In Versata v. Callidus, the Federal Circuit holds that the erred by refusing to stay litigation to await the outcome of an CBM post-grant review proceedings. Generally, stays of litigation are given to the discretion of the district court judge and reviewed only for abuse of discretion. However, the AIA provides that Federal Circuit review on this issue is de novo when the justification for a stay is CBM review.
Versata filed its lawsuit in 2012 — alleging infringement of three different patents. U.S. Patent Nos. 7,904,326; 7,908,304; and 7,958,024. More than one year later, in August 2013, Callidus filed three petitions for CBM post-grant review respectively challenging the asserted patents (although not all claims of all of the patents). Then, in March of 2014 the PTAB instituted its CBM review for each patent — finding that each challenged claim was most likely unpatentable as abstract under 35 U.S.C. 101. In April 2014 Callidus filed three new CBM petitions that challenge all of the remaining asserted claims in the patents. In May 2014, the district court granted a stay of proceedings as to the ‘326 infringement action but denied it as to the other two patents and prepared to move forward for a October 2015 trial date. Callidus then filed for interocutory appeal of the stay denial. And finally, while awaiting appeal, the PTO acted on the second-round of petitions and agreed that all of the claims are likely invalid under Section 101. The CBM reviews are still ongoing, but Callidus would like the district court to stop its proceedings and wait for the PTAB to finalize its results.
The AIA provides statutory guidance for dealing with stays of litigation in light of CBM reviews. In particular, the AIA provides that the judge should consider:
(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial; (B) whether discovery is complete and whether a trial date has been set; (C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.
AIA § 18(b)(1). The AIA also provides for immediate interlocutory appeal of decisions on stays pending CBM review and de novo review on appeal.
On appeal, the Federal Circuit has reversed – finding that the CBM review as a good chance of greatly simplifying the issues in the case. Of notable importance, the court found that, although the relevant time for judging a stay is as of the motion filing, the court may (and did) take judicial notice of the ongoing PTAB proceedings.