical advantage by allowing it to capitalize on TTi' s good faith pre-suit efforts to resolve the infringement." . . . But it appears that both parties negotiated in good faith before this suit was filed. During the negotiations, Lowe's told TTi that " [the defendant's supplier of the accused product] is in possession of evidence that can invalidate the [#451 patent] in a reexamination proceeding." D.I. 18-6, Ex.Fat 7. After the negotiations proved fruitless, Lowe's filed the request for reexamination and, several weeks later, TTi filed this case. If anything, Lowe's was fully transparent about its intentions and neither party gained a tactical advantage from these negotiations.
The parties here included plaintiff, a Home Depot supplier, and Lowe's, a competitor of Home Depot's. The Court held that the supplier plaintiff and defendant Lowe's were simply not competitors, which further cuts against a stay:
"Courts are reluctant to stay proceedings where the parties are direct competitors." Cooper, 2010 WL 5149351, at *5. But Lowe's and TTi are not direct competitors. Lowe's sells its alleged infringing product to consumers; TTi sells to Home Depot. Lowe's and Home Depot are direct competitors, but Lowe's and TTi are not. Absent direct competition, a stay is not likely to unduly prejudice TTi. Further, any prejudice is minimized because TTi " would be entitled to compensation for past infringement if the Court grants a stay and the [#451] patent survives reexamination." Id. at *4.
In other words, being "competitors" is not enough—the parties need to be direct competitors.
Two and a Half Months to Resolve Stay Motion Is Fast Under the Circumstances
The stay motion here was fully briefed as of August 22, 2022, and the decision issued today. That's 2 months and 16 days between filing and grant. Since the motion was filed, the parties have agreed to a scheduling order and a protective order, and have started discovery, initial contentions, and the claim construction process, which is no small amount of work.
But two and a half months is a fast turnaround for a super-busy Court like the District of Delaware, which simply has too few judges for the heavy caseload it has. When you are a defendant hit with a patent suit, and you're planning to move to stay, keep that in mind. Even the best stay motion may take 4-6 or more months to resolve, and the case will proceed forward during that time.
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