United States District Court, S.D. New York
April 18, 2005.
WING SHING PRODUCTS (BVI) LTD., Plaintiff,
SIMATELEX MANUFACTORY COMPANY, LTD., Defendant.
The opinion of the court was delivered by: RICHARD HOLWELL, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Wing Shing Products (BVI) Ltd. ("Wing Shing") filed
this action on February 9, 2001 against defendant Simatelex
Manufactory Co., Ltd. ("Simatelex"), seeking to enforce its
rights in United States design patent No. 348,585 (the
"Patent").*fn1 Wing Shing alleges both that Simatelex
directly infringed the Patent in violation of 35 U.S.C. § 271(a),
and that Simatelex induced Sunbeam Products, Inc. ("Sunbeam") to
infringe the Patent in violation of 35 U.S.C. § 272(b). Wing
Shing seeks actual and punitive damages, as well as costs and
Simatelex has moved to dismiss the case for lack of
jurisdiction, or, in the alternative, for summary judgment.
Simatelex has also moved to (i) stay the proceedings pending the
outcome of an appeal of a related case, Sunbeam Products, Inc.
v. Wing Shing Products (BVI) Ltd., 311 B.R. 378 (S.D.N.Y. 2004),
currently before the Federal Circuit; (ii) amend its answer to
add an advise of counsel defense, and (iii) strike certain expert testimony relied upon by Wing Shing in its motion for
summary judgment. Wing Shing opposes these motions, and
cross-moves for summary judgment.
For the reasons stated below, the Court grants Simatelex's
motion to stay, with one exception, discussed more fully,
infra. All other motions are denied without prejudice to renew
following resolution of the appeal.
In Landis v. North Am. Co., 299 U.S. 248, 254-55 (1936), the
Supreme Court held that "the power to stay proceedings is
incidental to the power inherent in every court to control the
disposition of the causes on its docket with economy of time and
effort for itself, for counsel, and for litigants." Id. Courts
considering stay applications must "exercise [their] judgment"
and "must weigh competing interests and maintain an even balance"
before reaching a conclusion. Id. At all points during this
process, the proponent of a stay "bears the burden of
establishing its need." Clinton v. Jones, 520 U.S. 681, 708
(1997) (citation omitted).
Courts in this Circuit typically consider five factors when
deciding whether a stay is appropriate: (1) the private interests
of the plaintiffs in proceeding expeditiously with the civil
litigation as balanced against the prejudice to the plaintiffs if
delayed; (2) the private interests of and burden on the
defendants; (3) the interests of the courts; (4) the interests of
persons not parties to the civil litigation; and (5) the public
interest. Kappel v. Comfort, 914 F.Supp. 1056, 1058 (S.D.N.Y.
1996) (citing Volmar Distributors v. New York Post Co.,
152 F.R.D. 36, 39 (S.D.N.Y. 1993)).
Plaintiff argues that a stay is appropriate in this case
pending resolution of a related appeal currently before the
Federal Circuit, docketed as Sunbeam Products, Inc. v. Wing Shing Products (BVI) Ltd., Case No. 04-1526, 1536 (Fed.
Cir.) (the "Sunbeam Appeal"). The Sunbeam Appeal is from a
memorandum opinion and order of this Court, reported as Sunbeam
Products, Inc. v. Wing Shing Products (BVI) Ltd., 311 B.R. 378
(S.D.N.Y. 2004) (the "Sunbeam Action"), brought by Wing Shing
against Sunbeam to enforce its rights in the Patent.
This Court, in turn, heard the Sunbeam Action on appeal from a
ruling by the bankruptcy court of the Southern District of New
York. In that case, In re AI Realty Marketing of N.Y. Inc.,
293 B.R. 586 (Bankr. S.D.N.Y. 2003) (the "Sunbeam Bankruptcy
Action"), Judge Gonzalez found that the Patent was valid, that
Sunbeam had no rights in the Patent, and that Sunbeam infringed
the Patent. As a result, the bankruptcy court permanently
enjoined Sunbeam from infringing the Patent and awarded damages
to Wing Shing. Both parties appealed the Sunbeam Bankruptcy
Action to this Court.
In the Sunbeam Action, this Court upheld the bulk of the
bankruptcy court's finding, including, inter alia, the findings
that (i) Sunbeam was not a joint inventor of the Patent; (ii)
Sunbeam did not have joint ownership rights in the Patent; (iii)
Sunbeam did not have a permanent exclusive license to the Patent;
(iv) Wing Shing is not equitably estopped from enforcing the
Patent vis-à-vis Sunbeam; and (v) the Patent is otherwise
enforceable. 311 B.R. 378 at 388-99. Sunbeam appealed, and the
case is now on appeal to the Federal Circuit. It has been fully
briefed and is awaiting oral argument.
Although courts award stays in a wide variety of circumstances,
they often do so when "a higher court is close to settling an
important issue of law bearing on the action." In re Literary
Works in Electronic Databases Copyright Litigation,
58 U.S.P.Q.2d 1317, 1319 (S.D.N.Y. March 1, 2001) (citing Marshel
v. AFW Fabric Corp., 552 F.2d 471 (2d Cir. 1977); Goldstein v. Time Warner New York City Cable Group,
3 F.Supp.2d 423, 439 (S.D.N.Y. 1998)). Indeed, "[w]here it is
efficient for a trial court's docket and the fairest course for
the parties, a stay may be proper even where the issues in the
independent proceeding are not necessarily controlling of the
action before the court." In re Literary Works, 58 U.S.P.Q.2d
As Simatelex points out, at least three of the issues now
before the Federal Circuit on the Sunbeam Appeal are potentially
outcome determinative in this case. First, and most obviously, if
the Federal Circuit finds that the Patent is unenforceable as a
matter of law, all of Wing Shing's claims against Simatelex will
fail because each is premised on the enforceability of the
Patent. Similarly, Wing Shing's claims will fail if the Federal
Circuit finds that Sunbeam was a co-inventor of the Patent, or
otherwise has ownership rights to the Patent, and this Court
determines that Simatelex manufactured the coffee makers at issue
at Sunbeam's behest. Finally, Wing Shing's inducement claims will
fail if the Federal Circuit finds that Wing Shing is equitably
estopped from enforcing the Patent vis-à-vis Sunbeam. For all of
these reasons, Simatelex argues that a stay is warranted pending
resolution of the Sunbeam Appeal.
Having weighed the interests of the parties, the Court, and the
public, the Court agrees. With respect to the rights of the
plaintiff, the Court finds that a stay of several months will
cause little prejudice or hardship to Wing Shing. This is not a
case where "a litigant. . . . [is] be[ing] compelled to stand
aside while a litigant in another settles the rule of law that
will define the rights of both." Landis, at 255. Wing Shing is
a party to the Sunbeam Appeal. Neither is this stay likely to be
oppressive in its consequences. To the contrary, any loss caused
by the stay will be monetary in nature, and therefore will be susceptible to an award of interest. Further, this is not to be a
stay of indefinite duration it will be lifted upon resolution
of the Sunbeam Appeal, at which time the Court will promptly rule
on the presently pending motions, subject to supplemental
submissions regarding the Federal Circuit's decision.
The interests of the Court, the defendant, and the public also
counsel in favor of a stay. As noted, supra, several of the
matters at issue on the Sunbeam Appeal go to the heart of Wing
Shing's claims in this case. To proceed under the circumstances
would not be an efficient use of time and resources. Although it
is of course true that prompt enforcement of the patent laws
benefits all who seek protection thereunder, it is undisputed
that there is no ongoing harm here because Simatelex no longer
manufactures the allegedly infringing coffee makers. Accordingly,
the Court finds that a stay will not damage the interest of the
For the foregoing reasons, the Court concludes that a stay
within the bounds of moderation, automatically ending upon a
decision by the Federal Circuit in the Sunbeam Appeal, is an
appropriate exercise of discretion. A stay of this sort "will
[not] work damage" to Wing Shing of a degree sufficient to
overcome the potential hardship on all parties should the stay be
denied. Landis, 299 U.S. at 255. Defendant's motion for a stay
is therefore granted, with one exception: the case shall remain
on the active docket for the limited purpose(s) of resolving the
discovery dispute currently pending in the Southern District of
Florida regarding subpoenas issued by Wing Shing, and, if those
subpoenas are found to be enforceable, for the purpose of
effectuating them. For all other purposes, the case will be
placed on the suspense docket until such time as the Sunbeam Appeal has been resolved. The parties are directed to notify the
Court within 20 days of the date of that decision.
All other pending motions are denied without prejudice to renew
once the stay is lifted.