Federal Circuit to Decide First Appeal of Order Denying Motion to Stay Pending CBM Review
On January 9, 2014, the United States District Court for the Eastern District of Texas, Marshall Division, denied a Motion to Stay Pending CBM Review. The CBM Review procedure, which was created by Seciton 18 of the AIA, allows the PTAB to review the validity of certain business-method patents. When the PTAB institutes a CBM Review, the petitioning party may seek a stay of litigation in the district court. Under Section 18, the district court is required to consider the following four factors:
Whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;
Whether discovery is complete and whether a trial date has been set;
Whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and
Whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.
In denying the defendants' Motion to Stay, the district court concluded each of the statutory stay factors weighed against a stay. The district court's decision, which was filed in VirtualAgility, Inc. v. Salesforce.com, Inc., et al., was quickly appealed to the Federal Circuit.
The court held oral argument on March 11, 2014. At oral argument, the panel focused on the correct standard of review, the distinction between the first and fourth factors, and whether the district court should be required to assess the underlying merits of a petition for CBM Review when determining whether the first and fourth factors weigh in favor of a stay.
The Federal Circuit's opinion should shed light on the statutory stay factors and the scope of the district court's discretion in determining whether to grant or deny a stay. A decision is expected within the coming weeks.
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