Will AIA Post-Issuance Cases Increase ITC’s Popularity?

| June 6, 2013

In recent years, District Court judges have tended to favor stays of infringement actions pending completion of the PTO reexamination proceedings of the patents-in-suit.  Anecdotally, at least, that tendency to stay has increased for the new AIA inter partes review and covered business method post-grant proceedings.

By contrast, the U.S. International Trade Commission has resolutely refused to suspend its investigations to allow reexaminations at the Patent Office to play through.  The Commission’s attitude is based largely on that fact that it, unlike the District Courts, has no authority to award money damages to patentees at the end of its investigations – only prospective relief (by an exclusion order and/or a cease and desist order) is available at the ITC.

The Commission’s stated five-factor test, for determining whether to stay an investigation when there is an ongoing reexamination, is much like the three-factor test applied by the District Courts:

 (1) the state of discovery and the hearing date;

(2) whether a stay will simplify the issues and hearing of the case;

(3) the undue prejudice or clear tactical disadvantage to any party;

(4) the stage of the PTO proceedings; and

(5) the efficient use of Commission resources.

The Commission sometimes adds a sixth factor – whether there are alternative remedies in District Court.

Will the Commission’s application of this test in cases involving the new AIA post-issuance proceedings differ from its past practice with reexamination?  Very likely not, if the Judge E. James Gildea’s recent decision in Certain Microelectromechanical Systems, 337-TA-876, is any indication.

There, the PTO had granted ex parte reexamination of three of the five patents in the investigation, and inter partes review requests were under consideration for institution by the PTO.  The respondent, who had filed these requests, asked Judge Gildea its investigation pending completion of these PTO proceedings.  The respondent’s papers noted, inter alia, that the District Court had stayed a parallel infringement action involving the same five patents.

Judge Gildea ran through the five factors and concluded that no stay was warranted.  First, he noted that the ITC investigation had just begun and that the PTO reexamination statistics suggested that “simplification of issues” would be the probable result of a stay, both factors suggesting a stay.

On the other hand, Judge Gildea found that stay would be more prejudicial to the patentee than to the respondent: a “stay of lengthy and uncertain duration would deprive Complainant of any opportunity to obtain relief for alleged infringement.”  Further, the Judge faulted respondent “who opted to initiate the reexamination petitions after being accused of infringement … and thus this potential prejudice results from [respondent’s] own tactical choices.”

On the fourth factor, the stage of the PTO proceedings, Judge Gildea noted that two of the ex parte reexaminations had been granted in November, one in March, and the two inter partes review requests, pending institution at the PTO, had been filed in April.  For the Judge, this meant that “a stay could potentially last for several years, which would run contrary to the Commission’s mandate for expeditious proceedings. As a result, this factor weighs strongly against a stay of proceedings.”

On the fifth factor – the efficient use of Commission resources – Judge Gildea noted that reexamination/review might affect some but not all the patents, so that suspension of the investigation would be a “negligible” benefit to the Commission.  Then the Judge commented on the Commission’s standing:

there is a certain intangible cost to the Commission in maintaining such a lengthy Investigation when it is under a statutory mandate to proceed expeditiously. See 19 U.S.C. § 1337(b)(1); 19 C.F.R. § 210.2. This would be particularly true if any of the asserted claims were to emerge from reexamination intact after a delay of several years, resulting in an Investigation that could span more than four years instead of 16 months.

(Emphasis added).  By “intangible cost,” the Judge might have meant displeasure in Congress resulting from unduly delayed relief for domestic industries the Commission is charged with defending from infringing imports.

Finally, on the availability of alternative relief in the District Courts, Judge Gildea commented that “[i]n effect, staying the Investigation would result in a dead period of 2-3 years (or more) in which Complainant would be unable to assert its patent rights against alleged infringers, which conflicts with the statutory presumption that patents are valid … Furthermore, if it were possible to create such a lengthy dead zone, reexamination petitions would become part of every respondent’s tactical playbook in every single ITC investigation” (emphasis added).

Unlike District Courts, the Commission must consider the possibility of an adverse reaction in Congress and perhaps even a substantial reduction in the number of patent-based investigations, as respondents shift the disputes to the PTO.  Given those worries, the Commission is unlikely to stay its investigations, making the Commission a more appealing forum than ever.

Category: ITC

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