On May 4, 2016 Magistrate Judge Dena Hanovice Palermo denied ION Geophysical Corp.’s motion for stay and  recommended that the District Court deny ION’s request for relief under Rule 60(b)(6) after the Patent Trial and Appeal Board found certain of the claims associated with the judgment about to attach to ION invalid.  WesternGeco LLC, plaintiff, filed a patent infringement suit against ION Geophysical Corp., defendant, for multiple claims of four patents.  WesternGeco’s patents utilize marine seismic streamer technology: technology that uses long cables that are attached to the back of the boat.  These cables release acoustic signals and sensors that produce three-dimensional maps of the ocean floor’s surface to create clear images to help ships maneuver around natural barriers.  Specifically, the patents protect  streamer positioning devices that control the streamers’ position as they are dragged behind the boat.  The District Court held, and the Federal Circuit affirmed, that claims on all four of the patents had been infringed.  When the case was sent back down to the District Court to implement the Federal Court’s decision, WesternGeco petitioned to the United States Supreme Court for enhanced damages, and ION submitted the patents to the PTAB, utilizing a joinder motion to avoid the 1-year-from-service bar.  The PTAB ultimately found several asserted claims unpatentable.  Those PTAB decisions are now on appeal to the Federal Circuit.

Before the Federal Circuit could make a final judgment on the patent claims’ patentability, ION moved for a motion for a stay of entry of final judgment, noting that the Federal Circuit could affirm and cancel three of the five  patent claims that both courts had found in favor of WesternGeco.  ION also argued that the stay should be awarded in the interest of justice.  A court may grant a stay pending PTAB trial/Federal Circuit Review review.  However, there is no per se rule that a stay should be awarded in such a scenario.  Although the District Court has the power to grant a stay, this power is limited, and any court granting a stay must balance the following factors:  (1) prejudice or tactical disadvantage to the non-moving party, (2) whether a stay will simplify the issues in question, and (3) whether discovery is complete and a trial date has been set.

Judge Palermo determined that factor one did not favor granting a stay because WesternGeco would face prejudice in two ways if the stay was granted.  The first way would be the delay in vindication of patent rights, but more importantly, the delay could cause ION to slip into financial troubles and then subsequently not be able to pay WesternGeco, in full, for damages.  Judge Palermo denied ION’s claim of prejudice against itself, citing that the moving party is not considered under a factor one inquiry.  The second factor measures if providing the judge and jury at the district court level with the PTAB’s analysis would simplify their decision making in any way.  Judge Palermo found that this factor weighed against granting a stay because there was already a trial and post-trial appeal and thus, simplification was not possible.  Finally, Judge Palermo ruled that factor three also weighed against granting a stay because the case had moved beyond the discovery and trial stage.  Because of the trial’s advanced stage, a stay would be inappropriate.  Due to all three factors weighing against granting a stay, Judge Palermo found that a stay did not need to be awarded pending Federal Circuit appeal of the PTAB’s final written decision.

In the alternative, ION also argued that relief from the judgment should be awarded pursuant to the Federal Rules of Civil Procedure Rule 60(b)(6) because the Federal Circuit could affirm the PTAB’s finding of unpatentability.  If the Federal Circuit’s holding was enforced, this inconsistent combination of enforcing judgment on later invalidated claims would impact the fairness of the trial.  ION also claimed their present financial condition combined with the current state of the oil and gas market could be considered extraordinary circumstances that qualified for section 6 protection.  Magistrate Judge Palermo recommended denying the defendants motion for relief under Rule 60(b)(6) citing that PTAB’s final written decisions alone do not justify Rule 60(b)(6) relief.  Additionally, Judge Palermo pointed out a pending PTAB proceeding cannot be given the power to render the entire judicial and jury process moot because that would be a “great disservice to the Seventh Amendment and the entire procedure put in place by Article III of the Constitution” (4:09-CV-1827, Page Number 14).

While this type of scenario will certainly become less common with the advent of the fast paced PTAB patent review, it is a cruel reminder that it certainly is possible to be forced to pay damages associated with patent claims that are ultimately found invalid in the future.

Special thanks to Summer Associate Mica Rollock for her help in preparing this post.

By: Matt Johnson (Jones Day Bio)


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