Defendants have one year from the date of service of a complaint of patent infringement to file a request for inter partes review of the asserted patent. 35 U.S.C. § 315(b). In Trover Group, Inc., et al. v. Dedicated Micros USA, et al., 2:13-CV-1047 (E.D. Tex. March 11, 2015), two defendants filed an IPR petition shortly before that one year deadline. Four weeks later, all four defendants filed a motion requesting that the district court stay the litigation until the PTAB resolved the IPR.
Federal Circuit Judge Bryson, sitting by designation, denied the stay motion without prejudice to refile if and when the IPR petition was granted. He noted that the three factors district courts usually consider for a stay pending IPR—(1) whether a stay would unduly prejudice the nonmoving party; (2) whether the proceedings have reached an advanced stage, including whether discovery is complete and a trial date has been set; and (3) whether the stay will simplify the issues in question—largely overlap with the four factors set forth by Congress for stays pending covered business method review. For CBM stays, Congress added a fourth factor requiring an inquiry into whether a stay will reduce the burden of litigation, which according to Judge Bryson indicates that special attention should be given to minimizing that burden.
Judge Bryson held that the plaintiffs’ argument that they would be prejudiced by the risk of lost documentary and testimonial evidence during the stay, though generalized and not specific, weighed slightly in their favor. More compelling was the defendants’ delay in filing the IPR petition and stay motion. The court noted that by the time briefing was complete on the stay motion, the claim construction hearing had been conducted, a pretrial conference was four months away, and trial was only six months away. The defendants’ pattern of delay, by first waiting months after their invalidity contentions were served to file an IPR petition, and then waiting an additional month to file the stay motion, weighed against granting a stay. They could have filed when the case was truly in its infancy, at which time a stay would not have substantially interfered with the proceedings.
Whether a stay would simplify the issues depends on whether the IPR petition is granted. Citing dozens of opinions concerning both IPR and CBM petitions, Judge Bryson observed that the prevailing trend nationwide has been to postpone a ruling or deny the request for a stay until the PTAB takes action on the IPR or CBM petition. In the Eastern District of Texas, stays pending IPR have been uniformly denied when the PTAB has yet to act on the petition, as they have been in all but one stay motion pending a CBM review.
The lone exception, Landmark Technology, LLC v. iRobot Corp., No. 6:13-cv-411 (E.D. Tex. Jan. 24, 2014), exemplifies a situation that would justify granting a stay before the PTAB acts. In that case, the most important factor was the timing of the CBM petition relative to the state of the litigation: the stay motion was filed only five months into litigation, just after the scheduling conference and well before the claim construction hearing. Further, PTAB action on the CBM petition was due only four months after the stay order issued, and the legislative history of the America Invents Act suggested that stays should be granted more liberally in CBM cases.
Judge Bryson concluded that the present case differed from Landmark in every way: it concerned an IPR petition, not a CBM petition; claim construction briefing and discovery were well underway; and the defendants significantly delayed in filing their IPR petition and stay motion. He noted that the defendants’ reasons for granting a stay are likely present in every case seeking IPR of a patent owned by a non-competing entity, and were not enough to compel a stay at this stage. Finally, he concluded that timely denying the stay motion without prejudice to renew is a better practice than simply postponing the ruling until the PTAB acts on the petition.
Even though they are given a year from service of a complaint to file an IPR petition, defendants should consider the district court’s scheduling order if they hope to secure a stay before the PTAB acts on the petition. Further, defendants seeking a stay should file their motion simultaneously with their IPR or CBM petition, or as soon as possible thereafter.