Monday, September 26, 2011

SPREAD SPECTRUM v. EASTMAN KODAK: CAFC dismisses for lack of jurisdiction

The beginning of the case:

In this patent case, Spread Spectrum Screening LLC (“S3”) filed suit in the Northern District of Illinois against Eastman Kodak Company (“Kodak”) and four of Kodak’s customers – Continental Web Press, Inc., Graphic Part- ners, Inc., Genesis Press, Inc., and Johns-Byrne Company (collectively, “the Kodak Customers”) – alleging infringe- ment of U.S. Patent No. 5,689,623 (“the ’623 Patent”). On September 1, 2010, the district court granted Kodak’s motion to: (1) sever the claims against it from those against the other defendants; (2) stay the action against the Kodak Customers in Illinois; and (3) transfer the case against Kodak to the Western District of New York. S3 appeals only from the portion of the order granting Ko- dak’s motion to stay the case against the Kodak Custom- ers pending the outcome of its action against Kodak in New York. Spread Spectrum Screening, LLC v. Eastman Kodak Co., No. 10 C 1101, 2010 U.S. Dist. LEXIS 90549 (N.D. Ill. Sept. 1, 2010) (“District Court Opinion”). Because this appeal is not from a final judgment within the meaning of 28 U.S.C. § 1295(a)(1), and does not otherwise qualify as an appealable order, we dismiss for lack of jurisdiction.

Of details:

Generally, a stay is not considered a final appealable order. A stay order is appealable, however, if it puts the plaintiff “effectively out of court.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 10 (1983). In Moses Cone, the Supreme Court held that an order stay- ing litigation in federal court pending resolution of a case in state court that would have res judicata effect on the federal action put the plaintiff “effectively out of court.” Id. (noting that the stay order “amounts to a dismissal of the suit”).

This court similarly has held that a stay may be an appealable order “when it effectively puts the parties out of the district court, either permanently because it termi- nates the action as a practical matter, or, as some courts have held, for a protracted or indefinite period.” Gould v. Control Laser Corp., 705 F.2d 1340, 1341 (Fed. Cir. 1983) (citation omitted). In Gould, the district court granted a stay pending reexamination. Id. On appeal, we found that the stay was “not for such a protracted or indefinite period as to render its issuance an abuse of discretion” and that it did not terminate the action but “merely shifted to the PTO an issue (patent claim validity) in- volved in the dispute before the district court.” Id. at 1341-42.



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