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Guest post by Kevin B. Laurence and Matthew C. Phillips.

Stay jurisprudence from the Federal Circuit is a legacy of the Transitional Program for Covered Business Method (“CBM”) Review. Prior to the America Invents Act (AIA), the Federal Circuit rarely heard appeals related to stay motions because of the final-judgment rule.[1] However, under the CBM statute, a party to a CBM review was allowed to take an immediate interlocutory appeal from a district court’s decision regarding whether to stay an infringement case pending a CBM review.[2] The CBM statute was intended to increase the predictability of context-dependent stay decisions and to increase the grant rate of CBM-related stay motions. At the sunset of the eight-year CBM program on September 16, 2020, we reflect on the CBM stay jurisprudence developed around this statute.

The CBM statute explicitly sets forth a four-factor test a court shall consider when deciding whether to enter a stay in an infringement case pending a CBM review. These factors include:

  1. Whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;
  2. Whether discovery is complete and whether a trial date has been set;
  3. Whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and
  4. Whether a stay, or the denial thereof, will reduce the burden of litigation on the parties on the court.[3]

In VirtualAgility, the first interlocutory appeal of a stay decision under the CBM statute, the Federal Circuit applied these factors and provided a helpful framework for district courts to apply to other cases.[4] In a flurry of precedential decisions during 2014-2015, the Federal Circuit addressed a range of additional factual scenarios.[5]

With the sunset of the CBM program, the Federal Circuit will have limited opportunities to supplement this body of precedent because the Federal Circuit does not typically have jurisdiction over a district court’s stay decision related to an inter partes review (IPR), a post-grant review (PGR), or a reexamination. A relatively rare exception is provided by the doctrine of pendent jurisdiction that allows the Federal Circuit, during an authorized interlocutory appeal, to exercise its discretion and hear other issues, such as a stay decision, which would ordinarily be nonappealable standing alone.[6]

The AIA was meant to encourage CBM-related stays more than with other types of review proceedings, and from the outset its intended effects were achieved.[7] However, outside the context of CBM-related stay motions, district courts are not bound to follow the Federal Circuit. A district court is free to apply its own precedent without review by the Federal Circuit because it “has broad discretion to stay proceedings as an incident to its power to control its own docket.”[8] Thus, while the Federal Circuit’s jurisprudence theoretically could bring greater predictability and uniformity to district court decisions,[9] the lack of a mandate for district courts to follow Federal Circuit jurisprudence when applying the traditional stay factors allows for inconsistent outcomes.[10] The result is that district courts with traditionally high or low grant rates do not seem likely to change.

The four-factor test has been referred to as a codification of the traditional test applied to IPRs, PGRs, and reexaminations. However, there is a tension in this comparison because the first factor (simplification of the issues) and the fourth factor (burden of litigation) are typically collapsed as a single factor under the traditional test, which has three factors. The Federal Circuit addressed this issue and concluded that for a CBM-related stay motion these factors must be separately considered because they are separately listed in the statute.[11] Judge Bryson encouraged district courts to apply the four-factor test to IPRs while sitting-by-designation in the Eastern District of Texas.[12] This decision, which has been hailed as providing “a roadmap to [stay] motion precedent,”[13] has been cited by the Federal Circuit with approval.[14] In Murata, the Federal Circuit approved reliance on the fourth factor for an IPR-related motion as within the district court’s discretion.[15] However, because explicitly and separately analyzing the fourth factor relative to the first factor is discretionary, Murata has been cited by district courts that have not applied the CBM version of the test to IPR-related motions[16] and those that have.[17]

In conclusion, because stay motions involve differing fact-dependent scenarios, they will still yield context-dependent decisions. Additionally, the fact-dependent nature of stay motions and differing perspectives of district court judges present hurdles to nationwide uniformity. This will remain true for IPR-related stay motions even as some district court judges rely on the CBM-related jurisprudence. For the district court judges who decline to rely on CBM-related jurisprudence, it will fade to limited historical interest as those judges rely on their own precedents.

Kevin B. Laurence is a partner at Laurence & Phillips and an adjunct professor at the George Washington University Law School. He is a co-author of a two-volume treatise titled “Post-Grant Patent Practice.” Mr. Laurence has been recognized as a leading practitioner in the United States for post-grant proceedings every year since 2012 by Intellectual Asset Management (IAM) in IAM Patent 1000.

Matthew C. Phillips is a partner at Laurence & Phillips. He is is a co-author of a two-volume treatise entitled “Post-Grant Patent Practice.” Mr. Phillips has nearly 25 years of experience working with patents in private practice and government service, which includes stints as a patent examiner at the USPTO and a law clerk at the U.S. Court of Appeals for the Federal Circuit. 

  1. The final judgment rule limits the Federal Circuit to jurisdiction to review ‘‘a final decision of the district court.’’ 28 U.S.C. § 1295(a)(1). ↑

  2. AIA § 18(b)(2). ↑

  3. AIA § 18(b)(1). ↑

  4. VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307 (Fed. Cir. 2014). ↑

  5. Benefit Funding Sys. v. Advance Am. Cash Advance Ctrs. Inc., 767 F.3d 1383 (Fed. Cir. 2014); Versata Software Inc. v. Callidus Software Inc., 793 F.3d 1306 (Fed. Cir.2015); SightSound Techs., LLC v. Apple Inc., 809 F.3d 1307 (Fed. Cir. 2015); Intellectual Ventures II LLC v. JP Morgan Chase & Co., 781 F.3d 1372 (Fed. Cir. 2015). ↑

  6. Murata Mach. USA v. Daifuku Co., Ltd., 830 F.3d 1357, 1361 (Fed. Cir. 2016). ↑

  7. Matthew C. Phillips & Kevin B. Laurence, Stays Pending Review, Intell. Prop. Today 34-35 (Dec. 2013). ↑

  8. Clinton v. Jones, 520 U.S. 681, 706 (1997). ↑

  9. Jonathan Stroud, Linda Thayer & Jeffrey C. Totten, Stay Awhile: The Evolving Law of District Court Stays in Light of Inter Partes Review, Post-Grant Review, and Covered Business Method Post-Grant Review, 11 Buff. Intell. Prop. L.J. 226 (2015). ↑

  10. Joel Sayres & Julie Wahlstrand, To Stay or Not to Stay Pending IPR? That Should be a Simpler Question, 17 Chi.-Kent J. Intell. Prop. PTAB Bar Assoc. 52 (2018). ↑

  11. VirtualAgility at 1313. ↑

  12. NFC Tech. LLC v. HTC Am., Inc., No. 2:13-cv-1058, 2015 WL 1069111, at *5 (E.D. Tex. Mar. 11, 2015) (Bryson, J.) (noting that ‘‘whether a stay will reduce the burden of litigation on the parties and the court [ ] is a consideration that courts often take[ ] into account in determining whether to grant a stay pending inter partes review’’). See also Ioengine, LLC v. Paypal Holdings, Inc., No. 18-cv-452-WCB, 2019 WL 3943058, at *4 (D. Del. Aug. 21, 2019) (Bryson, J., sitting by designation); British Telecomm. PLC v. IAC/InteractiveCorp., No. 18-cv-366-WCB, 2019 WL 3943058, at *4 (D. Del. Aug. 21, 2019) (Bryson, J., sitting by designation). ↑

  13. Jonathan Stroud, Staying Litigation for Covered Business Method Post-Grant Reviews, 17 Colum. Sci. & Tech. L. Rev. 120-203, 144 (Fall 2015). ↑

  14. Murata at 1362. ↑

  15. Id. ↑

  16. Uniloc 2017 LLC v. LG Elecs. U.S.A., Inc., No. 3:18-cv-3071, 2020 WL 374545 at *1 (N.D. Tex. Jan. 23, 2020); Intellectual Ventures II LLC v. Kemper Corp., No. 6:16-cv-0081, 2019 WL 7634422, at *2 (E.D. Tx. Nov. 7, 2016); Uniloc USA Inc. v. LG Elecs. U.S.A., Inc., 18-cv-06737, 2019 WL 1905161, at *2 (N.D. Cal. Apr. 29, 2019); Drink Tanks Corp. v. GrowlerWerks, Inc., No. 3:16-cv-410, 2017 WL 2633389, at *2 (D. Or. June 19, 2017). ↑

  17. Cocona, Inc. v. VF Outdoor, LLC, No. 16-cv-02703, 2018 WL 10910847, at *3 (D. Colo. Mar. 19, 2018). ↑