Apple Wins Stay of Infringement Action in Favor of PTO’s Post-Grant Review of Covered Business Method Patent

Scott Daniels | June 7, 2013

Judge Donnetta Ambrose of the Western District of Pennsylvania has stayed the infringement action SightSound Technologies v. Apple, 2013 U.S. Dist. LEXIS 79319, pending resolution of the PTO’s post-grant review of the patent in issue.  Judge Donnetta began her analysis by citing the AIA standard for considering a stay request:

1)         whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;

2)         whether discovery is complete and whether a trial date has been set;

3)         whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and

4)         whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. 

AIA 18(b)(1), P.L. 112-29, 125 Stat. 284, 331 (2011). The Judge then quoted the comment from the legislative history that Section 18 “places a very heavy thumb on the scale in favor of a stay being granted … Since the entire purpose of the transitional program at the PTO is to reduce the burden of litigation, it is nearly impossible to imagine a scenario in which a district court would deny a stay.”

Starting with simplification, Judge Ambrose observed that parallel proceedings involving the same patents have the undesirable potential for differing outcomes. “Allowing one to conclude, even if the two proceedings involve different prior art, is likely to streamline the other in several of the ways enunciated by [a 2001 Delaware decision]. Further, a “stay leaves open the significant potential to simplify the issues for trial, and streamline the trial, and this factor thus favors a stay.”

As for the stage of the action, Judge Ambrose found that although “this litigation has reached a relatively late stage, expert discovery is not complete. No trial date has been set. We are still at a point, under the present circumstances, where a stay can ‘maximize the likelihood that neither the Court…nor the parties expend their assets addressing invalid claims.’”

Regarding the third factor, prejudice to the patent owner, Judge Ambrose recognized the inherent prejudice to a patent owner resulting from a stay. But she found that delay per se “does not amount to undue prejudice … Moreover, Plaintiff does not contend that a stay would result in prejudice stemming from direct competition between the parties. The prejudice, in sum, is not ‘undue.’”

Finally, on the question of “whether the stay, or the denial thereof, will reduce the burden of litigation on the parties and the Court,” Judge Ambrose found that “while much has been done thus far, there is more to come. The parties and Court will expend further substantial resources in this litigation, through completing discovery and trial. A stay will reduce the burden of litigation, and this factor weighs in favor of a stay.”

Judge Ambrose concluded with some comments that will interest practitioners.  First, she acknowledged that the patent owner’s argument that its patent was not a “covered business method patent” for which post-grant review was authorized by the AIA, but she found that the question should be resolved by the PTO, not by the courts.  Second, as to the fact that the PTO had not yet instituted post-grant review of the patent, she stated “that the relevant stay provisions of the AIA apply when the petition for review is filed, and not when the PTAB institutes such review.”

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