The Law of District Court Stays for USPTO Proceedings

The Patent Trial and Appeal Board (PTAB), an administrative body tasked with patent post-grant review, reviews most issues of patentability cheaply compared to district court review, and challenges can estop later validity arguments. So too does the Central Reexamination Unit (CRU) launch ex parte reexaminations that often streamline or resolve disputes between ersatz litigants. Stays for these proceedings are particularly favored.

One senior appellate judge from the U.S. Court of Appeals for the Federal Circuit, sitting by designation, has for almost a decade been issuing authoritative orders on stays for U.S. Patent and Trademark Office (USPTO) proceedings, at least twice in the Eastern District of Texas and recently in Delaware, where he has exhaustively compiled district court stay cases and offered a guide for other judges faced with determining whether to stay.³ Those cases outline the clear contours controlling the judicial exercise of discretion surrounding motions to stay and are applicable in all of the U.S., as dictated by the Federal Circuit and as applied by the various district courts. Judges who ignore those cases or fail to weigh those factors in written opinion risk running afoul of reviewing courts and their brethren below.

The Law of Stays

A federal court has the power to stay litigation in a patent infringement case pending the USPTO’s review of the patent, as noted both above and elsewhere,⁴ under its inherent docket control authority.⁵ The courts have concluded there are three factors judges look to in determining whether to grant a stay in light of a USPTO proceeding:

1. whether the stay will simplify issues at trial,
2. whether discovery is complete and a trial date is set, and
3. whether a stay will unduly prejudice the nonmoving party.⁶

The formulation of the as-applied test can vary slightly, the substance should not, and it has been endorsed by the Federal Circuit and by nearly every other district court judge who has ruled on a contested motion.

In VirtualAgility Inc. v. Salesforce.com, Inc.,⁷ the Federal Circuit applied these factors in reviewing a denial of a stay for a USPTO review. The court was careful to apply the abuse of discretion standard and found such an abuse there.⁸ As the U.S. Supreme Court notes, there is “good authority that ‘a motion to [a court’s] discretion is a motion, not to its inclination, but to its judgment; and its judgment is to be guided by sound legal principles.’”⁹ The same goes for a court’s “belief.”¹⁰ The application of the court’s discretion includes adherence to the sound legal principles and judgments outlined by the hundreds of district court orders that have issued before them, as guided by their appellate and sister courts. Discretion cuts a channel.

Even so, given the interlocutory nature of stay orders, the practical opportunities for an appellate court to review lower courts on the issue are vanishingly small.¹¹ True, the writ of mandamus is available, but the court has admonished that it “is not to be used as a substitute for appeal.”¹² But it is of use “when there is ‘usurpation of judicial power’ or a clear abuse of discretion.”¹³ And it is also appropriate where there can be no appellate review absent certification—such as interlocutory issues of docket control like the granting of stay motions, which have serious and wide-ranging consequences in heavily traveled districts. Nonetheless, mandamus review is an extraordinary remedy, and the Federal Circuit has had and will have little chance to comment on the actions (or inactions) of district court judges.

So it is welcome that Federal Circuit Judge Bryson, sitting by designation in various district courts, has provided the most comprehensive guidance on how to employ the factors,¹⁴ for both inter partes reviews (IPRs) and ex parte reexaminations, from the beginning of the America Invents Act’s (AIA’s) application to today. He has collected cases and synthesized rules and notes that, among the many district court cases in which contested stays have been requested, there have been upward of 60 decisions applying the factors as the dominant legal framework for applying the judicial discretion to decide whether to stay a case.¹⁵

In NFC Technology LLC v. HTC America, Inc. in 2015,¹⁶ for instance, Judge Bryson exhaustively cataloged the appropriateness of stays in light of IPRs.¹⁷ He refreshed that difficult, detailed work in 2019 in Cywee Group Ltd. v. Samsung Electronics Co. Ltd.,¹⁸ and capped off those efforts with an opinion, sitting by designation the District of Delaware, that collects stays in light of ex parte reexaminations and applies the same stay analysis in that context, analyzing in detail the facts particular to that type of proceeding, in British Telecommunications PLC v. IAC/InterActiveCorp.¹⁹ Anyone applying for, opposing, or writing about district court stay motions for parallel proceedings should read them carefully. The synthesized rules of reason laid down by Judge Bryson in all three are compelling, persuasive, and exhaustively researched; they are also being ignored by the nation’s busiest patent judge.

After extensively researching the landscape of district court orders deciding stay motions in patent cases, Judge Bryson laid out appropriate applications of the stay power and the application of facts to the three factors. Initially, a stay is particularly justified when “the outcome of a PTO proceeding is likely to assist the court in determining patent validity or eliminate the need to try infringement issues.”²⁰ As to the factors as properly applied, he finds “the most important factor bearing on whether to grant a stay in this case is the prospect that the inter partes review proceeding will result in simplification of the issues before the Court,”²¹ that is, factor one of most judicial opinions on stays. For factor two, he has found that where petitions are filed four to seven months after the filing of a complaint, they are generally reasonable, early, and likely to simplify the case.²² For factor three, the courts have generally recognized that, while a USPTO action may result in a delay of the case, that “omnipresent potential for delay does not alone suffice to establish the prejudice needed to deny a stay,” and as “granting inter partes review probably results in an even higher likelihood than under the prior standard that the issues in [an] action will be simplified by the reexamination,” courts are careful to realize that prejudice cannot be found through the mere act of filing a challenge.²³ These considerations apply with equal force to ex parte reexaminations.²⁴ The law of stays, and the written opinions that normally follow, all apply a judge’s discretion against the backdrop of these reasonable decisions based on case-specific reasoning.

The Nation’s Busiest Patent Docket

The Western District of Texas has quickly become the leading patent litigation venue in the U.S., receiving a deluge of almost a thousand patent cases in 2020, a year district court filings were down nationally.²⁵ It is still rising. Plaintiffs now file one-quarter of all U.S. patent cases in the Western District of Texas.²⁶ To be precise, 233 of the 937 new U.S. district court patent cases were assigned to a judge in the Western District during the first quarter of 2021;²⁷ in comparison, in all of 2016 and 2017 combined, 120 patent cases were filed in the Western District.²⁸

That volume is due to one judge—Alan Albright of the Waco Division, a single-judge division in Western Texas. As the sole judge sitting in the Waco Division, Judge Albright has transformed the dockets overnight from minuscule to seemingly unmanageable. Indeed, according to Judge Albright himself, he has upward of 1,200 cases on his docket as recently as May 2021,²⁹ far up in a pandemic year when judicial caseloads dropped substantially.³⁰ This is far in excess of the Judicial Conference’s recommended 400 weighted cases³¹ and means he has brought one of the nation’s heaviest dockets to Waco.

And it is widely known that Judge Albright appeals to patent plaintiffs through his professed reluctance to stay litigation.³² He has “publicly stated that he will not stay cases pending the outcome of [IPRs] absent special circumstances, as he believes that patent owners deserve jury trials in federal court.”³³ In just one of many examples, a law firm posted a recorded video of Judge Albright explaining his “general approach on rulings on motions to stay”: “If the case is filed, and after the case is filed there is an effort to institute the IPR . . . in those situations, I almost will never stay my case because my trial will happen before the resolution of the IPR.”³⁴

According to the Docket Navigator database, there appear to be no grants of contested stay motions by Judge Albright—though there do appear to be grants of contested stay motions by some of his colleagues in the Western District of Texas during the same time frame, all under similar rules and constraints. In the span from 2019 through 2021, it appears that Judge Albright has denied every contested motion to stay in view of PTAB proceedings. The only grants uncovered resulted from joint or unopposed motions to stay.

Including consolidated cases, Judge Albright has denied at least six contested motions for stay in view of PTAB proceedings and granted at least 10 joint/uncontested motions. The orders denying contested motions are generally short and rely on Judge Albright’s strong belief in the Seventh Amendment³⁵ rather than any of the guiding case law or the legal test outlined above. More often, though, they are mere text orders denying the motions for reasons stated at the hearing³⁶—or there is no order and no ruling at all in cases where one would make sense, because either the parties were told not to file orally or were apparently discouraged from doing so. And this is just in the six the parties had the temerity to file.

Judge Albright’s zero-for-six record contrasts with a nationwide average of roughly 60 percent of contested motions for both IPRs and the slower ex parte reexaminations, and almost 80 percent for motions in general, a number that is on the rise since SAS Institute streamlined IPR institution decisions.³⁷

It also contrasts with other judges in the Western District of Texas. Despite having a tiny fraction of Judge Albright’s patent docket, these judges have granted contested stay motions in multiple cases in that same time frame.³⁸ And his professed reason—the fast time to trial—sits at around 24 months for the seven trials he has had to date—six months longer than his aggressive scheduling orders, and promising to grow longer, as many more of his patent matters look as if they will go to trial this year.

Prejudgment and Discretion

Judge Albright has commented on this issue of stays in statements to the press, to members of the bar practicing before him, and in court. He has made clear that he relies on his extant beliefs and feelings when doing so.³⁹ And while no judge is a tabula rasa—nor should be—prejudgment before considering the parties’ circumstances before the court is unusual and could affect a fourth of all patent cases filed in the U.S. annually.

To be sure, judges have broad discretion to manage their own dockets and have freedom to exercise that discretion, albeit soundly, on record, and within the confines of the law. It is the power inherent in Article III courts and in the importance of their roles in the federal judiciary. And we should be careful before we cast stones and give them wide latitude to fulfill their constitutional duties. Sensing this, reviewing courts have always sought to avoid internecine battles among the judges where possible, and should, as lifetime appointments have long memories, and a conservative approach is generally best. But there are extreme cases, and this seems one of them. At least in the court of public opinion, it is clear where this particular court—with well over a quarter of all U.S. patent cases—will rule.

Endnotes

1. See Landis v. N. Am. Co., 299 U.S. 248, 254 (1936) (finding that this docket control power necessarily implies that district courts also have the ability to modify or lift a stay if it is no longer deemed efficient or equitable); see also Clinton v. Jones, 520 U.S. 681, 706 (1997) (“The [d]istrict [c]ourt has broad discretion to stay proceedings as an incident to its power to control its own docket.” (citing Landis, 299 U.S. at 254)).

2. See, e.g., 28 U.S.C. § 1659 (“Stay of certain actions pending disposition of related proceedings before the United States International Trade Commission”); 9 U.S.C. § 3 (“Stay of proceedings where issue therein referable to arbitration”); 35 U.S.C. § 315(a) (automatic stays of declaratory judgment actions in light of IPRs).

3. NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058-WCB, 2015 WL 1069111, at *2 (E.D. Tex. Mar. 11, 2015); British Telecomms. PLC v. IAC/InterActiveCorp, No. 18-366-WCB, slip op. at 10–20 (D. Del. Sept. 11, 2020); Cywee Grp. Ltd. v. Samsung Elecs. Co. Ltd., No. 2:17-cv-00140, slip op. at 7–20 (E.D. Tex. Feb. 14, 2019).

4. For a comprehensive study of district court stays pending USPTO proceedings, see, for example, Jonathan Stroud, NFC Technology LLC v. HTC America, Inc.: Judge Bryson’s Sitting-by-Designation Guide to Securing Stays in Light of Inter Partes Reviews, 65 Am. U. L. Rev. 1075 (2016); Jonathan Stroud, Staying Litigation for Covered Business Method Post-Grant Reviews, 17 Colum. Sci. & Tech. L. Rev. 120 (2015) (cited in 29 A.L.R. Fed. 3d art. 9 (2018)); Jonathan Stroud et al., Stay Awhile: The Evolving Law of District Court Stays in Light of Inter Partes Review, Post-Grant Review, and Covered Business Method Post-Grant Review, 11 Buff. Intell. Prop. L.J. 226 (2015) (same).

5. See Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426–27 (Fed. Cir. 1988) (“Courts have inherent power to manage their dockets and stay proceedings, including the authority to order a stay pending conclusion of a PTO reexamination.” (citation omitted)). Of course, Congress could make those stays mandatory, as they have for the International Trade Commission.

6. See Murata Mach. USA v. Daifuku Co., 830 F.3d 1357, 1361 (Fed. Cir. 2016) (quoting pre-AIA cases); NFC Tech., 2015 WL 1069111, at *2; see also VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1309 (Fed. Cir. 2014) (applying four statutory factors to consider stays related to an instituted covered business method post-grant review, the first three factors of which apply in the IPR context).

7. 759 F.3d at 1309.

8. Id. at 1310.

9. Martin v. Franklin Cap. Corp., 546 U.S. 132, 139 (2005) (quoting United States v. Burr, 25 F. Cas. 30, 35 (C.C. Va. 1807)).

10. Id.

11. Indeed, we may need to look to denials of writs of mandamus or parallel statutory appeals to find much commentary from the court. See, e.g., Smartflash LLC v. Apple Inc., 621 F. App’x 995, 1006 (Fed. Cir. 2015); Intellectual Ventures II, LLC v. JPMorgan Chase & Co., 781 F.3d 1372, 1373 (Fed. Cir. 2015); Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368, 1369–70 (Fed. Cir. 2014), vacated, 780 F.3d 1134 (Fed. Cir. 2015); Benefit Funding Sys. LLC v. Advance Am. Cash Advance Ctrs. Inc., 767 F.3d 1383 (Fed. Cir. 2014); VirtualAgility, 759 F.3d at 1308.

12. Schlagenhauf v. Holder, 379 U.S. 104, 110 (1964) (citing Ex parte Fahey, 332 U.S. 258, 259–60 (1947)).

13. Id. (quoting Bankers Life & Cas. Co. v. Holland, 346 U.S. 379, 383 (1953)).

14. NFC Tech. LLC v. HTC Am., Inc., No. 2:13-CV-1058-WCB, 2015 WL 1069111, at *2 (E.D. Tex. Mar. 11, 2015); British Telecomms. PLC v. IAC/InterActiveCorp, No. 18-366-WCB, slip op. at 10–20 (D. Del. Sept. 11, 2020); Cywee Grp. Ltd. v. Samsung Elecs. Co. Ltd., No. 2:17-cv-00140, slip op. at 7–20 (E.D. Tex. Feb. 14, 2019).

15. See, e.g., Murata Mach. USA v. Daifuku Co., 830 F.3d 1357, 1362 (Fed. Cir. 2016); Smartflash, 621 F. App’x at 1005; VirtualAgility, 759 F.3d 1307; Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426–27 (Fed. Cir. 1988); In re Etter, 756 F.2d 852, 857 (Fed. Cir. 1985); Gould v. Control Laser Corp., 705 F.2d 1340, 1342 (Fed. Cir. 1983); British Telecomms., No. 18-366-WCB, slip op. at 10–20; Cywee, No. 2:17-cv-00140, slip op. at 7–20; Lund Motion Prods., Inc. v. T-Max Hangzhou Tech. Co., No. SACV 17-1914, 2019 WL 116784, at *2 (C.D. Cal. Jan. 2, 2019); Neuro Cardiac Techs., LLC v. LivaNova, Inc., No. H-18-1517, 2018 WL 4901035, at *2 (S.D. Tex. Oct. 9, 2018); VirnetX Inc. v. Apple Inc., No. 6:12-cv-855, 2018 WL 398433, at *3 (E.D. Tex. Jan. 12, 2018); 454 Life Scis. Corp. v. Ion Torrent Sys., Inc., No. 15-595, 2016 WL 6594083, at *3 (D. Del. Nov. 7, 2016); Gatearm Techs., Inc. v. Access Masters, LLC, No. 14-62697, 2015 WL 13752667, at *1 (S.D. Fla. July 13, 2015); Crossroads Sys., Inc. v. Dot Hill Sys. Corp., No. 13-ca-1025, 2015 WL 3773014, at *2 (W.D. Tex. June 16, 2015); NFC Tech., 2015 WL 1069111, at *2–6; Finjan, Inc. v. Symantec Corp., 139 F. Supp. 3d 1032, 1036 (N.D. Cal. 2015); Norman IP Holdings, LLC v. TP-Link Techs., Co., No. 6:13-cv-384, 2014 WL 5035718, at *2 (E.D. Tex. Oct. 8, 2014); Destination Maternity Corp. v. Target Corp., 12 F. Supp. 3d 762, 766–68 (E.D. Pa. 2014); Market-Alerts Pty. Ltd. v. Bloomberg Fin. L.P., 922 F. Supp. 2d 486, 489 (D. Del. 2013); Ultratec, Inc. v. Sorenson Commc’ns, Inc., No. 13-cv-346, 2013 WL 6044407 (W.D. Wis. Nov. 14, 2013); E-Watch, Inc. v. Lorex Can., Inc., No. H-12-3314, 2013 WL 5425298, at *2 (S.D. Tex. Sept. 26, 2013); Softview LLC v. Apple Inc., No. 12-989, 2013 WL 4757831, at *1 (D. Del. Sept. 4, 2013); EchoStar Techs. Corp. v. TiVo, Inc., No. 5:05-cv-81, 2006 WL 2501494 (E.D. Tex. July 14, 2006).

16. 2015 WL 1069111, at *2.

17. See Stroud, NFC Technology, supra note 4.

18. No. 2:17-cv-00140, slip op. at 7–20.

19. No. 18-366-WCB, slip op. at 10–20.

20. NFC Tech., 2015 WL 1069111, at *1 (citing cases).

21. Id. at *8 (Bryson, J., sitting by designation).

22. Id. at *3.

23. Stroud, NFC Technology, supra note 4, at 1092–93.

24. Princeton Digit. Image Corp. v. Konami Digit. Entm’t Inc., No. CV 12-1461, 2014 WL 3819458, at *2 (D. Del. Jan. 15, 2014) (citing cases); St. Clair Intell. Prop. Consultants v. Sony Corp., No. 01-557, 2003 WL 25283239, at *1 (D. Del. Jan. 30, 2003); British Telecomms. PLC v. IAC/InterActiveCorp, No. 18-366-WCB, slip op. at 4 (D. Del. Sept. 27, 2019).

25. See The Rise of the Super NPE and the Western District of Texas, Unified Pats. (July 13, 2020), https://www.unifiedpatents.com/insights/2020/7/13/the-rise-of-the-super-npe.

26. See Q1 2021 Patent Dispute Report, Unified Pats. (Mar. 31, 2021), https://www.unifiedpatents.com/insights/2021/3/31/q1-2021-patent-dispute-report.

27. Id.

28. See Docket Navigator, Analysis of Patent Litigation in the Western District of Texas 4 (2020), https://brochure.docketnavigator.com/analysis-of-patent-litigation-in-the-western-district-of-texas.

29. Ryan Davis, Albright Says He’ll Very Rarely Put Cases on Hold for PTAB, Law360 (May 11, 2021), https://www.law360.com/articles/1381597/albright-says-he-ll-very-rarely-put-cases-on-hold-for-ptab (“Noting that his docket currently has 1,250 civil cases, about 60% of which are patent cases, [Judge Albright] added that ‘my belief is that if someone files a patent case, they’re entitled to have a jury trial,’ but that the quick trial dates also encourage parties to reach settlements.”).

30. See generally Press Release, Admin. Off. of the U.S. Courts, Judiciary Seeks New Judgeships, Reaffirms Need for Enhanced Security (Mar. 16, 2021), https://www.uscourts.gov/news/2021/03/16/judiciary-seeks-new-judgeships-reaffirms-need-enhanced-security (“[S]ince [1990], the caseload in the district courts had risen 47 percent (civil cases were up 41 percent and criminal filings rose 72 percent) by the end of fiscal year 2019, before the COVID-19 pandemic began to impact filings. As of fiscal year 2020, filings in the courts of appeals had risen 12 percent since 1990.”).

31. Id. (“Weighted case filings are a measure that the Judiciary uses to account for the varying level of resources cases require. Weighted case filings exceeded 600 per judgeship in 14 of these courts, 700 per judgeship in six courts, and 900 per judgeship in two courts.”).

32. J. Jonas Anderson & Paul R. Gugliuzza, Federal Judge Seeks Patent Cases, 71 Duke L.J. (forthcoming 2021–2022), https://ssrn.com/abstract=3668514 (“Plaintiffs also like knowing that Judge Albright is reluctant to stay litigation, even for a patent validity challenge at the PTAB.”).

33. Q1 in Review: New Uncertainties Spark Further Change as Reform Momentum Builds, RPX Blog (Apr. 30, 2019), https://www.rpxcorp.com/intelligence/blog/q1-in-review-new-uncertainties-spark-further-change-as-reform-momentum-builds.

34. Views from the Top: Conversation with Judge Alan D Albright, Akin Gump, at 27:50 (Sept. 9, 2020), https://www.akingump.com/a/web/dpKG4oSeP2Q7jnUNk6ZCvi/event-with-judge-albright.m4v (emphasis added); see also Baker Botts, View from the Bench: Q&A Session with Judge Alan Albright, YouTube, at 47:30 (Nov. 16, 2020), https://www.youtube.com/watch?v=9_Or0cFwCN0 (responding to the interviewer’s question whether he (Judge Albright) would consider a stay “in an instance where the IPR was filed before litigation began” only with examples where an IPR was filed well before the complaint was filed).

35. Cont’l Intermodal Grp.-Trucking LLC v. Sand Revolution LLC, No. 7:18-cv-00147 (W.D. Tex. July 22, 2020), ECF No. 104 (“The Court strongly believes [in] the Seventh Amendment.”).

36. See, e.g., Solas OLED Ltd. v. Dell Techs. Inc., No. 6:19-cv-00514 (W.D. Tex. June 23, 2020), ECF No. 55 (“for the reasons stated by the Court in the hearing”); Solas OLED Ltd. v. Google, Inc., No. 6:19-cv-00515 (W.D. Tex. June 23, 2020), ECF No. 72 (“for the reasons stated by the Court in the hearing”).

37. SAS Inst. Inc. v. Iancu, 138 S. Ct. 1348, 1359 (2018) (“SAS is entitled to a final written decision addressing all of the claims it has challenged[.]”); Forrest McClellen et al., How Increased Stays Pending IPR May Affect Venue Choice, Law360 (Nov. 15, 2019), https://www.law360.com/articles/1220066/how-increased-stays-pending-ipr-may-affect-venue-choice (noting that the average went from 72 percent to 77 percent since the SAS decision).

38. See Aquila Innovations, Ltd. v. Advanced Micro Devices, Inc., No. 18-cv-554 (W.D. Tex. June 10, 2020); Anza Tech., Inc. v. Avant Tech., Inc., No. 17-cv-01193 (W.D. Tex. Nov. 15, 2018).

39. The orders denying contested motions often rely on Judge Albright’s strong belief in the Seventh Amendment. See Cont’l Intermodal Grp.-Trucking, No. 7:18-cv-00147 (“The Court strongly believes [in] the Seventh Amendment.”). Or they may deny the motions for reasons stated at the hearing. See, e.g., Solas OLED, No. 6:19-cv-00514 (“for the reasons stated by the Court in the hearing”); Solas OLED, No. 6:19-cv-00515 (same).