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District Court Grants Stay Before The PTO Institutes An IPR

In MLC Intellectual Property, LLC v. Micron Technology, Inc., Case No. 14-cv-3657 (N.D. Cal.), MLC filed its lawsuit on August 12, 2014, accusing Micron of infringing U.S. Patent No. 5,764,571 (“the ‘571 patent”). On October 15, 2014, Micron answered the complaint and asserted counterclaims for declaratory judgment of non-infringement and invalidity of the ‘571 patent. At the initial case management conference on November 21, 2014, the Court set a further case management conference for March 20, 2015, the tutorial hearing for June 10, 2015, and the claim construction hearing for June 17, 2015.

On December 24, 2014, Micron filed a petition for inter partes review (“IPR”) at the U.S. Patent and Trademark Office (“PTO”), challenging the patentability of at least each asserted claim of the ‘571 patent. The PTO accorded the IPR petition a filing date of December 24, 2014, and thus the PTO must issue a decision on whether to institute the IPR no later than June 24, 2015. On December 29, 2014, Micron filed its motion to stay pending the IPR. In its motion, Micron sought a stay through a final written decision of the IPR including any appeals to the Federal Circuit. MCL partially opposed only the portion of the stay beyond the final written decision of the PTO rather than after all appeals have been exhausted. MCL also argued that the case should not be stayed at this time until after the claim construction was completed.

In its decision, the Court rejected MCL’s position and held that a stay was in the interests of judicial efficiency:

As an initial matter, “it is not uncommon for [courts] to grant stays pending reexamination prior to the PTO deciding to reexamine the patent.” Pragmatus AV, No. 11-CV-02168-EJD, 2011 WL 4802958, at *3 (N.D. Cal. Oct. 11, 2011). Should the PTO deny the IPR petition, the delay caused by the stay will have been relatively short. The claim construction hearing in this case is currently set for June 17, 2015. Even if the PTO uses the full statutory six months from petition filing date and issues its decision on institution on June 24, 2015, it is highly unlikely that the PTO would have the opportunity to consider this Court’s claim construction. In addition, although the IPR and district court claim construction standards could be similar because the ‘571 patent will expire on June 9, 2015, the PTO “[is] not bound by the district court’s claim construction” and there is a risk that proceeding through claim construction in this case will result in competing claim constructions and wasted effort. In re Trans Texas Holdings Corp., 498 F.3d 1290, 1301 (Fed. Cir. 2007); see also Facebook v. Software Rights Archive, IPR2013-00478, Paper No. 17, at *11 (P.T.A.B. Feb. 3, 2014) (“Although a district court’s interpretation of the claims of an expired patent is instructive in a proceeding before the Board, we are not bound by these constructions.”).

Having determined that a stay was in the interests of justice, the Court turned to the length of the stay. But, rather than decide the issue of the length of the stay, the Court provided a framework for reevaluating the stay at appropriate intervals:

The Court is concerned about the possibility of a lengthy stay in the event the IPR is instituted and an appeal with the Federal Circuit is filed. The Court finds that the more prudent course is to enter a stay now, and reevaluate the propriety of the stay at periodic intervals. When the PTO issues a decision regarding whether to institute the IPR, the parties shall file a joint letter informing the Court of the PTO’s decision. If the PTO denies the IPR petition, the stay shall be lifted. If the PTO grants the IPR petition in part, either party may file a motion to lift the stay, and the Court will reevaluate whether to continue the stay in light of the PTO’s determinations. In the event the PTO grants the petition in full, the stay shall continue until the PTO issues a final decision, at which time the parties shall file a letter informing the Court of the PTO’s decision and the parties’ positions regarding the need for a further stay.

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The Court’s approach to granting a stay before the PTO institutes an IPR is not uncommon. However, many, if not most, courts prefer to wait to see whether an IPR is instituted so that they will know the basis and extent of the review before deciding whether a stay is appropriate. The Court’s approach of reevaluating the stay at appropriate intervals addresses the possibility of changing circumstances and seems to be a reasonable and prudent approach that balances the parties’ competing interests, particularly where the disputed issue primarily was the length of any stay.

MLC Intellectual Property, LLC v. Micron Technology, Inc., Case No. 14-cv-3657 (N.D. Cal. Feb. 3, 2015) (Dkt. 27) (J. Illston)

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