In PNC Bank NA v. Parus Holdings, Inc., the PTAB denied the Parties’ joint request for authorization to file a motion to terminate because the requested “termination” would merely amount to a stay of proceedings pending appeal in an underlying District Court case. CBM2015-00109, Paper 10 (Nov. 9, 2015).
After being sued in District Court for patent infringement, the Petitioner filed a petition seeking CBM review of the patent. In a preliminary response to the petition, the Patent Owner asserted that the PTAB should not institute CBM review because the Petitioner did not demonstrate that the patent qualifies as a CBM patent. Meanwhile, the District Court granted the Petitioner’s motion to dismiss under 35 U.S.C. § 101, which the Patent Owner appealed to the Federal Circuit.
In light of the appeal in the underlying litigation, the Patent Owner and the Petitioner had a telephone conference with the Board to request authorization for filing a motion under 35 USC § 327 to terminate the CBM proceeding. As the Board highlighted, § 327 is “the statute governing termination of instituted post-grant reviews due to settlement . . . .” (emphasis in original). At the time of the request regarding termination, however, the Board had not yet decided whether to institute CBM review.
Further, § 327 requires that any settlement be in writing and filed with the PTAB before a proceeding can be terminated. Yet the Parties admitted in the telephone conference that no written settlement agreement existed. The Parties also stated that they wanted the proceeding to be terminated without estoppel so that the Petitioner could re-file the same petition, if necessary, after the Federal Circuit decided the appeal of the dismissal in the District Court case.
In denying the Parties’ request regarding termination, the Board characterized the request as one for a “stay [of] these proceedings pending Federal Circuit review of the District Court’s decision.” The Board then assessed the merits of the CBM petition. In doing so, it considered the Patent Owner’s assertions in the preliminary response, determined that the patent was not eligible for CBM review, and held that deferring entry of that determination was inconsistent with the PTAB’s policy of providing “just, speedy, and inexpensive resolution of every proceeding.” For all of these reasons, the Board denied institution.
As this decision illustrates, the PTAB will likely deny requests to terminate a proceeding if the terms of such “termination” would amount to a mere delay in considering a petition for review, particularly if the Board can dispose of the petition on other grounds. In addition, parties seeking to terminate a proceeding should bear in mind that, under § 327, a written settlement agreement must be filed with the PTAB.
Interestingly, although this PTAB panel appeared to tacitly question whether § 327 applies to non-instituted proceedings, other PTAB panels have terminated non-instituted proceedings under the corresponding statute for IPRs. See, e.g., IPR2014-00126, Paper 15, (Jan. 21, 2014).