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Judge Sleet Grants Motion to Stay Pending CMB Review by the PTO

This week, Judge Sleet issued an order granting a motion for stay pending resolution of a covered business method patent review instituted by the defendants, Bloomberg and Charles Schwab. Quest Licensing Corp. v. Bloomberg L.P., et al., C.A. No. 14-561-GMS, Order at 1-3 (D. Del. Dec. 3, 2014). Judge Sleet applied the statutory test for a stay pending CBM review set out in Section 18 of the America Invents Act, which provides for four factors to be considered. Id. at 2 n.2.

Judge Sleet first found that a stay was likely to simplify the issues and streamline the trial. Despite the different claim construction standards applicable in the District Court and the PTAB, Judge Sleet found that the Court could still consider the PTAB’s determination and the intrinsic evidence relevant to that determination. Judge Sleet also found that simplification of issues generally was likely given the defendants’ argument that the PTAB would not only engage in claim construction but could also potentially cancel or amend claims or “affect the substantive meaning of the claims by prosecution history or otherwise.” Id.

“The second factor, which has the court consider how far the litigation has progressed, likewise favor[ed] a stay” because no discovery had yet occurred, particularly given that the Court had stayed discovery pending the resolution of the motion to stay. Id. Judge Sleet also found that “the conflicting evidence of attempts by the parties to start discovery prior to the court’s Rule 26(f) conference does not constitute dilatory tactics” designed to delay discovery. Id.

Turning to the third factor, potential prejudice from a stay or lack therefore, Judge Sleet found the factor neutral in the stay analysis: “Should the defendants eventually be found to have infringed, Quest can be adequately compensated by money damages for any harm suffered during the PTO proceedings. Further, the CBM review process initiated by Congress is required by law to conclude one year after initiation and only extendable by six months with a showing of good cause. The court recognizes that Quest has an interest in the timely enforcement of its patent rights. Nonetheless, the court also recognizes the reduced time-frame allotted by Congress for CBM review completion. Moreover, Bloomberg and Schwab’s filing of the motion to stay approximately six months after the filing of the first complaint is not considered by the court to be intentionally delayed or dilatory. Since the parties and the court will have a definitive answer from the PTO whether it will grant CBM review five months prior to the scheduled Markman hearing, the court finds this factor neutral. While a delay in proceeding with its case may be somewhat prejudicial to Quest, it is not unduly prejudicial.” Id. at 2-3 n.2.

Finally, Judge Sleet considered whether a stay would reduce the burden of the litigation on the parties and the Court. Actions against several defendants had previously been consolidated into one civil action, yet only two of five total defendants had joined the CBM petition in the PTO. Under these circumstances, the plaintiff argued that the remaining three defendants “will be in a position to trigger separate CBM challenges at any time during the pendency of this litigation or to re-litigate the claims determined by the PTO as a result of the CBM petition.” Id. at 3 n.2. Nevertheless, “the court [found] credible the nonmoving defendants’ assertions that they were uninformed of the Petition prior to the eve of filing by Schwab and Bloomberg and in no way were attempting to ‘game’ the system. Additionally, the defendants note, and the court agrees, that this is an unlikely proposition. Further, § 18(b) does not require the court impose estoppel effect on the nonmoving defendants or consider the lack of stipulated estoppel effect in assessing the four factors. Rather, the court is asked to balance the factors with a ‘thumb on the scale in favor of a stay being granted.’” Id.

Accordingly, Judge Sleet found that the “balance of the four statutory factors weighs in favor of granting a stay pending resolution of the CBM review proceedings.” Id.

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