In a decision clarifying the applicable test for staying a district court case during an inter partes review (IPR), the US Court of Appeals for the Federal Circuit confirmed that district courts have broad discretion in determining what factors to consider. In addition, the Court warned that when ruling on preliminary injunction motions, district courts must explain the reasoning behind their decisions. Murata Machinery USA v. Daifuku Co., Ltd., Case No. 15-2094 (Fed. Cir., Aug. 1, 2016) (Stoll, J).
The case concerns two sets of patents related to “automated material handling systems,” which are robotic machinery installed in semiconductor manufacturing cleanrooms to manipulate the components. Murata and Daifuku both manufacture such automated systems. In September 2013, Murata initially sued Daifuku on three patents. Almost a year later, Murata sought leave to add two more patents to the case. Daifuku then filed IPRs on the three original patents and moved to stay the district court litigation.
The two parties clashed over the appropriate factors that courts should consider when deciding IPR-based motions for a stay. Both parties agreed that courts should consider (1) stage of the proceedings, (2) potential for the stay to simplify issues in the case, and (3) undue prejudice to the non-moving party or a clear tactical advantage. Murata, however, argued that courts should also consider a fourth factor: the potential for a stay to reduce the burden of litigation on the parties and the court. The district court applied Murata’s proposed test but nevertheless granted Daifuku’s stay motion. The district court also granted Murata leave to add the two new patents to the case, but noted that they would fall under the stay as well.
Murata amended its complaint to add the new patents and moved to lift the stay with respect to those patents. It also moved for a preliminary injunction based on the newly added patents. This time Murata argued against the stay based on the three-prong test, omitting the “litigation burden” factor it previously had included. The district court denied Murata’s motion to lift the stay and its motion for a preliminary injunction, but provided only cursory denial regarding its treatment of the preliminary injunction motion. Murata appealed.
The Federal Circuit affirmed the denial of the stay but remanded the preliminary injunction decision for a more detailed opinion.
With respect to the stay, the Federal Circuit agreed that the district court appropriately applied the four-factor test. Murata had argued that the district court should not have considered the fourth factor because Congress specifically included it in considerations for covered-business-method-related stays, but not for IPR-related ones. The Federal Circuit disagreed, because the power to stay a case is inherent to the district courts and is not granted by Congress. District courts therefore have discretion to consider a wide variety of factors, including the burden of litigation. The Federal Circuit also noted that Murata had previously advocated for this fourth factor, making its new position less credible.
The Federal Circuit also addressed the district court’s cursory denial of the preliminary injunction. Although the Federal Circuit did not find that such a denial was inappropriate given the stay, citing Fed. R. Civ. P. 52(a)(2), it remanded the case back to the district court for a fuller explanation of the reasoning behind the decision, noting that a district court must “state its findings and conclusions” in support of its decision to grant or deny a preliminary injunction.