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E-ImageData Corp v. Digital Check Corp

United States District Court, E.D. Wisconsin

February 17, 2017

E-IMAGEDATA CORP, Plaintiff / Counter-Defendant,
v.
DIGITAL CHECK CORP doing business as ST Imaging, Defendant / Counter-Plaintiff.

          DECISION AND ORDER

          WILLIAM E. DUFFIN U.S. Magistrate Judge

         I. Introduction

         Plaintiff e-ImageData Corp holds the rights to three relevant patents: U.S. Patent Nos. 8, 537, 279 (the ‘279 patent) (ECF No. 1-1); 9, 179, 019 (the ‘019 patent) (ECF No. 1-2), and 9, 197, 766 (the ‘766 patent) (ECF No. 1-3). The patents all relate to machines used to digitally display a microform image (e.g., microfilm or microfiche). e-Image sells a line of machines that use the patented technology.

         Defendant Digital Check Corp, which does business as ST Imaging and will be referred to here as ST Imaging, is a competitor of e-Image and also sells machines that digitally display microform images. In this lawsuit, commenced on May 12, 2106, e-Image alleges that ST Imaging's machines infringe upon e-Image's patents.

         After the parties consented to the jurisdiction of this court, a scheduling conference was held on June 21, 2016. At the scheduling conference, ST Imaging stated that it may file a petition for inter partes review (IPR) and move to stay the litigation pending that review. (ECF No. 15.) Soon thereafter the parties filed claim construction briefs (ECF Nos. 20, 22, 23, 24), and on August 23, 2016, a claim construction hearing was held (ECF No. 37). On November 4, 2016, the court issued an order construing the claims disputed by the parties (ECF No. 38.)

         On November 3, 2016, ST Imaging filed two petitions seeking IPR before the U.S. Patent and Trademark Office. (ECF No. 40 at 8.) According to ST Imaging, the petitions challenge the validity of the only asserted claim of the ‘279 Patent and “the vast majority of the asserted claims of the ‘766 Patent.” (Id.) However, a review of the records of the Patent Trial and Appeal Board (PTAB), available at https://ptab.uspto.gov, reveal that this it was not the ‘766 patent but the ‘019 patent that ST Imaging also addressed on November 3, 2016. It was not until November 30, 2016, that ST Imaging filed a third IPR petition now challenging the claims asserted in the ‘766 Patent. (Id.) In total ST's petitions challenge 62 of the 73 claims asserted by e-Image. (Id.)

         On November 18, 2016, ST Imaging filed a motion to stay the present proceedings pending completion of the IPR. (ECF No. 39.) e-ImageData opposes the motion. (ECF No. 42.) The briefing on the motion to stay is complete and the matter is ready for resolution.

         II. Inter Partes Review

The Leahy-Smith America Invents Act, 35 U.S.C. § 100 et seq., creates a process called “inter partes review.” That review process allows a third party to ask the U.S. Patent and Trademark Office to reexamine the claims in an already-issued patent and to cancel any claim that the agency finds to be unpatentable in light of prior art. See § 102 (requiring “novel[ty]”); § 103 (disqualifying claims that are “obvious”).

Cuozzo Speed Techs., LLC v. Lee, 136 S.Ct. 2131, 2136 (2016).

         The Patent Trial and Appeal Board (PTA B) will grant a request for IPR only if the challenger of the patent shows “‘a reasonable likelihood that' the challenger ‘would prevail.'” Id. at 2137 (quoting 35 U.S.C. § 314(a) (2012 ed.)). After a request for IPR is filed the patent holder has three months in which to respond to the petition. 35 U.S.C. § 313. Following that response, the PTAB generally has three months to decide whether to grant a request for review. 35 U.S.C. § 314(b). If it institutes IPR, the review is conducted before a panel of three technically-trained administrative patent judges of the PTAB. 35 U.S.C. §§ 6(a)-(c), 311. The PTAB must decide the review within one year of the institution date (although that one year deadline may be extended for up to six months for good cause). 35 U.S.C. § 316(a)(11). “If the PTAB issues a final written decision in an inter partes review on a patent claim, a petitioner ‘may not request or maintain a proceeding before' the USPTO, the U.S. International Trade Commission, or a federal district court ‘with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.'” Phigenix, Inc. v. ImmunoGen, Inc., 2017 U.S. App. LEXIS 323, 13-14 (Fed. Cir. Jan. 9, 2017) (quoting 35 U.S.C. § 315(e)(1)).

         III. Standard for Issuance of a Stay

         The parties agree that the court has the inherent power to stay the present proceedings. (ECF No. 40 at 8; 42 at 9-10 (all citations to electronically filed documents reflect the ECF pagination)); Texas Indep. Producers & Royalty Owners Assoc. v. EPA, 410 F.3d 964, 980 (7th Cir. 2005). Courts typically weigh three factors when deciding whether to stay litigation pending resolution of an IPR: (1) whether the litigation is at an early stage; (2) whether a stay will simplify the issues in question; and (3) whether a stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving party. Acantha LLC v. Depuy Synthes Sales Inc., No. 15-cv-1257-WCG, Order at 1 (E.D. Wis. June 4, 2016) (citing Milwaukee Elec. Tool Corp. v. Hilti, Inc, . 138 F.Supp.3d 1032, 1036 (E.D. Wis. 2015)).

         IV. ...


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