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Concrete Log Systems Inc. v. Better Than Logs, Inc.

United States District Court, D. Montana, Missoula Division

July 19, 2018

CONCRETE LOG SYSTEMS INC., d/b/a/ EVERLOG SYSTEMS, Plaintiff,
v.
BETTER THAN LOGS, INC., Defendant.

          ORDER

          Donald W. Molloy, District Judge.

         At issue is Defendant Better Than Logs, Inc.'s ("Better Than Logs") request for a stay pending reexamination of Plaintiff Concrete Log Systems Inc. d/b/a/ Everlog Systems' ("Everlog") patent for a cement-based, simulated log siding ('"598 Patent") pending reexamination by the United States Patent and Trademark Office ("Patent Office"). (Doc. 9.) The motion is denied.

         Everlog is a Montana corporation with its principal place of business in Missoula, Montana. (Compl. Doc. 1 at ¶ 2.) It is the owner of the '598 Patent, entitled "Simulated Log Siding," which issued July 4, 2017. (Id. at ¶ 7.) The '598 Patent covers a cementitious siding product designed to appear as wooden log siding. (Id. at ¶ 9.) Everlog sells products practicing the '598 Patent under the names "Everlogs," "Everlog Systems," "Everlog Siding," and "Everlog Timbers." (Id., at ¶ 10.)

         Better Than Logs is a Montana corporation with its principal place of business in Drummond, Montana. (Ans. Doc. 7 at ¶ 2.) Everlog asserts that Better Than Logs manufactures and sells a number of products which infringe on the '598 Patent, (Doc. 1 at ¶ 13), which Better Than Logs Disputes, (Doc. 7 at ¶ 13). Generally speaking, those products are elongated, concrete "logs" patterned to look like wood. (Doc. 1 at ¶ 14.) Everlog argues the products compete directly with its engineered siding products. (Id. at ¶ 13.) Everlog has not licensed or authorized Better Than Logs to manufacture, sell, or import any products covered by the '598 Patent. (Id. at¶15.)

         Everlog seeks injunctive and monetary relief against Better Than Logs for false advertising and deceptive trade practices pursuant to the Lanham Act and Montana common law. (Doc. 1 at ¶ 1.) Count One alleges patent infringement in violation of 35 U.S.C. § 271. (Id. at ¶¶ 16-23.) Count Two alleges false designation of origin and unfair competition, in violation of 15 U.S.C. § 1125(a)(1)(A). (Id. at ¶¶ 24-59.) Count Three alleges false advertising, in violation of 15 U.S.C. § 1125(a)(1)(B). (Id. at ¶¶ 60-63.) Count Four alleges unfair competition, in violation of Montana common law. (Id. at ¶¶ 64-68.) Boiled down, Everlog alleges Better Than Logs has infringed on its patent and falsely advertised that its products are "Made in U.S.A." and "Made in Montana." (Doc. 13 at 2.)

         On April 18, 2018, Better Than Logs filed a request with the Patent Office to have the '598 Patent "reexamined" to determine its validity. (Doc. 10 at 2; Doc. 10-1.) On June 1, 2018, the Patent Office granted Better Than Logs' request for ex parte reexamination. (Doc. 10 at 3; Doc. 10-2.) Better Than Logs filed its Answer on May 15, 2018, denying each of Everlog's claims and raising two counterclaims, alleging it has not infringed on the '598 Patent and that the '598 Patent is invalid. (Doc. 7.)

         After the Patent Office granted its request for reexamination, Better Than Logs filed a motion to stay this case pending reexamination. (Doc. 9.) Everlog opposes the motion, (Doc. 13), which has been fully briefed and is ripe for ruling.

         Legal Standards

         Pursuant to 35 U.S.C. § 302, "any person" may request that the Patent Office reexamine an issued patent and present prior art references that affect the validity of the patent. The Patent Office then "determine[s] whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request." Id. at §303(a). "If... a substantial new question of patentability affecting any claim of a patent is raised, the determination will include an order for reexamination of the patent for resolution of the question." Id. at § 304.

         "While courts are not required to stay judicial resolution in view of reexamination, a stay for purposes of reexamination is within the district court's discretion." In re Cygnus Telecomm. Tech, LLC, Patent Litig., 385 F.Supp.2d 1022, 1023 (N.D. Cal. 2005) (internal citations omitted). "When determining the appropriateness of a stay pending reexamination, the court considers the following three factors: (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." Id. (internal quotations omitted).

         Analysis

         Better Than Logs argues a stay is appropriate to promote judicial efficiency, simplify the issues, and avoid inconsistent results. (Doc. 10 at 1-2.) Everlog responds that, because the delay at the Patent Office will be considerable and will not resolve all the issues in the case, a stay is not merited. (Doc. 13 at 2.)

         I. Whether a stay would prejudice or tactically disadvantage Everlog

         Better Than Logs argues Everlog will not be prejudiced by a stay. (Doc. 10 at 15.) Everlog insists that a lengthy stay while the Patent Office completes its reexamination will prejudice Everlog by depriving it of its right to assert ...


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