Timing Is Everything When It Comes To Interlocutory Appeals of CBMR-Related Motions To Stay

GavelThe issue of when interlocutory appellate jurisdiction vests with the Federal Circuit under Section 18 of the AIA to review a district court’s decision on a motion to stay in view of a related CBMR was recently addressed in Intellectual Ventures II LLC, v. JPMorgan Chase & Co., et al., 2014-1724.

The filing of a motion to stay federal patent litigation in view of a related IPR or CBMR is commonplace.  Generally, a district court’s decision on such a motion is not immediately appealable under the final judgment rule governing appellate jurisdiction.  However, Section 18 of the AIA carves out a statutory grant of jurisdiction to the Federal Circuit to hear immediate interlocutory appeals of decisions on motions to stay “relating to a [CBMR] proceeding for that patent [asserted in the district court]…”  In Intellectual Ventures, the Federal Circuit held that a CBMR “proceeding” does not begin when the petition is filed, but, instead, only begins once the PTAB institutes review.  Therefore, the Federal Circuit’s jurisdiction to hear an interlocutory appeal of a decision on a motion to stay a case having a related CBMR only vests once the PTAB institutes review.

The underlying case is pending in the Southern District of New York, where Intellectual Ventures has asserted multiple patents against JPMorgan and other defendants.  About a year after the case was filed, JPMorgan filed a motion to stay based on its anticipated filing of four CBMR petitions.  Shortly thereafter, JPMorgan in fact filed two CBMR petitions (but did not file the other two promised petitions).  Applying the four-factor test set forth in AIA § 18(b)(1), the district court denied JPMorgan’s motion to stay.  JPMorgan filed an interlocutory appeal to the Federal Circuit, asserting that the Federal Circuit had jurisdiction under AIA § 18(b).  JPMorgan argued that (i) a CBMR “proceeding” begins as soon as a party files a CBMR petition, and (ii) alternatively, even if a CBMR “proceeding” does not commence until the PTAB institutes such a proceeding, a petition for a proceeding (or even the anticipation of the filing of a petition) is sufficiently “related” to a proceeding to give rise to jurisdiction under § 18(b)(2).  The Federal Circuit analyzed the statutory language of the AIA as well as the congressional record and concluded that a CBMR “proceeding” commences only when the PTAB institutes review.  The Federal Circuit also dismissed JPMorgan’s second argument, concluding that the clear language of AIA §18(b) only gives the Federal Circuit jurisdiction over a decision on a motion to stay “that is related to an actual CBMR proceeding, not a decision on a motion to stay that is related to anything that relates – however remotely – to a hoped-for CBMR proceeding.”  (emphasis in original)  Though not at issue in this case, the Federal Circuit noted that its decision does not preclude district courts from deciding motions to stay prior to the institution of a CBMR proceeding.

While the timing of when to file a motion to stay in view of a related IPR or CBMR is always a strategic consideration, this case underscores that the immediate interlocutory jurisdiction in the context of related CBMR “proceedings” adds an extra layer of consideration.

Board Issues First Post-AIA Precedential Opinion

PrecedentAn ongoing and (surprisingly) often-raised issue in Covered Business Method Reviews has led the Board to issue its first Precedential opinion in an AIA post-grant proceeding.  In Securebuy, LLC v. CardinalCommerce Corp., CBM2014-00035, Paper 12, the Board issued a Precedential Opinion denying a petition for covered business method review on the grounds that the petition was barred pursuant to 35 USC § 325(a)(1), which requires that a post-grant review will not be instituted if, before the filing of the petition, a civil action challenging the validity of the subject patent was filed.

To date, at least several CBM petitions have been filed, despite a prior-filed declaratory judgment action seeking patent invalidity, all with the Petitioner arguing that the one-year bar of 35 USC § 325(a)(1) did not apply to CBM petitions.  See, e.g., PNC Bank, et al., v. Maxim Integrated Prods., Inc., CBM2014-00038, Paper 19.  In an apparent attempt to settle the issue once and for all, given a slight vagueness in the CBM implementing statute, the Board took the opportunity of the Securebuy case to issue its first precedential order.  For future reference, a list of all Board precedential orders can be found here: PTAB List of Precedential Opinions.