Source: http://www.jptos.org/news/358/80.html
Timestamp: 2019-04-26 06:26:25+00:00

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Procedural History Salesforce.com, Inc. and other defendants (collectively, Defendants)1 appeal from the district court’s order denying their joint motion to stay VirtualAgility Inc.’s (VA) patent infringement lawsuit against Defendants pending post-grant review of the validity of VA’s asserted claims under the Transitional Program for Covered Business Method Patents (CBM program).
Facts In January 2013, VA sued Defendants alleging infringement of U.S. Patent No. 8,095,413 (’413 patent). On May 24, 2013, Salesforce filed a petition with the Patent Trial and Appeal Board (PTAB) for post-grant review of all claims of the ’413 patent under the CBM program. […] On May 29, 2013, Defendants filed a motion to stay district court proceedings pursuant to AIA § 18(b)(1). […] In early January 2014, the district court denied Defendants’ motion to stay the case pending CBM review.
Virtualagility Inc., at *2-3 (internal citations omitted).
(D) whether a stay, or the denial thereof, will re- duce the burden of litigation on the parties and on the court.
Collateral Attack [A] challenge to the PTAB’s “more likely than not” determination at this stage amounts to an improper collateral attack on the PTAB’s decision to institute CBM review, and allowing it would create serious practical problems. As a preliminary matter, Congress made post- grant review more difficult to obtain than reexamination by raising the standard from “a substantial new question of patentability,” 35 U.S.C. § 303(a) (2012), to “more likely than not . . . unpatentable,” id. § 324(a). Congress clearly did not intend district courts to hold mini-trials reviewing the PTAB’s decision on the merits of the CBM review. To do so would overwhelm and dramatically expand the nature of the stay determination. If the district court were required to “review” the merits of the PTAB’s decision to institute a CBM proceeding as part of its stay determination, it would undermine the purpose of the stay. When the stay decision is then appealed to this court, we would be required to likewise review the PTAB’s decision to institute a CBM proceeding. This is clearly not how or when Congress intended review of the PTAB’s CBM determinations to take place.
CBM grant weight The district court’s decision regarding the first and fourth factors was based predominantly on its improper review of whether the PTAB was correct in its determination that the claims of the ’413 patent were more likely than not invalid. After this review is removed from the calculus, the remaining evidence of record weighs heavily in favor of a stay. We find it significant that the PTAB granted CBM review on all asserted claims of the sole asserted patent. And it determined that all of these claims were more likely than not unpatentable on two separate, alternative grounds. The statute allows for institution of post-grant review if “it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.” 35 U.S.C. § 324(a). In this case, the PTAB expressly determined that all of the claims are more likely than not unpatentable. This CBM review could dispose of the entire litigation: the ultimate simplification of issues.
We are mindful that “[a]n appellate court may consider only the record as it was made before the district court.” Ballard Med. Prods. v. Wright, 821 F.2d 642, 643 (Fed. Cir. 1987); see also Sage Prods., Inc. v. Devon Indus., Inc., 126 F.3d 1420, 1426 (Fed. Cir. 1997) (“No matter how independent an appellate court’s review of an issue may be, it is still no more than that—a review.”). Nevertheless, pursuant to Rule 201(b)(2) of the Federal Rules of Evidence, we may take judicial notice of the fact that a filing was made before the PTAB. See, e.g., Genentech, Inc. v. Chiron Corp., 112 F.3d 495, 497 n.1 (Fed. Cir. 1997) (noting that, because the “record before the Board is a public record . . . and thus capable of accurate and ready determination by resort to unquestionable sources,” judicial notice was appropriate). Cognizant of the limits imposed by Rule 201(b)(2), however, we reiterate that we consider only the fact that a Motion to Amend was filed— not the impact of the proposed amendments on the parties’ claim construction and infringement arguments. The latter cannot be “accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(2). Moreover, the district court’s ability to address the Motion to Amend in its ruling denying a stay of its proceedings pending appeal supports our consideration of the fact that VA filed proposed claim amendments because we are not faced with the uncomfortable task of doing so for the first time on appeal.
Waiting on CBM Petition Determination In this case, the stay motion was filed in May 2013, almost immediately after Salesforce had filed its CBM petition with the PTAB. The PTAB granted the petition in November 2013. The district court denied the motion to stay in January 2014. As noted above, we see no error in the district court’s decision to rule on the stay motion after the PTAB rendered its decision on the CBM petition. Furthermore, a district court is not obligated to “freeze” its proceedings between the date that the motion to stay is filed and the date that the PTAB decides on the CBM petition. Of course, the court should make every effort to expeditiously resolve the stay motion after the PTAB has made its CBM review determination. To do otherwise would undermine the intent of Congress to allow for stays to prevent unnecessary duplication of proceedings.
In Favor of Granting Stay [T]he time of the motion is the relevant time to measure the stage of litigation.[…] In this case, we see no error in the district court’s having waited until the PTAB granted the CBM review to rule upon the motion. Whether we consider the May 2013 date, when the motion to stay was filed, or the November 2013 date, when the PTAB granted CBM review, this factor heavily favors Defendants. At the time Defendants filed their motion in May 2013, the case was less than four months old. Discovery had not yet begun and no trial date had been set. As of the date the PTAB granted CBM review, there remained eight months of fact discovery, the joint claim construction statements had yet to be filed, and jury selection was a year away. The litigation at either time was still at its infancy, which favors granting the stay.
Direct Competition [A]s to evidence of direct competition, the record establishes only that Salesforce was mentioned in a Government Services Administration (GSA) bid, which VA received, identifying Salesforce’s products as the brand name reference products. J.A. 316, 322–37. VA admitted during oral argument, however, that this GSA bid was a small business set-aside, for which Salesforce, a large business, could not compete. […] Thus, there is no evidence in this record that the two companies ever competed for the same customer or contract. We acknowledge, however, that direct evidence of such competition is not required to establish that VA and Salesforce are competitors, especially at such an early stage of the proceedings.
Lack of Preliminary Injunction Probative Although this is not dispositive, we note that VA did not move for a preliminary injunction against Defendants. We acknowledge, as the district court did, that there could be a variety of reasons that a patentee does not move for a preliminary injunction. […] In this case, VA argues that it did not move for a preliminary injunction because it is a small company with limited resources and that the litigation process would move fast enough to make this unnecessary. VA’s arguments are rational reasons for not pursuing a preliminary injunction, but the fact that it was not worth the expense to ask for this remedy contradicts VA’s assertion that it needs injunctive relief as soon as possi- ble. We also note that VA, for some unexplained reason, waited nearly a year after the ’413 patent issued before it filed suit against Defendants. These facts weigh against VA’s claims that it will be unduly prejudiced by a stay.
We reverse the district court’s order denying Defendants’ motion for a stay of the district court proceedings pending CBM review and remand with instructions to grant the motion. This decision moots Defendants’ motion to stay district court proceedings pending appeal.
NEWMAN, Circuit Judge, dissenting. Virtualagility Inc., Newman Op., at *1.
No Requirement to Stay The America Invents Act permits but does not require the district court to stay earlier-filed litigation during later-requested post-grant PTO proceedings. Such a stay is not obligatory, but is consigned to the district court’s discretion. During consideration of the proposed post- grant review legislation, there was extensive debate about the relation between concurrent infringement actions in the courts and post-grant patentability redeterminations in the PTO. After eight years of discussion, the America Invents Act adopted rules for concurrent proceedings in various circumstances. No statute or rule requires the district court to stay ongoing court proceedings after a petition for post-grant review is filed in the PTO. My colleagues’ contrary ruling today is also contrary to the legislation and its purpose.
Virtualagility Inc., Newman Op., at *1-2.
District Court Discretion A stay is an “intrusion into the ordinary processes of administration and judicial review, and accordingly is not a matter of right, even if irreparable injury might other- wise result to the appellant.” Nken v. Holder, 556 U.S. 418, 427 (2009). Section 18(b)(1) of the America Invents Act authorizes the district court to stay the litigation of a patent for which CBM review in the PTO has been requested. Such a stay is not automatic; the statute authorizes the district court in its discretion to stay its proceedings, on taking into account certain equitable factors as may exist in the particular case. In today’s ruling the panel majority overrides the district court’s discretion, and effectively creates a rule that stays of district court litigation pending CBM review must always be granted.
More Rigor on Stay Determination The panel majority has imposed greater rigor on “stay” considerations than the statute warrants. Post- grant review in the PTO is a useful tool, but the principle of post-grant review does not require elimination of judicial discretion to proceed with pending litigation. Indeed, the America Invents Act contemplates such discretion. I must, respectfully, dissent from my colleagues’ distortion of the statutory plan.
Image Attribution Statement: Unknown, “The Dismissal,” available as a public domain image due to expired copyright, http://commons.wikimedia.org/wiki/File:Edward_Stafford_cartoon_-_the_dismissal.jpg (imaged edited) (last visited Oct. 12, 2014).

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