Patents • Inter Partes Review • Stay of Proceedings

Destination Maternity Corp. v. Target Corp., PICS Case No. 14-0444 (E.D. Pa. March 24, 2014) Brody, J. (13 pages).

Where a defendant filed a petition for inter partes review of patent claims within four months of learning of the claims asserted against it, and where there were multiple competitors to the parties, and where inter partes review would either streamline the issues or provide analysis to the court and the case was not in an advanced stage of litigation, a stay of the proceedings was proper. Affirmed.

Defendant Target Corp. filed for a stay of the proceedings between it and plaintiff Destination Maternity Corp. over patent infringement claims, pursuant to Target’s petition to the Patent Trial and Appeal Board for inter partes review proceedings to invalidate all the claims DMC asserted against Target.

The court noted that the factors it had to consider in determining whether to grant a stay of the proceedings were: (1) whether a stay would unduly prejudice or clearly tactically disadvantage the non-moving party; (2) whether a stay would simply the issues; (3) whether discovery was complete and/or a trial date had been set.

DMC argued that a stay would unfairly prejudice it and would provide Target with a clear tactical advantage. The court noted that a petition for inter partes review could lead to an inference that the moving party was seeking an impermissible tactical advantage. However, the court found that Target had made its petition less than four months after learning of the claims presented against it, and that such delay was not unreasonable. The court also found that DMC would not be unduly prejudiced by a stay due to the loss of market share, noting that DMC and Target both had multiple direct competitors, and that DMC’s argument was undermined by the fact that DMC neither brought claims against those competitors after making threats of litigation, nor did it seek preliminary relief against Target.

The court also found that allowing a stay for inter partes review would lead to a simplification of the issues, as the PTAB would either eliminate claims at issues, confirm the validity of claims, narrow the scope of claims, or at the very least assist the court and the record with its expertise in evaluating prior art and assessing patent validity. Although DMC argued that the issues would not be simplified due to the fact that two of its claims were not being reviewed, the court held that review of 93 percent of the claims would result in simplification, and that Target was planning to bring the final two claims before review.

Finally, the court found that the case was not in a stage of litigation that would weigh against a stay. The court noted that stays had been granted even after the close of discovery and after trial dates had been set. The court rejected DMC’s argument that the litigation was already in an advanced stage, finding that discovery was nowhere complete, no dispositive motions had been filed, and a trial date had not been set. Therefore, the court held that a stay would avoid the waste of the resources of the court and the parties.