No second guessing the PTAB: Federal Circuit reverses E.D. Tex. denial of stay pending CBM review in automatic appeal under AIA § 18(b)(2).

Published July 10, 2014

In an automatic interlocutory appeal from the district court’s denial of defendants’ motion to stay pending CBM review, the Federal Circuit found that the district court committed legal error by reviewing the PTAB’s decision to institute. The district court had given little weight to Section 18(b)(2)’s “simplification of issues” and “burden of litigation” factors, largely because it was “not convinced” by the PTAB’s initial assessment of patentability. The Federal Circuit, noting that “the stay determination is not the time or the place to review the PTAB’s decisions to institute,” found that the remaining evidence on the “simplification” and “burden” factors weighed heavily in favor of a stay.

The panel greenlighted the district court’s decision to wait until institution of the CBM before deciding the stay motion. In finding that the second “timing” factor weighed heavily in favor of a stay, the panel noted that “[g]enerally, the time of the motion is the relevant time to measure the stage of litigation.” On the remaining factor, “undue prejudice,” the panel found the patent owner’s failure to move for a preliminary injunction resulted in this factor being only slightly neutral. Finding that three of four factors weighed heavily in favor of a stay, the Federal Circuit reversed.

Of note, the panel passed on deciding whether the AIA § 18 mandates de novo review, finding reversal proper even under the stricter abuse of discretion standard. The statute leaves some ambiguity on this point, stating “review may be de novo.”

The case is VirtualAgility Inc. v., Inc. et al., 759 F.3d 1307 (Fed. Cir. 2014), Judges Moore and Chen with a dissent by Judge Newman.

Strategy Tip: file your stay motion promptly after your CBM (or IPR) petition; doing so increases the chances that the “litigation stage” factor will weigh in favor of a stay.

VirtualAgility Inc v., Inc. et al


By Andrew M. Mason