Stays of Litigation and ITC Investigations Pending IPRs

Authored by John R. Kenny and Scott Forman

District courts have ruled on a number of motions to stay litigation pending inter partes review (“IPR”), granting at least five unopposed, joint motions or stipulated orders; granting at least eleven opposed motions; denying at least twelve opposed motions; and partially granting at least five opposed motions (i.e., staying the case only until the PTAB decides whether to institute the IPR). In deciding these stay motions, district courts have used the three factor test previously set forth for stays pending reexamination proceedings:

  1. whether discovery is complete and whether a trial date has been set;
  2. whether a stay will simplify the issues in question and trial of the case; and
  3. whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party.¹

See, e.g., Regents of the Univ. of Mich. v. St. Jude Med., Inc., No. 12-12908, 2013 U.S. Dist. LEXIS 76845, at *5 (E.D. Mich. May 31, 2013); Semiconductor Energy Lab. Co. v. Chimei Innolux Corp., No. SACV 12-21-JST (JPRx), 2012 U.S. Dist. LEXIS 186322, at *3-4 & n.1 (C.D. Cal. Dec. 19, 2012).

However, at least one court has indicated that “the inquiry is not limited to these three factors,” as “the totality of the circumstances governs.” Automatic Mfg. Sys., Inc. v. Primera Tech., Inc., No. 6:12-cv-1727-Orl-37DAB, 2013 U.S. Dist. LEXIS 67790, at *4 (M.D. Fla. May 13, 2013).

Regarding the first factor, whether discovery is complete and a trial date has been set, petitions for IPRs have to be filed within one year of the service of the complaint, so litigation discovery is often not complete when the petition for an IPR is filed. Nevertheless, the sooner the IPR is requested, the more likely a stay will be granted. In some cases, a defendant might want to wait for the patentee’s infringement contentions before filing a petition for an IPR. At least one stay has been granted with such a delay. Semiconductor, 2012 U.S. Dist. LEXIS 186322, at *8-9, 11. Waiting for a Markman ruling, even an early Markman ruling, however, can undermine a motion to stay. See Universal Elecs., Inc. v. Universal Remote Control, Inc., No. SACV 12-00329 AG (JPRx), slip op. at 6, 10 (C.D. Cal. May 2, 2013).

Regarding the second factor, whether the stay will simplify the issues in question and trial of the case, courts have examined whether all asserted patent claims are subject to the IPR. Pi-Net Int’l, Inc. v. Hertz Corp., No. CV 12-10012 PSG (JEMx), 2013 U.S. Dist. LEXIS 81570, at *7-8 (C.D. Cal. June 5, 2013); Transcript of Oral Argument at 82, Clouding IP, LLC v. Oracle Corp. (D. Del. Jan. 25, 2013) (No. 12-642-LPS). Similarly, courts have examined whether the litigation involves non-patent claims. Regents, 2013 U.S. Dist. LEXIS 76845, at *6-9; Semiconductor, 2012 U.S. Dist. LEXIS 186322, at *5-6. Courts have also examined whether all defendants in the litigation would be bound by any preclusive effects of the IPR. In one case, defendants, who might otherwise not be subject to the preclusive effect of the IPR, agreed to be bound to obtain a stay. Semiconductor, 2012 U.S. Dist. LEXIS 186322, at *6-7.

Regarding the third factor, undue prejudice or tactical disadvantage, courts have examined whether the patentee and defendant(s) are competitors. Everlight Elecs. Co. v. Nichia Corp., No. 12-cv-11758, 2013 U.S. Dist. LEXIS 61666, at *21-23 (E.D. Mich. Apr. 30, 2013); Transcript of Oral Argument, Clouding IP, at 86. At least one court has noted that if the patentee is not practicing the invention, then a stay might cause less harm to the patentee since the patentee can always recover money damages once the stay is lifted. See Transcript of Oral Argument, Clouding IP, at 86. That court also noted however, that even a non-practicing entity may suffer prejudice due to an erosion of the value of its licenses. Id.

The International Trade Commission (“ITC”) considers three additional factors for deciding stay motions: the stage of the PTO proceedings, the efficient use of commission resources, and the availability of alternative remedies in district court. In re Certain Microelectromechanical Systems (“MEMS Devices”) and Products Containing the Same, Inv. No. 337-TA-876, at 3 (May 21, 2013). MEMS Devices held that the expedited nature of ITC proceedings and the fact that the ITC does not award damages weigh against a stay. See id. at 6-8.

                                                

¹ The analysis of a motion to stay pending a review under the Transitional Program for Covered Business Method Patents involves a fourth factor mandated by the America Invents Act:  whether a stay will reduce the burden of litigation on the parties and on the court.  America Invents Act, Pub. L. No. 112-29, § 18(b)(1)(D), 125 Stat. 284, 321 (2011).

For a more detailed update on stays pending PTAB trial proceedings, check out the authors’ article on the topic recently published on Law360.  Please click here to view the article (subscription required).