Thursday, September 25, 2014

CAFC reviews procedure for granting stay of district court proceedings during CBM review by USPTO


Traditionally, we have reviewed district court decisions
on motions to stay pending U.S. Patent and Trademark
Office proceedings under the abuse of discretion
standard. VirtualAgility Inc. v., Inc., No.
2014-1232, 2014 WL 3360806, at *2 (Fed. Cir. July 10,
2014). The AIA, however, provides this court with the
authority to conduct more searching review of decisions to
stay pending CBM review.
Specifically, the AIA provides
that this court “shall review the district court’s decision to
ensure consistent application of established precedent,
and such review may be de novo.” AIA § 18(b)(2).

Of the issue raised by the appellants [ BENEFIT FUNDING SYSTEMS LLC,
represented by CASEY L. GRIFFITH, Klemchuk Kubasta LLP, of Dallas,
Texas ]:

Appellants’ argument on appeal rests on the single
premise that the PTAB is not authorized to conduct CBM
review based on § 101 grounds
. Consequently, according
to Appellants, the district court would not be bound by the
results of the CBM review and, as such, “the PTAB’s
review of the ’582 patent cannot simplify this case.”
Appellants’ Br. 5. Instead, in Appellants’ view, a stay will
unduly prejudice Appellants, present a clear tactical
advantage to Appellees, and increase—not decrease—the
burden of litigation.

Appellants raised essentially this same argument
with the district court, which found the argument unpersuasive.
Specifically, the district court acknowledged the
risk that “there is a definitive legal ruling that Section
101 is not a proper basis for a CBM review” and the CBM
review thus simplifies very little. Hearing Transcript at
42. Still, the district court concluded that “[such] risk is
relatively small and certainly is not big enough to cause
this first factor to disfavor a stay.” Id. at 43.

The CAFC found such reasoning to amount to an improper collateral

Such review “amounts to an improper collateral attack on the PTAB’s
decision to institute CBM review, and allowing it would create serious
practical problems,”

The bottom line:

Having rejected Appellants’ sole argument on appeal,
we conclude that the district court did not abuse its
discretion in granting the stay. Further, consistency with
established precedent was not at issue in this case and no
other compelling reason for a more searching review was


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