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Wayne Lederer v. Newmatic Sound Systems

January 4, 2011

WAYNE LEDERER, PLAINTIFF,
v.
NEWMATIC SOUND SYSTEMS, INC., DEFENDANT.



The opinion of the court was delivered by: Seybert, District Judge:

MEMORANDUM AND ORDER

Plaintiff Wayne Lederer ("Plaintiff") commenced this suit against Defendant Newmatic Sound Systems, Inc. ("Defendant"), alleging patent infringement, theft of trade secrets, breach of contract and unfair competition. Pending before the Court is Defendant's motion to stay this proceeding pending the United States Patent and Trademark Office's ("PTO") reexamination of the subject patent. In the event that the Court does not grant its motion to stay, Defendant has also moved to dismiss Plaintiff's Complaint. For the reasons that follow, Defendant's motion to stay is GRANTED. In light of the stay, Defendant's motion to dismiss is DENIED WITH LEAVE TO RENEW once the stay is lifted.

BACKGROUND

Plaintiff owns United States Patent No. 7,609,844 (the "'844 Patent") entitled "Noise Attenuating Headset." (Compl. ¶¶ 5-6.) The '844 Patent was issued on October 27, 2009 and is based on the application Plaintiff filed on September 2, 2007. (Id. ¶ 5.) The application is based on a series of earlier patent applications that Plaintiff filed dating back to October 27, 2003. (Id.)

Defendant is among Plaintiff's competitors in the field of manufacturing sound delivery devices for use with Magnetic Resonance Imaging ("MRI") machines. (Id. ¶ 17.) GE Healthcare Systems ("GE") manufactures MRI machines and sets standards for the sound devices used with its machines. In December 2008, GE notified its vendors that it was implementing more stringent noise attenuation requirements for sound delivery systems. (Id. ¶ 16.)

Although GE's new standards were generally viewed as difficult to satisfy, (id. ¶ 17), Plaintiff was eventually able to develop a headset that met the new requirements. (Id. ¶ 9.) In March 2009, Plaintiff and Defendant agreed to a business relationship whereby Plaintiff would reveal to Defendant trade secret--unspecified in Plaintiff's Complaint--and Defendant would market Plaintiff's new headset. (Id. ¶ 18.) Defendant's president, Elias Husary, agreed on behalf of Defendant to this deal. (Id. ¶ 25.)

The parties' business relationship apparently fell apart not long after it allegedly began, and Defendant thereafter began selling a headset of its own, which--like Plaintiff's--satisfied GE's new noise-reduction requirements. (See id. ¶ 28.) Plaintiff alleges that Defendant's product, the Newmatic Coil Headset (item CHS29), infringes his '844 Patent. (Id. ¶ 10.)

On August 3, 2010, Defendant requested that the PTO conduct an ex parte reexamination of the '844 Patent. (Docket Entry 10, Order Granting Reexamination at 2.) The PTO granted Defendant's request on October 25, 2010, finding that a substantial new question of patentability exists with respect to eight (8) of the '844 Patent's claims. Id.

On May 17, 2010, Defendant moved to stay this litigation pending the outcome of the reexamination. Defendant contemporaneously moved to dismiss Plaintiff's Complaint or, in the alternative, for a more definite statement.

DISCUSSION

The Court first addresses Defendant's motion to stay and then briefly discusses Defendant's motion to dismiss.

I. Motion to Stay

Defendant's motion to stay is granted, subject to Defendant's expeditious pursuit of ...


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