Source: https://www.schwabe.com/newsroom-publications-13597
Timestamp: 2019-04-24 08:06:59+00:00

Document:
e.Digital – The Circuit affirms a judgment of non-infringement based on a determination that e.Digital was ‎collaterally estopped from seeking construction of a limitation presented in a claim added during reexamination of a first patent but improperly ‎applied the doctrine to a second, unrelated patent.
Versata Software – The panel instructs the district court to grant a motion to stay action pending post-grant review under the CBM review program, noting that a stay may be warranted even when the CBM proceeding does not address all asserted patents in the litigation.
Versata sued Callidus on July 19, 2012 for infringement of its '326, '304, and '024 patents. In September of 2012 Callidus filed a motion to transfer the case, which was eventually denied by the district court in May of 2013. In early August, Callidus then answered, counterclaimed as to three of its own patents, and informed the court that it would file a CBM petition and seek a stay of the litigation. Later that month, Callidus filed its first set of CBM petitions based on § 101, challenging all of the claims of the '326 patent, the independent claims of the '304 and '024 patents, and some dependent claims of those two patents. Callidus simultaneously filed its motion to stay.
While declining to consider a stay until the PTAB instituted a CBM review, the district court set dates for a Markman hearing and trial for 2015. On March 4, 2014, the PTAB initiated a CBM review for each patent, and Callidus renewed its motion to stay in the district court. Shortly thereafter, Callidus petitioned for a second CBM review, this time for the remaining claims of the '304 and '024 patents, also under § 101.
After the PTAB instituted CBM review on the first set of petitions, the district granted a stay as to the '326 patent but denied it as to the '304 and '024 patents. Thereafter, Callidus filed an interlocutory appeal under § 18(b) of the AIA. During this appeal, the PTAB instituted a CBM review on Callidus' second set of petitions, finding every remaining claim of the '304 and '024 patents more likely than not unpatentable under § 101.
(D) whether a stay, or the denial thereof, will reduce the burden of litigation of the parties and the court.
The panel rules that the court clearly erred by essentially creating a categorical rule that if any asserted claims are not also challenged in the CBM proceeding, this factor disfavors a stay. Though the panel factor weighs more heavily in favor of a stay "when all of the litigated claims are undergoing CBM review" "stays can be warranted even when a CBM proceeding does not address all asserted patents, claims, or invalidity defenses." VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1312-14 (Fed. Cir. 2014).
A proper simplification analysis would look to what would be resolved by CBM versus what would remain. The district court erred in not finding relevant the fact that all of the independent claims, as well as some dependent claims, of the '304 and '024 patents are undergoing CBM review. The panel also takes judicial notice of the fact that the PTAB had instituted a second CBM review, this time on all remaining claims.
Finally, the panel explains that it is not necessary for the CBM proceedings to simplify all invalidity issues to warrant stay. The statute explicitly allows petitioners to raise one invalidity defense without invoking estoppel as to other defenses that could have been raised. Compare AIA § 18(a)(1)(D) with 35 U.S.C. § 315(e)(2). Balancing all of these interests, the panel finds that the first factor strongly favors stay.
The district court weighed this factor against a stay or was at best neutral, finding that though discovery wasn't complete, the trial date that is scheduled is within months of when the PTAB is expected to issue its decision. The panel found two errors with this reasoning: first, the court did not explain how the PTAB's decision before the trial date counsels against stay; second, the court failed to analyze how much more remains to be done in litigation before reaching the trial date.
Callidus filed its first CBM petitions and motion to stay when the litigation was still in its infancy. The district court clearly erred when it evaluated the stage of litigation at the time of its decision because "as we explained in VirtualAgility, generally the time of filing the motion will be the relevant stage at which to measure this factor." Further, while the panel noted that it is correct for the district court to wait for the PTAB's institution of a CBM review before granting a stay, whether "we look at the date the motion to stay was filed or the date when the PTAB granted review, the factor strongly favors a stay."
With the close of expert discovery still seven months away, no exchange of claim construction terms or constructions, and Markman and trial over a year away, the panel finds that much of the litigation was still in front of the parties and the district court. The panel noted that courts must be mindful of the burden on the parties and the court in completing both discovery, resolving summary judgment motions, completing the Markman process, and preparing for trial. This timing factor thus strongly favors stay.
The district court made no factual findings that Versata would suffer undue prejudice as a result of a stay, yet found that Callidus would gain a tactical advantage because it would still seek its own infringement counterclaims during the stay on Versata's patents. The panel finds these findings clearly erroneous considering Callidus' admission that it was seeking a stay as to all proceedings and Versata's silence as to a stay of the entire litigation. Because the record does not suggest any undue prejudice to Versata or tactical advantage to Callidus, the court clearly erred, and this factor strongly favors a stay.
The district court found that "Callidus' tactics in filing motions to transfer and dismiss under 12(b)(6) have actually increased the burdens of litigation, rather than reduced them." In so finding, the court determined that this factor weighed against a stay. The panel finds that the district court clearly erred because the correct test is one that focuses prospectively on the impact of the stay on the litigation, not on the past actions of the parties."
As previously noted in VirtualAgility, the "simplification factor analysis under the first factor points in the same direction as reducing the burden of litigation under the fourth factor." For these reasons and the reasons given in the first factor, the panel found that this factor strongly favors a stay.
This case, and its recent VirtualAgility decision, show how strongly the Circuit feels about cases being stayed pending CBM review. Though the CBM petition on appeal in Versata was not on all claims in the case and only on § 101 grounds (without mention of § 102, 103, or 112), the panel finds it enough of a simplification of issues to warrant a stay. The Circuit also does not give much weight to what has already occurred in the litigation as long there is much left to do before trial.

References: § 101
 § 101
 § 18
 § 101
 v. 
 § 18
 § 315
 § 101
 § 102