The Software IP Report

No Stay When Inter Partes Review Not Yet Instituted

Where the Patent Trial and Appeals Board (PTAB) had not yet ruled on a petition for Inter Partes Review (IPR), a U.S. District Court denied a defendant’s motion for a stay pending completion of the IPR. Seymour Levine v. The Boeing Co., No. 14-1991RSL (W.D. Wash. July 29, 2015). The court was swayed by the fact that the PTO had not yet decided whether to conduct an IPR proceeding concerning U.S. Patent No. RE39,618.

The court relied on a familiar three-pronged test to determine whether to stay the proceeding. Specifically, “1) whether a stay will simplify the issues in question; 2) the stage of litigation, i.e., whether discovery is complete and whether a trial date has been set; and 3) whether a stay would unduly prejudice the non-moving party.”

Here, because there was only slightly more than a 50% chance that a claim will be invalidated upon review, a stay may have “no salutary effects and would simply delay litigation.” That is, the court multiplied the .67 chance that an IPR would be instituted by a .79 chance that the IPR would favor the defendant. The court seems to have ignored the fact that, if the IPR was instated and the defendant lost, the IPR would nonetheless have a preclusive effect with respect to the defendant’s invalidity arguments that would make litigation more efficient. Perhaps estimating a 2/3, and not a ½, chance of having a salutary effect on the litigation would have been appropriate.

Turning to other prongs, the court thought that the early stage of litigation weighed somewhat in favor of the defendant; the plaintiff would likely not be prejudiced by a stay. Because the litigation was merely 10 months old and thus in the early stages, a stay might conserve judicial and party resources and prevent inconsistent determinations. The court noted that the plaintiff did “not explain why deferring to the PTO’s expertise for resolution . . . would cause prejudice when litigating the same issues in two different proceedings would not.”

In the end, however, the court at this point gave more weight to the first prong of the analysis. The PTO had not yet instituted an IPR and, until it did, a stay might simply delay proceedings to no end. Perhaps the proper time for a motion to stay is immediately upon a petition to institute IPR proceedings being granted.