'Staying' Power: Litigation Stays Under The America Invents Act

Between September 16, 2012, when new forms of patent validity review became available at the U.S. Patent and Trademark Office ("USPTO") under the Leahy-Smith America Invents Act ("AIA"), and July 16, 2015, patent challengers filed 3,610 petitions for review at the USPTO.1

Many of these petitions challenged patents subject to pending litigation, which accused infringers sought to stay during the USPTO's review. The majority of these stay motions have been successful, particularly where the USPTO has issued an initial decision instituting trial on at least one patent claim by the time of the decision on the stay motion.

The new reality for patent litigation thus often involves the patentee being forced to defend the validity of the patent at the USPTO - frequently against long odds - before pursuing claims for infringement in district court.

This article discusses: (i) the factors courts consider when evaluating stay motions pending AIA review; (ii) how particular districts have decided stay motions, with a focus on how institution of trial on at least one patent claim affects outcome; and (iii) practical tips relating to stays for both patent challengers and patent owners.2

USPTO Reviews Under the America Invents Act

The AIA3 establishes three new types of USPTO review of issued patents:

Inter partes review ("IPR"); Post-grant review ("PGR"); and Covered business method patent review ("CBMPR").4 While there are many differences between these three new types of AIA patent review, all three share the same overall framework and strict statutory time limits. For each, a party seeking to challenge the validity of an issued U.S. patent may submit a petition to the USPTO's Patent Trial and Appeal Board ("PTAB") setting forth why particular claims of the patent are invalid.5 The PTAB is statutorily required to issue an institution decision within six months of the petition's filing.6

In the institution decision, the PTAB must determine whether the petitioner has asserted sufficient grounds to institute trial. Once instituted, the PTAB is statutorily required to issue a final decision within one year.7

Thus, by statute, all three types of AIA review must be completed within 18 months of the filing of a petition, with limited exceptions.8

District Court Litigation and AIA Patent Review

District courts must frequently determine whether to stay litigation pending the outcome of an AIA review. The AIA recites factors for courts to evaluate whether a stay of district court litigation is appropriate when a patent is subject to CBMPR. Specifically, AIA § 18(b)(1) provides that courts shall decide whether to stay an action pending CBMPR based on:

whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial; whether discovery is completed and whether a trial date has been set; whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. As a result of statutory provisions expressly providing for immediate interlocutory appeal to the Federal Circuit for CBMPR stay decisions,9 the Federal Circuit has provided substantial guidance on how to evaluate these four factors.

The first factor concerns whether a stay will simplify the issues and streamline trial. Although this factor weighs more heavily in favor of a stay when all asserted patent claims and all invalidity defenses in the litigation are undergoing review at the USPTO, a court may stay the case even when the CBMPR does not address all asserted patents, claims or invalidity defenses.10 There is no categorical rule that all claims be challenged in a CBMPR proceeding for a stay to be warranted.

In addition, when evaluating this factor, it is improper for the district court to reevaluate the merits of PTAB's initial decision, if one exists at the time of the motion. Accordingly, this factor does not weigh against granting a stay where the district court disagrees with the PTAB's institution of trial.11

The second factor, "whether discovery is completed and whether a trial date has been set," is evaluated as of the date the motion to stay is filed - not the time of the decision on the stay motion.12 Discovery and litigation activity that occur between the filing of the stay motion and the date the motion is decided do not weigh against a stay.

The third factor requires courts to examine whether undue prejudice or tactical advantage exists. The types of prejudice asserted by parties and considered by the courts...