Stays Pending Review

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.


22 thoughts on “Stays Pending Review

  1. 5


    Does the AIA mandate a stay upon conditions met, or does it provide discretion, with conditions as guidelines?

  2. 4

    or present a clear tactical advantage for the moving party;

    Pardon me, but does the data not indicate such a tactical advantage?

  3. 3

    CBM reference PGRs for grounds. PGR states at Section 321

    SCOPE.—A petitioner in a post-grant review may request to cancel as unpatentable 1 or more claims of a patent on any ground that could be raised under paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent or any claim).

    282(b) reads at paragraph 2 and 3, as follows:

    (2) Invalidity of the patent or any claim in suit on any ground specified in part II as a condition for patentability.
    (3) Invalidity of the patent or any claim in suit for failure to comply with—
    (A) any requirement of section 112, except that the failure to disclose the best mode shall not be a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable; or
    (B) any requirement of section 251.

    100 (note) AIA First inventor to file provisions.
    100 Definitions.
    101 Inventions patentable.
    102 Conditions for patentability; novelty.
    103 Conditions for patentability;
    non-obvious subject matter.
    104 [Repealed]
    105 Inventions in outer space.

    The only conditions for patentibility listed in PART II consist sole of 102/103.

    As a matter of statutory construction, how is it even arguable that 101 is a grounds for a CBM?

    I know the drafters intended that it should be. But, the statute is highly specific and the statute itself does not include 101.

    1. 3.1

      Do you have any guess as to why this hasn’t been brought up to PTAB yet? Surely it would only take one paragraph within a larger petition to preserve the issue for appeal.

      The longer the text is interpreted as it is now, the harder that interpretation is going to be to change. Of course, if it were to come up now, there would be a technical correction pretty quick since the Judiciary Committee has CBM reform on the agenda in 2015.

      1. 3.1.1

        Owen, oh, it has been brought up, both to the PTAB and in court actions. The PTO simply says 101 is a proper grounds and if you disagree, tough. They contend that one cannot appeal the statutory construction issue anywhere, either to the district court or to the Federal Circuit.

        The first case to be heard on this issue is Versata. Oral argument is on the 5th.

        The arrogance of the PTO is something not only to behold, but to fear. Unchecked power beyond judicial review is completely unheard of in a democracy. This is Stalinist.



          You should be aware of the corollary that unchecked power solely with the judicial review is ALSO a Stalinist indicator for a democracy built on separation of powers.

          Your complaint here loses much force given that you not only turn a blind eye, but actively cheer on violations of separation of powers when such align with your desired ends.


          “Unchecked power beyond judicial review is completely unheard of in a democracy.”

          The DPRK would disagree with you.

    2. 3.2

      You go through the gate to get to the conditions.

      But you still must go through the gate, and that gate is still in Part II.

  4. 2

    I couldn’t resist taking a peek at the asserted claims.

    Yes, these appear to be quintessential examples of computer-implemented junk. Let’s “validate” information with a computer! Sooper dooper techno stuff.

    1. In a computer system, a method for collectively performing validation of credential information of one or more product distributors associated with one or more product distribution transactions, the method comprising:

    obtaining a set of available credential information of each of the one or more product distributors associated with the one or more product distribution transactions;

    storing the set of credential information in the computer system, wherein the credential information is stored in a form that can be processed by the computer system;

    loading from at least one data source a set of credential validation rule data;
    obtaining the one or more product distribution transactions associated with the one or more product distributors; and

    processing in the computer system the one or more product distribution transactions and the credential validation rule data to validate the obtained one or more product distribution transactions associated with the one or more product distributors in accordance with predetermined validation criteria to determine if the one or more transactions can be used for compensating one or more product distributors, to validate the obtained credential information of one or more product distributors associated with one or more transactions to determine whether the one or more product distributors meet eligibility requirements for compensation associated with each of the obtained product distribution transactions for the one or more product distributors, and to generate results data representing at least any validated transactions and determined-eligible product distributors; and

    generating compensation data from the results data for each of the one or more product distributers to be compensated for the one or more product distribution transactions.

    Determine, determine, determine, process and (wait for it) generate data. Wow! Who knew?

    If the independent claim isn’t silly enough, get a load of some of the dependent claims (which are presumably narrower!). Try to believe this:

    13. The method of claim 1 further comprising:
    obtaining the rule data from a data file.

    18. The method of claim 1 wherein product distribution transactions comprise data related to sales of a product.

    21. The method of claim 1 wherein predetermined validation criteria comprises at least one member of the group consisting of: required educational credits; required licenses; required level of liability coverage; license renewal requirements; background check; and residency rules.

    Meanwhile we know that there’s a bunch of equally daft claims out there purporting to protect methods of driving a car — “on a computer.” Golly, we can only imagine the awesome information going into and out of that “process.” After all, it’s not like people have been going places for thousands of years. Cars were invented yesterday, after all, just five minutes before computers.

    1. 2.1

      It’s amazing that the CAFC and PTO have been such an echo chamber for the patent bar that nobody influential ever stood up to say the hundreds of thousands of patents like this were a problem.

      1. 2.1.1

        Even today this kind of patent finds defenders. But now the actual responsible officers of the government are paying attention. I wonder if they will even go far enough to neuter this nonsense. And then how long it will be before the flood rolls back a bit and the inherent reluctance of politicians to get involved in anything complicated leaves space again for patent attorneys to ruin the system to get rich.


              Go ahead and defend those miserable claims.

              After all, they look a lot like your client’s claims, don’t they?



                Thank you, MM, for that insightful comment.

                It is exactly this kind of comment that makes this blog “America’s leading patent law source”; you should be very proud of your contributions.

                1. Thank you, MM, for that insightful comment.

                  You’re very welcome.

                  But somehow you forgot to thank your two “insightful” buddies who never fail to keep their lips clammed up tight when computer-implemented junk claims like these are at issue but who are always really quick with the personal insults.

                  Gee, I wonder why. Can you tell everyone why you forgot, “Ziggie”?

      2. 2.1.2

        Owen, in major part, this is why the IPO and the AIPLA backed creation of the Federal Circuit. To influence the court. They may say they are above influence, but when both sides of most cases are members of the same bar who have larger interests in outcomes, what would you expect to happen?

        It is a primary reason why I think the Federal Circuit failed on patentable subject matter and a host of similar issues.

    2. 2.2

      Yep, let’s: (i) just ignore the claims as a whole and only see if a computer can be programmed to perform the method, (ii) invalidate all claims in one of the only industries that the US can legitimately claim innovative leadership, (iii) ignore that the US software development industry provides an enormous number of jobs and revenue, (iv) let anyone or company with a computer rip off US software innovation, (v) ignore In re Alappat, and (vi) let’s assume that software claims are not novel without actually applying the rigor of 102 to actually adjudicate novelty and non-obviousness. In the meantime, you should also come up with a framework, judicial or extrajudicial, to destroy all patents in all technology fields, not just software, that can be appropriated, especially those in which the US has an innovative edge.

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