Patent Infringement Stayed Pending ITC Investigation


The United States Federal District Court for the Southern District of California has recently issued a ruling favorable to Spectra Logic Corporation in the company’s patent infringement dispute with Overland Storage, Inc. (NASDAQ: OVRL). The district court agreed to stay the proceedings regarding the alleged patent infringement pending the outcome of similar proceedings currently in process with the International Trade Commission (“ITC”).

Overland Storage brought a patent infringement complaint against Spectra Logic on June 28, 2012. The complaint alleges infringement of U.S. Patent No. 6,328,766 and U.S. Patent No. 6,353,581.

The ’766 patent teaches an innovative data storage system containing a plurality of media elements, in which each media element may be a member of one of a plurality of sets of media elements; and a controller configured so that a subset of media elements and media element drives are available for read/write access by one set of host computers, but are unavailable for read/write access by another set of host computers. The patent also discloses methods where host computers can store and retrieve data to and from separate portions of the media library without interfering with one another.

The ’581 patent teaches an innovative automated media library and retrieval system where a user can easily insert or remove storage media, such as magnetic tapes, through a mail slot without having to remove the magazine of media elements, without requiring complicated transport mechanisms, and without limiting system options for media access security. The patent also discloses methods of moving a particular storage medium contained in the media library from a readable location to a manually accessible location.

Back in November 2012, the ITC voted to institute an investigation of certain automated media library devices. The products at issue in this investigation were automated media storage systems used primarily for electronic data backup. The investigation was based on a complaint filed by Overland Storage on October 19, 2010.

The complaint alleged violations of section 337 of the Tariff Act of 1930 in the importation into the United States and sale of certain automated media library devices that infringe patents asserted by Overland. The complainant requested that the ITC issue an exclusion order and a cease and desist order. The patents cited by Overland in the ITC complaint were both the ‘766 patent and the ‘581 patent, which is undoubtedly how Spectra Logic was able to convince the district court to hold off on this patent infringement lawsuit pending outcome of the ITC case initiated over 2 years ago.

In reaching its determination relative to the requested stay, the district court concluded:

Upon weighing the competing interests that will be affected by the granting or refusal of the stay, the Court finds that the grant of a discretionary stay will promote the dual interests of efficiency and fairness.

Specifically of interest may be the fact that the potential delay in adjudicating the matter was weighed against Overland because they have “licensed the patents-in-suit to a competitor, IBM. Therefore, there is at least some indication that money damages would be adequate to remedy any harm to Overland.”

The stay ordered is not indefinite, however.  The district court refused to order a stay pending any appeal from the ITC determination.  Instead the stay will run until March 25, 2013, or until a Final Determination from the ITC, whichever comes first. The parties must notify the court with a motion to lift the stay within 7 days of March 25, 2013, or a Final Determination by the ITC, whichever comes earlier. At that time, the district court will determine whether the discretionary stay should be lifted or continued.

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