Differing Approaches to Stays of Co-Pending Litigation

By Griffin Mesmer

The United States Patent and Trademark Office (“PTO”) is quickly becoming a popular forum for parties who have been accused of patent infringement.  A defendant can challenge the validity of an asserted patent by filing a petition for inter partes review (“IPR”) with the PTO while the infringement suit is pending in another forum.  After filing an IPR, the potential infringer can move to stay the co-pending infringement suit pending a decision in the IPR.  To evaluate whether a stay will be granted, is necessary to consider in what forum the patent litigation suit is taking place.  Different forums use different approaches and may reach different results when determining whether to grant a stay.

Patent infringement suits are most often brought in the federal district courts under Section 281 of the US Patent Laws (35 U.S.C. § 281).  However, the United States International Trade Commission (“USITC”) also has limited jurisdiction to hear allegations of infringement.  Under Section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337), the USITC has jurisdiction to conduct investigations into allegations of certain unfair practices in import trade.  These practices include infringement of certain statutory intellectual property rights, including patent rights.  However, differences between federal court practice and ITC regulations lead to judges taking different approaches when considering whether to grant a motion to stay pending an IPR, potentially leading to different results.

This can be seen by examining the Northern District of California case, STMicroelectronics, Inc. v. Invensence, Inc., No. C 12-02475 JSW (Feb. 27, 2013) and the USITC investigation, Certain Microelectromechanical Systems (“MEMS Devices”) and Products Containing the Same, Inv. No. 337-TA-876, Order No. 6 (May 21, 2013).  The judges in both addressed the issue of whether to grant a motion to stay litigation pending an IPR, and the cases involved the same parties and the same patents.  The defendant in STMicroelectronics filed an IPR with the PTO and then successfully moved to stay the district court action.  Subsequently, the plaintiff in STMicroelectronics filed a complaint in the USITC, becoming the complainant in MEMS Devices, and the defendant became the respondent.  Like in STMicroelectronics, the respondent filed a motion to stay the action pending resolution of the IPR.  However the motion to stay in the ITC was denied.

District courts use a three factor balancing test when determining whether to grant a motion to stay, as discussed in our earlier article: IPR and Stays of Co-Pending Litigation.  In STMicroelectronics, the court followed this test and balanced the three factors: (1) whether the litigation is at an early stage; (2) whether a stay will unduly prejudice or provide a tactical disadvantage to the non-moving party; and (3) whether a stay will simplify the issues in question.

The court granted the motion to stay pending the IPR, finding that the first factor weighed in favor of granting a stay because the case was still in its early stages.  Next, the Court found that a stay would not unduly prejudice the plaintiff.  Additionally, because a stay did not present a clear tactical advantage to either party, a general delay in litigation does not constitute undue prejudice.  Finally, the court found that a stay would simplify the issues because validity was in issue in the patent infringement suit and could be resolved by the IPR.

In MEMS Devices, the Administrative Law Judge (“ALJ”) applied a different balancing test to determine whether to grant a motion to stay.  Based on prior Commission Opinions, the ALJ determined that a stay pending an IPR should be evaluated using six factors: (1) the state of discovery and the hearing date; (2) whether a stay will simplify the issues and hearing of the case; (3) the undue prejudice or clear tactical disadvantage to any party; (4) the stage of the PTO proceedings; (5) the efficient use of Commission resources; and (6) the availability of alternative remedies in Federal Court.

The ALJ denied the motion to stay pending the IPR.  First, similar to the district court, the ALJ found that the investigation was in its early stages and this weighed in favor of a stay. Second, the ALJ stated that a stay will simplify the issues and hearing of the case.  However, the ALJ noted the limited weight of this factor because the impact the IPR will have cannot be known in advance. Third, unlike the district court, the ALJ determined that the complainant would be unduly prejudiced by a stay, finding the respondent posed permanent harm to the complainant’s domestic industry while the IPR would be pending.  Fourth, the ALJ found that the early stage of the IPR weighed against the stay because, like IPRs, Section 337 investigation must be completed within statutorily set time period. Fifth, the ALJ found that a decision would likely not affect the efficient use of Commission resources.  Finally, the ALJ found that the difference in procedure and remedies offered between the USITC and the district court weighed against a stay.  Unlike in district court, the parties in the USITC may not obtain monetary obtain monetary damages and therefore, may not obtain relief for a violation until exclusion or cease and desist orders are issued.

A review of these two cases reveals the importance of considering the forum of a patent infringement suit when evaluating whether a motion to stay pending an IPR will be granted.  The difference between the rules and procedures of each forum leads to differing approaches to stays of co-pending litigation and may lead to different results.

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