We have previously written about the emerging trend of district courts not granting motions to stay until IPR or CBM proceedings have been instituted. The Federal Circuit seemed to indirectly support that approach in its recent decision in Intellectual Ventures II LLC v. JPMorgan Chase & Co., in which it held that it lacked jurisdiction under § 18(b)(2) of the AIA to consider an interlocutory appeal on a motion to stay until the PTAB institutes a Covered Business Method Review proceeding. 781 F.3d 1372 (Fed. Cir. 2015).

Intellectual Ventures sued several JP Morgan Chase entities alleging infringement of five patents. About a year later, JPMC moved to stay on grounds that it intended to file four petitions seeking CBM Reviews of some of the patents-in-suit. Only two CBM petitions were ever filed. Before the Board acted on those petitions, the district court denied the motion to stay.

Applying the four-factor test set out in § 18(b)(1) of the AIA, the district court first noted that it would be inappropriate to stay the entire litigation to see whether only two of the patents at issue might be reviewed. The court also concluded that it would be able to resolve the litigation in under a year, sooner than the CBM petitions would be resolved. Ultimately, JPMC’s argument was held to be largely speculative and was offset by IV’s right to a speedy trial.

JPMC sought interlocutory review of the denial of its motion to stay. Under the final judgment rule, 28 U.S.C. § 1295(a)(1), appellate courts typically lack jurisdiction to consider decisions on motions to stay. The AIA makes an exception to this rule in the case of CBM proceedings. Section 18(b)(1) states that if a party seeks a stay of a civil action alleging patent infringement “relating to a [CBM] proceeding for that patent” the court shall decide whether to enter a stay. Section 18(b)(2) provides that “a party may take immediate interlocutory appeal from a district court decision[.]”

The AIA’s statutory grant of interlocutory jurisdiction is an exception to the final judgment rule that must be construed narrowly. Because the district court’s order concerned two CBM petitions pending before the PTAB, the Federal Circuit had to decide whether a “CBM proceeding” encompassed a CBM petition.

The Federal Circuit concluded that, in light the language of the statute and the legislative history, it did not: a CBM “proceeding” begins when the Board institutes review, not when a CBM petition is filed. Therefore, the Federal Circuit lacked jurisdiction to consider the interlocutory appeal because it concerned CBM petitions for which review had not yet been instituted.

District courts may, however, continue to use their broad equitable powers to exercise the discretion to decide a motion to stay at any time. A patentee dissatisfied with a grant of a stay motion before the PTAB institutes a proceeding may, if appropriate, seek a writ of mandamus. And, as provided in the AIA, a CBM petitioner may seek interlocutory review of a district court’s denial of a stay motion after the petition is granted.