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Prior Denial of IPR Petitions Dooms Litigation Stay Based On “Second Round” of Petitions Under the Totality of the Circumstances Standard

In CTP Innovations, LLC v. Solo Printing, Case No. 1:14-cv-21499-UU, the Court denied, without prejudice, Defendant’s motion to stay the litigation pending the inter partes review of the two patents-in-suit.

In its motion to stay, the Defendant argued the traditional factors considered by court favored a stay, including that the USPTO’s analysis will simplify the issues in litigation because third party petitions have challenged all claims of the asserted patents, that the case was in its earliest stages having just been filed a little over two months ago, and that there would be no prejudice to the plaintiff because, as a non-practicing entity, it does not compete in the marketplace with the Defendant and thus any infringement, if proven, could be adequately remedied by monetary damages.

In its opposition to the stay, the Plaintiff explained that the totality of the circumstances must be considered, including that only seven months earlier the PTAB denied a third party’s petitions to review the patents-in-suit. The Plaintiff explained that under similar circumstances other courts have denied stays. The Plaintiff also argued that a stay of 6 to 18 months would prejudice its ability to prosecute its claims. Finally, the Plaintiff argued that the likelihood the PTO would grant the IPR petitions was low because they were based on invalidity grounds and prior art that was the same, or substantially similar to, those in the initial, rejected IPR petitions.

In siding with the Plaintiff, the Court agreed that, in addition to the traditional factors, it must consider the totality of the circumstances:

“Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion” of a USPTO administrative proceeding. Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426-27 (Fed. Cir. 1988) (internal citation omitted). The party asking for a stay must set forth the reasons why a stay should be granted. Landis v. N. Am. Co., 299 U.S. 248, 255 (1936). “A stay pending an administrative proceeding is not automatic; rather, it must be based upon the circumstances of the individual case before the court. . . . In deciding whether to stay a given action, courts frequently consider three factors: (1) whether the stay would unduly prejudice or present a clear tactical disadvantage to the non-moving party; (2) whether a stay will simply the issues in question and trial of the case; and (3) whether discovery is complete and whether a trial date has been set. The court’s inquiry is not limited to these three factors-the totality of the circumstances governs.” Automatic Mfg. Sys. v. Primera Tech., Inc., No. 6:12-cv-1727, 2013 WL 1969247, at *1 (M.D. Fla. May 13, 2013) (internal citations omitted).

The Court then determined that a stay was not warranted because “all that is pending before the PTO is a petition for inter partes review proceedings.” The Court relied on the facts that the PTAB previously denied petitions for inter partes review of the patents-in-suit and that “the petition alone does not indicate any likelihood of success.” Thus, a stay could “delay these proceedings for at least six months with little to show.”

This decision illustrates an example where the Court determined that a stay was not warranted under a totality of the circumstances, including the fact that the PTAB only recently had denied inter partes review of the patents-in-suit and that there was no indication that the PTAB would institute inter partes review based on the current petitions. However, by denying the motion without prejudice, the Court left open the possibility of revisiting the issue, presumably in the event that the PTAB grants the petitions and institutes review of the asserted claims of the patents-in-suit.
CTP Innovations, LLC v. Solo Printing, Case No. 1:14-cv-21499-UU (S.D. Fla. August 28, 2014) (J. Ungaro).

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. The authors represent inventors, patent owners and technology companies in patent licensing and litigation in U.S. District Courts and in the United States Patent and Trademark Office, including numerous IPRs currently pending before the PTAB. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Greg Cordrey at 949.623.7236 or