Intellectual Ventures v. JPMorgan (Fed. Cir. 2015)
IV has asserted a set of computer security patents against JPMorgan, some of which are directly related to electronic transactions. Within a month of the civil action filing, JPMorgan responded by filing petitions for post-grant Covered-Business-Method (CBM) review of two of the five asserted patents. JPMorgan then immediately requested a stay of litigation (noting that the patents-in-suit are also undergoing inter partes review proceedings).
The district court rejected JPMorgan’s stay request and the company filed this interlocutory appeal. On appeal, however, the Federal Circuit has dismissed the case – finding that it does not (yet) have jurisdiction over the interlocutory case.
Section 18 of the America Invents Act provides a four factor test for determining whether to stay a civil action pending the outcome of a CBM transitional proceeding.
(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.
The statute goes on to provide for “immediate interlocutory appeal” of a district court decision on the motion for stay that is related to a CBM Proceeding and that the Federal Circuit will review the decision de novo. Of course, that provision is an exception to the normal rule that the appellate courts only have jurisdiction to review final judgments of the district courts. 28 U.S.C. § 1295(a)(1) (2012). And further, judgments on motions to stay are normally considered interlocutory orders that are not subject to immediate appeal.
CBM Petition is not a CBM Proceeding: As I said, the statute provides for immediate appeal of district court stay decisions relating to CBM proceedings. Here, the Federal Circuit made a thin but important distinction by noting that the filing of a CBM petition is not itself a CBM proceeding. Rather, the CBM review only becomes a “proceeding” once the petition is granted. Truthfully, the statute is not entirely clear on this point, but the court cobbled together is conclusion by noting: (1) the statute indicates that that the process is begun with the filing of a “petition for a [CBM] proceeding” which indicates that “a petition is a request for a CBM proceeding, not that the petition itself is part of the proceeding.” The statute then indicates that it is the USPTO Director who “may institute a [CBM] proceeding” — an event that occurs after the filing of the petition.
Because the statute provides for no immediate appeal pre-CBM-proceeding, the Federal Circuit dismissed the case for lack of appellate jurisdiction.
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In the big picture, this means that the challenger will likely still move for a stay immediately following the filing of a CBM/PGR, but if that is denied will need to renew that motion once the proceeding is initiated in order to create appellate jurisdiction. Meanwhile, the patentee may be looking to delay the petition decision and push the civil action more quickly in order to shift the balance of factors in its direction (toward denying the stay).