Free Statement - District Court of Arizona - Arizona

Fish v. Watkins, et al . CIV-o3-67-Phx-SMM Index of Exhibits to Motion for Summary Judgment

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Defendant's Motion to Dismiss and Memorandum of Points and Authorities

06/20/01

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Defendant's Motion to Stay and Memorandum of Points and Authorities

06/20/01

Case 2:03-cv-00067-SMM

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MEYER HENDRICKS & BIVENS . P .A .
ATTORNEYS AT LAW

In.,4Y t--sA14y = i3
opP - NUB - 7110 (7uc-S~

1
x Corp. Car. 3005N. Central Ave . Suite 1200 P .O . Box 2199 Phoenix . Arizona 85001-2199 Telephone 602-604-2200 Facsimile 602-263-5333

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Robert W . Payne Pro Hac Vice Application to be submitted Don R . Mollick Pro Hac Vice Application to be submitted LARIVIERE, GRUBMAN & PAYNE, LLP Post Office Box 3140 Four Justin Court Monterey, CA 93942-3140 Telephone : (831) 649-8800 Jennifer P . Note, No . 004951 MEYER, HENDRICKS & BIVENS, P .A. 3003 North Central Avenue Suite 1200 Phoenix, Arizona 85012-2915 (602) 604-2200 Attorneys for Defendant So-Lite Manufacturing, Inc . IN THE UNITED STATES DISTRICT COURT

11

FOR THE DISTRICT OF ARIZONA
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Skyline Manufacturing Inc ., Plaintiff, v. So-Lite (Inc .)/So-Lite Innovative Roofing Products ; Jason F . Reeves ; Ronald Craig Fish, P.C. ; and Don Robinson, d/b/a Robinson Sales, Defendants .

) ) ) ) ) ) ) ) ) ) ) MOTION

NO . CIV 01-0940 PHX-MI-IM DEFENDANT'S MOTION TO DISMISS AND MEMORANDUM OF POINTS AND AUTHORITIES (Oral Argument Requested)

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Defendant So-Lite Manufacturing, Inc . ("So-Lite") moves the Court as follows : 1. To dismiss the action because the court does not have subject matter

jurisdiction under Rule 12(b)(1) as there is no Case or Controversy raised by the Compliant because it seeks Declaratory Relief on an unissued U .S . Patent and unasserted Patent and Trademark Claims . 2. To dismiss the action pursuant to Rule 12(b)(6) because the Complaint

fails to state a claim upon which relief can be granted .
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MEMORANDUM OF POINTS AND AUTHORITIES Introduction This lawsuit should not have been brought . It is a waste of everyone's time and is completely meritless, as a matter of law . Even if allowed, there is no possibility that Plaintiff can prevail on its claims at trial, nor any evidence that the claim is asserted in good faith based on a reasonable interpretation of known or likely facts . The suit is brought at the wrong time and asks the Court to intervene in the confidential administrative proceeding of prosecution authorized by the United States Constitution and law already taking place in the United States Patent and Trademark Office (PTO) with the express purpose of destroying that confidentiality . Statement of Facts This action ostensibly concerns a letter sent by So-Lite which enclosed a letter from Defendant Fish which stated that So-Lite had patent applications filed in the PTO concerning improvements to So-Lite's products, reassured customers that no plans existed to bring suit against them and that when and if such patents issued SoLite would take steps to enforce such patents . (The letters are attached as Exhibits A and B respectively to this motion .) The letters make no reference to trade dress coverage under Federal or State law and contain neither overt or implied threats to sue for any trade dress infringement . Plaintiff has been asking to see the application file of So-Lite's Patent application from the first call . This action was filed in May 28, 2001 . On June 6, 2001, Plaintiff mailed a Request for Production of Documents seeking to discover the contents of So-Lite's Patent Applications file to So-Lite's patent counsel who is not counsel of record for any party to this action . As near as can be determined, the action is in fact an action for Declaratory Judgment on a confidential pending United States Patent Application and an unregistered trademark of trade dress under Section 43 (b) of the Lanham Act, as expressly stated in Count 3 of Plaintiff's Complaint. Plaintiff has attempted to stretch the Complaint into a claim for unfair competition
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action under the Lanham Act 15 U .S .C.§ 1125 with the claim coverage of the potential patent being the "false statement" relied on . Plaintiff has also pled an action for the tort of interference with business relationships under Arizona state law using the same "false statement" . The suit is a sham with the express goal of obtaining So-Lite's confidential pending patent applications with the intent of prematurely learning through abuse of process So-Lite's innovations to get a head start in "designing around" any patents that ultimately issue . Despite defective efforts to serve So-Lite, So-Lite is appearing to oppose the Complaint . No service has been effected against Defendants Jason Reeves or Donald Robinson, who do not appear in this action . ARGUMENT I. THERE IS NO SUBJECT MATTER JURISDICTION TO DETERMINE THE VALIDITY OR SCOPE OF A PENDING PATENT APPLICATION. So-Lite has found no reported case where a court has accepted a declaratory judgment action on a confidential pending Patent Application . On the other hand, in a recent case the Federal Circuit specifically sustained the dismissal of a declaratory judgment action which was filed before a patent issued . It further refused to allow amending the Complaint when the patent did issue .' GAF Building Materials v. Elk
Corp . of Dallas, 90 F.3d 479, (Fed . Cir 1996) .

[ 1 ] Using these guidelines, it is clear that GAF's complaint did not present a justiciable case or controversy under Article III and Section 2201 when it was filed . The complaint alleged a dispute over the validity and infringement of a possible future patent not then in existence . The district court did not know with certainty whether a patent would issue or, if so, what legal rights it would confer upon Elk. Thus, the dispute was purely hypothetical and called for an impermissible advisory opinion . Furthermore, the court could not have

' The Court of Appeals for the Federal Circuit has exclusive appellate jurisdiction in all cases arising under 28 U .S .C . § 1338 except those which involve copyright or trademark claims but no patent claims, 28 U .S .C . § 1295(a) . In addition, Plaintiff's trademark and Arizona state law claims depend upon interpretation of patent law as they are based on questions of claim coverage and infringement . Christianson v . Colt Indus . Oper. Corp .,486 US 800, 7 USPQ2d 1109 (1988) .
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provided "specific relief through a decree of a conclusive character," 300 U .S . at 241, since there was no issued patent for the court to declare "invalid" or "not infringed ." A declaratory judgment of "invalidity" or "noninfringement" with respect to Elk's pending patent application would have had no legal meaning or effect . The fact that the patent was about to issue and would have been granted before the court reached the merits of the case is of no moment . Justiciability must be judged as of the time of filing, not as of some indeterminate future date when the court might reach the merits and the patent has issued . [2] We therefore hold that a threat is not sufficient to create a case or controversy unless it is made with respect to a patent that has issued before a complaint is filed . Thus, the district court correctly held that there was no justiciable case or controversy in this case at the time the complaint was filed . See Spectronics, 940 F .2d at 636, 19 USPQ .2d at 1549 ("[T]he existence of issued patent claims, presently enforceable against [the declaratory judgment plaintiff], are a requisite to litigation of a declaratory judgment action ."); Muskegon Piston Ring Co . v. Olsen, 307 F .2d 85, 89, 134 USPQ 471, 474 (6th Cir . 1962) (If there is no issued patent, "no controversy under the patent laws exists, upon which [the accused infringer] can bring an action for declaratory judgment ."), cert . denied, 371 U .S. 952 (1963) . Ibid. at 482-483 (Emphasis added) . The inquiry and proper result is identical in the case at bar . Since all claims in the suit depend upon a determination of the existence and scope of the patent as yet unissued, this suit is premature . This Court lacks subject matter jurisdiction not only over the declaratory judgment action, but all causes of action . There is no patent on which this Court may decide validity or infringement . Plaintiff has not pled a patent number of an existing United States Patent for this Court to determine the validity of or the infringement of any claim thereof . For this reason alone the Declaratory Judgment claim must be dismissed . To decide what claims will issue on the basis of a confidential application in prosecution is a pure exercise in hypothetical thinking . So-Lite does not and cannot know whether Plaintiff's actions will constitute infringement until claims issue, and So-Lite's actions at that time may immediately cease or alter in any event . Neither Plaintiff, So-Lite nor the Court can make that determination until the PTO issues a patent .

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II.

THERE IS NO CASE OR CONTROVERSY ARISING FROM SOLITE'S ACTIONS . For a district court to have jurisdiction over a declaratory judgment action,

there must be an "actual controversy ." 28 U .S .C . Section 2201(a) . This requirement is identical to the constitutional requirement of Article III that there be a case or controversy,
Hunter Douglas, Inc . v. Harmonic Design, Inc .,

153 F.3d 1318, 47

USPQ2d 1769 (Fed . Cir . 1998) . When a declaratory judgment plaintiff alleges that the claims of a patent are not infringed, invalid, or unenforceable, a two-step test is applied to determine whether there is an actual controversy . This two-step inquiry provides that there must be "(1) an explicit threat or other action by the patentee, which creates a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit, and (2) present activity which could constitute infringement or concrete steps taken with the intent to conduct such activity ."
Cygnus Therapeutics Sys . v. ALZA Corp .,

92 F .3d 1153, 1159, 39 USPQ2d 1666,

1670 (Fed . Cir . 1996) .
Hunter Douglas

involved an issued patent and found the suit to seek an

advisory opinion ; in the case at bar there is not even an issued patent . The Court's analysis was : [U]nder the facts as alleged by Hunter Douglas, for the district court to adjudicate this declaratory judgment action "would involve the court in rendering a forbidden advisory opinion ." Id. at 735, 6 USPQ2d at 1688 . We have consistently required that, for a district court to exercise jurisdiction over a declaratory judgment action in which the plaintiff complains of noninfringement, invalidity, or unenforceability, the plaintiff must allege "acts of defendant indicating an intent to enforce its patent ." Id . at 737, 6 USPQ2d at 1689 . In other words, "for an actual controversy more is required than the existence of an adversely held patent ." BP Chems ., 4 F .3d at 978, 28 USPQ2d at 1126 . We have maintained this requirement, for it "protects quiescent patent owners against unwarranted litigation" under Title 35 . Arrowhead, 846 F.2d at 736, 6 USPQ2d at 1689 . The "reasonable apprehension" prong of the two-part test thus contributes to policing the boundary between a constitutional controversy, which is under the Declaratory Judgment Act, and "a difference or cognizable a difference dispute of hypothetical or abstract character," Aetna, 300 U.S . at 240, which is not . Accordingly, because the allegations do not support a reasonable apprehension on Hunter Douglas's part, there is no actual controversy .
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Here, there is no explicit threat nor basis for reasonable apprehension, justifying a present case or controversy . There was no threat from So-Lite to Plaintiff written or oral, express or implied, to sue or even an offer to license any patent or trade dress . Lacking a direct threat from So-Lite, Plaintiff relies upon letters written by So-Lite to its customers informing them of a pending application and expressly informing them there are no plans to sue those customers . Letters to customers that only inform the customers of the existence of a patent do not create a case or controversy . In point is Hunter Douglas, Inc. v . Harmonic Design, Inc ., supra, where the Court reasoned : [1] Under this test, the district court's dismissal of the declaratory judgment action was proper . In concluding that there was no actual controversy, the district court held that the first prong was not satisfied because Hunter Douglas had not alleged any facts indicating that it had a reasonable apprehension, stemming from the Defendants' conduct, of an infringement suit based on the Harmonic patents . The most that Hunter Douglas has alleged is that the Defendants own the Harmonic atents and that the have ublicized them . (Emphasis added .) The letter from attorney Fish on behalf of So-Lite explicitly states, "This letter is to reassure you that So-Lite currently has no plans to sue any customers ." It then goes on to condition any possible patent infringement claim against possible unnamed imitators by stating, "when and if the So-Lite patents issue, if So-Lite proves infringement of any claim by one of these imitators, any customer who uses or sells the infringing product is also an infringer ." (Emphasis added .) The letter from So-Lite itself merely states, "If and when the situation arises, So-Lite reserves the right to aggressively prosecute all patent and copyright infringers ." (Emphasis added.) All statements are thus conditioned upon the patent issuing, upon the patent having applicable claims, upon an alleged infringer (including Plaintiff) then selling product which reads on one or more applicable claims, upon the potential infringer and So-Lite being unable to resolve any dispute then arising short of litigation, and, failing that, upon So-Lite determining that litigation should be pursued rather than
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I

competing instead only in the marketplace . Since So-Lite has explicitly stated its unequivocal intention not to file suit at this time and has conditioned future actions

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upon a number of future conditions, no case or controversy currently exists . See
Cygnus Therapeutics Sys, supra, at 1159-1162 (no objectively reasonable

apprehension despite statements and letters by patent holder informing potential infringer of "very strong proprietary position", that patent had survived reexamination, refusal to license and statement of intent to "enforce" the patent) . The second prong of the test is also not satisfied . There is no way to know what the claims of an unissued patent will or will not cover . There is thus no way in which the conduct of Plaintiff can be assessed as to whether or not it is infringing . The actual products So-Lite is selling are totally irrelevant regarding patent claim coverage . Plaintiff may know it has copied So-Lite's products, but the final claims may or may not cover So-Lite's actual products . Plaintiff's entire suit is based upon a fundamental misunderstanding of patent law, that copying of a product is tantamount to patent infringement . It is black letter law that the determination of infringement is by a comparison of the accused product to the patent claims . At this point in time, because there are no claims, the Court is missing a vital element and as a result the question is incapable of answer . The declaratory judgment claim lacks subject matter jurisdiction on this second independent ground that the actions of So-Lite do not give rise to a case or controversy . III. THERE IS NO CASE OR CONTROVERSY REGARDING TRADE DRESS : THE ALLEGATIONS SHOULD BE STRICKEN. The reasoning used above applies and is strengthened even more in connection with the trade dress claim . One can search the letters of any of the Defendants and the statements in Plaintiff's Complaint in vain for any statement of any Defendant that they intend to sue Plaintiff, Plaintiff's customers, or any one, for that matter for trade dress infringement . There is not even an indication in the
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complaint that any Defendant even claimed a distinctive trade dress . The issue of
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trade dress is purely an invention of Plaintiff . There being no facts provided to support the contention, it should be dismissed or in the alternative stricken under Rule 12(f) . IV. SO-LITE HAS A RIGHT TO PUBLICIZE ITS PATENT APPLICATION : THERE IS NO UNFAIR COMPETITION OR TORTIOUS CONTRACTUAL INTERFERENCE AS A MATTER OF LAW. A person who has a pending application is allowed to publicize that fact . Identical to the case at bar, in Scosche Industries Inc . v. Visor Gear Inc . (Fed.Cir. 1997) 121 F .3d 675, 43 USPQ 2d 1659, the defendant had advised plaintiff's customers of its pending patent application which it believed would be infringed by plaintiff. The letter that Gear's attorneys sent to Tandy Corporation in February 1995, before the '159 patent issued, stated that Visor Gear was responding to a concern expressed by Tandy that Scosche's compact disc holder is "virtually identical" to Visor Gear's and that "Scosche may have patent rights in their product ." The letter explained that after filing its patent application, Visor Gear had sold one of its compact disc holders to Scosche and that shortly thereafter Scosche began marketing its own compact disc holder . The letter further stated : "We believe that the product sold by Scosche falls within the scope of the pendin application and that their sale of the visor CD storage device will infringe the Visor Gear patent when it issues f91 Scosche's evidence with respect to Visor Gear's contact with Tandy is insufficient to raise a triable issue of unfair competition under applicable law . The letter accurately set forth the status of Visor Gear's patent application and expressed Visor Gear's belief that the Scosche product would infringe the patent once the patent issued . Scosche offered no evidence from which a fact finder could conclude that Visor Gear's representation was made in bad faith, and Scosche points to no authority holding that it is unfair competition for a patent applicant to advise a prospective customer of the status of his pending patent application and of the applicant's belief that competing goods will infringe the patent if and when it issues . [9[] The only authorities that Scosche invokes in support of its argument with respect to the Tandy letter are Gardiner v . Gendel, 727 F . Supp . 799, 14 USPQ2d 2043 (E.D .N.Y . 1989), and Mixing Equipment Co . v . Innova-Tech, Inc., 228 USPQ 221 (E .D. Pa. 1985) . Neither case supports Scosche's legal contention that it is actionable for a party to advise others that it has a patent application pending and that it believes that another party's products will infringe the patent if and when the patent issues .
(Ibid.

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at 679-680 ; emphasis added .) The case goes on to explain that, as in the case at
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bar, there was no explicit threat to sue customers for infringing the patent applicant's "patent rights" unless they immediately ceased infringement . Furthermore, it was appropriate to indicate that the unissued confidential patent application was "likely to cover" particular products when and if issued . In the case at bar, of course, So-Lite did not even allege that Plaintiff would infringe the claims when the patent issues . So-Lite only alleged that it had confidential applications in prosecution and would prosecute infringers when and if the patent issues and if the claims are infringed . So-Lite has every right to do . The complaint obviously fails to state a ground for which relief can be granted because, even taking all of Plaintiff's factual allegations at face value, they do not define a case of unfair competition by false statement . Similarly, no right of action has accrued for interference of contractual relations for the same reason that no right presently exists for declaratory relief regarding this claim . V. THE ENTIRE ACTION SHOULD BE D ISMISSED . IN THE ALTERNATIVE, THE IMPROPER CLAIMS SHOULD BE STRICKEN AND THE REMAINING ACTION STAYED . For the foregoing reasons, this action should be dismissed under Rule 12(b)(1) and 12(b)(6) . If, on the other hand, the Court holds that any portion of the Complaint is not subject to dismissal, it should strike all remaining claims and consider So-Lite's Motion for Stay of Action, filed concurrently herewith . SUMMARY AND CONCLUSION The entire action should be dismissed. It is completely meritless, as a matter of law . The Court has no subject matter jurisdiction over the claims asserted in the confidential pending patent application, and may not consider at this time declaratory or other relief . Claim I, for unfair competition, should be dismissed or stricken . So-Lite has a right to publicize its patent application . No improper conduct can be asserted based on So-Lite's beliefs regarding the application and its conditional intentions,
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and the trade dress allegations are meaningless, disembodied from any basis or claim
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of fact. For the same reasons, the second claim for interference with contractual relations must be dismissed or stricken . The declaratory relief claim is also without basis because there is no reasonable apprehension of suit at this time . The entire action should be dismissed, or, in the alternative, the claims stricken and the Motion for Stay of Action should be granted . Dated this ~ day of

S(~, 2001 .
Robert W . Payne Don R . Mollick LARIVIERE, GRUBMAN & PAYNE, LLP Post Office Box 3140 Four Justin Court Monterey, CA 93942-3140 MEYER, HENDRICKS & BIVENS, P .A.


14 15 16 17 18 19 20 21 22 23 24 25 26 27 330518 .1 28

By:
Jennifer P. No 3003 N . Central Avenue Suite 1200 Phoenix, Arizona 85012

o`c_F

Attorneys for Defendant SO-LITE MANUFACTURING, INC. COPY of the foregoing mailed thisday of June, 2001, to : Thomas G. Watkins III Cahill, Sutton & Thomas, PLC 2141 East Highland Avenue Suite 155 Phoenix, Arizona 85016 Attorneys for Plaintiff Ronald C . Fish Falk & Fish P.O . Box 2258 Morgan Hill, California 95038

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Case 2:03-cv-00067-SMM Document 123-2 Filed 03/31/2006 Page 13 of 35

FALK & FISH

An Association of Profeerional Law corporations

CnUN9alnas ATL4W arrELL CRJALPOflTVM TlrsaS

ROaUT HARDY FALK P ..C RONALD CRAIG FISHL P.C .8
A drtllurd m Texas ealda a - Dallas Ornm eAdmiMW In CWfemia "Teas Rmldaml -salwt volley OM= RO JPPA787fSWORLnNffrATrNET Cellular (409) ST)-4991

16590 OAK VIEW acts MOROAN i1nJ .. CALD*OBNIA 95031 fl. (408) 778 .3624 FAX: (409) 776 04U RITP:4WW WYATENrfT

March 22, 2001 Dear valued Customer of Strike Corporation ; Enclosed Is a letter from Jason Reeves, Presidont of So-Ute . Recerrty . Imitators have copied certain products of Soi .ite Including im)reven,ents which are the subject of Went applications pending at the United States Patent and Trademark Office . On Informadon and bellef,,untrue statement have been made by at kest one imitate about the W resistant: of So-Uto Weatherblock . It Is therefore possible that litigation will ensue in the future between So-Lltc and rare or more of these poachers This letter is to reassure you that So-Lite currently tas no plans to sue arty cuatanera. However, you should be aware of several facts to guide your future endeavor, . (1) First, when and if the Sc-Ute patents Issue, It So-Ute proves Infringement of any claim by tote of these imitators, any ctatomar who uses or sells the Infringing product Is also an Infringer . (2) Further, if you buy Infrlngbig products, your source of theca products an be shut down by the courts creating cornpllradons for yvu . (3) Further, If you hear or sea any untrue statements made by Imitators of So-Ute products .

tfvt makes you a
docu nents.

w4tnesa and

you can be legally required to testify and possibly supply

If you have any questions, feel free to contact me or 0a id Oupenauit at Sliicon VaGey Law
Group in San Jose, California .

With kinde3t regards, RONALD CRAIG FISH, A LAW C0RPCRATION

Ronald Craig Fish RCF/Ilf/enclosure

EXHIBIT " ____

PageJ-Ot
WATKINS 001637

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March

22,

2001

Notice To Our Valued Customers and Suppliers : So-Lite invcn :ed preformed plastic Weatherbiock and over the past 18 yeah So-life has built a reputation for unnovativc, high quality roofing products . We proudly stamp the So-Lite name on each plc of our Weattarblock products far ridge, hips and roof-to-wall applicadona . So-Lite has learned that newcomer to the Industry are anemptinz to sell imitations of our pre-formed plastic produem for ridge and hip . One may ask whether the makers of these imitation products are willing to stand behind them because the products bear no manufacrurtr's name or logo . If these imitation products fail after being installed, the builder or roofer who uses them might have difficulty identifying or locating the manufacturer, or proving which manuiacru r was the eource of the defective products . So-Lice has provided a 30-year Warranty an its Weatherblock products since October 1998 . So-Lite Warranty certificates may not be issued except with respect to products that we manufacture . Contrary to the claims of one Imitator of our products, we continue to cue the same durable, UV-resistant weatherable surfaea on our Weatherbtock products as we hive used since 1998 . In fact, in all the years that our our raw materials supplier has been selling the same durable, UV-resistant weatherable surface, they have bad no wearber related failure . Sbayld we be regyir'.d lye will take what ever level action necessary to proterr our orndttct swim and our vaod reputation . Please see the cover letter from our attorneys for more information on what this means to you .
We will continue to stamp die So-Lite name to acknowledge our Weathetblock products . Our imitators may be unwilling to do the same . Builders and roofers who insist on genuine So-Lite products can use them with confidence, knowing that we stand behind them with a 30-year Warranty and a track record for quality, reliability and accountability .

AU current So-Lift Wearberbloek which Includes certain Improvements for (aD ]let file, all profile tile, and slate) ridge, hip, roof to-wall, and bird stop are patent pending before the United Sate Parent Office, Washington D .C. So-Lite literature, photos, warrahry and video tapes are copyright protected . if and when the viteAtinn arises . So-T,lte reserves the rivbt to aPvressivety Drotectte All patent and crmyrivht infringwmeets, Builders who buy or use or resell infringing products become Infringers themselves . Please see the cover letter from our attorneys for more information on what this means to you . We value our toyaktustomers end suppliers . I invlts you to call me personally to discuss these issues or other quest rs or comments on our products or service .

cc :

David V. Dupcn i4[t Anatnay an La-, Silicon voicy Li'-Goup Ran Fish, Anceney at law, Fa k a Fish

W8TIONS 001639

¶06a Neln 5th R~c, San Jose . C~ 9119 ,a 'c' (- C ] CYS .eaoe .Few tint Q -G-e .%5

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MEYER HENDRICKS & BIVENS, P .A .
"ORNEYS AT LAW

1
Phi-,: .Jet Corp. Ctr . 3003 N . Central Ave . Suite 1200 P .O. Box 2199 Phoenix, Arizona 85001-2199 Telephone 602-604-2200 Facsimile 602-263-5333

2 3 4 5 6 7 8 9 10

Robert W . Payne Pro Hac Vice Application to be submitted Don R . Mollick Pro Hac Vice Application to be submitted LARIVIERE, GRUBMAN & PAYNE, LLP Post Office Box 3140 Four Justin Court Monterey, CA 93942-3140 Telephone : (831) 649-8800 Jennifer P . Nore, No . 004951 MEYER, HENDRICKS & BIVENS, P .A. 3003 North Central Avenue Suite 1200 Phoenix, Arizona 85012-2915 (602) 604-2200 Attorneys for Defendant So-Lite Manufacturing, Inc . IN THE UNITED STATES DISTRICT COURT

11

FOR THE DISTRICT OF ARIZONA
12 13 14 15 16 17 18

Skyline Manufacturing Inc ., Plaintiff, v. So-Lite (Inc .)/So-Lite Innovative Roofing Products ; Jason F . Reeves ; Ronald Craig Fish, P.C . ; and Don Robinson, d/b/a Robinson Sales, Defendants .

) ) ) ) ) ) ) )

NO. CIV 01-0940 PHX-MHM DECLARATION OF ROBERT W. PAYNE IN SUPPORT OF SO-LITE'S MOTION FOR STAY OF ACTION

19 20 21 22 23 24 25 j 26j 27 28

I, ROBERT W . PAYNE, declare as follows : 1 . I am an attorney and partner of the law firm of LaRiviere, Grubman & Payne, LLP, counsel for Defendant So-Lite Manufacturing, Inc . (sued herein erroneously as "So-Lite (Inc .)" and "So-Lite Innovative Roofing Products") . I have personal knowledge of the following and could competently testify thereto . 2 . I have seen a copy of the patent application in issue in this case . The filing date recited in various papers in the application file dates back over two years ago . 1VATKNS 001640 Filed 03/31/2006 Page 17 of 35

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3 . As Plaintiff stated in the Complaint, based on his counsel's review of publicly available records, no patent has yet issued to Defendant So-Lite Manufacturing, Inc . in connection with the patent application in issue . My review of the publicly available records reflects the same . 4 . A separate patent (not involved' in or relevant to this action) has just issued as of June 16, 2001, in favor of assignee So-Lite . It is entitled, "Method and apparatus for closing openings under tiles along eave line," U .S . Patent No . 6,243,995 . 5 . In one of my first communications with opposing counsel, he asked for a copy of the contents of the confidential file for the patent application in issue (stating in some sense that was "all he wanted") . He also threatened to serve immediately a document request for such documents . I refused that request on the grounds that patent applications are always treated as highly confidential as a matter of federal public policy, and the application was still pending before the Patent and Trademark Office. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct . Dated this I day of
Jk.h~
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Robert W Payne
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Target Therapeutics Inc . v . SciMed Life Systems Inc . (DC NCalif) 33 USPQ2d 2022 (1/13/1995)

arge r h rap

tlc In

iMed Life

r
lif6rniia

Dilat ie Court North ern District o Cal if 3 SPQ2d 2022' 1l1 / 19 5
Decided January 13, 1995 No. C-94-20775 RPA (EAI) Headnotes

PATENTS

L-Practice and procedure in Patent and Trademark Office -- Re-examination -- In general(& 110 .1501)_

JUDICIAL PRACTICE AND PROCEDURE

Procedure -- Stays -- In general(& 410 .2901) Stay of patent infringement action pending re-examination of patent in suit is warranted, since action is in early stages and parties have not engaged in extensive discovery, since awaiting outcome of re-examination could eliminate need for trial or Copyright 1995-1999, The Bureau of National Affairs, Inc . 1
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BNA's Intellectual Property Library on CD -- Full Text of Cases (USPQ Second Series) facilitate trial by clarifying scope of claims, and since plaintiff has not shown that it will suffer undue prejudice if action is stayed . Particular patents -- General and mechanical -- Catheter 4,739,768, Engelson, catheter for guide-wire tracking, action for infringement stayed pending outcome of re-examination proceeding .

Case History and Disposition :

Page 2022

Action by Target Therapeutics Inc . against SciMed Life Systems Inc . and Cordis Endovascular Systems Inc ., for patent infringement . On motion of defendant Cordis Endovascular Systems Inc . to stay action pending outcome of re-examination of patent in suit . Granted .

Attorneys :
Jack W . Londen of Morrison & Foerster, San Francisco, Calif ., for plaintiff . Philip S . Johnson, of Woodcock, Washburn, Kurtz, Mackiewicz & Norris, Philadelphia, Pa. ; David Eiseman and Kenneth E . Keller, of Bronson, Bronson & McKinnon, San Francisco, for defendant SciMed Life Systems Inc . George H. Gerstman and Terrence W . McMillin, of Gerstman, Ellis & McMillin, Chicago, Ill . ; John W . Keker, Jeffrey Chanin, and Michelle K . Lee, of Keker & Van Nest, San Francisco, for defendant Cordis Endovascular Systems Inc .

Opinion Text Opinion By :
Aguilar, J .

Defendant Cordis Endovascular Systems, Inc . ("Cordis") moves for a stay of this patent infringement action pending re-examination of Plaintiff Target Therapeutics, Inc .'s ("Target") United States Patent No . 4,739,768 . The court,
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ASCII Corp. v . STD Entertainment USA, Inc ., 844 F .Supp . 1378, 1381 [ 30 USPQ2d 1709 ]

(N.D Cal . 1994) . In ruling on a motion to stay, courts consider whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party, whether a stay will simplify the issues in question and trial of the case, whether discovery is completed and whether a trial date has been set . GPAC, Inc. v . D . W . W . Enterprises, Inc. , 144 F .R .D . 60, 66 [ 23 USPQ2d 1129 ] (D .N .J . 1992) ; United Sweetener USA, Inc . v. Nutrasweet Co ., 766 F . Supp . 212, 217 [ 19 USPQ2d 1579 ] (D . Del . 1991) . In this case, the relevant factors weigh heavily in favor of staying the proceedings pending the conclusion of the reexamination . First, this case is in its incipient stages . The parties have not engaged in expensive discovery and no trial date has been set . Second, waiting for the outcome of the reexamination could eliminate the need for trial if the claims are cancelled or, if the claims survive, facilitate trial by providing the court with expert opinion of the PTO and clarifying the scope of the claims . The claims of the patent will likely be amended or narrowed during reexamination . See Output Tech . Corp . v. Dataproducts Corp. , 22 U .S .P .Q .2d ._11_74. (W .D . Wash . 1991) (noting that 77% of reexaminations lead to cancelled or amended 1072, claims) . The final form of the claims therefore will remain uncertain until the conclusion of the reexamination procedure . It makes sense to ascertain the ultimate scope of the claims before trying to figure out whether defendants' products infringe the patent-in-suit . Absent a stay, the parties may end up conducting a significantly wider scope of discovery than necessary, and the court may waste time examining the validity of claims which are modified or eliminated altogether during reexamination . Finally, Target has failed to demonstrate that it will suffer undue prejudice if this action is stayed . As mentioned above, this case, filed only two months ago, is brand new . No significant discovery or trial preparation has taken place . As in GPAC , supra , " [ plaintiff] has not demonstrated that substantial expense and time has been invested in this litigation which would militate against a further delay of disposition of this matter ." 144 F .R.D . at 64 . Nor is there any merit to Target's suggestion that SciMed initiated reexamination proceedings as a dilatory tactic . SciMed filed its request for reexamination within three weeks of the PTO's announcement that it would issue a reexamination certificate with revised claims and months before Target filed this lawsuit . By contrast, in Freeman v. Minnesota Mining , 661 F .Supp . 886 [ 4 USPQ2d 1574 ] (D . Del . 1987), a case on which Target relies, the defendant was aware of prior art on which the reexamination was based eight months before filing a petition for reexamination and the reexamination petition was filed more than two years after the plaintiff had filed suit .

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BNA's Intellectual Property Library on CD -- Full Text of Cases (USPQ Second Series) For the foregoing reasons, the court concludes that this action should be stayed pending the outcome of the reexamination of the '768 Patent . Cordis' motion to stay is GRANTED . IT IS SO ORDERED .

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Wireless Spectrum Technologies Inc . v. Motorola Corp., 57 USPQ2d 1662 (DC NI112001)

57: U PQ2D! 1662
1-1

1

less Spectrum Tech oloogies Inc . DC NIII

MO oro

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U.S . District Court No here District
No . 00 C 0905 Decided January 10, 2001 1/10/2001

a Ilhno>s

Headnotes
JUDICIAL PRACTICE AND PROCEDURE [1_] Procedure - Stays - In general (§410 .29011

Equities favor granting stay of action for patent infringement pending outcome of interference proceeding, since interference involves validity of patent in suit, which is same issue currently before federal district court, and if U .S . Patent and Trademark Office determines that all or some claims of patent in suit are invalid, then that determination will either dispose of case entirely or aid court in adjudicating case, since plaintiff has not shown that interference will outlast its patent or that damages will not adequately remedy any infringement, and since there is no indication that stay would create any tactical advantage or undue hardship for parties .

Particular Patents
Particular patents - Electrical - Telephone systems 4,736,453, Schloemer, method and apparatus for making frequency channel assignments in a cellular or non-cellular radiotelephone communications system, stay of infringement action granted pending outcome of interference proceeding .
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Case History and Disposition Action by Wireless Spectrum Technologies Inc . against Motorola Corp . for patent infringement, in which defendant counterclaims for declaratory judgment of patent invalidity and non-infringement . On defendant's motion to stay action pending outcome of interference proceeding in U .S . Patent and Trademark Office . Granted .

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Attorneys : Marvin N . Benn, Dawn Marie Cassie, and George Chicago, Ill ., for plaintiff.

W.

Hamman, of Hamman & Benn,

Russell Evan Levine, Michael Anthony Parks, and Michelle A .H . Francis, of Kirkland & Ellis, Chicago, for defendant . Opinion Text

Opinion By : Kennelly, J . This is a patent infringement action filed February 14, 2000 by plaintiff Wireless Spectrum Technologies against defendant Motorola Corporation . Wireless holds Patent No . 4,736,453 ("the '453 Patent"), which is entitled "Method for Making Frequency Channel Assignment in a Cellular or Non-Cellular Radiotelephone Communications System ." Wireless claims that Motorola has infringed on the '453 Patent by marketing its MEN products and other cellular communications systems, and it seeks a permanent injunction and damages resulting from the alleged infringement . Motorola filed its answer in April and counterclaimed for a declaration of noninfringement and invalidity . After this lawsuit was filed, Motorola asked the Patent Trademark Office ("PTO") to declare an interference and adjudicate the priority of invention between the '453 Patent and a pending Motorola patent application (the "Thro Patent") that claims the same subject matter as the '453 Patent . Both parties
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agreed to delay the progress of this action until the PTO decided whether to institute an interference . The PTO declared Interference No . 104,502 ("the Interference") on August 11, 2000 . This case is presently before the Court on Motorola's motion to stay pending the final outcome of the Interference . Both parties agree that the grant of a stay is within the sound discretion of the Court based on the Court's inherent power to control its docket . See Research Corp . v. Radio Corp . of America, 181 F.Supp . 709, 710 [124 USPQ 401] (D. Del . 1960) (citing Landis v . North American Corp .,299 U .S . 248, 254 (1936)) . In deciding whether to grant a stay, the Court must consider the "possible damage, hardship and inequities to the parties to the lawsuit and the relationship of the stay to the fulfillment of judicial objectives of simplification of the issues in question and trial of the case ." United Sweetener USA, Inc . v. Nutrasweet Co ., 766 F .Supp . 212, 217 [19 USPQ2d 1579] (D . Del . 1991) . Motorola argues that a stay is appropriate in this case because it would eliminate the risk that the Court and the PTO will reach inconsistent results . Motorola is concerned that because a presumption of the validity of the '453 Patent exists in this lawsuit but does not exist in the Interference proceedings, see Okada v. Hitotsumachi, 16 U .S .P .Q .2d 1789, 1790 (Bd . Pat. App . & Int . 1990), it could suffer undue hardship resulting from a finding of validity in this Court and a finding of invalidity in the PTO . See Research Corp ., 181 F .Supp . at 711 (noting the effect of differing burdens in federal district court proceedings versus interference proceedings before the PTO) . Motorola also argues that a stay would conserve the Court's and the parties' resources, because the PTO's determination could render this action moot . At the very least, Motorola claims, the Interference could simplify the issues before the Court by permitting the PTO to exercise its expertise in the matters of priority and patentability . Finally, Motorola argues that a stay will not unfairly prejudice Wireless because, by the parties'agreement, this case has not progressed beyond the pleadings stage . Wireless asserts that the equities militate against a stay of this action . Wireless is primarily concerned that the '453 Patent will expire before the PTO adjudicates the Interference,lwhich will prejudice Wireless by eliminating the possibility of obtaining a permanent injunction . Although Wireless admits that simultaneous litigation of the Interference and this action will strain its resources, it claims that
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this scenario is preferable to losing its right to a permanent injunction . Wireless also claims that a stay will not further the interests of judicial economy because the Interference primarily involves a single piece of prior art to the '453 claims, the Thro Patent, whereas this action will conceivably involve a broader range of issues . Finally, Wireless argues that the risk of inconsistent judgments is extremely low and in any event was precipitated by Motorola itself, which provoked the Interference after the instigation of this lawsuit .

[,X] The Court finds that the equities favor a stay . The Court agrees with Motorola that a stay will further the interests of judicial economy and the conservation of the parties' resources . The Interference involves the validity

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of the '453 Patent, the same issue currently before this Court . If the PTO with its unique expertise determines that all or some of the '453 Patent's claims are invalid, that determination will either dispose of this case entirely or at least aid the Court in adjudicating this case . See American Telephone & Telegraph Co . v. Milgo Electronic Corp ., 416 F .Supp . 951, 953 [193 USPQ 242] (S .D .N .Y . 1976) (staying infringement action because the PTO's adjudication of the priority issue "can only aid the court in its determination of this lawsuit") ; Childers Foods, Inc . v . Rockingham Poultry Marketing Co-op, Inc ., 203 F .Supp . 794, 797 [133 USPQ 648] (W .D . Va . 1962) (staying infringement pending interference because PTO's determination of priority of invention would be "most helpful" to court) ; Bayer v . Novartis Crop Protection Inc ., 55 U .S .P .Q .2d 1509,1511-12 (M .D . La . 2000) (staying infringement action pending interference because PTO's expertise would aid court in deciding case on the merits) . Under these circumstances, there is no need for either party to spend time and money litigating both here and in front of the PTO at the same time . See Childers, 203 F .Supp . at 796 (noting that simultaneous proceedings in federal district court and the PTO are "wasteful and extravagant"where issues to be decided are very similar) ; Bayer,55 U .S .P .Q .2d at 1511-12 (holding that simultaneous litigation of
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patent issues "would create an economic hardship on the parties and also result in the ineffective administration of justice") . Although the Court is sensitive to Wireless's concern that the Interference may impact its ability to obtain a permanent injunction, Wireless has failed to show either that the Interference is likely to outlast the '453 Patent Zor that damages will not adequately remedy Motorola's alleged infringement in the event an injunction is unavailable . Further, Wireless agreed to suspend the onset of discovery in this action until the PTO determined whether it would declare an Interference .3 Accordingly, this case has not progressed beyond the initial pleadings stage, and there is no indication that a stay would create any tactical advantage or undue hardship for the parties . See Bayer, 55 U .S .P .Q .2d at 1512 (granting stay where lawsuit sat dormant for several months before PTO declared interference and stay would not confer tactical advantage on defendant) . Compare Amersham International v . Corning Glass Works, 108 F .R .D . 71, 72 [228 USPQ 782] (D . Mass . 1985) (denying stay where PTO declared interference 112 years after infringement suit and extensive discovery) ; General Foods Corp . v. Struthers Scientific and International Corp ., 309 F .Supp . 161, 162 [164 USPQ 609] (D . Del . 1970) (denying stay where interference proceedings declared one year after lawsuit filed and extensive discovery had already taken place) . For this reason and the reasons stated above, the Court stays this lawsuit pending the final outcome of the Interference . Motorola's motion for a stay [Item 9-1] is granted .

Footnotes
IThe'453 3Given
Patent is scheduled to expire in April 2005,

2 The Court has not found and neither party has cited any credible authority as to the likely duration of the Interference . Wireless's acquiescence in the suspension of discovery, the Court finds that Motorola's invocation of the Interference folowing the filing of the

lawsuit has not occurred so late in the proceedings to compel the conclusion that Motorola acted solely for the purposes of delay . Cy. Hamilton Indutries, Inc. v . MidWest Folding Products MJg . Corp . . No . 99 C 9696 . 1990 WL 37642 . 9 (N . D . III . March 20, 1990) (granting slay pending patent reexamination) .

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MEYER HENDRICKS & BIVENS, P .A . ' TTORNBYS
AT LAW

1 a
s-af;,x Corp. Co . 3003 N . Central Ave . Suite 1200 P .O. Box 3199 Phoenix . Anzona 85001-2199 Telephone 602-604-2200 Facsimile 602-263-5333

2 3

Robert W . Payne Pro Hac Vice Application to be submitted Don R . Mollick Pro Hac Vice Application to be submitted LARIVIERE, GRUBMAN & PAYNE, LLP Post Office Box 3140 Four Justin Court Monterey, CA 93942-3140 Telephone : (831) 649-8800 Jennifer P . Note, No . 004951 MEYER, HENDRICKS & BIVENS, P .A. 3003 North Central Avenue Suite 1200 Phoenix, Arizona 85012-2915 (602) 604-2200 Attorneys for Defendant So-Lite Manufacturing, Inc . IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA
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Skyline Manufacturing Inc ., Plaintiff, v. So-Lite (Inc .)/So-Lite Innovative Roofing Products ; Jason F . Reeves ; Ronald Craig Fish, P .C . ; and Don Robinson, d/b/a Robinson Sales, Defendants .

) ) ) ) ) ) ) ) ) MOTION

NO . CIV 01-0940 PHX-MHM DEFENDANT'S MOTION TO STAY AND MEMORANDUM OF POINTS AND AUTHORITIES (Oral Argument Requested)

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In the event the Court does not grant (or grants in part) its Motion to Dismiss, Defendant So-Lite Manufacturing, Inc . ("So-Lite") moves the Court to stay the action and all proceedings therein until the status of the patent application in issue in the action is finally determined by the U.S . Patent and Trademark Office (PTO) . Staying the action is in the interest of judicial economy, gives proper deference to the role of the PTO and the Court in reviewing the actions of the PTO, and avoids problems inherent with the lack of case or controversy and of subject matter jurisdiction of Plaintiff's claims . Finally, because the causes of action alleged in the
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Complaint have not accrued and because the issues cited therein may be mooted by the action of the PTO, a stay is appropriate here . MEMORANDUM OF POINTS AND AUTHORITIES Introduction So-Lite has filed contemporaneously herewith a Motion to Dismiss Plaintiff's Complaint . If that motion is granted, this Motion to Stay is likely moot . However, to the extent it is not, this motion is brought in the alternative to stay the current proceedings, pending issuance of the patent which is central to the issues alleged in the Complaint. Plaintiff asks this Court to do something that no court is ever asked to undertake : construe a patent's claims before the patent even exists . The action is newly minted, premature and unmanageable and brought for improper competitive purposes . Each claim is or must be based upon the existence of an issued patent, an event which has not yet occurred and which must be left undisturbed in the hands of the U.S . Patent and Trademark Office (PTO) at this time . This action should be stayed, pending issuance or other final determination by the PTO in connection with So-Lite's patent application . Only at that point can all claims which may be asserted by either party be meaningfully assessed and efficiently managed by the Court . Statement of Facts This action concerns a letter sent by So-lite which enclosed a letter from Defendant Fish, an attorney . The letter stated that So-Lite had patent applications filed in the PTO concerning improvements to So-Lite's products and that when and if such patents issued, So-Lite would take steps to enforce such patents . The patent in question has not yet issued . The letters do not claim that a patent exists, that SoLite will sue any customer, that Plaintiff will be sued or that the patent when issued will cover the product currently sold by Plaintiff . Nothing "untrue" or misleading is stated.
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Nevertheless, Plaintiff's Complaint alleges unfair competition, interference with contractual relations and seeks a declaratory judgment . All turn on the pending patent application . Argument I. THE SCOPE OF THE PATENT IN QUESTION IS NOT YET FIXED The patent application in question was filed over two years ago . There has been no final determination by the PTO on the application . Since the PTO has not yet issued a Notice of Allowance and the application is still pending, the scope of the patent in question is not yet fixed . For the Court to consider at this time the contents of a pending patent application, which is potentially subject to change by the PTO during its regular examination process, would not simply be shooting at a moving target ; it would be shooting at a meaningless one . Furthermore, disclosure of the contents of the patent application is contrary to fundamental public policy and potentially irreversibly damaging .' II. THE VIABILITY OF PLAINTIFF'S CLAIMS REQUIRE FINAL DETERMINATION BY THE PTO None of the claims brought by Plaintiff can be determined until the patent issues . A. Setting the Status of the Patent is a Necessary Predicate of the Claims .

If the patent issues with claims reading on Plaintiff's product (which mimics So-Lite's products), issuance will be dispositive of Plaintiff's action ; it will be proven as baseless . There can be no actionable interference with contractual relations if the letters to customers are factual . There can be no "unfair" competition, as a matter of law

' Pending applications are highly confidential as a matter of law, 35 U .S .C. 122 . As a matter of public policy, courts firmly bar discovery by a competitor prior to issuance, absent compelling reasons . Minnesota Mining and Manufacturing v . North American Science, 189 FRD 406, 51 USPQ .2d 1605 (D .Minn. 1999) .
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for that reason and others .' All legitimate competition "interferes" with a competitor's business hopes and expectations . The key element in the tort of interference with contractual relations is whether the alleged interference was legally "improper." See Wagenseller v . Scottsdale Mem . Hosp ., 147 Ariz . 370, 710 P .2d 1024 (1985); Caudle v . Bristow Optical Co ., Inc., 224 F.3d 1014 (9' Cir. 2000) (applying Arizona law) . An issued patent is the centerpiece in determining whether that element exists . Only an issued patent reflects the scope of the patent and legitimately permits inquiry into the reasonable expectations and conduct of So-Lite in connection with the application . Similarly, the declaratory relief claim cannot be meaningfully prosecuted at this time . Not only is there a failure to allege appropriate "reasonable apprehension of imminent threat," as discussed in the Motion to Dismiss . Additionally without an issued patent there is no scope to adjudicate . If on the other hand no patent issues, there is no need or legitimate basis for declaratory relief . B. No Right Accrues to Plaintiff Until the Patent Issues and Its Scope is Determined .

As noted in the Motion to Dismiss, in addition to these practical and substantive concerns are fundamental procedural ones : no causes of action have yet accrued . Without "unjustified" conduct no interference cause of action has yet accrued, and only after final determination by the PTO of the confidential patent application can that issue be meaningfully and fairly resolved. The Motion to Dismiss amply deals with lack of accrual of the declaratory relief claim . III . EVEN IF AN ISSUED PATENT WERE NOT THE CENTERPIECE OF PLAINTIFF'S CLAIM, IT IS THE FOUNDATION FOR SO-LITE'S DEFENSE Irrespective of predicate elements to a claim and issues of accrual,

Plaintiff's claim regarding trade dress infringement is unintelligible and baseless, for the reasons set forth in the Motion to Dismiss and are not discussed further here .
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fundamental principles of fairness to So-Lite dictate in favor of a stay . So-Lite is
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hampered in mounting its defense at this time, and Plaintiff seeks unfairly to take advantage of that fact . Its best defense -- that the issued claims back up the statements in the letter -- must await action from the PTO . Its fundamental right to keep its confidential information inviolate until the patent issues (upon which its right to enforce the patent commences) will be compromised by the pressures brought in this action . In fact, this action is brought for an unconscionable and sanctionable ulterior purpose : to permit an aggressively mimicking competitor to access the contents of highly privileged documents on file with the PTO for competitive purposes, prior to issuance of the patent and contrary to well-established patent law .' IV. SOUND ADMINISTRATION PRINCIPLES REQUIRE A STAY Courts routinely grant stays in district court cases involving patent construction where the PTO is reconsidering the allowable scope of the patent . Thus, in Target Therapeutics a stay was granted at the outset of the district court action where the patent was undergoing reexamination before the PTO . Target
Therapeutics, Inc . v . SciMed Life

Svs., 33 USPQ .2d 2022, 1995 WL 20470 (ND Cal .

1995).° "In this case, the relevant factors weigh heavily in favor of staying the proceedings pending the conclusion of the reexamination . First, this case is in its incipient stages . The parties have not engaged in expensive discovery and no trial date has been set . Second, waiting for the outcome of the reexamination could eliminate the need for trial if the claims are canceled or, if the claims survive, facilitate trial by providing the court with [the] expert opinion of the PTO and clarifying the scope of the claims . (Citation .) The final form of the claims

' Plaintiff's counsel has consistently demanded that "all he wants" is to see the contents of the confidential patent application file . A so-called "document request" for those materials was mailed to a prior attorney of plaintiff, before any appearance by that counsel . It may also be that this action is filed improperly to obtain unfair venue advantage prior to the right to bring legitimate suit . ' A copy of the decision is attached to the Court's and counsel's copies hereof.
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ris ,

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therefore remain uncertain until the conclusion of the reexamination procedure . .. . Absent a stay, the parties may end up conducting a significantly wider scope of discovery than necessary, and the court may waste time examining the validity of claims which are modified or eliminated altogether during reexamination ."
Accord, Vitronics Corp . v. Conceptronic, Inc ., 36 F .Supp .2d 440, 442,44 USPQ .2d

1536, 1538, 1997 WL 702300 (D .NH 1997) ("Because determining the scope of the disputed claim is central to the resolution of this case, it would be inefficient for the court to expend time and resources engaging in claim interpretation while the scope of the claim is still under review at the PTO .") ; Wireless Spectrum Technologies, Inc .
v. Motorola Corp ., 57 USPQ .2d 1662, 2001 WL 32852 (D . NI11 . 2001) (stay pending

outcome of interference proceeding) .5 A reexamination or interference reviews an issued patent for further potential changes to the scope ; the logic in these cases applies with much greater force where no patent has yet issued at all . As in the above cases, no cognizable harm will result from granting the stay . The action was just filed ; no expensive discovery or work up has commenced ; the action is not ripe for trial . There is no ongoing letter-writing campaign by So-Lite . The PTO's determination and expertise will heavily bear on the Court's understanding of the scope of the claims and legitimacy of So-Lite's conduct . If and when both the patent issues and an infringement suit is brought against Plaintiff, the Court will have the full context and countervening rights of both parties before it, not simply the baseless assertions of one party . SUMMARY AND CONCLUSION So-Lite's Motion to Dismiss should be granted . If it is not, any remaining vestige of the suit should be stayed pending final determination of the PTO of the patent in issue . Plaintiff asks this Court to construe a patent's claims before the patent even exists . This is unprecedented . Moreover, the action is newly filed and little has yet

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occurred. It is premature and unmanageable . It was brought for improper competitive purposes . Each claim is or must be based upon the existence of an issued patent, an event which has not yet occurred and which must be left undisturbed in the hands of the PTO at this time . Only at that point can all claims

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which may be asserted by either party can be meaningfully assessed and efficiently managed by the Court . Dated this ~O day of _-_'S 0t1 E -, 2001 . Robert W . Payne Don R . Mollick LARIVIERE, GRUBMAN & PAYNE, LLP Post Office Box 3140 Four Justin Court Monterey, CA 93942-3140 MEYER, HENDRICKS & BIVENS, P .A.

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WATKINS 001625

By:~ ~- Jennifer P . Nom ' 3003 N . Central Avenue Suite 1200 Phoenix, Arizona 85012 Attorneys for Defendant SO-LITE MANUFACTURING, INC.

COPY of the foregoing mailed this~q day of June, 2001, to :

n

Thomas G . Watkins III Cahill, Sutton & Thomas, PLC 2141 East Highland Avenue Suite 155 Phoenix, Arizona 85016 Attorneys for Plaintiff Ronald C . Fish Falk & Fish P.O. Box 2258 Morgan Hill, California 95038

Case 2:03-cv-00067-SMM

NO Page 35 of 35 Document 123-2 7 Filed 03/31/2006 . CIV 01-0940 PHX-NtWA