Claims that Target copied the design for maternity pants made by Destination Maternity are on hold until the patent office rules on its review of the allegedly infringed patents.
U.S. District Judge Anita B. Brody of the Eastern District of Pennsylvania granted Target’s motion to stay the litigation in federal court since it sought review of the patents from the Patent Trial and Appeal Board, (PTAB).
“In February 2014, the PTAB concluded that there is a reasonable likelihood that Target will prevail with respect to the invalidity of 27 of the 29 claims that DMC asserts against defendants. Thus, the PTAB instituted inter partes review proceedings for those 27 claims,” Brody said in Destination Maternity v. Target.
Target intends to file for inter partes review, based on Japanese prior art to show that the patents are invalid, on the remaining two claims that are at issue in the federal suit, according to the opinion.
“Target will seek to join these petitions with its existing ones, and believes that all 29 claims will soon be subject to inter partes review proceedings,” Brody said.
Destination Maternity alleged that Target and its brand of clothes for pregnant women infringed on two of its patents for maternity pants that have “a flexible belly panel that can be worn during different stages of pregnancy and different stages of postpartum body changes,” according to the opinion.
Destination Maternity also threatened other direct competitors, Gap and J.C. Penney, with a patent suit in 2008, according to the opinion.
“Despite these threats against Gap and J.C. Penney, DMC has only filed suit against Target, and has never sued any of its other competitors,” Brody said in her opinion.
She got to that point in weighing the first factor in a three-part test that courts use to consider whether staying a case for inter partes review is appropriate.
The three factors, as laid out in the 2008 Eastern District court opinion in Innovative Office Products v. SpaceCo, are: “(1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the nonmoving party; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether discovery is complete and whether a trial date has been set,” according to the opinion.
Destination Maternity had argued that Target had waited longer than it needed to before filing for inter partes review in order to gain a tactical advantage. The judge, however, was satisfied that Target filed for review from the patent office within a reasonable time, less than four months, after finding out what specific claims were asserted against it.
Destination Maternity also argued that it would be prejudiced if the case were to be stayed because Target is a direct competitor.
But, the judge noted that the presence of other direct competitors in the same market undermines the argument that a party would suffer prejudice due to a loss of market share.
“There is no dispute that DMC and Target are direct competitors,” Brody said. “However, DMC has several other competitors in the market, including H&M, Babies ‘R’ Us, Walmart, Old Navy, J.C. Penney, and Gap.”
She then noted Destination Maternity’s threat to Gap and J.C. Penney regarding the patents.
“While DMC may experience a loss of market share during a delay in litigation, only a fraction of this loss will be attributable to Target because of the several other competitors that continue to compete for market share with DMC without repercussions,” Brody said. “While DMC may experience some prejudice as a result of a stay, the multiple competitors in the field belie the assertion that DMC will experience undue prejudice because of loss of market value.”
Brody similarly dispensed with Destination Maternity’s argument that it would lose a significant portion of its patent term if the case were to be stayed. The patents don’t expire until 2027, she said, “thus, even after a stay, DMC likely will have over a decade to enforce its patent rights.”
On the second factor, Brody agreed with Target that the patent office’s review of the claims is likely to streamline the case.
And on the third factor she again sided with Target, ruling that the case is at an early enough stage of litigation to be stayed.
Destination Maternity had argued that the case is at an advanced stage—so far, it has produced more than 100,000 pages of documents in discovery, but fact and expert discovery is “nowhere near complete,” Brody said.
The judge decided that all three factors weighed in favor of staying the litigation.
(Copies of the 12-page opinion in Destination Maternity v. Target, PICS No. 14-0444, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •