Federal Court Decisions in AIA Reviews
Nancy J. Linck
J. Steven Baughman [1]
April 2015
The AIA was enacted on September 16, 2011 and became effective with respect to AIA reviews
one year later. Congressional comments indicate that the AIA was enacted in large part in
response to the high cost of litigation, particularly fueled by our extensive discovery process, but
its provisions were heavily debated and the subject of significant lobbying from multiple
competing constituent groups. In its first two years of post-AIA proceedings, the Patent Trial
and Appeal Board (“PTAB”) has risen to become the most active single forum in the U.S. for
patent validity disputes,1 but early comments on these post-grant challenges continue to reflect a
divide in viewpoints, with some praising the effectiveness of PTAB proceedings for challenging
invalid patents (earlier this year the USPTO announced that at least some claims were
invalidated in 216 of its 264 final written decisions (85%)2) and others decrying the forum as a
“death squad[] killing property rights.”3 Whatever the reader’s perspective, the PTAB has
assumed a prominent place in patent disputes, and its early operations have also become the
subject of district court and appellate litigation. While many questions remain unanswered, a
number of early decisions in those fora have begun to shed light on how federal courts will treat
such cases. This paper analyzes select federal court decisions addressing some recurrent issues
in PTAB reviews.
1. Mandamus: A Way to Obtain Relief from 35 U.S.C. § 314(d)?
Under the America Invents Act (“AIA”), 35 U.S.C. § 314(d), entitled “No Appeal” provides:
“The determination by the Director whether to institute an inter partes review under this section
shall be final and nonappealable.” Identical language is found in 35 U.S.C. § 324(e) which
governs post-grant reviews.
In St. Jude Medical, Cardiology Div. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014), the
PTAB (acting for the Director) denied St. Jude’s petition for inter partes review because Volcano
had filed a counterclaim alleging infringement of the subject patent more than two years earlier.
St. Jude appealed the denial of the petition. The Federal Circuit dismissed the appeal based on
[1]
The views expressed in this paper are those of the authors alone, and do not necessarily reflect those
of their firms. The authors gratefully acknowledge the assistance of Ian Brooks, associate at Ropes &
Gray.
1
See https://www.docketnavigator.com/stats/ (last visited Apr. 27, 2015).
IP360 (March 30, 2015).
3
See Tony Dutra, Rader Regrets CLS Bank Impasse, Comments on Latest Patent Reform Bill, BNA Patent Trademark
& Copyright Daily (Oct. 29, 2013).
2
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its determination that (1) the language of § 314(d) prohibited direct appeal of the Director’s
decision not to grant a petition for inter partes review and (2) only the PTAB’s “final written
decision” on the merits under § 318(a) resulting from the conduct of the proceeding after
institution was appealable. The court further noted that the language of § 314(d) “may well
preclude all review by any route” but did not decide whether that was the case, as only a noninstitution decision was then before it.
In In re Cuozzo Speed Technologies, LLC, 778 F.3d 1271 (Fed. Cir. Feb. 14, 2015), the Federal
Circuit decided one of the issues left open in St. Jude, i.e., whether the PTAB’s decision to
institute inter partes review is reviewable by the Federal Circuit on direct appeal from the
PTAB’s final written decision under § 318(a). The court held it was not.
In part, the court supported its holding with reference to In re Hiniker Co., 150 F.3d 1362, 1367
(Fed. Cir. 1998), a reexamination in which the decision to institute was challenged because it
was based on art previously considered during initial examination. In that case, according to the
Federal Circuit, “any error in instituting reexamination … was ‘washed clean during the
reexamination proceeding,’ which relied on new art.” Because § 303(c) provided that a
“determination by the Commissioner … that no substantial new question of patentability has
been raised will be final and nonappealable,” the court denied review of the Commissioner’s
decision to institute reexamination in Hiniker. Comparing the language of § 303(c) with that of
§ 314(d), the court concluded that it was even clearer that Cuozzo’s appeal should be dismissed.
The Federal Circuit did indicate that “mandamus may be available to challenge the PTO’s
decision to grant a petition to institute IPR after the Board’s final decision in situations where the
PTO has clearly and indisputably exceeded its authority.” However, the court noted that three
conditions must be satisfied:
Even if § 314 does not bar mandamus after a final decision, at least "three
conditions must be satisfied before [a writ of mandamus] may issue." Cheney v.
U.S. Dist. Court for the D.C., 542 U.S. 367, 380, 124 S. Ct. 2576, 159 L. Ed. 2d
459 (2004). "First, 'the party seeking issuance of the writ [must] have no other
adequate means to attain the relief he desires.'" Id. (quoting Kerr v. U.S. Dist.
Court for the N. Dist. of Cal., 426 U.S. 394, 403, 96 S. Ct. 2119, 48 L. Ed. 2d 725
(1976) (alteration in original)). That condition appears to be satisfied since review
by appeal is unavailable. "Second, the petitioner must satisfy 'the burden of
showing that his right to issuance of the writ is clear and indisputable.'" Id. at 381
(internal quotations, citation, and alterations omitted). "Third, the issuing court, in
the exercise of its discretion, must be satisfied that the writ is appropriate under
the circumstances." Id. (citation omitted).
In Cuozzo, the court determined that, even if it were to treat the appeal as a mandamus petition,
there was “no clear and indisputable right that precludes institution of the IPR proceeding.”
Thus, even though the court concluded that the “no other adequate remedy” requirement
appeared to be met due to the lack of any appeal, mandamus was not available given the facts of
this case. The court did not decide “whether mandamus to review institution of an IPR after final
decision is available in other circumstances.”
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Judge Newman dissented: According to Judge Newman, the panel majority in Cuozzo “thwarts
the statutory plan” to provide “a far-reaching and powerful surrogate for district court validity
determinations.” With respect to the majority’s determination that § 314(d) bars the Federal
Circuit’s review of all PTAB institution decisions, Judge Newman observed that such a
determination “negat[es] the purpose of the America Invents Act to achieve correct adjudication
of patent validity through Inter Partes Review in the administrative agency.” In Judge
Newman’s opinion, § 314(d) only bars review of interlocutory proceedings, not review after a
final decision by the agency.
While several mandamus petitions have been filed in the Federal Circuit, the court has yet to
grant one. Thus, it has not clearly identified fact patterns that would justify such a grant. In the
following cases, the court has identified certain fact patterns in which the grant of a mandamus
petition has been denied:
In In re Redline Detection, LLC, 547 Fed. Appx. 994 (Fed. Cir. 2013) (non-precedential), the
court denied a mandamus petition based on its determination that mandamus was not available to
compel the PTAB to accept certain submissions. The court noted that “mandamus is rarely a
proper means by which an appellate court should take up such evidentiary matters” which
matters “can be reviewed after the Board’s final decision.”
In In re MCM Portfolio, LLC, 554 Fed. Appx. 944 (Fed. Cir. 2014) (non-precedential), MCM
filed a mandamus petition to direct the PTO to withdraw its order instituting inter partes review.
MCM’s petition was based on the allegation that §315(b) barred review because of a relationship
between the Petitioner HP and a party MCM had sued more than one year before the petition was
filed. The court denied the mandamus petition “without prejudice to MCM attempting to raise
its section 315(b) arguments on appeal after final decision by the Board.”
In In re Dominion Dealer Sol’ns, LLC, 749 F.3d 1379 (Fed. Cir. 2014), the court denied a
mandamus petition to direct the PTO to institute inter partes review. Its denial was based on the
court’s analysis of the requirements for a writ of mandamus and on its determination on the same
day in St. Jude Med. v. Volcano (discussed above), that the Director’s decision not to institute
review is not appealable because of §314(d) that states “whether to institute an inter partes
review … shall be final and nonappealable.” With respect to the availability of mandamus, the
court concluded that Dominion had “no ‘clear and indisputable’ right to challenge a noninstitution decision directly in this court, including by way of mandamus.” The court noted that
the Eastern District of Virginia had agreed with the government that the broad language of §
314(d) precluded judicial review in the district court as well in Dominion Dealer Solutions, LLC
v. Lee, No. 3:13CV699 (E.D. Va. Apr. 18, 2014) but did not decide that issue in this case.
In The Procter & Gamble Co., LLC, 749 F.3d 1376 (Fed. Cir. 2014), prior to the PTAB’s final
written decision, patent owner Procter & Gamble filed a mandamus petition asking the Federal
Circuit to direct the USPTO to withdraw its orders instituting inter partes review. Its petition
was based on its allegation that § 315(a) barred review because the petitioner had previously
filed a declaratory judgment action alleging that the subject patents were invalid. That action
had been dismissed without prejudice. Finding that there was no “clear and indisputable right”
to immediate review nor “irremediable interim harm, the court denied the petition, concluding
that “immediate review of such a decision is not available in this court.” Again, the court
observed: “Perhaps section 314(d)’s broad language precludes all judicial review, even in an
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eventual section 319 appeal,” but did not decide that question in this case.
2.
Challenges to PTAB Rulings in the Eastern District of Virginia
The Eastern District of Virginia has decided several cases relating to the issue of whether and
when a patent owner can obtain judicial review of the PTO’s decision to institute inter partes
review. Thus far, no patent owner has succeeded in doing so.
The first case was filed and decided before any of the cases discussed above, including the
Cuozzo decision. That case was Versata Development Corp. v. Rea, 959 F.Supp.2d 912 (E.D.
Va. April 17, 2013) (Lee, J.). It arose out of the first covered business method patent review to
be filed in the USPTO in which the PTAB broadly interpreted “covered business method patent”
and determined the claims were not eligible for patenting under 35 U.S.C. § 101. Prior to the
PTAB’s final written decision, Versata challenged institution of the review proceeding under the
Administrative Procedure Act (“APA”) based on the PTAB’s interpretation of “covered business
method patent” and on its application of § 101. The USPTO and Intervenor SAP filed motions
to dismiss under Rules 12(b)(1) and 12(b)(6). The district court granted the motions to dismiss
based on the following reasoning:
The first issue is whether the AIA precludes judicial review of the PTAB's
decision to institute post-grant review in accordance with the AIA. The Court
holds that it lacks subject matter jurisdiction over Plaintiff's claim because the
AIA's express language, detailed structure and scheme for administrative and
judicial review, legislative purpose, and nature of the administrative action evince
Congress's clear intent to preclude subject matter jurisdiction over the PTAB's
decision to institute patent reexamination proceedings. Therefore, Plaintiff's
claims are dismissed for want of subject matter jurisdiction under the clear
statutory guidance provided by the AIA.
The second issue is whether the PTAB's statutory interpretation regarding
institution of post-grant review proceedings constituted a "final agency action" for
which there is no other adequate remedy in a court, thereby providing Plaintiff a
cause of action to bring challenge to such decision in this Court. The Court holds
that the decision to institute post-grant review is merely an initial step in the
PTAB's process to resolve the ultimate question of patent validity, not a final
agency action as contemplated by 5 U.S.C. § 704. The decision to institute patent
reexamination proceedings is not the consummation of an agency's decision
making process, nor does it elicit rights or obligations, and Plaintiff retains an
alternative adequate remedy through appeal to the Court of Appeals for the
Federal Circuit. Therefore, as an alternative ground for dismissal, Plaintiff's
challenge to the PTAB's decision to institute post-grant review is dismissed for
failure to state a claim.
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Id. at 915. In discussing whether Versata would have an adequate remedy in its direct appeal to
the Federal Circuit, the district court stated:
…. Upon appeal of the PTO's determination, the Court of Appeals for the
Federal Circuit shall receive "a certified list of the documents comprising the
record in the Patent and Trademark Office." 35 U.S.C. § 143. The record would
thus include Plaintiff's written and oral appeals to the PTAB regarding the
PTAB's interpretation of "covered business method." In requiring the court to
"review the decision from which an appeal is taken on the record before the
[PTO]," nowhere is it indicated that the Federal Circuit will refuse to consider the
entire administrative record. See 35 U.S.C. § 144.
Id. at 927. At this time, Versata’s Federal Circuit appeals from the PTAB’s final decision and
from the district court dismissal are pending. The cases were argued on December 3, 2014.
Two later APA cases, filed in the Eastern District, stemmed from the inter partes review,
Synopsis, Inc. and Mentor Graphics Corp.
In the first of these cases, Mentor Graphics Corp. v. Rea, No. 1:13-cv-518, 2013 U.S. Dist.
LEXIS 10456 (E.D. Va. July 25, 2013), patent owner Mentor Graphics sought judicial review of
the USPTO’s decision to institute inter partes review and asked the district court to enjoin the
proceeding. The USPTO, joined by Intervenor Synopsys, filed a motion to dismiss. The district
court granted the motion because it found (1) the institution was not a final agency action and (2)
“Mentor had another adequate remedy available in the Federal Circuit.”
In the second case, Synopsys, Inc. v. Lee, 1:14cv00674-JCC-IDD, 2014 U.S. Dist. LEXIS
144089 (E.D. Va. Oct. 9, 2014) (Cacheris, J.), following the PTAB’s final written decision,
petitioner Synopsys challenged the USPTO’s authority to institute review of only some of the
challenged claims (“partial review”) and its promulgation of USPTO’s 37 C.F.R. § 42.108 which
authorizes such review. Synopsys argued that the Office had exceeded its statutory authority in
doing so, citing inter alia 35 U.S.C. § 318(a) which reads: “[T]he Patent Trial and Appeal Board
shall issue a final written decision with respect to the patentability of any patent claim challenged
by the petitioner ….” The USPTO filed a motion to dismiss under Rule 12(b)(1).
Not unexpectedly, given the district court’s prior decisions, Judge Cacheris granted the USPTO’s
motion, finding the AIA precluded judicial review in the district court and that “the AIA
provides an alternative adequate remedy in the Federal Circuit. …” The case was appealed on
December 2, 2014.
In Cooper v. Lee, No. 1:14-cv-00672, 2015 U.S. Dist. LEXIS 19419 (E.D. Va. February 18,
2015), plaintiffs, whose patents were the subject of inter partes review, challenged the
constitutionality of inter partes review prior to a final written decision of the PTAB. The
plaintiffs position was that inter partes review “deprives Plaintiffs of their right to have the
matter adjudicated before an Article III tribunal.” Both parties moved for summary judgment.
The district court denied plaintiffs motion and granted the USPTO’s “because Plaintiffs have not
exhausted administrative remedies before seeking judicial relief.”
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In granting the USPTO’s summary judgment motion, the court further relied on the Federal
Circuit’s decisions in Patlex v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985) and Joy Techs., Inc.
v. Manbeck, 959 F.2d 226 (Fed. Cir. 1992) to suggest that plaintiff’s constitutional challenge
would “ultimately fail.” In each of these cases, the Federal Circuit upheld the constitutionality of
ex parte reexamination, and the Supreme Court refused to grant certiorari on the constitutionality
question.
With respect to the court’s determination that plaintiffs had not exhausted their administrative
remedies, the court pointed to the language of § 314(d), i.e., that the decision whether to institute
inter partes proceedings is “final and nonappealable,” and cited the Versata case discussed
above. The court again noted that the AIA limited judicial review “only once the PTAB’s ‘final
written decision’ has issued” and limited “the forums for challenging inter partes review
determinations” to the Federal Circuit. According to the court, the constitutionality issue could
be raised before the Federal Circuit as part of an appeal of the PTAB’s final written decision.
The court recognized there are two exceptions to the exhaustion doctrine, i.e., “(1) when a statute
is ‘patently unconstitutional or an agency has taken a clearly unconstitutional position’ [‘clear
right’ exception]; and (2) where the litigant will suffer ‘irreparable injury’ without immediate
judicial relief [‘irreparable injury’ exception’].” However, the court determined that no
exceptions applied in this case.
In discussing the constitutionality issue, the court compared ex parte reexamination to inter
partes review and concluded that the two “schemes … mirror each other in three key ways.”
First, both authorize the PTO to review the validity of an issued patent despite
the availability of federal court review of that patent. Compare 35 U.S.C. § 302
("Any person at any time may file a request for reexamination by the [PTO] of
any claim of a patent on the basis of any prior art cited under the provisions of
section 301.") (ex parte reexamination), with 35 U.S.C. § 311 ("[A] person who is
not the owner of a patent may file with the [PTO] a petition to institute an inter
partes review of the patent.").
Second, both ex parte reexamination and inter partes review do not give an
issued patent a presumption of validity and construe the claims of an issued patent
using their broadest reasonable interpretation. See 35 U.S.C. § 316(e) ("In an inter
partes review instituted under this chapter, the petitioner shall have the burden of
proving a proposition of unpatentability by a preponderance of the evidence.").
Finally, both ex parte reexamination and inter partes review allow for Article III
judicial review of the PTAB's decision at the conclusion of the administrative
proceedings. See 35 U.S.C. §§ 306, 319.
Based on this analysis, the court concluded that “there is no constitutionally-significant
distinction between the system of ex parte reexamination at issue in Patlex and Joy and the inter
partes review system at issue here.” Thus, according to the court, the “clear right” exception did
not apply. And neither did the “irreparable injury” exception apply because the “only cognizable
‘injury’ was the cost associated with inter partes review proceedings.”
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A Notice of Appeal was filed in the Federal Circuit on February 19, 2015.
3. Appeal from final written decisions (§ 318(a)): Written opinions, Rule 36, and the Wave
of Coming Appeals
The Federal Circuit has only recently started issuing orders in cases on appeal from post-AIA
final written decisions of the PTAB. As of the date of this writing, the Federal Circuit has issued
two written opinions addressing PTAB decisions on the validity of challenged patents. In most
cases, however, the Federal Circuit has affirmed the PTAB without opinion, pursuant to Fed. Cir.
R. 36.
The first Federal Circuit opinion to address issues on appeal was Cuozzo, discussed in detail
above. A split Federal Circuit panel affirmed the PTAB’s determination that the challenged
claims were obvious, and held that it had no jurisdiction to review on appeal the PTAB’s
decision instituting the underlying Inter Partes Review (“IPR”) trial and that the PTAB properly
employed the “broadest reasonable interpretation” (“BRI”) standard in construing the reviewed
claims. In holding that the Federal Circuit does not have jurisdiction to review the PTAB’s
institution decision, the court relied primarily on 35 U.S.C. § 314(d), which is entitled “No
appeal,” and provides that “[t]he determination by the Director [of the PTO] whether to institute
an inter partes review under this section shall be final and nonappealable.” The Federal Circuit
further found no error in the PTAB’s obviousness determination for the challenged claims,
indicating that, on appeal, it was reviewing factual findings under a “substantial evidence”
standard, and legal conclusions de novo. Judge Newman dissented from the majority, arguing
that “several of the panel majority’s rulings are contrary to the legislative purpose of the [AIA],”
which was meant to provide “quick and cost effective alternatives to litigation.” Much of the
dissent rests on the view that PTAB proceedings are meant to be “a surrogate for district court
litigation,” and thus should “apply the same legal and evidentiary standards as would apply in the
district court.” While Judge Newman did not dispute the specific claim construction upheld by
the majority or the majority’s obviousness findings, Judge Newman was critical of the majority’s
endorsement of the “broadest reasonable interpretation” standard for construing claims in IPR
proceedings, which she contends “defeats the legislative purpose of substituting administrative
adjudication for district court adjudication. Judge Newman also was critical of the majority’s
holding that an institution decision is never appealable “even if contrary to law, even if material
to the final appealed judgment,” taking the view instead that “[t]he purpose of the
‘nonappealable’ provision apparently is to bar interlocutory proceedings and harassing filings by
those seeking to immobilize the patent or exhaust the patentee.”
In the second opinion, Belden Inc. v. Berk-Tek LLC, No. 14-1676 (Apr. 17, 2015), the Federal
Circuit affirmed the PTAB’s decisions in two IPRs cancelling the challenged claims of two
patents as anticipated and/or obvious. In affirming the PTAB’s decisions, the court rejected
Appellant Belden’s arguments that the Board erred in construing various terms in the claims.
For example, the court agreed with Appellee that the term “channel” was correctly construed
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“according to its ordinary meaning and the intrinsic record.” The Board had relied upon a
dictionary definition, which the court determined to be “an adequate starting point” where “the
specification does not recite, much less define, ‘channels.’” The court also found the Board’s
construction of “channels” to be consistent with the patents’ parent patent, which was
incorporated by reference into each and therefore was “part of the prosecution history and the
specification”—making it appropriate for the Board to rely on for guidance even though it was
not raised in the petition or the Board’s decision to institute. The court also rejected Belden’s
argument that the claims required the claimed wire structure to be made by a certain method of
manufacture—finding that the claims were directed to a product with no specific method for
achieving the claimed structure. Further, the court rejected Belden’s arguments that the Board
erred in finding certain claims obvious through the combination of prior art references.
As noted above, the majority of the Federal Circuit’s orders have been affirmances pursuance to
Fed. Cir. R. 36. For example, in Softview v. Kyocera (Nos. 14-1599, -1600), the Federal Circuit
affirmed without opinion, pursuant to Fed. Cir. R. 36. In Case No. 14-1599, Appellant Softview
had complained of various “due process rights” violations, including the Board permitting
petitioner to present new opinions on key prior art presented in a 90-page reply declaration.
Specifically, Softview complained of the Board’s denial of its motion to exclude, sur-reply, and
motion to strike. Softview also had complained of the Board’s referencing the new prior art in
its final decision, and reliance on new claim constructions. In Case No. 14-1600, Appellant
Softview had complained that the Board erred in its claim construction and in concluding that the
construed elements of the claim obvious. Moreover, Appellant argued that the Board erred in its
treatment of secondary considerations.
In Board of Trustees v. Micron Technology, Inc. (Nos. 14-1509, -1510, -1511), the Federal
Circuit affirmed without opinion, pursuant to Fed. Cir. R. 36. Appellant Board of Trustees of the
University of Illinois had complained that the Board erroneously determined that prior art
inherently yielded the claimed improvement of the patented invention—arguing that both experts
presented experimental data that supported, at most, the possibility of an improvement.
Appellant further argued that the Board erroneously concluded that the patent claim was
rendered obvious by prior art.
In Helferich Patent Licensing, LLC v. CBS Interactive, Inc. (No. 14-1556), the Federal Circuit
affirmed without opinion, pursuant to Fed. Cir. R. 36. Appellant Helferich Patent Licensing had
complained of the Board’s obviousness determinations as improper in view of the fact that the
PTO during reexamination had previously rejected the proposition accepted by the Board.
Appellant further argued that the Board’s claim constructions were unreasonably overbroad and
the Board’s refusal to allow Appellant to amend the claims was contrary to the Board’s own
regulations.
In Clearlamp, LLC v. LKQ Corp. (14-1627), the Federal Circuit affirmed without opinion,
pursuant to Fed. Cir. R. 36. Appellant Clearlamp had complained of the Board’s obviousness
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determination as using impermissible hindsight and failing to apply BRI in view of the
specification. In Appellant’s view, the Board adopted unreasonably broad interpretations of the
claims that were “at odds with the specification.” Appellant further argued that the Board should
have applied the Phillips standard of claim construction instead of BRI. Appellant also argued
that the Board impermissibly shifted the burden of proof to Appellant and failed to give proper
consideration to secondary considerations.
In Luv N’ Care Ltd. v. Munchkin, Inc. (14-1653), the Federal Circuit affirmed without opinion,
pursuant to Fed. Cir. R. 36. Appellant Luv N’ Care appealed the holding of invalidity of the
claim of its design patent. Specifically, Luv N’ Care had complained that it was unfair for the
Board to set forth the priority claim issues at trial in its institution decision, but decide priority on
different grounds—purportedly depriving Luv N’ Care the opportunity to provide evidence on
the decided grounds. Further, Luv N’ Care complained of the Board’s denial of priority as
contrary to facts presented regarding the inventor’s possession of the claimed invention at the
time he filed the parent utility application. Finally, Luv N’ Care complained that the Board
failed to consider or apply the appropriate burden of proof in its determination that the
challenged patent claim lacked written description support from its parent.
4. Stays in District Court Pending CBM Review Outcomes: Jurisdiction and Discretion
In a number of cases, the Federal Circuit has considered the district courts’ denials of stays
pending CBM review under the interlocutory appeal provisions provided under AIA § 18(b)(2),
including – in one case – its own jurisdiction under those provisions to review such denials
where a PTAB proceeding has not yet been instituted.
In VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307 (Fed. Cir. 2014), a split Federal
Circuit panel concluded that the Eastern District of Texas (Judge Gilstrap) “clearly erred” in
finding that the factors under AIA § 18(b)(1) did not favor a stay pending CBM review. In
particular, the court, on interlocutory appeal, found it was error to conclude that the four stay
factors provided by Congress for CBM reviews did not favor a stay where defendants had moved
for a stay five days after Salesforce filed a petition for CBM review of all claims of the asserted
patent, although the court saw no error in the district court’s decision to wait to rule on the stay
motion until after the PTAB rendered its decision on institution. In dissent, Judge Newman
stated that the grant of a stay was within the district court’s discretion and not available as a
matter of right, and—upon review of the district court’s consideration of the four factors—Judge
Newman concluded that the district court did not abuse its discretion in weighing the factors and
denying a stay. Notably, after the motion to stay was denied at the district court, the defendants
moved to stay district court proceedings pending disposition of the interlocutory appeal, but
received such a stay only after it was imposed by the Federal Circuit.
In Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368 (Fed. Cir. 2014) vacated 780
F.3d 1134 (Fed. Cir. 2015), the Federal Circuit reversed and remanded a denial by the District of
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Delaware (Judge Robinson) of a stay pending CBM review. Defendant Callidus filed two sets of
CBM petitions—the first set before Versata had identified asserted claims in the litigation. At
the time it filed the first set of petitions, Callidus sought a stay of the district court proceedings.
Subsequently, Versata identified asserted claims and Callidus filed a second set of CBM
petitions challenging the validity of claims not previously challenged in the earlier petitions.
After institution of the first set of CBM petitions, the district court granted the stay as to one of
the patents, but not the others. Callidus filed an interlocutory appeal from the district court’s
partial denial of the stay. The Federal Circuit concluded that “the factors when taken together
strongly favor[ed] a stay pending CBM review,” reversing the district court and remanding with
instructions to grant the motion to stay. The decision was later vacated as a result of settlement.
In Intellectual Ventures II LLC v. JPMorgan Chase & Co. (No. 14-1724), a split Federal Circuit
panel dismissed JPMorgan Chase’s (“JPMC”) appeal from the Southern District of New York’s
denial of its motion to stay an infringement suit pending JPMC’s CBM petitions on two of five
asserted patents. In denying the motion, the district court had applied the four-factor test set
forth in AIA § 18(b)(1) and decided that, because three asserted patents were not covered by the
CMB petitions filed and the PTAB had not yet initiated proceedings, district court litigation
would be resolved more quickly than CBM proceedings. The district court ultimately concluded
that JPMC’s argument that the PTAB’s resolution of the CBM petitions would reduce the court’s
workload was speculative. On interlocutory appeal, the Federal Circuit concluded that AIA
§ 18(b)(2) does not grant the Federal Circuit jurisdiction over interlocutory appeals of a district
court’s denial of a motion to stay where a CBM petition has been filed but proceedings have not
yet been instituted by the PTAB. In reaching its conclusion, the court construed the statute to
determine the appropriate interpretation of “proceeding”—ultimately finding the “AIA
differentiates between a petition for a CBMR proceeding (which a party files) and the act of
instituting such a proceeding (which the Director is authorized to do).” In JPMC’s case, the act
of instituting had yet to occur. The Federal Circuit accordingly dismissed JPMC’s appeal for
lack of jurisdiction.
5. Estoppel
The application of estoppel – a likely subject of significant future attention – has already been
considered in district court and at the PTAB, helping to provide early guidance on how broadly
courts may find actions at the PTAB to trigger estoppel as to arguments later raised in later
litigation, or the Board may find them to trigger estoppel at the Office in later petitions.
In Star EnviroTech, Inc. v. Redline Detection, LLC et. al., No. 8-12-cv-01861 (C.D. Cal.), a case
that had resumed at the district court following a PTAB final written decision in which the Board
found Defendant Redline had failed to show the challenged claims to be unpatentable, Plaintiff
moved to strike Defendants’ invalidity contentions—and in particular sought to exclude seven
references cited by Defendants that Plaintiff contended were raised or reasonably could have
been raised by Defendants in their prior IPR petition. In its invalidity contentions, Defendants
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relied, as part of its combination of references, on a prior art product made by Plaintiff.
Defendants argued they could not have raised this prior art in IPR because it was not a patent or
printed publication. Plaintiff responded that in the IPR proceeding, where Defendants failed to
show the claims were unpatentable, Defendants could have raised the manual for the prior art
product now relied on in the litigation contentions. The court, however, denied the motion to
strike, finding that the physical product could not have been raised as prior art in the IPR, and
noting (as argued by Defendants) that it also disclosed features not found in the instruction
manual, and was therefore a superior and separate reference.
In Dell Inc. v. Elecs. & Telecomms. Research, Inst., IPR2015-00549 (Mar. 26, 2015, Paper 10,
Decision Denying Institution), in an order denying institution of an IPR, the PTAB concluded
that Petitioner was estopped from requesting inter partes review because, “[u]nder 35 U.S.C.
§ 315(e)(1), once a Petitioner has obtained a final written decision, that Petitioner may not
request or maintain subsequent proceedings on a ground that ‘it could have raised’ during the
prior proceeding.” Here, the PTAB found that the Petitioner was the same as in a prior petition,
and that the prior petition resulted in a final written decision that overlapping challenged claims
had not been shown to be unpatentable. Moreover, the current (denied) petition relied on prior
art that Petitioner had previously cited in the prior concluded IPR to challenge the same patent.
Accordingly, the PTAB found that Petitioner’s grounds for invalidity could have been raised in
the prior petition, and denied institution on that basis for those overlapping claims. (As to two
claims that had not previously been challenged, the Board declined to grant partial joinder with
an earlier-pending IPR, and the current petition was accordingly time-barred.)
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