Plaintiff GT Nexus, Inc. (“GT Nexus”) filed a declaratory judgment action against Inttra, Inc. (“Inttra”) seeking a declaration that four of Inttra’s patents (“patents-in-suit”) were invalid and have not been infringed. Inttra filed counterclaims against GT Nexus for infringement of the patents-in-suit.
The district court had previously stayed the action pending the ex parte re-examination of the patents-in-suit. After the patents emerged from the ex parte re-examination, Inttra moved to lift the stay. GT Nexus opposed arguing that the stay should not be lifted because it had filed petitions for Covered Business Method (“CBM”) review with the Patent Trial and Appeal Board (“PTAB”). The district court then denied Inttra’s motion, finding that each of the four factors for determining whether to stay a case pending CBM review weighed in favor of a stay. In its order, the district court “stated that if CBM review is granted, the case will remain stayed pending completion of the CBM review proceedings. Id. The Court also stated that if CBM review is denied, Inttra may file a motion requesting to lift the stay and reopen the action. Id.”
After the PTAB instituted review, “Inttra filed a motion to dismiss the CBM review proceedings, arguing that CBM review was statutorily barred under 35 U.S.C. § 325(a)(1). On December 10, 2014, the PTAB issued an order terminating the CBM review proceedings and vacating its decision to institute such proceedings.”
Inttra then filed a subsequent motion to lift the stay. Inttra contends that the stay should be lifted and this action reopened because the CBM review proceedings are complete as GT Nexus is statutorily barred from appealing the PTAB’s Termination Order. Inttra argues that the Federal Circuit only has jurisdiction to hear appeals of final PTAB decisions concerning the patentability of a challenged patent claim. GT Nexus opposed the motion arguing that the stay should not be lifted because it is not barred from appealing the Termination Order and because the AIA factors weigh in favor of maintaining the stay.
The district court then analyzed whether the Termination Order would be appealable. “Section 18 of the AIA provides that CBM review proceedings shall ’employ the standards and procedures of, a post-grant review under chapter 32 of title 35 United States Code [i.e., 35 U.S.C. 321-329], subject to the following: . . . Section 321(c) of title 35, United States Code, and subsections (b), (e)(2), and (f) of section 325 of such title shall not apply to a transitional proceeding.’ AIA § 18(a)(1), Pub. L. No. 112-29, 125 Stat. 284, 329. Section 325(a)(1), entitled ‘Post-grant review barred by civil action,’ provides: ‘A post-grant review may not be instituted under this chapter if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.’ 35 U.S.C. § 325(a)(1). Section 324(e), entitled ‘No appeal,’ provides: ‘The determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable.” 35 U.S.C. § 324(e).
The district court concluded that “it is undisputed that GT Nexus filed the instant action challenging the validity of the claims of the patents-in-suit prior to filing petitions for CBM review with the PTAB. As such, the plain language of § 325(a)(1) bars the institution of CBM review proceedings for the patents-in-suit. It is also undisputed that while the PTAB initially decided to institute CBM review proceedings for the patents-in-suit, it subsequently issued an order terminating the proceedings and vacating its decision to institute such proceedings. Dkt. 73-2. In terminating the CBM review proceedings, the PTAB explained that § 325(a)(1) is a statutory limitation on its jurisdiction. Id. The PTAB further explained that because an agency may not expand its power in the face of a congressional limitation on its jurisdiction, the institution of CBM review proceedings is not within its discretion where, as here, a petitioner seeking CBM review has filed a civil action challenging a patent prior to filing a petition for CBM review of that patent. Id. Accordingly, because the PTAB’s Termination Order is not a final written decision regarding the patentability of any patent claim challenged by GT Nexus, it is not appealable. See 35 U.S.C. § 329. GT Nexus has not cited any authority supporting the conclusion that the PTAB’s Termination Order is appealable. Indeed, the plain language of the governing statutory scheme and Federal Circuit authority make it clear that the PTAB’s Termination Order is not an appealable order.”
The district court then concluded that lifting the stay was appropriate. “Here, because the PTAB did not issue a final appealable decision, the CBM proceedings have effectively terminated. As such, the Court finds that there is no basis to maintain the stay under the AIA factors. Moreover, even assuming for the sake of argument that GT Nexus is entitled to appeal the PTAB’s Termination Order, an order lifting the stay is still appropriate. It is undisputed that GT Nexus commenced the instant action challenging the validity of the patents-in-suit prior to filing petitions for CBM review. Under such circumstances, CBM review may not be instituted under the plain language of § 325(a)(1). The PTAB recognized as much in its order terminating the CBM review proceedings and vacating its decision to institute such proceedings. GT Nexus has not cited any authority supporting the conclusion that the PTAB may conduct CBM review proceedings in direct contravention of § 325(a)(1). Accordingly, because CBM review proceedings are statutorily barred in this case under § 325(a)(1), the Court finds that the AIA factors weigh in favor of lifting the stay and reopening this action. A stay will not simplify the issues in question, streamline the trial, or reduce the burden of litigation on the parties and the court.”
GT Nexus, Inc. v. Inttra, Inc., Case No. C 11-02145-SBA (N.D. Cal. Mar. 25, 2015)
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.