District Court Stays Four Cases Pending PTAB Review of CBM Patents

Earlier today, Judge Pearson of the Northern District of Ohio stayed four co-pending district court cases involving patents subject to a number of ongoing Covered Business Methods (CBM) Post-Grant Reviews. See Progressive Casualty Insurance Co. v. Safeco Insurance Co., No. 1:10-cv-01370, Order resolving ECF No. 98, at 22 (N.D. Ohio Apr. 17, 2013). To date, no district court has ultimately denied a motion to stay pending CBM review.

Section 18(b)(1) of the AIA specifies four factors for determining whether to stay a case pending post-grant review of CBM patents:

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 and on the court.

Judge Pearson concluded that “[t]he analysis of the four-factor test . . . counsels in favor of granting each defendant’s motion to stay” and closed each of the cases pending notification of the completion of the CBM review.

Judge Pearson considered the legislative history of the factors identified in the AIA and concluded that “the test established by the AIA is designed to increase the likelihood that a stay will be granted when transitional CBM review, in comparison with an ordinary USPTO reexamination, has been instituted.” Examining the four factors, the court concluded that factor three (undue prejudice) “moderately points in favor of denying the motions to stay, [but] it is insufficient to defeat the remaining factors which strongly counsel in favor [of] staying the cases.” The court noted that “[b]ased on the preliminary determinations made by the PTAB, it appears that each claim in contention . . . across the five patents-in-suit, is ‘more likely than not’ to be invalidated.” With respect to the fourth factor, the court found that granting a “stay would relieve Liberty Mutual and Progressive of the burden of litigating in multiple fora” and that the “Court would be relieved of having to expend substantial judicial resources in deciding claim construction, noninfringement, and invalidity issues before those claims are invalidated, narrowed, or refined through CBM review.”

*Jonathan R.K. Stroud is a Law Clerk at Finnegan.