Astay can be a potent legal tool when
used in the right place and at the
right time. A stay, in legal terms, is a temporary halt to a legal proceeding until
the occurrence of some future event.
“In complex cases, courts stay a case
when a pending motion or other proceeding
could impact the case,” explains Jamil N.
Alibhai, shareholder and attorney in the litigation section at Munck Butrus Carter, P.C.
For example, in securities litigation cases,
the filing of a motion to dismiss “stays” the
case and precludes the parties from engaging in time-consuming and expensive discovery in a situation where the court may
end up dismissing the case in its entirety.
Aren’t stays frequently used in an administrative re-examination of a patent or the like?
The United States Patent and Trademark
Office (PTO) has established a procedure
by which any person at any time may file a
request for re-examination of any claim of
a patent. Basically, an individual or a company can ask the PTO to review a patent
and determine whether it is valid. When a
defendant in a patent case seeks re-examination in the PTO of the patent asserted
against it in the litigation, a defendant will
often ask for a stay of the proceeding pending the re-examination.
Re-examination permits efficient resolution of questions about the validity of
issued patents without expensive and
sometimes lengthy litigation. Courts have
the inherent power to issue stays as part of
their control of the disposition of their
dockets. The inherent power to stay proceedings specifically applies to patent
cases while the PTO re-examines a patent
at issue in the litigation.
When will the courts allow a stay?
Courts usually consider three factors in
deciding whether to stay litigation pending
re-examination:
(1) whether a stay will unduly prejudice
or present a clear tactical disadvantage to
the nonmoving party;
(2) whether the re-examination will simplify the issues in question and trial of the
case; and,
(3) the status of discovery and whether a
trial date has been set.
Courts first look at whether all of the
claims asserted in the action are under reexamination. If the re-examination does
not cover all of the patent claims asserted
in the litigation, a court will not be inclined
to stay a case because the court will still
need to consider the validity and infringement issues regarding patent claims not
under re-examination.
Courts also prefer to grant stays that are
requested early in the lawsuit and before
the parties have engaged in discovery and
claim construction proceedings.
What are the advantages of obtaining a stay?
If the court grants a stay, the parties can
wait for the conclusion of the re-examination. The stay allows the parties to save the
time and money that otherwise would be
spent on discovery and claim construction
proceedings.
An advantage of the re-examination
process is that it allows the validity of a
patent to be tested in the PTO by a Central
Re-examination Unit made up of highly
qualified examiners. If a re-examination proceeding results in cancellation of the
asserted patent claims, the suit likely will
be dismissed. In over 70 percent of all
granted re-examinations, the patent claims
are canceled or amended.
If claims survive the re-examination proceeding, re-examination may facilitate a
trial because the court will have been provided with the expert view of the PTO
regarding the validity of the patent.
How much time is allotted for a stay?
Most courts will stay the case pending the
outcome of the re-examination proceeding. According to federal patent law, reexamination proceedings are conducted
with ‘special dispatch.’ Depending on the
type of patent involved, the first office
action by the PTO can be as quick as three
to six months.
Can’t stays be used to drag out an issue to the
detriment of one party or the other?
A plaintiff facing a motion for stay pending re-examination will often claim that the
re-examination is a stall tactic. A court will
have to compare the patent claims in reexamination versus the patent claims
asserted in the litigation to determine
whether a stay is warranted. If a party can
make a showing of harm or prejudice, a
court will not likely stay the case.
What should be accomplished during the
stay?
During the stay, the PTO will re-examine
the patent and determine whether it is
valid. The patent owner will respond to
office actions from the PTO and has the
opportunity to amend claims in the patent.
The defendant should keep track of the proceedings in the PTO, and both parties
should also keep the court apprised of the
status of the re-examination proceeding.
JAMIL N. ALIBHAI is a shareholder in the litigation section at Munck Butrus Carter, P.C. His practice focuses on intellectual property
and complex commercial litigation and appeals. Reach him at [email protected].