The Software IP Report

A District Court’s Denial of a Motion to Stay Is Not Appealable After a Petition Seeking a CBM Review Proceeding at the PTAB Has Been Filed (but not Granted)

The Federal Circuit has dismissed, for lack of subject matter jurisdiction, a denial of a motion to stay where petitions had been filed, but not granted, seeking covered business method (“CBM”) reviews  at the Patent Trial and Appeal Board (“PTAB”). Intellectual Ventures II LLC v. JPMorgan Chase & Co., 2015 U.S. App. LEXIS 5204 (Fed. Cir. Apr. 1, 2015).

The accused infringer’s motion for a stay had been denied by the district court.  Intellectual Ventures II LLC v. JPMorgan Chase & Co., 13 Civ. 3777 (AKH) (S.D.N.Y. Aug. 11, 2014). The district court applied the four-factor test set forth in § 18(b)(1) of the America Invents Act (“AIA”), and concluded that overall judicial efficiency would be best served (i.e., the dispute would be resolved more quickly) by litigating the case in district court. The districts court’s main rationale was that the PTAB would first need to consider whether to even grant the petitions for CBM review. The district court noted that the PTAB is allowed to take twelve months to complete a CBM review, and this timeline could be extended another six months. The district court estimated that this procedure could take up to “four years,” as opposed to being completed in “less than a year” where the case currently sits.

The defendant appealed to the Federal Circuit, seeking interlocutory review of the denial of the motion to stay.  The Federal Circuit dismissed the appeal for lack of jurisdiction.

The question was whether this case fell into an exception to the general rule that a denial of motion to stay is not appealable, because such a ruling is “always subject to reconsideration,” and is never truly a “final decision” of the district court. However, Congress “crafted an exception to the final judgment rule,” allowing for interlocutory appeal from a district court’s decision, “[i]f a party seeks a stay of civil action alleging infringement of a patent . . . relating to a [CBMR] proceeding for that patent.” See AIA § 18(b)(1)-(2).  The Federal Circuit, unsurprisingly, construed “relating to a [CBM] proceeding” to mean a currently existing proceeding. The PTAB had not initiated a CBM proceeding in this instance. Appellate jurisdiction exists only “over a decision on a motion to stay that is related to an actual CBMR proceeding,” and not on a “decision on a motion to stay that is related to anything that relates – however remotely – to a hoped-for CBMR proceeding.”

The practice tip from this case seems pretty clear.  Absent some clear reason why a stay is likely to be granted, or other extenuating reasons, patent infringement defendants should generally wait until the PTAB has acted on a petition for CBM review to file a motion to stay.