Canady v. Erbe Elektromedizin Gmbh

• Citation: 271 F.Supp.2d 64
• Decision Date: 31 July 2002
• Docket Number: No. CIV.A. 96-2012(RMU).,CIV.A. 96-2012(RMU).
• Parties: Jerome CANADY, M.D. and Argon Electro-Surgical Corp., Plaintiffs, v. ERBE ELEKTROMEDIZIN GMBH and Erbe U.S.A., Defendants.
• Court: U.S. District Court — District of Columbia

271 F.Supp.2d 64

Jerome CANADY, M.D. and Argon Electro-Surgical Corp., Plaintiffs, v. ERBE ELEKTROMEDIZIN GMBH and Erbe U.S.A., Defendants.

No. CIV.A. 96-2012(RMU).

United States District Court, District of Columbia.

July 31, 2002.

Timothy R. DeWitt, Arnold & Porter, McLean, VA, Counsel for the plaintiffs.

Martin Paul Hoffman, Hoffman, Wassen & Gitler, Arlington, VA, Co-counsel for the defendants.

Nate F. Scarpelli, Marshall, O'Toole, Gerstein, Murray & Borun, Chicago, IL, Co-counsel for the defendants.

MEMORANDUM OPINION

URBINA, District Judge.

DENYING THE PLAINTIFFS' MOTION TO LIFT THE STAY

I. INTRODUCTION

This matter is before the court on the plaintiffs' motion to lift the stay imposed by this court on July 28, 2000 pending the outcome of reexamination proceedings before the U.S. Patent and Trademark Office ("PTO"). U.S. Patent Number 5,207,675 ("the 675 patent"), the patent at issue in this action, describes an electrosurgical¹ device capable of facilitating blood coagulation² during surgical procedures. The plaintiffs, Jerome Canady and Argon Electro-Surgical Corporation, own the 675 patent. The defendants, Erbe U.S.A. and its German parent corporation, Erbe Elektromedizin GmbH, manufacture and sell several models of a similar electrosurgical device known as an argon plasma coagulation ("APC") probe.

The plaintiffs seek to lift the stay asserting that by filing a total of three requests for reexamination, the defendants are using PTO proceedings for dilatory purposes, and that continuing the stay presents a tactical disadvantage to the plaintiffs. The defendants counter that the filing of multiple requests for reexamination is proper where the submissions in those requests raise a new question of patentability. Although the PTO has already reviewed the first request for reexamination, it has granted two additional requests for reexamination filed by the defendants on September 24, 2001 and October 12, 2001 respectively. The PTO has merged those additional requests and is currently undergoing reexamination proceedings. The defendants correctly indicate that the PTO's determination is expected to narrow or resolve many issues in this litigation. Consequently, since the PTO has not rendered a final decision regarding the validity of the plaintiffs' 675 patent, and the plaintiffs have not sufficiently demonstrated that they will suffer a tactical disadvantage as a result of sustaining the stay, the court denies the plaintiffs' motion to lift the stay as not ripe for adjudication.

II. BACKGROUND

A. Factual Background

This litigation is the result of a chance meeting of the parties at the "Minimally Invasive Surgery Conference" held in Luxemburg in 1992. Am. Compl. ¶¶ 10-13. At that conference, defendant Erbe Elektromedizin GmbH had a booth demonstrating a new device, the APC, to members of the medical field. Id. Plaintiff Canady happened upon this booth and notified defendant Erbe Elektromedizin of his own similar invention that had been filed with the PTO for patent on July 15, 1991. Id. Subsequent communications between the parties revealed that plaintiff Canady's patent was filed first in time and the present litigation ensued. Id.

Initially, plaintiff Canady claimed patent infringement by the defendants. Compl. ¶ 12. The defendants counterclaimed that there was no infringement and that plaintiff Canady's patent was invalid because prior art showed that the device was "obvious"³ and merely the combination of two previous patents, Manwaring (U.S. Patent No. 5,122,138 (issued June 16, 1992)) and McGreevy (U.S. Patent No. 4,781,175 (issued November 1, 1988)). Defs.' Counterclaim ¶¶ 23-25. As the case progressed, Argon-Electrosurgical Corp. was joined as a plaintiff on July 14, 1997 when it obtained co-ownership of the 675 patent. Order dated July 14, 1997.

On June 21, 2000, the defendants filed a request for reexamination of the 675 patent with the PTO asserting that substantial new questions of patentability of claims 1 and 7-16 of the 675 patent were raised by certain references not considered by the PTO in plaintiff Canady's patent application. Defs.' Mot. for Stay at 1; Pls.' Mot. to Lift Stay ("Pls.' Mot.") Ex. D. As a result of this request the court entered a stay on July 28, 2000 pending the outcome of the PTO's reexamination.

The PTO granted the defendants' first request for reexamination on September 12, 2000 finding a "substantial new question of patentability" affecting claims 1 and 7-16 of the 675 patent. Defs.' Opp'n Ex. 2 at 2.⁴ On November 7, 2000, plaintiff Canady filed a patent owner's statement pursuant to the reexamination procedure, opposing the defendants' first request for reexamination and the PTO's decision to grant that request. Id. Plaintiff Canady submitted to the PTO a self-declaration under 37 C.F.R. § 1.132 supporting his position that no substantial questions of patentability were raised by the references submitted by the defendants. Id. On January 8, 2001, the defendants filed their requestor's reply to plaintiff Canady's patent owner's statement. Id. In response to the arguments in the November 7, 2000 patent owner's statement and the requestor's reply, the PTO issued an office action⁵ on June 24, 2001, rejecting plaintiff Canady's claims 1, 2, and 7-16 as unpatentable. Id. (citing Ex. 6 (the PTO's office action, dated June 24, 2001)).

Plaintiff Canady then filed a response opposing the PTO's rejection of claims, relying in part on his supplemental declaration under 37 C.F.R. § 1.132. Pls.' Mot. Ex. F. The plaintiffs assert that they did not seek to lift the stay at that time because they believed the submission of this response would resolve the adverse decision by the PTO, thereby allowing the present litigation to continue. Pls.' Mot. at 2. Since the parties updated the court on the status of this case on August 24, 2001, however, several developments have transpired, both in the PTO's reexamination of the patent and otherwise, which the plaintiffs believe significantly change the circumstances that existed at the time this court entered the stay and which now justify lifting the stay. Id.

Specifically, on September 24, 2001, the defendants filed a second request for reexamination, bringing to the PTO's attention two references that were not considered by the PTO either during its initial examination of plaintiff Canady's patent application or during its reexamination pursuant to the defendants' first request. Pls.' Mot. Ex. L. The defendants believe these references (1) refute unsupported and unsupportable factual allegations made in plaintiff Canady's response to the June 24, 2001 office action and in plaintiff Canady's supplemental declaration, and (2) will raise substantial new questions of patentability of the 675 patent when reviewed by the PTO. Defs.' Opp'n at 4. The defendants state that they filed the second request promptly after discovering the two relevant references, assuring that the PTO would have these references available for consideration before issuing another office action in reexamination. Id. This task accomplished, the defendants continued to search for additional references to refute plaintiff Canady's arguments and render the 675 patent invalid. Id.

The defendants uncovered additional references shortly after they filed their second request. Pls.' Mot. Ex. M. Accordingly, on October 12, 2001, they filed a third request for reexamination, submitting six additional references not considered in any other PTO proceeding. Id. The defendants assert that they did not violate the PTO's reexamination process because they filed their request promptly. Defs.' Opp'n at 15-21.

The PTO granted both the defendants' second and third requests on November 29, 2001 after determining that the references when combined with other submissions in the record "raise a substantial new question of patentability." Id. at 6. Plaintiff Canady's opportunity to file a patent owner's statement expired on January 29, 2002. Id. Moreover, plaintiff Canady has not challenged the PTO's decision to grant reexamination by filing a petition with the PTO's Director. Defs.' Opp'n at 6; 37 C.F.R. § 1.182. On June 17, 2002, the PTO merged the second and third accepted requests under 37 C.F.R. § 1.565. Defs.' Status Report dated June 17, 2002 (including the PTO's decision to merge, dated June 17, 2002).

1. The PTO's Reexamination

As a result of the high costs of enforcing patent rights, Congress passed the Patent Act of 1980, as amended, 35 U.S.C. §§ 301-07. The purpose of the Patent Act is to allow the reexamination of patent validity in an impartial forum at almost 100 times less cost to the parties by people trained to understand the technologies described in patents. H.R.Rep. No. 1307, 96th Cong., 2d Sess., pt. 7 at 4 (1980) (enacted), reprinted in 1980 U.S.C.C.A.N. 6460. In fact, courts often stay proceedings, such as in the instant case, to wait for reexamination results that will simplify litigation by eliminating, clarifying, or limiting the claims. Ethicon v. Quigg, 849 F.2d 1422, 1428 (Fed.Cir.1988).

The Manual of Patent Examining Procedure ("MPEP") outlines the process of reexamination drawing from Title 35 of the United States Code, Title 37 of the Code of Federal Regulations, and the PTO's own practices. Although the Federal Circuit has not expressly adopted the MPEP, the Federal Circuit generally follows the MPEP. Patlex Corp. v. Mossinghoff, 758 F.2d 594, 606 (Fed.Cir.1985) (citing In re Kaghan, 55 C.C.P.A. 844, 387 F.2d 398, 401 (Cust. & Pat.App.1967) (determining that appellants can rely on procedures outlined by the MPEP)). Reexamination of a patent is initiated when one files a request for reexamination with the PTO regarding the invalidity of any claim in a patent on the basis of prior art. 35 U.S.C. § 302. Prior art consists of patents or printed publications, which are believed to bear on the patentability of any claim in a particular patent. 35...