District Court Partially Denies Stay Motion Where CBM Review Did Not Encompass All Patents-in-Suit

by Jeffer Mangels Butler & Mitchell LLP

Plaintiffs Versata Software, Inc. and Versata Development Group, Inc. (collectively, "Versata") filed a patent infringement action in July 2012 against defendant Callidus Software, Inc. ("Callidus") The patents were all characterized as "covered business method patents."

Callidus filed a challenged to the validity of the patents-in-suit in August 2013, pursuant to the "covered business method" ("CBM") patent review process provided for under the America Invents Act. As explained by the district court, "[t]he CBM petitions were filed by Callidus some 13 months after suit was filed and after Callidus had instituted a motion practice which included motions to dismiss and/or transfer. On March 4, 2014, the Patent Trial and Appeal Board ("PTAB") granted review of the patents-in-suit, finding it more likely than not that the challenged claims are directed to non-statutory subject matter and, therefore, unpatentable under 35 U.S.C. § 101."

Finding that the PTAB had actually instituted review of certain claims of the patents-in-suit, the district court deemed it appropriate to review Callidus' motion to stay. "The court notes at the outset that Callidus chose to seek limited CBM review before the PTAB on a subset of the patent claims at issue. More specifically, the PTAB's CBM patent review will not address claims 3-12, 14, 16-27, 29, and 31-34 of the '024 patent, or claims 3, 4, 7-11, 26, and 33-38 of the '304 patent. (D.I. 84 at 1) As noted by Versata, Callidus itself has asserted three of its own patents and more than 30 patent claims against Versata, all of which remain to be litigated. (Id.)"

The district court then analyzed whether a stay would be appropriate under the CBM provisions of the America Invents Act. "Looking to the standard enunciated by Congress, the court is not convinced that the PTAB's review of a subset of claims will simplify, to any meaningful extent, the issues in question or help streamline the trial. Although discovery is not complete, the trial date that is scheduled is within months of when the PTAB is expected to issue its decision. Given the fact that Callidus has affirmatively asserted its patents against Versata, it is apparent that Callidus is playing the stay card as both a sword and a shield, moving forward on its interests but denying Versata the opportunity to do the same, thus presenting a clear tactical advantage for Callidus, the moving party. Finally, Callidus clearly is defending against the asserted claims of infringement aggressively, having engaged the court and Versata in a preliminary motion practice before resorting to the administrative avenue for relief and the resulting stay motion. Under the circumstances of this case, Callidus' tactics have actually increased the burdens of litigation, rather than reduced them."

Accordingly, the district court concluded that only a partial stay was warranted. "Despite the presence of Congress' thumb on the scales of justice, the court concludes that a complete stay, under the circumstances at bar, will not simplify the issues or reduce the burdens of litigation. Because the PTAB's CBM patent review process will not significantly limit the parameters of the litigation as to the `024 and '304 patents, and is likely to be completed close in time to the scheduled trial in this case,' defendant's motion to stay is denied as to these two patents. Defendant's motion to stay is granted as to the '326 patent.'"

Versata Software, Inc. v. Callidus Software, Inc., Case No. 12-931-SLR (D. Del. May 2014)


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Jeffer Mangels Butler & Mitchell LLP

Jeffer Mangels Butler & Mitchell LLP on:

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