District Courts Grant Post-Institution CBM Stays 100% of Time

Section 18 of the AIA allows a defendant in a patent-infringement lawsuit to request a stay of that lawsuit pending resolution of post-grant review of a covered business method (CBM). Since CBMs became available last year, twenty-two parties have sought to stay district court litigation in view of CBM proceedings. Fifteen courts have decided the issue. District courts have granted all but two stay requests, and those two were both denied prior to CBM institution, with leave to re-file.

Courts have granted all fourteen stays requested or decided after the PTAB instituted the related CBM. The 100% stay rate illustrates courts’ willingness to stay cases while the PTAB considers validity issues. This aligns with Congress’s stated goals in enacting Section 18.

Section 18 provides that courts “shall” consider the following four factors when considering a CBM-related stay motion:

1. Whether stay will simplify issues and streamline trial;
2. Whether discovery is complete and trial date is set;
3. Whether stay will unduly prejudice the non-moving party;
4. Whether stay will reduce the burden of litigation.

AIA § 18(b)(1). According to Senator Charles Schumer (D–NY), the fourth factor “places a very heavy thumb on the scale in favor of a stay,” making it “nearly impossible to imagine a scenario in which a district court would not issue a stay.” 157 Cong. Rec. S1363–65 (daily ed. Mar. 8, 2011).

Two district courts—the Eastern District of Texas and the District of Delaware—have denied motions for stay filed before the PTAB decided whether to institute the requested CBM. Both denials were without prejudice, allowing the petitioners to seek a stay should the PTAB institute the corresponding CBM. In both cases, the CBM petitions were awaiting PTAB action, and had been neither denied nor instituted. Since then, the PTAB instituted one, and the party filed a second motion to stay, which the District of Delaware granted via an October 25 oral order.

To date, no party has appealed the grant or denial of a stay motion in a CBM-related litigation. Section 18 allows a party to seek an immediate interlocutory appeal of any decision on a stay motion to the Federal Circuit. The statute instructs the Federal Circuit to “review the district court’s decision to ensure consistent application of established precedent.” AIA § 18(b)(2). Because the Federal Circuit has not yet received an appeal of a CBM-related stay provision, the interpretation of this language will have to wait for another day.

Note: Many CBM petitions list dozens of co-pending litigations, in no small part due to the non-joinder provisions of the AIA. The cases listed here are only representative of each litigation group, which can be (and often are) multi-complaint and multi-district. Note too that parties' citations to district court cases vary wildly. We have tried to be consistent here, by way of example only.