The Indo-Czech combination had began well but lost 6-1 3-6 5-10 to British-Australian combination in the last-eight stage of the euro 468,460 grass court event, a warm up for Wimbledon.
It was first time Paes and Stepanek were playing together since competing in Australian Open in January.
A neck injury, which required surgery to heal, had forced Stepanek out of action.
They have been seeded fourth at the Wimbledon.
