An Issue of First Impression: Federal Circuit Limits Review of Stay Motions in Connection With Covered Business Method Reviews

On April 1, 2015, The Federal Circuit dismissed JPMorgan Chase & Co.’s (“JPMC”) interlocutory appeal of a district court ruling denying a motion to stay pending a covered business method review (“CBMR”). Addressing an issue of first impression, the Court concluded that it lacked jurisdiction under §18(b)(2) of the America Invents Act (“AIA”) to review the district court’s order because JPMC moved for a stay while JPMC’s CBM petition was under review by the USPTO Director and a CBM proceeding had yet to be instituted.

In Intellectual Ventures v. JPMorgan Chase & Co., Intellectual Ventures (“IV”) sued JPMC alleging infringement of five patents. JPMC responded by filing a motion to stay pending the results of four CBMR petitions that it was planning to file. Immediately after, JPMC filed two CBM petitions covering only two of the asserted patents.

The district court, however, denied the motion to stay because “there are multiple patents and claims in suits, [and] it would be inappropriate to stay the entire litigation while waiting to see if the PTAB would chose to initiate review. . . since the PTAB is authorized to take [at least] twelve months to complete a CBMR.” The district court expected the litigation to be resolved in less than a year.

JPMC sought review of the district court’s decision by the Federal Circuit under §18 of the AIA, which provides:


(1) IN GENERAL.—If a party seeks a stay of a civil action alleging infringement of a patent under section 281 of title 35, United States Code, relating to a [CBMR] proceeding for that patent, the court shall decide whether to enter a stay . . . .

(2) REVIEW.—A party may take an immediate interlocutory appeal from a district court’s decision under paragraph (1). The United States Court of Appeals for the Federal Circuit shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo.

Although the court acknowledged that §18 grants jurisdiction to consider an interlocutory appeal from a decision on a motion to stay after the institution of a CMBR proceeding, it held §18 does not apply here because the Director had yet to institute a proceeding based on JPMC’s CBMR petitions when the stay was being considered by the District Court. It noted, “the AIA differentiates between a petition for a CBM proceeding (which a party files) and the act of instituting such a proceeding (which the Director is authorized to do.” In fact, “[a] CBMR proceeding will not begin until the PTAB institutes the proceedings and the PTAB will only institute a proceeding if a party’s petition presents a ‘high up-front showing of likely invalidity.’” Thus, since §18 only authorizes interlocutory reviews of motion to stay only when a CBMR proceeding is pending, the Federal Circuit dismissed JPMC’s interlocutory appeal for lack of jurisdiction under §18.

Gibbons will continue to monitor developments on this matter.

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