In a recent 2:1 decision, the Federal Circuit held that it lacks jurisdiction over an interlocutory appeal from a decision on a motion to stay pending a covered business method review (CBMR) until the Patent Trial and Appeal Board (PTAB) institutes the review.1 Thus, a party seeking to challenge a court's decision on a motion to stay may not appeal until after institution of the review.
Intellectual Ventures sued a number of banks and payments processors, including JPMorgan Chase & Co. (JPMC), alleging infringement of five patents.2 Approximately a year after the filing of the suit, JPMC moved to stay the case pending the outcome of CBMRs that it planned to file on the four patents-in-suit.3 JPMC's motion was also based on the filing of 12 inter partes review petitions by third parties.4 Ultimately, JPMC filed only two of the CBMR petitions.5 The District Court analyzed the motion to stay under the four-factor test required for CBMRs6 and denied the motion.7 In reaching its decision, the District Court noted that "the litigation would likely be resolved more quickly than any extended CBM review."8 JPMC filed an interlocutory appeal.
The majority opinion: no jurisdiction to consider an interlocutory appeal from a decision on a motion to stay until the PTAB institutes a CBM
While ordinarily decisions on motions to stay are not immediately appealable to the Federal Circuit, the America Invents Act (AIA) expressly provides for an immediate interlocutory appeal of a District Court's decision on a motion to stay pending the outcome of a CBMR proceeding.9 Specifically, the Federal Circuit has "jurisdiction over an immediate interlocutory appeal from a district court's decision on a motion to stay 'relating to a [CBMR] proceeding for that patent.'"10
Since the District Court decided JPMC's motion to stay based on pending CBMR petitions prior to institution of CBMR by the PTAB, the Federal Circuit considered whether "petitions on which the PTAB has not yet acted" are "a proceeding" within the meaning of § 18(b)(2) of the AIA, which is the statutory basis for Federal Circuit jurisdiction.11 Looking at the AIA and its legislative history, the Federal Circuit concluded that "the language of the statutory scheme consistently defines 'proceeding' as beginning when the PTAB institutes review."12 Thus, the Federal Circuit concluded that it "does not have jurisdiction under § 18(b)(2) of the AIA to consider an interlocutory appeal from a decision on a motion to stay until after the PTAB institutes a CBMR proceeding."13Therefore, the appeal was dismissed.14 However, a district court has "the ability to exercise its discretion in deciding a motion to stay at any time," including before the PTAB acts on a CBM petition, but a district court decision on a stay motion may not be appealed until after the PTAB acts.15
The dissent – the Federal Circuit should have exercised jurisdiction and affirmed on the District Court
Circuit Judge Hughes, in his dissent, noted that he "read the stay provision in § 18(b)(1) as more broadly authorizing district courts to stay a case based on a CBM review at any stage in the CBM process, and consequently our review extends to stay decisions issued at any stage in the CBM process."16 He also expressed concern that "the majority's distinction between pre- and post-CBM review institution decisions may create anomalous situations."17 Specifically, he was concerned with how the Court would exercise jurisdiction in hybrid cases in which "a stay motion is predicated on one patent for which CBM review has been instituted and another patent for which a petition for CBM review is pending."18 He would have exercised jurisdiction and affirmed the District Court's decision.19
The Court's decision in Intellectual Ventures clarifies the timing of an appeal of a decision on motion to stay in a CBMR. The decision also emphasizes that district courts have broad discretion as to whether to implement a stay. However, the decision is only limited to CBMRs and does not apply to inter partes reviews or post-grant reviews. In fact, neither inter partes reviews nor post-grant reviews provide for a statutory right to appeal a decision on a motion to stay, but at the same time, neither of these mechanisms have statutorily defined stay criteria, such as CBMRs. Accordingly, the Intellectual Ventures decision is of limited value to these proceedings. Since the denial of the motion to stay was also based on the consideration that the litigation would likely be resolved before a final decision in a CBMR, the decision emphasizes the importance of filing for a CBMR early in a district court litigation.