No. 2014-1724
`
`UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
`
`
`
`INTELLECTUAL VENTURES II LLC,
`
`
`Plaintiff-Appellee,
`
`v.
`
`JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, NATIONAL
`ASSOCIATION, CHASE BANK USA, NATIONAL ASSOCIATION, CHASE
`PAYMENTECH SOLUTIONS, LLC, PAYMENTECH LLC,
`
`
`Defendants-Appellants.
`
`
`
`
`Appeals from the United States District Court for the Southern District of New
`York in civil action No. 1:13-cv-03777, Judge Alvin K. Hellerstein
`
`BRIEF FOR AMICUS CURIAE
`ASKELADDEN L.L.C.
`IN SUPPORT OF DEFENDANTS-APPELLANTS’ OPPOSITION TO
`PLAINTIFF-APPELLEE’S MOTION TO DISMISS
`
`
`JAMES L. QUARLES III
`GREGORY H. LANTIER
`ROBERT A. ARCAMONA
`WILMER CUTLER PICKERING
` HALE AND DORR LLP
`1875 Pennsylvania Avenue NW
`Washington, DC 20006
`(202) 663-6000
`
`
`
`
`RICHARD W. O’NEILL
`WILMER CUTLER PICKERING
` HALE AND DORR LLP
`60 State Street
`Boston, MA 02109
`(617) 526-6000
`
`
`
`
`September 15, 2014
`
`

`
`CERTIFICATE OF INTEREST
`
`Counsel for Amicus Curiae Askeladden, L.L.C. certifies the following:
`
`The full name of every party or amicus represented by me is:
`
`Askeladden, L.L.C.
`
`The name of the real party in interest (if the party named in the caption is not
`the real party in interest) represented by me is:
`
`Askeladden, L.L.C.
`
`All parent corporations and any publicly held companies that own 10 percent
`or more of the stock of the party or amicus curiae represented by me are:
`
`Askeladden, L.L.C. is a wholly-owned subsidiary of The Clearing
`House Payments Company L.L.C. No corporation or publicly held
`company owns 10 percent or more of The Clearing House Payments
`Company L.L.C.
`
`The names of all law firms and the partners or associates that appeared for
`the party or amicus now represented by me in the trial court or agency or are
`expected to appear in this court are:
`
`Wilmer Cutler Pickering Hale and Dorr LLP: James L. Quarles III;
`Gregory Lantier; Richard W. O’Neill; and Robert A. Arcamona
`
`1.
`
`2.
`
`3.
`
`4.
`
`
`
`Dated: September 15, 2014
`
`
`
`
`/s/ James L. Quarles III
`JAMES L. QUARLES III
`
`
`
`
`i
`
`

`
`TABLE OF CONTENTS
`
`Page
`CERTIFICATE OF INTEREST ................................................................................ i
`
`TABLE OF AUTHORITIES .................................................................................... iii
`
`STATEMENT OF IDENTITY AND INTEREST OF AMICI CURIAE ................ 1
`
`ARGUMENT ............................................................................................................ 2
`
`CONCLUSION ......................................................................................................... 9
`
`CERTIFICATE OF SERVICE
`
`CERTIFICATE OF COMPLIANCE
`
`ii
`
`

`
`TABLE OF AUTHORITIES
`
`CASES
`
`Page(s)
`
`Athenahealth, Inc. v. Carecloud Corp., No. 13-cv-10794,
`2014 WL 3566068 (D. Mass. July 17, 2014) .................................................. 5
`
`AutoAlert Inc. v. DealerSocket, Inc., No. 13-cv-00657,
`ECF Dkt. No. 190 (C.D. Cal. July 18, 2014) .................................................. 5
`
`Bender v. Dudas, 490 F.3d 1361 (Fed. Cir. 2007) ..................................................... 4
`
`Broadcast Innovation, L.L.C. v. Charter Communication Inc.,
`No. 03-cv-2223, 2006 WL 1897165 (D. Colo. July 11, 2006) ....................... 7
`
`buySAFE, Inc. v. Google, Inc., No. 3:12-cv-781, 2014 WL 2714137
`(E.D. Va. June 16, 2014) ................................................................................. 5
`
`Capital Dynamics AG v. Cambridge Associates, No. 13-cv-7766,
`2014 WL 1694710 (S.D.N.Y. Apr. 1, 2014) ................................................... 5
`
`Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
`467 U.S. 837 (1984)......................................................................................... 4
`
`Credit Acceptance Corp. v. Westlake Services, LLC, No. 13-cv-01523,
`ECF Dkt. No. 67 (C.D. Cal. Dec. 30, 2013) .................................................... 5
`
`GT Nexus, Inc. v. Inttra, Inc., No. 11-cv-02145, 2014 WL 3373088
`(N.D. Cal. July 9, 2014) ................................................................................... 5
`
`Gustafson v. Alloyd Co., 513 U.S. 561 (1995)........................................................... 4
`
`In re Ameranth Patent Litigation Cases, No. 11-cv-1810,
`2013 WL 7144380 (S.D. Cal. Nov. 26, 2013) ................................................. 5
`
`Intertainer, Inc. v. Hulu, LLC, No. 13-cv-5499, 2014 WL 466034
`(C.D. Cal. Jan. 24, 2014) ................................................................................. 5
`
`Jay v. Boyd, 351 U.S. 345 (1956) .............................................................................. 6
`
`Landmark Technology, LLC v. iRobot Corp., No. 6:13-cv-411,
`2014 WL 486836 (E.D. Tex. Jan. 24, 2014) ................................................... 5
`
`iii
`
`

`
`Market-Alerts Pty. v. Bloomberg Finance L.P., 922 F. Supp. 2d 486
`(D. Del. 2013) .................................................................................................. 5
`
`NLRB v. Catholic Bishop of Chicago, 440 U.S. 490 (1979) ..................................... 8
`
`Sightsound Technologies, LLC v. Apple, Inc., No. 11-cv-1292,
`2013 WL 2457284 (W.D. Pa. June 6, 2013) ................................................... 5
`
`Van Wersch v. Department of Health & Human Services,
`197 F.3d 1144 (Fed. Cir. 1999) ....................................................................... 6
`
`Versata Software, Inc. v. Volusion, Inc., No. 12-cv-893,
`2013 WL 6912688 (W.D. Tex. June 20, 2013) ............................................... 5
`
`VirtualAgility, Inc. v. Salesforce.com, Inc., No. 2014-1232,
`2014 WL 3360806 (Fed. Cir. 2014) ................................................................ 9
`
`Xilidev, Inc. v. Boku, Inc., No. 13-cv-2793, 2014 WL 3353256
`(S.D. Cal. July 1, 2014) ................................................................................... 5
`
`Zillow, Inc. v. Trulia, Inc., 12-cv-1549, 2013 WL 5530573
`(W.D. Wash. Oct. 7, 2013) .............................................................................. 6
`
`STATUTES AND REGULATIONS
`
`35 U.S.C.
`§ 323 ................................................................................................................ 9
`§ 324 ................................................................................................................ 9
`
`Leahy-Smith American Invents Act, Pub. L. No. 112-29,
`125 Stat. 284 (2011) ...............................................................................passim
`
`37 C.F.R. § 42.2 ......................................................................................................... 3
`
`Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756 (2012) .............................. 3
`
`LEGISLATIVE MATERIALS
`
`157 Cong. Rec.
`S1053 (daily ed. Mar. 1, 2011) ........................................................................ 2
`S1360 (daily ed. Mar. 8, 2011) ................................................................ 3, 7, 8
`
`iv
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`

`
`STATEMENT OF IDENTITY AND INTEREST OF AMICUS CURIAE1
`
`Askeladden L.L.C. is an education, information and advocacy organization
`
`whose goal is to improve the understanding, use, and reliability of patents in
`
`financial services and related industries. Askeladden seeks to improve the United
`
`States patent system by, among other things, submitting amicus curiae briefs on
`
`important legal issues.2
`
`Askeladden is a wholly-owned subsidiary of The Clearing House Payments
`
`Company L.L.C. Established in 1853, The Clearing House is the oldest banking
`
`association and payments company in the United States. It is owned by the
`
`world’s largest commercial banks, which collectively hold more than half of all
`
`deposits in the United States and employ over one million people in the United
`
`States and more than two million people worldwide. The Clearing House
`
`Payments Company L.L.C. clears almost $2 trillion each day, representing nearly
`
`half of all automated clearing-house, funds transfer, and check-image payments
`
`made in the United States. Its affiliate, The Clearing House Association L.L.C., is
`
`a nonpartisan advocacy organization that represents the interests of its owner banks
`
`by promoting and developing policies to support a safe, sound, and competitive
`
`banking system.
`
`1
`No party, and no person other than Askeladden, L.L.C., or its members,
`contributed toward the preparation or submission of this brief.
`2
`Defendants-Appellants have consented to the filing of this brief. Plaintiff-
`Appellee has not.
`
`1
`
`

`
`The stay provisions of Section 18 of the Leahy-Smith American Invents Act,
`
`Pub. L. No. 112-29, 125 Stat. 284 (2011) (“AIA”) are a critically important
`
`component of Congress’s efforts to diminish abusive patent litigation practices
`
`involving “business method” patents. Because the financial services sector, like
`
`other sectors, has been subjected to numerous lawsuits on business method patents,
`
`Askeladden has a specific and strong interest in promoting the correct
`
`interpretation of Section 18, and ensuring that interlocutory review by this Court is
`
`available to financial services companies and other defendants that have been
`
`denied a stay of pending patent infringement litigation where a petition for covered
`
`business method (“CBM”) review is currently pending before the U.S. Patent and
`
`Trademark Office (“PTO”).
`
`ARGUMENT
`
`Congress enacted Section 18(b)(1) of the AIA to encourage district courts to
`
`stay litigation based on business method patents that are involved in CBM review
`
`proceedings before the PTO. See 157 Cong. Rec. S1053 (daily ed. Mar. 1, 2011)
`
`(statement of Sen. Schumer) (Section 18(b)(1) places a “very heavy thumb on the
`
`scale in favor of the stay.”). At the same time, Congress enacted Section 18(b)(2)
`
`to ensure that district courts consistently adhere to that Congressional intent by
`
`authorizing immediate interlocutory appeal of any order issued under Section
`
`18(b)(1) that grants or rejects a stay of litigation “relating to a [CBM review]
`
`2
`
`

`
`proceeding.” AIA § 18(b)(1); see 157 Cong. Rec. S1360 (daily ed. Mar. 8, 2011)
`
`(statement of Sen. Schumer) (Section 18(b)(2) will “ensure consistent application
`
`of standards and precedents across the country.”).
`
`In its pending motion to dismiss this appeal, Intellectual Ventures (“IV”)
`
`seeks to undermine that important statutory scheme by wrongly interpreting
`
`Section 18(b) to “only allow[] interlocutory appeal where a CBM proceeding has
`
`been granted.” Dkt. No. 18-1 at 2. For the four reasons below, Askeladden
`
`respectfully urges the Court to reject that incorrect reading of the statute, make
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`clear that Section 18(b) permits interlocutory appeals of orders that grant or deny a
`
`litigation stay based on the filing of a petition for CBM review, and deny IV’s
`
`motion to dismiss this appeal.
`
`First, IV’s argument conflicts with Section 18(b)(1)’s broad reference to a
`
`CBM review “proceeding,” which necessarily commence when a petition is filed
`
`seeking CBM review. Indeed, acting pursuant to a Congressional directive to
`
`“issue regulations establishing and implementing [CBM] review proceeding[s],”
`
`AIA § 18(a)(1), the PTO has defined the term “proceeding” as involving “a trial or
`
`preliminary proceeding,” and has defined a “preliminary proceeding” as
`
`“begin[ing] with the filing of a petition for instituting a trial.” 37 C.F.R. § 42.2
`
`(emphasis added); see also Office Patent Trial Practice Guide, 77 Fed. Reg. 48756
`
`(2012) (“Proceedings begin with the filing of a petition to institute a trial.”).
`
`3
`
`

`
`The PTO’s expert interpretation of Section 18(a)(1) strongly suggests that
`
`the term “proceeding” as used in Section 18(b)(1) includes the period during which
`
`a petition for CBM review is pending before the PTO. See Gustafson v. Alloyd
`
`Co., 513 U.S. 561, 570 (1995) (stating that there is a “normal rule of statutory
`
`construction” that “identical words used in different parts of the same act are
`
`intended to have the same meaning”); see Bender v. Dudas, 490 F.3d 1361, 1368-
`
`1370 (Fed. Cir. 2007) (Court “defer[ed]” to the PTO’s interpretation of the term
`
`“before the office” when used in a statute authorizing the PTO to establish
`
`regulations) (citing Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467
`
`U.S. 837, 842-845 (1984)).
`
`That conclusion is further reinforced by the many district courts that have
`
`similarly interpreted the term “proceeding” in Section 18(b)(1) as encompassing
`
`the filing of a petition for CBM review.
`
`The AIA states that “the court shall decide whether to enter a stay
`based on [the four enumerated factors]” whenever “a party seeks a
`stay of a civil action alleging infringement of a patent ... relating to a
`transitional proceeding for that patent.” § 18(b)(1) (emphasis added).
`Since the PTO has recognized that “the proceedings begin with the
`filing of a petition,” the court finds that the relevant stay provisions
`apply when the petition is first filed. Office Patent Trial Practice
`Guide, 77 Fed. Reg. 48,757 (Aug. 14, 2012).
`
`
`4
`
`

`
`Market-Alerts Pty. v. Bloomberg Fin. L.P., 922 F. Supp. 2d 486, 497 n.5 (D. Del.
`
`2013) (emphasis added).3 Indeed, every substantive decision on a motion to stay
`
`litigation due to the filing of a petition for CBM review has applied the four-factor
`
`test set forth in Section 18(b)(1).4 In each of these orders, the district court
`
`
`3
`See buySAFE, Inc. v. Google, Inc., No. 3:12-cv-781, 2014 WL 2714137, at
`*2-3 (E.D. Va. June 16, 2014) (granting stay prior to institution of CBM review
`trial because “regardless of whether PTAB grants the Petition and a CBM Review
`is ultimately conducted, this Court must apply the AIA § 18(b)(1) factors to
`determine if a stay is appropriate at the time the Petition is first filed” (emphasis
`added)); Versata Software, Inc. v. Volusion, Inc., No. 12-cv-893, 2013 WL
`6912688, at *2 (W.D. Tex. June 20, 2013) (“[T]he statute further authorizes district
`courts to stay civil proceedings once a party has petitioned the PTAB for review
`under the CBM Program. AIA § 18(b).” (emphasis added)); GT Nexus, Inc. v.
`Inttra, Inc., No. 11-cv-02145, 2014 WL 3373088, at *2 (N.D. Cal. July 9, 2014)
`(denying motion to lift stay: “The statutory stay analysis under the AIA is
`triggered upon the filing of a petition for CBM review, not upon the granting of a
`petition for CBM review by the PTAB.” (emphasis added)).
`4
`See, e.g., Capital Dynamics AG v. Cambridge Assocs., No. 13-cv-7766,
`2014 WL 1694710, at *1-2 (S.D.N.Y. Apr. 1, 2014) (granting stay prior to the PTO
`instituting CBM review and applying four-factor test of Section 18(b)(1));
`Intertainer, Inc. v. Hulu, LLC, No. 13-cv-5499, 2014 WL 466034, at *1-2 (C.D.
`Cal. Jan. 24, 2014) (same); Sightsound Techs., LLC v. Apple, Inc., No. 11-cv-1292,
`2013 WL 2457284, at *1-4 (W.D. Pa. June 6, 2013) (same); In re Ameranth Patent
`Litig. Cases, No. 11-cv-1810, 2013 WL 7144380, at *1-3 (S.D. Cal. Nov. 26,
`2013) (same); Credit Acceptance Corp. v. Westlake Servs., LLC, No. 13-cv-01523,
`ECF Dkt. No. 67, at *3-8 (C.D. Cal. Dec. 30, 2013) (same); AutoAlert Inc. v.
`DealerSocket, Inc., No. 13-cv-00657, ECF Dkt. No. 190, at *3-9 (C.D. Cal. July
`18, 2014) (same); Landmark Tech., LLC v. iRobot Corp., No. 6:13-cv-411, 2014
`WL 486836, at *2 (E.D. Tex. Jan. 24, 2014) (same); Xilidev, Inc. v. Boku, Inc., No.
`13-cv-2793, 2014 WL 3353256, at *1 (S.D. Cal. July 1, 2014) (same, and stating
`the AIA “requires the court” to consider the factors of Section 18(b)(1));
`Athenahealth, Inc. v. Carecloud Corp., No. 13-cv-10794, 2014 WL 3566068, at
`*1-2 (D. Mass. July 17, 2014) (staying litigation except as to claim construction
`prior to institution of CBM review, stating the court “must consider” the four
`
`5
`
`

`
`necessarily interpreted the term “proceeding” in Section 18(b)(1) as encompassing
`
`petitions for CBM review because the four factors in the statute apply only to stay
`
`requests “relating to a [CBM review] proceeding.”
`
`Second, IV’s motion to dismiss cannot be squared with the clear grant in
`
`Section 18(b)(2) for this Court to hear interlocutory appeals arising from orders to
`
`stay litigation “relating to a [CBM review] proceeding.” See AIA § 18(b)(1)
`
`(emphasis added). Even if a CBM review “proceeding” could be construed as
`
`beginning only after the PTO has instituted a trial, a pending petition for CBM
`
`review certainly relates to an instituted CBM review trial—indeed, it is a condition
`
`precedent. Similarly, the grant or denial of a stay motion predicated on a petition
`
`for CBM review relates to a yet-to-be-instituted CBM review trial. Congress’s use
`
`of the broad term “relating” cannot be ignored; it broadly allows for immediate
`
`interlocutory appeals of orders beyond those simply based on instituted CBM
`
`review. See, e.g., Jay v. Boyd, 351 U.S. 345, 357 (1956) (“we must adopt the plain
`
`meaning of a statute”); Van Wersch v. Department of Health & Human Servs., 197
`
`F.3d 1144, 1148 (Fed. Cir. 1999) (“If the language is clear, the plain meaning of
`
`
`factors of Section 18(b)(1)); Zillow, Inc. v. Trulia, Inc., 12-cv-1549, 2013 WL
`5530573, at *4-8 (W.D. Wash. Oct. 7, 2013) (granting stay where CBM review
`had yet to be instituted and IPR of the same patent had been instituted, applying
`the four factor test of Section 18(b)(1)). Some decisions do not identify the
`standard that was applied (e.g., docket entry orders).
`
`6
`
`

`
`the statute will be regarded as conclusive.”). As a result, the “relating” language in
`
`Section 18(b) separately confirms that this Court has jurisdiction over this appeal.
`
`Third, the legislative history of Section 18(b)(1) is consistent with this clear
`
`statutory language. Senators Schumer and Kyl—the key proponents of what
`
`became Section 18(b)—both stated that Section 18(b)(1) codified the rationale of
`
`Broadcast Innovation, L.L.C. v. Charter Commc’n Inc., No. 03-cv-2223, 2006 WL
`
`1897165 (D. Colo. July 11, 2006). See 157 Cong. Rec. at S1364 (statement of Sen.
`
`Schumer); Id. at S1380 (statement of Sen. Kyl). That decision granted a stay of
`
`litigation based on the filing of a petition for reexamination of the asserted patent;
`
`the PTO had not yet granted review. See Broadcast Innovation, 2006 WL
`
`1897165, at *8 n.8. Thus, Section 18(b)(1) is modeled on a case that granted a
`
`litigation stay based on a then-pending petition for review.
`
`Finally, as a policy matter, this Court should allow interlocutory appeals
`
`arising from stay decisions based on the filing of a CBM review petition, even
`
`where the PTO has yet to act on the petition. The purpose of Section 18(b)(2) is to
`
`ensure that district courts consistently apply Section 18(b)(1). See 157 Cong. Rec.
`
`at S1364 (statement of Sen. Schumer). That purpose would be undermined by IV’s
`
`incorrect statutory construction, which would wrongly deprive this Court of
`
`jurisdiction to review the many stay motion rulings that district courts (including
`
`the district court in this case) have issued based on the filing of a petition for CBM
`
`7
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`

`
`review. See NLRB v. Catholic Bishop of Chicago, 440 U.S. 490, 511 (1979) (the
`
`judiciary’s “proper role in construing statute . . . is to interpret them as to give
`
`effect to congressional intention.”).
`
`Members of many business sectors, including financial services, merchants,
`
`and technology, would be significantly impacted by IV’s proposed undermining of
`
`Section 18(b)(2). These entities are often sued for patent infringement based on
`
`invalid business method patents—the very problem that Congress intended to
`
`remedy by enacting CBM review. Eliminating the statutory right to seek
`
`immediate appellate review of an order denying a litigation stay where a petition
`
`for CBM review has been filed will force these financial companies to fight on two
`
`fronts, despite Congress’s express goal to alleviate that precise burden. See 157
`
`Cong. Rec. at S1364 (stating that it is “unacceptable” for infringement defendants
`
`to have to “fight in two fora at the same time.”).
`
`Nor will any harm result if the Court interprets a Section 18(b)(1)
`
`“proceeding” as covering the filing of a CBM petition—as the multiple district
`
`courts identified above have already held. See supra at nn.3, 4. If a district court
`
`grants a stay of litigation based on a petition for CBM review that is later denied,
`
`the stay will be relatively short because the PTO is statutorily required to act on a
`
`petition for CBM review within six months from the date a petition is filed. See
`
`8
`
`

`
`AIA § 18(a)(1); 35 U.S.C. §§ 323, 324.5 Conversely, requiring a defendant to
`
`delay its stay request under Section 18(b)(1) until after the institution of CBM
`
`review will unnecessarily waste many months of valuable party and judicial
`
`resources in cases where the PTO later decides to grant the petition and institute
`
`CBM review.
`
`CONCLUSION
`
`Section 18(b)(1) applies to orders to stay litigation “relating to a [CBM
`
`review] proceeding,” which includes orders predicated on petitions for CBM
`
`review. Section 18(b)(2) allows for immediate interlocutory appeals from orders
`
`made pursuant to Section 18(b)(1). Thus, Section 18(b) allows for immediate
`
`interlocutory appeal of an order to stay litigation predicated on a petition for CBM
`
`review. As such, this Court has jurisdiction to hear the present appeal and should
`
`deny IV’s pending motion to dismiss.
`
`
`5
`Confirming that the Court has jurisdiction in this case will not result in a
`flood of appeals. Despite the more than 40 district court orders on contested
`motions to stay litigation applying Section 18(b)(1), only a half-dozen litigants
`have appealed. Thus, parties are invoking Section 18(b)(2) only when an order
`raises a considerable question. Indeed, this Court’s only decision on the merits of
`Section 18(b)(1) reversed a district court and ordered a stay. See VirtualAgility,
`Inc. v. Salesforce.com, Inc., No. 2014-1232, 2014 WL 3360806, at *18 (Fed. Cir.
`2014).
`
`9
`
`

`
`Dated: September 15, 2014
`
`
`
`
`
`Respectfully submitted,
`
`
`
`/s/ James L. Quarles III
`JAMES L. QUARLES III
`GREGORY H. LANTIER
`ROBERT A. ARCAMONA
`WILMER CUTLER PICKERING
` HALE AND DORR LLP
`1875 Pennsylvania Avenue, N.W.
`Washington, D.C. 20006
`(202) 663-6000
`Counsel for Amicus Curiae
`
`
`
`RICHARD W. O’NEILL
`WILMER CUTLER PICKERING
` HALE AND DORR LLP
`60 State Street
`Boston, MA 02109
`(617) 526-6000
`
`
`
`
`
`

`
`CERTIFICATE OF SERVICE
`
`I hereby certify that on this 15th day of September, 2014, I electronically
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`filed the foregoing with the Clerk of Court and caused a copy to be served on
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`counsel of record using the CM/ECF System.
`
`
`
`/s/ James L. Quarles III
`JAMES L. QUARLES III
`
`
`
`
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`

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`CERTIFICATE OF COMPLIANCE
`
`I certify that the foregoing brief amicus curiae is less than one-half the
`
`maximum length authorized for a party’s principal motion under the Federal
`
`Circuit Rules and Federal Rules of Appellate Procedure. See Fed. R. App. Proc.
`
`29(d).
`
`/s/ James L. Quarles III
`James L. Quarles III