Pioneer Hi-Bred Intern. v. J.E.M. Ag Supply, Inc.
| Decision Date | 29 January 1999 |
| Docket Number | No. C 98-4016-MWB.,C 98-4016-MWB. |
| Citation | 33 F.Supp.2d 794 |
| Parties | PIONEER HI-BRED INTERNATIONAL, INC., Plaintiff, v. J.E.M. AG SUPPLY, INC., d/b/a Farm Advantage, Inc., et al., Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
Daniel J. Cosgrove, Zarley, McKee, Thomte, Voorhees & Sease, P.L.C., Des Moines, IA, for Pioneer Hi-Bred International, Inc.
Bruce Johnson, Steven P. DeVolder, Lewis, Wesbster, Johnson, Van Winkle and DeVolder, Des Moines, IA, for Farm Advantage.
Mark R. Sargis, Mauck, Bellande & Cheely, Chicago, IL, for Ottawa Plant Food, Inc.
This matter comes before the court pursuant to the "Farm Advantage" defendants' November 20, 1998, motion to stay proceedings pending appeal to the Federal Circuit Court of Appeals. Defendant Ottawa Plant Food, Inc., filed a separate motion for a stay on January 22, 1999, joining in and supplementing the arguments asserted by the Farm Advantage defendants. Plaintiff Pioneer resisted the motion of the Farm Advantage defendants on December 7, 1998, and that of Ottawa on January 25, 1999. The court heard oral arguments thereon on January 26, 1999. Ottawa then filed a reply to Pioneer's resistance to its motion on January 28, 1999.
Plaintiff Pioneer Hi-Bred International, Inc., is the world's largest seed corn producer and the holder of seventeen patents-in-suit for sexually reproducing corn plants. Pioneer sells products under these patents under a limited label license that does not allow for resale, but solely for use "to produce grain and/or forage." Principal defendant Farm Advantage is a family-owned full service agricultural supply business. The other "Farm Advantage" defendants are corporations or residents of the state of Iowa who are distributors for Farm Advantage. Defendant Ottawa is also in the agricultural supply business. Pioneer brought this patent infringement lawsuit against the defendants alleging that they have been infringing one or more of its patents-in-suit by making, using, and selling, or offering for sale Pioneer seed corn, although none of the defendants is a party to any dealer contract with Pioneer. The defendants have asserted counterclaims alleging invalidity of Pioneer's patents, because the defendants contend that sexually reproducing plants, such as the ones covered by the patents-in-suit, are not patentable under 35 U.S.C. § 101 of the Patent and Trademark Act, but are instead covered exclusively by the Plant Variety Protection Act of 1970 (PVPA), 7 U.S.C. § 2321 et seq.
On August 19, 1998, Senior Judge Donald E. O'Brien denied the Farm Advantage defendants' motion for summary judgment.1 The key question before Judge O'Brien at that time was whether or not the PVPA is the exclusive federal statutory mechanism for granting patent-like protection for sexually reproducing plants to the exclusion of the general patent law. Judge O'Brien concluded that the PVPA was not the exclusive source of protection for sexually reproducing plants. On August 31, 1998, he amended and clarified that ruling and certified it, as amended, for interlocutory appeal to the Federal Circuit Court of Appeals. The Federal Circuit Court of Appeals has agreed to hear the appeal. Therefore, the defendants have now moved for a stay pending the outcome of the appeal.2 This case was reassigned to the undersigned on November 3, 1998.
Defendants assert that a stay pending appeal is appropriate, because the appeal is dispositive of all issues in the case, and the question on appeal is at least "fairly debatable." They assert further that they will be subjected to irreparable harm without a stay, because they are small businesses who will be damaged by the burdens and expense of continuing defense of this lawsuit. More particularly, they assert that continued litigation of this lawsuit while the appeal is pending will force continued and wider disclosure of confidential business information and other unduly burdensome discovery if Pioneer ultimately has no claim. Ottawa asserts that the potential damage to it is still more significant, because it has not yet been forced to reveal any of its confidential information in discovery. In contrast, the defendants argue that if Pioneer prevails, damages will still be available after resolution of the appeal to redress any wrongs, and Pioneer cannot now claim urgency of such a remedy when it essentially sat on its rights for several years after learning of unlicensed sales of its seed corn by these defendants without filing suit. Finally, the defendants contend that the public interest will be served by a stay, because the public interest favors protecting small defendants from the litigation onslaught of a huge company during the pendency of an appeal to determine whether the huge company even has a claim. Ottawa also asserts that the public interest will be served by fostering rather than suppressing price competition in the agricultural products market.
Pioneer, on the other hand, asserts that the defendants have no likelihood of success on their appeal, because Pioneer characterizes the applicability of 35 U.S.C. § 101 to sexually reproduced plants as well settled. Pioneer hypothesizes that the Federal Circuit Court of Appeals has taken the appeal in this case not to overturn or limit prior precedent, but to settle the issue once and for all. Pioneer also contends that irreparable harm to the patent owner—here, the non-movant Pioneer—can be presumed if the owner can make a showing of infringement and patent validity, while the harm to the defendants— the movants—arising from being compelled to continue responding to discovery and to disclose confidential information is simply part of the price the defendants pay for wrongful conduct. Pioneer also states that disclosure of confidential information in discovery is not a cognizable harm, because in the unlikely event that the appeal disposes of Pioneer's claims, any confidential information, which is currently protected from general disclosure by a protective order, will be returned. As to public interest, Pioneer contends that the relative size of the litigants is irrelevant. Instead, the public interest favors respect for patent rights and continuation of actions to enforce such rights. Pioneer also argues that the public interest favors continued discovery to protect its patent rights, because licensed distributors—and ultimately consumers—who are not part of this litigation are harmed by sales of pirate seed.
In a reply brief by the Farm Advantage defendants and a brief in support of its own motion for a stay by Ottawa, the defendants contend that a recent decision of the Federal Circuit Court of Appeals and recent statutory amendments demonstrate the difference in scope for plant protection between patent law and the PVPA. They assert further that Pioneer has mischaracterized the import of other precedent. Thus, the defendants argue that the law is not so settled in Pioneer's favor as Pioneer contends, and hence they have some likelihood of success on appeal. They also claim that there is minimal likelihood of harm to Pioneer if the case is stayed, because all defendants undertake not to sell Pioneer seed until resolution of this case, but there is serious likelihood of harm to the defendants from protracted discovery that may ultimately be mooted by a decision in their favor on appeal.
The court assumes that on the question of whether to stay a matter pending appeal, an essentially procedural question, the law of our regional circuit rather than that of the Federal Circuit Court of Appeals is applicable. See Dethmers Mfg. Co., Inc. v. Automatic Equip. Co., 23 F.Supp.2d 974, 988 (N.D.Iowa 1998) (). However, the court recognizes the impact of substantive law within the exclusive appellate jurisdiction of the Federal Circuit—specifically, patent law—on the question of the defendants' likelihood of success on the merits, and on that question, at least, this court will look to Federal Circuit law. See id.
As the Eighth Circuit Court of Appeals has explained,
We consider the following four factors in determining whether a stay [pending appeal] is warranted: (1) the likelihood that a party seeking the stay will prevail on the merits of the appeal; (2) the likelihood that the moving party will be irreparably harmed absent a stay; (3) the prospect that others will be harmed if the court grants the stay; and (4) the public interest in granting the stay. See Arkansas Peace Center v. Dep't of Pollution Control, 992 F.2d 145, 147 (8th Cir.1993), cert. denied, 511 U.S. 1017, 114 S.Ct. 1397, 128 L.Ed.2d 70 (1994); Wisconsin Gas Co. v. F.E.R.C., 758 F.2d 669, 673-74 (D.C.Cir.1985), cert. denied, 476 U.S. 1114, 106 S.Ct. 1968, 1969, 90 L.Ed.2d 653 (1986).
Iowa Utilities Bd. v. F.C.C., 109 F.3d 418, 423 (8th Cir.1996); accord Hilton v. Braunskill, 481 U.S. 770, 776, 107 S.Ct. 2113, 95 L.Ed.2d 724 (1987). Indeed, the Federal Circuit Court of Appeals considers identical factors. See, e.g., Standard Havens Prods. v. Gencor Indus., 897 F.2d 511, 512 (Fed.Cir. 1990) (...
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...of our regional circuit rather than that of the Federal Circuit Court of Appeals is applicable." Pioneer Hi-Bred Int'l, Inc. v. J.E.M. AG Supply, Inc., 33 F.Supp.2d 794, 796 (N.D.Iowa 1999) (citing Dethmers Mfg. Co. v. Automatic Equip. Co., 23 F.Supp.2d 974, 988 (N.D.Iowa 1998)). The Eighth......