2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
`
`6/4/20, 4:51 PM
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`March 23, 2020
`
`2019 PTAB Year in Review: Analysis & Trends: Success of
`Motions to Stay Rising, But Why?
`Graham Phero, Lauren Watt
`
`Sterne, Kessler, Goldstein & Fox P.L.L.C.
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`+ Follow
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`Summary
`Defendants sued for patent infringement in district court commonly seek litigation
`stays based on an American Invents Act (AIA)-contested proceeding that assesses
`the validity of the patents-in-suit before the Patent Trial and Appeal Board (PTAB).
`In doing so, defendants seek to avoid or reduce the high cost of district court
`litigation and increase settlement leverage. District courts make a fact-dependent
`analysis to determine whether to grant a stay including examining, among other
`factors, the likelihood that a co-pending AIA-contested proceeding will simplify the
`litigation. Initially, district courts were skeptical of the efficacy of AIA-contested
`proceedings and stay rates were relatively low despite Congressional intent to
`2
`promote judicial efficiency and avoid redundant proceedings.
`
`1
`
`However, since AIA-contested proceedings began in 2012, stay rates have generally
`trended upward with significant increases over the last two years (11% for all
`motions, 12% for contested motions). These increases appear at least in part tied to
`
`https://www.jdsupra.com/legalnews/2019-ptab-year-in-review-analysis-91715/
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`2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
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`6/4/20, 4:52 PM
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`3
`the all-or-nothing institution approach required under the SAS decision and the
`4
`PTAB’s adoption of the Phillips standard for claim construction. Indeed, in those
`courts handling the most patent litigation cases, stay rates are significantly higher.
`Notably, in the district courts of Delaware, Eastern District of Texas and Northern
`District of California, stay rates in 2019 were 70%, 73%, and 89%, respectively.
`Perhaps even more intriguing is the reliance on SAS and the claim construction
`change by some courts in 2019 to grant stay requests prior to institution of an AIA-
`contested proceeding.
`
`Stay Factors and Trends
`In determining whether to stay a case pending an AIA-contested proceeding—inter
`partes review, post-grant review, or covered business method review—district courts
`generally consider three factors: (1) whether a stay will unduly prejudice or present
`a clear tactical disadvantage to the nonmoving party; (2) whether a stay will simplify
`the issues at trial; and (3) the stage of the District Court case, for example, whether
`5
`discovery is complete and whether a trial date has been set.
`
`Since the inception of AIA-contested proceedings in 2012 through 2019, the grant
`rate for a district court motion to stay has slowly increased to 74% of all filed (both
`contested and uncontested) motions, as shown in the below table.
`
`Contested motions for stay follow a similar trend line and have slowly increased to
`53% since 2012.
`
`The stay rates after the SAS decision are even more favorable to movants in some of
`the hottest patent venues. Specifically, the table below highlights that the post-SAS
`stay rates in some of the most active patent venues range from 62% to a high of 89%
`in the Northern District of California.
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`https://www.jdsupra.com/legalnews/2019-ptab-year-in-review-analysis-91715/
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`2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
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`6/4/20, 4:52 PM
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`What is Driving the Recent Uptick in Stay Rates
`As shown in the above tables, over the last two years stay rates for all motions have
`increased by 11%, while contested stay rates have increased by 12%. Many factors
`may contribute to this increase, such as more-timely motions, overwhelmed district
`courts, and/or more confidence in the PTAB by courts. But likely reasons for the
`increase over the last two years may be due to recent changes to PTAB procedures
`that provide district court judges additional comfort in their decision to grant a stay
`pending an AIA-contested proceeding.
`
`First, in April 2018, the Supreme Court held that an AIA petitioner is “entitled to a
`6
`final written decision addressing all of the claims it has challenged.” This overruled
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`https://www.jdsupra.com/legalnews/2019-ptab-year-in-review-analysis-91715/
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`2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
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`6/4/20, 4:52 PM
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`the prior practice of granting partial institution of IPR petitions, which allowed the
`PTAB to proceed with review on a subset of claims and/or invalidity grounds
`brought by the petitioner.
`
`Second, in November 2018, the USPTO changed the claim construction standard
`7
`applied by the PTAB in trial proceedings. This change replaced the “broadest
`reasonable interpretation” (BRI) standard used in the patent examination procedure
`with the Phillips standard used by federal courts to construe patent claims. The
`impact of this change only began to be felt in mid-2019, as explained by the Claim
`Construction Change article in the SKGF 2019 PTAB Year in Review. These
`significant changes have influenced courts’ views as to whether a stay will simplify
`the issues at district court—likely leading to higher success rates for stay requests.
`
`The Impact of the SAS Decision
`Post-SAS district court decisions suggest that courts are more likely to grant a
`motion to stay now that the PTAB must address and rule on every ground raised by
`the petitioner. In Nichea Corp. v. Vizio, Inc., for example, the court noted that a stay
`was likely to simplify issues in the district court litigation in part because “the PTAB
`[is] taking the new all-or-nothing approach to institution decisions, [and] there’s no
`concern about the PTAB picking and choosing certain claims or certain invalidity
`8
`grounds from each petition.” Similarly, in Zomm, LLC v. Apple Inc., the Court
`stated “given that the [PTAB] must now issue final written decisions as to every
`ground raised in the instituted petition under recent Supreme Court case law, there
`9
`is a real possibility that the IPR process will simplify the case.” Likewise, the Court
`in SPEX Techs., Inc. v. Kingston Tech. Corp., found that inter partes review held
`potential to simplify the case since the PTAB would review all the claims which the
`10
`petitioner challenged.
` Moreover, with the PTAB addressing every claim the
`petitioner challenges, courts have recognized that “the PTAB will provide a more
`robust record that considers the scope and meaning of the claims, clarifies claim
`11
`construction issues, and is preclusive on issues of patent validity.” Subsequently,
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`https://www.jdsupra.com/legalnews/2019-ptab-year-in-review-analysis-91715/
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`2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
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`6/4/20, 4:52 PM
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`the “outcome of the PTAB’s review of the claims will be of ‘invaluable assistance’ to
`12
`[courts].”
`
`The SAS decision has also served as the basis for some courts’ willingness to grant a
`stay pre-institution of the related AIA contested proceeding. For example in Lund
`Motion Prods., Inc. v. T-Max Hangzhou Tech. Co., the court granted a stay where
`the defendants’ IPR petitions covered every claim of three of the four patents at
`13
`issue before the district court.
` The court noted that if instituted, the PTO would
`have to address all of the claims in those patents, thus simplifying the issues before
`14
`the district court.
` In Wi-LAN, Inc. v. LG Elecs., Inc., the court also granted a stay
`15
`pending the PTO’s institution decision.
` There, the court attributed their stay
`decision to the recent Supreme Court SAS decision, stating “[w]hile review is not
`guaranteed and, therefore, the benefits of review are only speculative at this
`juncture, in light of the Supreme Court’s mandate to review all contested claims
`upon grant of IPR and the complexity of this case, the [simplification of issues]
`factor weighs in favor of a limited stay of proceedings until the PTO issues its
`16
`decisions on whether to institute IPR.”
`
`Nonetheless, despite the SAS tailwind, some courts have been hesitant to find that
`changes under SAS would likely lead to a simplification of issues. Some courts still
`believe that that even with the PTAB’s review of all challenged claims under SAS, the
`17
`extent to which the PTAB would simplify issues was likely limited.
` Further, in at
`least one case, the judge saw SAS having the opposite impact. In Peloton
`Interactive, Inc. v. Flywheel Sports, Inc., the court denied the stay finding that any
`institution decision post-SAS provides “a weaker inference that the PTAB will
`18
`determine that all challenged claims are unpatentable.”
` The court reasoned that
`because the PTAB can no longer partially institute IPR proceedings, the institution
`decisions are “less effective as a barometer for the issue of whether the PTAB will
`19
`eventually determine that the challenged claims are unpatentable.”
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`https://www.jdsupra.com/legalnews/2019-ptab-year-in-review-analysis-91715/
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`2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
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`6/4/20, 4:52 PM
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`The Impact of the PTAB claim construction standard change
`While there are no final written decisions applying the Phillips standard, there is
`also some indication that courts are granting more motions to stay in light of the
`PTAB’s adoption of the Phillips claim construction standard. Notably, petitioners
`and patent owners alike can no longer distinguish their arguments under the BRI
`standard in AIA proceedings from those made under Phillips in district court. More
`fundamentally, there will likely be more consistency across the PTAB and District
`Court forums, as to the meaning of claim terms.
`
`In perhaps a harbinger of things to come, in Russo Trading Co. v. Donnelly
`Distribution LLC, the court noted that the PTAB’s claim construction rulings would
`“inform the analysis required of the Court in [that] case, should it continue” and
`20
`referenced the new claim construction standard.
` Thus, similar to the effect of SAS,
`the PTO’s adoption of the Phillips claim construction standard suggests to district
`courts that a stay is worthwhile in order to benefit from the PTAB’s consideration
`and analysis of the asserted claims.
`
`1
` On January 21, we used Docket Navigator to estimate the total number of patent
`cases that went to trial in 2019. The search identified 182. Of those cases, 89 or
`approximately 49%, involved at least one patent that had been challenged in an AIA
`contested proceeding.
`2
` Changes to Implement Inter Partes Review Proceedings, Post-Grant
`Review Proceedings, and Transitional Program for Covered Business Method
`Patents, 77 Fed. Reg. 48680 (August 14, 2012).
`SAS Inst., Inc., v. Iancu, 138 S. Ct. 1348, 1359, 200 L. Ed. 2d 695 (2018).
`Phillips v. AWH Corp., 415 F. 3d 1303 (Fed. Cir. 2005).
`See, e.g., Peloton Interactive, Inc. v. Flywheel Sports, Inc., 2019 WL 3826051
`*1 (E.D. Tex. Aug. 14, 2019); Zomm, LLC v. Apple Inc., 391 F. Supp. 3d 946, 956
`(N.D. Cal. 2019).
`
`3 4 5
`
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`2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
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`6/4/20, 4:52 PM
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`6 7
`
`8 9 1
`
`SAS Inst., Inc., 138 S. Ct. at 1359.
` 37 C.F.R. § 42.100(b); Changes to the Claim Construction Standard
`for Interpreting Claims in Trial Proceedings Before the Patent Trial and Appeal
`Board, 83 Fed. Reg. 51,340 (Oct. 11, 2018).
`Nichea Corp. v. Vizio, Inc., 2018 WL 2448098, at *3 (C.D. Cal. May 21, 2018).
`Zomm, LLC v. Apple Inc., 391 F. Supp. 3d 946, 957 (N.D. Cal. 2019).
`0
` SPEX Techs., Inc. v. Kingston Tech. Corp., No. 8:16-cv-1790, ECF Dkt. No. 157, at
`3-4 (C.D. Cal. May 16, 2018).
`11
` PopSockets LLC v. Quest USA Corp., 2018 WL 5020172, at *2–3 (E.D. N.Y. Sept.
`12, 2018); PopSockets LLC v. Quest USA Corp., 2018 WL 4660374 (E.D. N.Y. Sept.
`28, 2018) (report and recommendation adopted).
`12
` Id.
`13
` Lund Motion Prods., Inc. v. T-Max Hangzhou Tech. Co., 2019 WL 116784, at
`*2 (C.D. Cal. Jan. 2, 2019).
`14
` Id.
` Wi-LAN, Inc. v. LG Elecs., Inc., 2018 WL 2392161, at *2 (S.D. Cal. May 22, 2018).
`16
` Id.
`17
` Semco, LLC v. Trane U.S., Inc., No. 2:17-cv-04077, ECF Dkt. No. 136 (W.D.
`Mo. Jan. 2, 2019).
`18
` Peloton Interactive, Inc. v. Flywheel Sports, Inc., 2019 WL 3826051 *2 (E.D.
`Tex. Aug. 14, 2019).
`19
` Id.
`20
` Russo Trading Co., Inc. v. Donnelly Distribution LLC, 2019 WL 1493228,
`*2 (E.D. Wis. Apr. 4, 2019).
`
`15
`
`CHARTS
`21
` On January 10, we used Docket Navigator to review motion to stay pending IPR,
`CBM, or PGR that were categorized as either contested motions, stip-ulated
`motions, or sua sponte stays. We reviewed the outcomes of motions granted, denied,
`
`https://www.jdsupra.com/legalnews/2019-ptab-year-in-review-analysis-91715/
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`2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
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`6/4/20, 4:52 PM
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`granted in part, or denied without prejudice (other less common outcomes were
`excluded).
`22
` This data comes from the same search as note iii above but was limited
`to contested motions.
`23
` This data comes from the same search as note iii above but was limited to the
`district courts listed and was limited to all motions decided after April 24, 2018.
`
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`DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all
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`2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
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`6/4/20, 4:52 PM
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`Graham Phero
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`Lauren Watt
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`2019 PTAB Year in Review: Analysis & Trends: Success of Motions to St…ising, But Why? | Sterne, Kessler, Goldstein & Fox P.L.L.C. - JDSupra
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