Factors Affecting Success of Stay Motions Pending Inter Partes & Covered Business Method Review

Transcription

1 Factors Affecting Success of Stay Motions Pending Inter Partes & Covered Business Method Review Hosted by The Federal Circuit Bar Association October 21, 2016 Moderator: Kevin Hardy, Williams & Connolly LLP Speakers: Chris Geyer, Williams & Connolly LLP Jonathan Stroud, Unified Patents Andrew Riley, Finnegan 1

2 2 Background

3 Stays Pending Post-Grant Review (PGR) Leahy-Smith America Invents Act Sought to establish a more efficient and streamlined patent system Created IPR, CBM, and PGR to create a timely, cost-effective alternative to litigation Litigation may be stayed pending post-grant review CBM statute sets forth required stay factors, but no similar requirements for IPR and PGR 3

4 Stays Pending PGR District courts have inherent power to manage their dockets via stays Generally three factors for IPR, but varies by jurisdiction: (1) whether a stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether a stay will simplify the issues in question and trial of the case; and (3) whether discovery is complete and whether a trial date has been set. See Murata Machinery USA, Inc. v. Daifuku Co., Ltd., No at *6 (Aug. 1, 2016). 4

5 Factor 1 Prejudice or Tactical Advantage Consider any prejudice or tactical advantage resulting from a stay Timing of filing IPR petition? How long from service of complaint? How long from infringement contentions? Timing of moving for a stay? Plaintiff sought preliminary injunction? Estoppel considerations? 5

6 Stays Pending PGR Prejudice Acqis, LLC v. EMC Corp., 109 F. Supp. 3d 352 (D. Mass. 2015) Preparing and filing an IPR petition four months after service of infringement contentions was reasonable and weighed in favor of a stay Motion to stay filed within one month of IPR institution Koninklijke Philips N.V. v. Amerlux, LLC, 2016 WL (D. Mass. March 10, 2016) Undue prejudice where the defendant was not a party to the IPR and thus would not be bound by the IPR estoppel 6

7 Factor 2 Simplify the Issues Consider whether IPR will simplify the issues for trial Has IPR been instituted? Overlap between patents and claims at issue in the litigation and those involved in IPRs? Possibility of stay for only those patents involved in IPR? Have all parties to the litigation agreed to be estopped on IPR issues even if they are not all parties to the IPR? 7

8 Stays Pending PGR - Simplify Acqis, LLC v. EMC Corp., 109 F. Supp. 3d 352 (D. Mass. 2015) Factor weighed slightly in favor of a stay where only two of the eleven patents-in-suit and only three of the twenty-two asserted claims were under review in the instituted IPRs Court noted significant overlap in claim terms 8

9 Factor 3 Timing Consider a litigation s progression under the procedural schedule: Status of discovery Markman hearing or order Summary judgment motions Daubert and other pre-trial motions Imminent trial date 9

10 Stays Pending PGR - Timing IXI Mobile (R & D) Ltd. v. Samsung Elecs. Co. Ltd., 2015 WL (N.D. Cal. Nov. 12, 2015) Finding in favor of a stay where [n]o discovery, dispositive motions, pretrial, or trial deadlines have been set and Markman briefing ongoing but no hearing date was set Surfcast, Inc. v. Microsoft Corp., 2014 WL (D. Me. Nov. 14, 2014) Factor was neutral where discovery [was] complete, a Markman order... issued, and briefing [was] complete on the pending summary judgment, Daubert, and related motions, but there was a large volume of work remaining before trial Court noted this progress would ordinarily weigh against a stay but that additional discovery and briefing would be needed on the effect of the PTAB s Final Written Decision 10

11 Stays Pending Cover Business Method Review (CBM) Stay factors - AIA 18(b)(1): (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. 11

12 Stays Pending CBM Additional factor (D) overlaps significantly with factor (A) but must be separately considered [T]he reduced burden of litigation factor may implicate other considerations, such as the number of plaintiffs and defendants, the parties and witnesses places of residence, issues of convenience, the court s docket, and in particular its potential familiarity with the patents at issue. VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, (Fed. Cir. 2014) 12

13 ITC Stays Pending PTAB Trials 13

14 Stays Pending PGR at the ITC Unlike district court cases, no ITC case has been stayed because of a pending IPR Why? ITC schedule is typically 16 months from institution to final decision, faster than the 18 month PTAB schedule ITC has traditionally refused to stay cases pending reexamination, so keeping same approach 14

15 Stays Pending PGR at the ITC Certain Laser-Driven Light Sources, Inv. No. 337-TA-983, Order 8 (Mar. 3, 2016) IPRs instituted on 2 of 3 asserted patents before ITC complaint filed IPRs to conclude before ITC s target date Stay denied IPR findings can be integrated with ITC case without a stay Different issues at ITC (additional art, 112 issues, different claim construction standard) One asserted patent not subject to IPR 15

16 Stays Pending PGR at the ITC But see Certain Three-Dimensional Cinema Systems and Components Thereof, Inv. No. 337-TA-939 (July 21, 2016) ITC issued limited exclusion order and cease and desist orders Stayed enforcement of the orders for claims found unpatentable in IPR IPR petitions were filed 1 month before ITC complaint, so PTAB decision beat ITC decision 16

17 Statistics on Stay Motions Pending IPR or CBM Past Year 17

18 Comparing Filings & IPR Stay Motions Cases Filed (2015)* # Stay Motions Decided E.D. Tex. D. Del. C.D. Cal N.D. Cal. N.D. Ill * Source: Lex Machina

19 IPR Stay Grant Rate: Pre- and Post-Institution 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Grant Rate 91.7% 68.0% 60.0% 52.2% 45.5% 27.3% Pre-Institution Post-Institution Overall Top 5 Patent Jurisdiction Non-Top 5 (stipulations omitted, GIPs counted as denials) 19

20 IPR Stay Grant Rate: Post-Institution, Some vs. All Claims Instituted Grant Rate (all jurisdictions) 100% 100% 90% 80% 70% 68% 60% 50% 40% 40% 30% 20% 10% 0% Not All Claims Instituted All Claims Instituted Overall Grant Rate 20

21 IPR Stays Stipulations Variance observed in top 5 patent jurisdictions Overall number of stipulations in top 5 jurisdictions is 28.7 % N.D. Cal. D. Del. C.D. Cal. N.D. Ill. E.D. Tex. Non-Top 5 Stipulated Not Stipulated % Stipulated 35.7 % 34.9 % 30.0 % 16.7 % 11.5 % 21.9 % 21

22 IPR Stays: Grant Rate with & without Stipulations Grant Rate 100% 90% 80% 70% 60% 50% 40% 43% 63% 53% 71% 62% 57% 57% 70% 67% 69% 60% 60% 30% 20% 10% 0% D. Del. N.D. Cal. E.D. Tex. C.D. Cal. N.D. Ill. Non-Top 5 % Granted (w/o stipulations) % Granted (overall) 22

23 IPR vs. CBM Grant Rates Like IPRs, grant rates for CBMs are higher in the non-top 5 jurisdictions Popular Patent Jurisdiction Percentage Granted Other Jurisdictions Percentage Granted IPR 52 % 70 % CBM 78 % 100 % (stipulated motions omitted) 23

24 24 Statistics on Disposition by Type and Judge

25 IPR Stays Motions to Stay Pending IPR 6% 7% 19% 10% Denied Denied without Prejudice Granted 58% Granted in Part/Denied in Part Pending/Deferred 25 Source: Stroud et al, Staying Awhile

26 CBM Stays Motions to Stay Pending CBM : Post-Appeal 6% 2% 10% 4% 10% Denied Denied as moot Denied Without Prejudice Granted 68% Granted in Part/Denied in Part Pending/Deferred 26 Source: Stroud, Staying Litigation in Light of CBM Review

27 CBM Stays Motions to Stay Pending CBM: N.D. Cal Comparisons: Top 3 Districts 13% 12% 63% 12% Denied Denied Without Prejudice Motions to Stay Pending CBM: E.D. Tex 50% 4% 4% 9% 8% 25% Denied Denied as moot Denied Without Prejudice Granted Motions to Stay Pending CBM: D. Del 7% 13% Granted Denied Granted Granted in Part/Denied in Part Pending/Deferred 80% Granted in Part/Denied in Part 27 Source: Stroud, Staying Litigation in Light of CBM Review

28 CBM Stay CBM Stay Results for Top Judges Denied Denied as moot Denied Without Prejudice Granted Granted in Part/Denied in Part Gilstrap Mitchell Payne Robinson Sleet Stark 28 Source: Stroud, Staying Litigation in Light of CBM Review

29 Mean Defense Cost of US NPE Litigation Amount at Risk Mean Total Cost of Case < $1 million $625,000 $1 million to $10 million $1.39 million $10 million to $25 million $2.76 million 29 Source: AIPLA Survey 2015

30 Further Reading NFC Tech. LLC v. HTC Am., 2:13-cv WCB (E.D. Tex. Mar. 11, 2015) (Bryson, J., sitting by designation), discussed in Stroud, NFC Tech. LLC v. HTC Am, Inc..: Judge Bryson s Sitting-by-Designation Guide to Securing Stays in Light of Inter Partes Reviews, NFC Tech. v. HTC Am., 65 Am. U. L. Rev (2016). Staying Litigation for Covered Business Method Post-Grant Reviews, 27 Col. Sci. & Tech. L. Rev. 120 (2015) Coauthor, Stay Awhile: The Evolving Law of District Court Stays in Light of Inter Partes Review, Post-Grant Review, and Covered Business Methods Post-Grant Review, 11 Buffalo Intell. Prop. L. J. 226 (2016). 30

31 Average Cost of US Inter Partes Review Phase of IPR Reached To petition $75,000 Through IPR trial $275,000 Through appeal $350,000 Mean Cost 31 Source: AIPLA Survey 2015

32 Stay Motions Pending IPR/CBM Review Questions? 32

33 Kevin Hardy Chris Geyer Andrew Riley Jonathan Stroud