Success of Motions to Stay Rising, But Why?
`
`2019 to grant stay requests prior to institution of an AIA-
`contested proceeding.
`Stay Factors and Trends
`
`Intriguing is the reliance on SAS
`
`and the claim construction change
`
`by some courts in 2019 to grant
`
`stay requests prior to institution of
`
`In determining whether to stay a case pending an AIA-
`contested proceeding—inter partes review, post-grant
`review, or covered business method review—district
`courts generally consider three factors: (1) whether
`a stay will unduly prejudice or present a clear tactical
`disadvantage to the nonmoving
`party; (2) whether a stay will
`simplify the issues at trial; and
`(3)
`the stage of the District
`Court
`case,
`for
`example,
`whether discovery is complete
`and whether a trial date has
`been set.5
`inception of AIA-
`Since the
`contested proceedings in 2012
`through 2019, the grant rate for
`a district court motion to stay
`has slowly increased to 74% of all filed (both contested
`and uncontested) motions, as shown in the below table.
`Contested motions for stay follow a similar trend line
`and have slowly increased to 53% since 2012.
`The stay rates after the SAS decision are even more
`favorable to movants in some of the hottest patent
`venues. Specifically, the table below highlights that the
`post-SAS stay rates in some of the most active patent
`venues range from 62% to a high of 89% in the Northern
`District of California.
`
`AUTHORS: LAUREN A. WATT & GRAHAM C. PHERO
`Summary
`
`Defendants sued for patent infringement in district court
`commonly seek litigation stays based on an American
`Invents Act (AIA)-contested proceeding that assesses
`the validity of the patents-in-suit before the Patent Trial
`and Appeal Board (PTAB).1 In doing so, defendants
`seek to avoid or reduce the high cost of district court
`litigation and increase settlement leverage. District
`courts make a fact-dependent analysis to determine
`whether to grant a stay including examining, among
`other factors, the likelihood that a co-pending AIA-
`contested proceeding will simplify
`the
`litigation.
`Initially, district courts were skeptical of the efficacy
`of AIA-contested proceedings and stay rates were
`relatively low despite Congressional intent to promote
`judicial efficiency and avoid redundant proceedings.2
`However, since AIA-contested proceedings began in
`2012, stay rates have generally trended upward with
`significant increases over the last two years (11% for all
`motions, 12% for contested motions). These increases
`appear at least in part tied to the all-or-nothing institution
`approach required under the SAS decision3 and the
`PTAB’s adoption of the Phillips4 standard for claim
`construction. Indeed, in those courts handling the most
`patent litigation cases, stay rates are significantly higher.
`Notably, in the district courts of Delaware, Eastern
`District of Texas and Northern District of California, stay
`rates in 2019 were 70%, 73%, and 89%, respectively.
`Perhaps even more intriguing is the reliance on SAS
`and the claim construction change by some courts in
`
`an AIA-contested proceeding.
`
`Outcomes
`Granted
`Denied
`Denied without prejudice
`Denied in part granted in part
`n
`
`2019
`2018
`2017
`2016
`2015
`2014
`2013
`2012
`50% 68% 60% 64% 68% 63% 69% 74%
`17%
`14%
`18%
`18%
`14%
`17%
`12%
`11%
`17%
`9%
`14%
`9%
`12%
`14%
`11%
`8%
`17%
`9%
`8%
`8%
`5%
`6%
`8%
`6%
`6
`152
`318
`337
`340
`296
`262
`262
`
`District Court Motion to Stay Grant Rate Based on AIA-Contested Proceeding (All)21
`
`Outcomes
`Granted
`Denied
`Denied without prejudice
`Denied in part granted in part
`n
`
`2018
`2017
`2016
`2015
`2014
`2013
`2012
`51%
`40% 55% 46% 48% 49% 41%
`19%
`20% 21%
`25% 28% 23% 27%
`20% 13%
`17%
`14%
`20% 23% 19%
`20% 12%
`11%
`10%
`8%
`9%
`11%
`5
`102
`227
`218
`202
`170
`148
`
`2019
`53%
`21%
`16%
`9%
`129
`
`District Court Motion to Stay Grant Rate Based on AIA-Contested Proceeding (Contested Motions)22
`
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`District
`DED
`TXED
`CAND
`CACD
`CASD
`TXND
`WAWD
`ILND
`TXSD
`NJD
`NYSD
`FLSD
`Total
`
`Granted
`73%
`70%
`89%
`64%
`64%
`82%
`75%
`64%
`62%
`83%
`88%
`88%
`74%
`
`Denied
`without
`prejudice
`10%
`19%
`8%
`11%
`14%
`6%
`0%
`7%
`31%
`0%
`0%
`13%
`11%
`
`Denied in
`part granted
`in part
`1%
`4%
`2%
`13%
`18%
`0%
`19%
`0%
`0%
`0%
`0%
`0%
`5%
`
`Denied
`16%
`8%
`2%
`11%
`5%
`12%
`6%
`29%
`8%
`17%
`13%
`0%
`10%
`
`n
`77
`53
`53
`45
`22
`17
`16
`14
`13
`12
`8
`8
`338
`
`Post-SAS Motion for Stay Grant Rate by District (All)23
`
`What is Driving the Recent Uptick in
`Stay Rates
`
`As shown in the above tables, over the last two years
`stay rates for all motions have increased by 11%, while
`contested stay rates have increased by 12%. Many
`factors may contribute to this increase, such as more-
`timely motions, overwhelmed district courts, and/or more
`confidence in the PTAB by courts. But likely reasons for
`the increase over the last two years may be due to recent
`changes to PTAB procedures that provide district court
`judges additional comfort in their decision to grant a stay
`pending an AIA-contested proceeding.
`First, in April 2018, the Supreme Court held that an
`AIA petitioner is “entitled to a final written decision
`addressing all of the claims it has challenged.”6 This
`overruled the prior practice of granting partial institution
`of IPR petitions, which allowed the PTAB to proceed with
`review on a subset of claims and/or invalidity grounds
`brought by the petitioner.
`Second, in November 2018, the USPTO changed the
`claim construction standard applied by the PTAB in
`trial proceedings.7 This change replaced the “broadest
`reasonable interpretation” (BRI) standard used in the
`patent examination procedure with the Phillips standard
`used by federal courts to construe patent claims. The
`impact of this change only began to be felt in mid-2019,
`as explained by the Claim Construction Change article
`in the SKGF 2019 PTAB Year in Review. These significant
`changes have influenced courts’ views as to whether
`a stay will simplify the issues at district court—likely
`leading to higher success rates for stay requests.
`
`The Impact of the SAS Decision
`
`Post-SAS district court decisions suggest that courts
`are more likely to grant a motion to stay now that the
`PTAB must address and rule on every ground raised by
`the petitioner. In Nichea Corp. v. Vizio, Inc., for example,
`the court noted that a stay was likely to simplify issues
`in the district court litigation in part because “the PTAB
`[is] taking the new all-or-nothing approach to institution
`decisions, [and] there’s no concern about the PTAB
`picking and choosing certain claims or certain invalidity
`grounds from each petition.”8 Similarly, in Zomm, LLC v.
`Apple Inc., the Court stated “given that the [PTAB] must
`now issue final written decisions as to every ground
`raised in the instituted petition under recent Supreme
`Court case law, there is a real possibility that the IPR
`process will simplify the case.”9 Likewise, the Court in
`SPEX Techs., Inc. v. Kingston Tech. Corp., found that inter
`partes review held potential to simplify the case since the
`PTAB would review all the claims which the petitioner
`challenged.10 Moreover, with the PTAB addressing every
`claim the petitioner challenges, courts have recognized
`that “the PTAB will provide a more robust record that
`considers the scope and meaning of the claims, clarifies
`claim construction issues, and is preclusive on issues
`of patent validity.”11 Subsequently, the “outcome of
`the PTAB’s review of the claims will be of ‘invaluable
`assistance’ to [courts].”12
`The SAS decision has also served as the basis for some
`courts’ willingness to grant a stay pre-institution of the
`related AIA contested proceeding. For example in Lund
`Motion Prods., Inc. v. T-Max Hangzhou Tech. Co., the court
`granted a stay where the defendants’ IPR petitions covered
`every claim of three of the four patents at issue before the
`district court.13 The court noted that if instituted, the PTO
`would have to address all of the claims in those patents,
`
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`thus simplifying the issues before the district court.14 In
`Wi-LAN, Inc. v. LG Elecs., Inc., the court also granted a stay
`pending the PTO’s institution decision.15 There, the court
`attributed their stay decision to the recent Supreme Court
`SAS decision, stating “[w]hile review is not guaranteed
`and, therefore, the benefits of review are only speculative
`at this juncture, in light of the Supreme Court’s mandate
`to review all contested claims upon grant of IPR and the
`complexity of this case, the [simplification of issues] factor
`weighs in favor of a limited stay of proceedings until the
`PTO issues its decisions on whether to institute IPR.”16
`Nonetheless, despite the SAS tailwind, some courts have
`been hesitant to find that changes under SAS would likely
`lead to a simplification of issues. Some courts still believe
`that that even with the PTAB’s review of all challenged
`claims under SAS, the extent to which the PTAB would
`simplify issues was likely limited.17 Further, in at least one
`case, the judge saw SAS having the opposite impact. In
`Peloton Interactive, Inc. v. Flywheel Sports, Inc., the court
`denied the stay finding that any institution decision post-
`SAS provides “a weaker inference that the PTAB will
`determine that all challenged claims are unpatentable.”18
`The court reasoned that because the PTAB can no
`longer partially institute IPR proceedings, the institution
`decisions are “less effective as a barometer for the issue
`
`of whether the PTAB will eventually determine that the
`challenged claims are unpatentable.”19
`The Impact of the PTAB claim construction
`standard change
`
`While there are no final written decisions applying the
`Phillips standard, there is also some indication that
`courts are granting more motions to stay in light of
`the PTAB’s adoption of the Phillips claim construction
`standard. Notably, petitioners and patent owners alike
`can no longer distinguish their arguments under the BRI
`standard in AIA proceedings from those made under
`Phillips in district court. More fundamentally, there will
`likely be more consistency across the PTAB and District
`Court forums, as to the meaning of claim terms.
`In perhaps a harbinger of things to come, in Russo
`Trading Co. v. Donnelly Distribution LLC, the court noted
`that the PTAB’s claim construction rulings would “inform
`the analysis required of the Court in [that] case, should
`it continue” and referenced the new claim construction
`standard.20 Thus, similar to the effect of SAS, the PTO’s
`adoption of the Phillips claim construction standard
`suggests to district courts that a stay is worthwhile
`in order to benefit from the PTAB’s consideration and
`analysis of the asserted claims.
`
`________________________________________________________________________________
`
`1 On January 21, we used Docket Navigator to estimate the total number of
`patent cases that went to trial in 2019. The search identified 182. Of those
`cases, 89 or approximately 49%, involved at least one patent that had been
`challenged in an AIA contested proceeding.
`2 Changes to Implement Inter Partes Review Proceedings, Post-Grant Review
`Proceedings, and Transitional Program for Covered Business Method
`Patents, 77 Fed. Reg. 48680 (August 14, 2012).
`3 SAS Inst., Inc., v. Iancu, 138 S. Ct. 1348, 1359, 200 L. Ed. 2d 695 (2018).
`4 Phillips v. AWH Corp., 415 F. 3d 1303 (Fed. Cir. 2005).
`5 See, e.g., Peloton Interactive, Inc. v. Flywheel Sports, Inc., 2019 WL 3826051 *1
`(E.D. Tex. Aug. 14, 2019); Zomm, LLC v. Apple Inc., 391 F. Supp. 3d 946, 956
`(N.D. Cal. 2019).
`6 SAS Inst., Inc., 138 S. Ct. at 1359.
`7 37 C.F.R. § 42.100(b); Changes to the Claim Construction Standard for
`Interpreting Claims in Trial Proceedings Before the Patent Trial and Appeal
`Board, 83 Fed. Reg. 51,340 (Oct. 11, 2018).
`8 Nichea Corp. v. Vizio, Inc., 2018 WL 2448098, at *3 (C.D. Cal. May 21, 2018).
`9 Zomm, LLC v. Apple Inc., 391 F. Supp. 3d 946, 957 (N.D. Cal. 2019).
`10 SPEX Techs., Inc. v. Kingston Tech. Corp., No. 8:16-cv-1790, ECF Dkt. No. 157,
`at 3-4 (C.D. Cal. May 16, 2018).
`11 PopSockets LLC v. Quest USA Corp., 2018 WL 5020172, at *2–3 (E.D. N.Y.
`Sept. 12, 2018); PopSockets LLC v. Quest USA Corp., 2018 WL 4660374 (E.D.
`N.Y. Sept. 28, 2018) (report and recommendation adopted).
`12 Id.
`
`13 Lund Motion Prods., Inc. v. T-Max Hangzhou Tech. Co., 2019 WL 116784, at *2
`(C.D. Cal. Jan. 2, 2019).
`14 Id.
`15 Wi-LAN, Inc. v. LG Elecs., Inc., 2018 WL 2392161, at *2 (S.D. Cal. May 22, 2018).
`16 Id.
`17 Semco, LLC v. Trane U.S., Inc., No. 2:17-cv-04077, ECF Dkt. No. 136 (W.D. Mo.
`Jan. 2, 2019).
`18 Peloton Interactive, Inc. v. Flywheel Sports, Inc., 2019 WL 3826051 *2 (E.D. Tex.
`Aug. 14, 2019).
`19 Id.
`20 Russo Trading Co., Inc. v. Donnelly Distribution LLC, 2019 WL 1493228, *2
`(E.D. Wis. Apr. 4, 2019).
`
`CHARTS
`21 On January 10, we used Docket Navigator to review motion to stay pending
`IPR, CBM, or PGR that were categorized as either contested motions, stip-
`ulated motions, or sua sponte stays. We reviewed the outcomes of motions
`granted, denied, granted in part, or denied without prejudice (other less
`common outcomes were excluded).
`22 This data comes from the same search as note iii above but was limited to
`contested motions.
`23 This data comes from the same search as note iii above but was limited to
`the district courts listed and was limited to all motions decided after April 24,
`2018.
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