Oxygenator Water Technologies, Inc. v. Tennant Company

Background

Oxygenator Water Technologies, Inc. (OWT) alleged that Tennant Company infringed three patents: U.S. Patent Nos. RE45,415, RE47,092, and RE47,665. OWT alleged infringement based on two electrode arrangements: a flat, stacked-plate design called the “brick” design and a cylindrical-electrode design called the “sparger.” OWT asserted the ’415 patent against the brick design and the ’092 and ’665 patents against the sparger.

The case had been pending since January 2020. Fact discovery was nearly complete, expert discovery was about to begin, and the parties had exchanged claim charts, invalidity contentions, and tens of thousands of documents. The court had issued a claim-construction order, and several discovery-related motions remained pending. The scheduling order identified May 16, 2022, as the trial-ready date, but no trial date had been set.

In March 2021, Tennant filed two petitions for inter partes review (IPR), a proceeding in which the Patent Trial and Appeal Board (PTAB) reviews patent-validity challenges. The petitions challenged the validity of the ’415 patent. On August 20, 2021, the PTAB instituted review on the first petition and denied the second petition. The PTAB’s final written decision was generally due within one year of institution, subject to a possible six-month extension for good cause.

Motion and Analysis

Tennant moved to stay the litigation and requested a protective order relieving the parties from case deadlines while the motion was pending. The court considered whether the stay would unfairly harm OWT, whether the PTAB proceeding would simplify the case, and how advanced the litigation was.

The court found that Tennant had not shown an improper or tactical reason for waiting to seek IPR. The court accepted Tennant’s explanation that preparing and testing devices based on prior-art references took time and was further delayed by the COVID-19 pandemic. The court also found that OWT had not provided concrete evidence that a stay would cause harm beyond ordinary delay. OWT’s status as a non-practicing entity and its asserted licensing efforts did not establish that money damages would be inadequate. The court nevertheless considered OWT’s concern that restarting the litigation later could increase costs.

The court determined that the IPR could simplify the litigation even though it concerned only one of the three patents. The PTAB’s analysis of prior-art references could inform the court’s consideration of those references as to the other patents. If the ’415 patent were found invalid, the parties and court could avoid some expert work, dispositive motions, and trial issues involving that patent and the accused brick products. The court recognized that the IPR would not necessarily eliminate the entire case because the ’092 and ’665 patents would remain for adjudication.

The court found that the case was neither at an early stage nor immediately ready for trial. Fact discovery was nearly complete, but expert disclosures were on hold, dispositive motions were still months away, and the trial-ready date was not a firm trial date. The court concluded that remaining fact discovery would likely be necessary regardless of the PTAB’s decision, while pausing expert discovery could reduce wasted work and allow the parties to account for the PTAB’s analysis.

Order

The court granted in part and denied in part Tennant Company’s motion to stay and for a protective order.

The court ordered that:

- All expert discovery, dispositive-motion practice, and trial-related proceedings were immediately stayed pending the PTAB’s IPR of the ’415 patent. - Fact discovery and related motions were not stayed, to the extent they were not otherwise barred by the scheduling order, and were to be completed consistently with the results of pending motions. - To the extent it had not already been denied, the request for a protective order relieving the parties from case deadlines while the stay motion was pending was denied as moot. - Within 10 days after the PTAB issued its final written decision, the parties had to submit a joint report describing the result as to the asserted claims and proposing schedules for discovery, motions, settlement, and trial. The report was also to address whether either party sought to extend the stay during appeals of the PTAB’s decision.

The order was signed by Hildy Bowbeer, United States Magistrate Judge.