The Software IP Report

Stay Granted Based on Inter Partes Review Petition Filed Four Months Before Patent Lawsuit

By Charles Bieneman

Categories: Patent Civil Procedure, The Software IP Report

Judge Gilstrap in the Eastern District of Texas has granted a defendant’s motion for a stay based on institution of an Inter Partes Review (IPR) proceeding.  MemSmart Semiconductor Corp. v. AAC Technologies Pte. Ltd., No. 2:14-CV-1107-JRG (E.D. Texas July 10, 2015).  The defendant was able to present strong facts in support of a stay.  Notably, the defendant had filed its petition for IPR review four months before the lawsuit was instituted.  Moreover, the petition was granted before the defendant was served.

The IPR petition was filed in August 2014, the lawsuit commenced in December 2014, and the IPR instituted by the Patent Trial and Appeal Board (PTAB) at the U.S. Patent and Trademark Office in February 2015.  The defendant then filed its motion for a stay in May 2015.

The court began by listing factors typically considered in evaluating a motion for stay: “(1) whether a stay will unduly prejudice or present a clear tactical disadvantage to the nonmoving party; (2) whether a stay will simplify issues in question and trial of the case, and; (3) whether discovery is complete and whether a trial date has been set.”

Here, the defendant sought a stay of nine months (not the two to four years asserted by the plaintiff), and the IPR petition was filed four months before the plaintiff filed its lawsuit.  The court found it important that “there is no indication here that Akustica has gamed the system created by the Leahy–Smith America Invents Act by treating the IPR process as a ‘second bite at the apple’ rather than the alternative to district court litigation that Congress intended.”

Further, whether the IPR would simplify the issues for the court was a neutral factor.  Balanced against the possible simplification in the present case was the existence of another lawsuit in which the present patent-in-suit provided only a minority of the claims asserted.  However, a docket control order had not yet even been entered in that case.

Finally, the “relatively early stage of” the present “case weigh[ed] in favor of granting a stay.”  The defendant had not been served until March 2015, and the docket control order was not entered until a month later.