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Carlson Pet Products, Inc. v. North States Industries, Inc.

United States District Court, D. Minnesota

March 5, 2018

CARLSON PET PRODUCTS, INC., Plaintiff,
v.
NORTH STATES INDUSTRIES, INC., Defendant.

          Bryon Wasserman and Frederick A. Tecce, Ice Miller LLP; Emeric J. Dwyer, Cameron Law Office Chartered; counsel for Carlson Pet Products, Inc.

          Thomas J. Leach, III, Michael A. Erbele, and Rachel C. Hughley, Merchant & Gould PC, counsel for North States Industries, Inc.

          ORDER

          Katherine Menendez United States Magistrate Judge

         Carlson Pet Products, Inc., brought this suit alleging that North States Industries, Inc., is selling pet gate products that infringe two of Carlson's patents. North States has filed a motion asking the Court to stay this litigation while the United States Patent and Trademark Office (“PTO”) makes a decision on North States' ex parte requests for reexamination of both of the patents at issue.[1] [Def.'s Mot. ECF No. 36.] For the reasons set forth below, the court finds that a stay is appropriate.

         I. Standard Governing North States' Motion

         In determining whether to grant North States' request for a stay, the Court considers the following factors:

(1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving 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.

Card Tech. Corp v. DataCard Corp., No. 05-cv-2546 (MJD/SRN), 2007 WL 551615, at *3 (D. Minn. Feb. 21, 2007). The Court has substantial discretion to weigh these factors in light of the unique circumstances of the case before it, and decide whether a stay is appropriate using its inherent power to manage litigation. See Honeywell Intern., Inv. v. Furuno Elec. Co. Ltd., No. 09-cv-3601 (MJD/AJB), 2010 WL 3023529, at *2 (D. Minn. July 30, 2010) (citing Proctor & Gamble Co. v. Kraft Foods Global, Inc., 549 F.3d 842, 849 (Fed. Cir. 2008), and Viskase Corp. v. Am. Nat'l Can Co., 261 F.3d 1316, 1328 (Fed. Cir. 2001)).

         II. Dilatory Tactics and Gamesmanship

         Before turning to the three factors listed above, the Court addresses Carlson's argument that this case should not be stayed because North States has intentionally delayed the litigation and engaged in improper gamesmanship. Carlson presents this argument as a stand-alone reason to deny the motion for a stay, but these accusations also inform its discussion of the undue-prejudice and stage-of-litigation factors. [See Pl.'s Mem. at 1-2, 4-6, 10-12, 14-15, ECF No. 43.]

         Primarily, Carlson contends that the case should not be stayed because North States chose to pursue ex parte reexamination rather than requesting inter partes review (“IPR”). Carlson argues that North States only made this choice because it wanted to delay this litigation as much as possible, as evidenced by the longer timeline for completion of ex parte reexamination and the fact that reexamination does not have the same estoppel effect as IPR. [Pl.'s Mem. 4-6.] At least one court has construed an alleged infringer's choice to seek ex parte reexamination instead of pursuing IPR as an indication of “delaying tactics.” See Elm, Inc. v. VenMill Indus., Inc., No. 14-cv-4585 (SRC), Doc. No. 43 at 2 (D.N.J. June 18, 2015) (denying a motion to stay and inferring dilatory motive from, inter alia, the fact that the defendant sought ex parte reexamination instead of IPR). However, the record in this case does not support an inference that North States requested ex parte reexamination for an improper purpose. First, it was reasonable for North States to choose not to pursue IPR given that the constitutionality of the procedure is currently being considered by the United States Supreme Court in Oil States Energy Servs., LLC v. Greene's Energy Gr., LLC, 137 S.Ct. 2239 (2017) (granting petition for certiorari). Moreover, as counsel for North States explained at the hearing, choosing ex parte reexamination makes economic sense because IPR filing fees alone would cost $50, 000 more than reexamination. While the Court need not agree that ex parte reexamination is a superior option for the defendant, the reasons given plainly demonstrate that the choice between the two processes was not made for the illegitimate goal of seeking a longer delay of the litigation.

         Carlson also asserts that North States improperly delayed this case by waiting nearly seven months to file its requests for ex parte reexamination after seeking two extensions of the deadline for answering or otherwise responding to the complaint. [Pl.'s Mem. at 10-12.] By contrast, North States lays the blame for the slow pace of the litigation since the filing of the Complaint at Carlson's doorstep. [Def.'s Mem. at 8-10.] Neither party is solely responsible for the relatively slow pace at which things have gotten underway in this case. Rather than demonstrating that North States has engaged in tactical delay, the procedural history suggests that each side has extended professional courtesies, North States pursued reasonable pre-answer motion practice, and the parties advanced their own litigation interests.[2]

         Based on the entire record, the Court finds no basis to conclude that the motion to stay should be denied due to improper conduct by North States of its counsel.

         III. The Stage of the Litigation

         As described above, the first consideration in the analysis of whether to grant a stay in this circumstance is the stage of the litigation. This case is in its infancy. Discovery is not complete and no trial date has been set. The Complaint was filed July 5, 2017, but in response to North States' motion to dismiss, Carlson sought to amend. The District Court approved a stipulation for the amendment on November 27, 2017. [ECF No. 27.] North States answered the First Amended Complaint and filed a Counterclaim on December 11, 2017. [ECF No. 28.] Carlson filed an Answer to North States' Counterclaim on January 11, 2018, after obtaining North States' consent to the untimely submission. [ECF No. 33.] On January 18, 2018, North States made its request to the PTO for ex parte reexamination. [Leach Decl. ¶¶ 5-6 & Exs. 3-4, ECF No. 39.] The Court held a telephonic pretrial conference on January 25, 2018. [Mins. of Pretrial Conference, ECF No. 42.] Although the Court instructed the parties to make their initial disclosures, it has not yet entered a scheduling order.

         The reality that this litigation has just begun weighs in favor of North States' request for a stay. Relatively few resources have been spent by either side and the Court has not yet invested substantial time ...


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