[co-author: Jessica Vedrani]*

Congress implemented the Leahy-Smith America Invents Act (“AIA”) to “establish a more efficient and streamlined patent system that [would] improve patent quality and limit unnecessary and counterproductive litigation costs.” 77 F. Reg. 48680-01 (Aug. 14, 2012). Through the AIA, Congress established inter partes reviews (“IPR”) “to create a timely, cost-effective alternative to litigation.” Id. In some instances, district courts stay civil patent litigation cases where the patents-in-suit are subject to pending IPR before the Patent Trial and Appeal Board (“PTAB”). But the decision to stay is ultimately left to the district court’s discretion with the court’s inherent power to control its own docket.

On April 6, 2023, Judge Mazzant in E.D. Tex. denied the defendant’s motion to stay in light of instituted IPRs in SB IP Holdings, LLC v. Vivint, Inc., No. 4:21-cv-00912 (E.D. Tex. 2023). Earlier, in October 2022, the defendant, Vivint, Inc. (“Vivint”), filed a motion to stay litigation in light of its petitions for IPRs challenging all six patents-in-suit. At the time of filing, Vivint had petitioned for IPRs on all six patents-in-suit and the PTAB had instituted IPRs for all but one patent, US 7,193,644 (“the ’644 patent”), whose Petition was yet to be decided. Vivint asserted, amongst other rationales, that because all six patents were part of the same patent family, the stay should be granted.

According to the Court, “courts in this district typically refrain from ruling on the motion pending action by the PTAB or deny the motion without prejudice to refiling in the event that the PTAB institutes a proceeding.” SB IP Holdings, LLC at 2. Because the PTAB had not instituted an IPR for the ’644 patent, the court exercised its discretion to deny the motion stating that it was premature to make a decision at that time.

Overview of Motions to Stay Pending IPR

Courts typically analyze the decision of whether or not to stay pending IPR based generally on a three factor test: (i) whether the stay will unduly prejudice the nonmoving party; (ii) whether the proceedings before the court have reach[ed] an advanced stage, including whether discovery is complete and a trial date has been set; and (iii) whether the stay will likely result in simplifying the issues for trial. Papst Licensing GmbH & Co., KG v. Apple, Inc., No. 6:15-CV-01095, 2017 WL 11638426, at *2 (E.D. Tex. June, 16, 2017). A stay is particularly justified when “the outcome of a PTO proceeding is likely to assist the court in determining patent validity or eliminate the need to try infringement issues.” NFC Tech. LLC v. HTC Am., Inc., No. 2:13-cv-1058, 2015 WL 1069111, at *1 (E.D. Tex. Mar. 11, 2015) (citing Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983)). Although courts vary in the language of the three factors, the key takeaway is the importance of timing and stage of litigation.

Timing: When to File Motion to Stay?

Regardless of the different facts and circumstances that play a vital role in judicial decisions to grant or deny a motion to stay, a review of these cases demonstrates that timing is often a dispositive element in evaluating whether to stay litigation. Both the second and third factors depend heavily on the timing of litigation.

As evidenced in SB IP Holdings, timing was the main factor in issuing the denial without prejudice, where the judge determined the motion was filed prematurely. At that point, it was still unclear whether the PTAB would institute an IPR on the sixth patent. With the absence of a ruling from the PTAB, the court opined it was best to hold off on granting this stay motion, while still affording the opportunity to raise the motion at a later point in the litigation process once this information arises.

When exactly is it the best time for a defendant to file a motion to stay? On the one hand, a filing may be premature if the PTAB has not acted or hinted at acting on instituting an IPR. On the other hand, while waiting for an institution to be granted, litigation progresses strengthening the patent owner’s argument for undue prejudice based on investment in the trial court proceeding. Early filing, even if a denial without prejudice is the likely outcome, may be a good strategy decision in many cases.

Jurisdictional Differences with Timing and Granting Motions to Stay

A motion to stay in patent litigation is a heavily fact-dependent analysis utilizing the factors listed above. However, in addition to timing, this analysis is also jurisdictional dependent.

In a survey of cases within the Eastern District of Texas, when the PTAB has not yet issued a decision on whether to institute an IPR, courts in this jurisdiction have frequently denied motions to stay—even when IPR petitions have already been filed on some patents in suit. See NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058, 2015 WL 1069111, at *2 (E.D. Tex. Mar. 11, 2015); Barkan Wireless IP Holdings, L.P. v. Samsung Elecs. Co., Ltd., No. 2:18-CV-00028, 2019 WL 8647996, at *2 (E.D. Tex. Mar. 15, 2019).

In contrast to the Eastern District of Texas, however, there are many cases in other districts where motions to stay have been granted pre-institution. See e.g., Evolutionary Intelligence LLC v. Yelp Inc. No. 13-CV-03587, 2013 WL 6672451, at *10 (N.D. Cal. Dec. 18, 2013); Cannarella v. Volvo Car USA LLC, No. 16-CV-6195, 2016 WL 9450451, at * 14-15 (C.D. Cal. Dec. 12, 2016). In Pragmatus AV, LLC v. Facebook, Inc., No. 11-CV-02168, 2011 WL 4802958, at *3 (N.D. Cal. Oct. 11, 2011). In Pragmatus, the court noted “[i]t is not uncommon for [courts] to grant stays pending reexamination prior to the PTO deciding to reexamine the patent” and provided numerous cases from varying jurisdictions that exercised this discretion. See e.g., Ho Keung Tse v. Apple Inc., No. 06-CV-06573, 2007 WL 2904279, at *2 (N.D. Cal. Oct. 4, 2007); Ralph Gonnocci Revocable Living Trust v. Three M Tools & Mach., Inc., No. 02-CV-74796, 2003 WL 22870902, at n.6 (E.D. Mich. Oct. 7, 2003).

Thus, consideration of one’s particular district and judge may be worthwhile when considering stay strategy.

Takeaways

Although Congress’ intent for IPRs was to provide a more streamlined and efficient system for consideration of some patent litigation issues, there has been significant variance in trial courts’ handling of motions to stay. As such, a decision on when to file a stay should consider the posture of one’s IPR petitions as well as the history of stay motion treatment in your venue.

*Summer Associate