Virtualagility Inc. v. salesforce.com, Inc.
759 F.3d 1307
Fed. Cir.
2014
Check Treatment
Docket

VIRTUALAGILITY INC, Plaintiff-Appellee, v. SALESFORCE.COM, INC., Dell, Inc., Dr. Pepper Snapple Group, Inc., Kimberly-Clark Corporation, NBCUniversal, Inc., Livingsocial, Inc., Fedex Corporation, BMC Software, Inc., Bank of America Corporation, Bank of America National Association, Merrill Lynch & Co., Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Fedex Corporate Services, Inc., Defendants-Appellants.

No. 2014-1232.

United States Court of Appeals, Federal Circuit.

July 10, 2014.

1307

is not entitled to a new trial because of a legally erroneous jury instruction, its patents stand invalid based on the jury‘s obviousness finding.

For these reasons, I concur in the result the majority reaches, but not in the reasoning for doing so.

Christian John Hurt, Nix Patterson & Roach LLP, of Irving, TX, argued for plaintiff-appellee. With him on the brief were Edward K. Chin and Andrew Joseph Wright; and Derek T. Gilliland, of Daingerfield, TX. Of counsel was D. Neil Smith, of Irving, TX.

Jose C. Villarreal, Wilson, Sonsini, Goodrich & Rosati, PC, of Austin, TX, argued for defendants-appellants. With him on the brief was Darryl J. Adams, Baker Botts, LLP, of Austin, TX, for Kimberly-Clark Corporation. Of counsel were Joel Christian Boehm and Brian David Range, Wilson, Sonsini, Goodrich & Rosati, PC, of Austin, TX; and Kevin J. Meek, Baker Botts, LLP, of Austin, TX.

Before NEWMAN, MOORE, and CHEN, Circuit Judges.

Dissenting opinion filed by Circuit Judge NEWMAN.

MOORE, Circuit Judge.

Salesforce.com, Inc. and other defendants (collectively, Defendants)1 appeal from the district court‘s order denying their joint motion to stay VirtualAgility Inc.‘s (VA) patent infringement lawsuit against Defendants pending post-grant review of the validity of VA‘s asserted claims under the Transitional Program for Covered Business Method Patents (CBM program). We reverse.

BACKGROUND

In January 2013, VA sued Defendants alleging infringement of U.S. Patent No. 8,095,413 (‘413 patent). On May 24, 2013, Salesforce filed a petition with the Patent Trial and Appeal Board (PTAB) for post-grant review of all claims of the ‘413 patent under the CBM program. In the petition, Salesforce argued that all claims of the ‘413 patent were eligible for this form of post-grant review because they are di-rected to a “covered business method patent” within the meaning of § 18(a)(1) of the America Invents Act (AIA), Pub L. No. 112-29, 125 Stat. 284, 329-31 (2011), and that Salesforce had standing to bring the petition because it was sued for patent infringement, AIA § 18(a)(1)(B). Salesforce further argued the PTAB should institute CBM review because all the claims of the ‘413 patent were more likely than not patent-ineligible under 35 U.S.C. § 101 and invalid under 35 U.S.C. §§ 102, 103 in view of several prior art references.

On May 29, 2013, Defendants filed a motion to stay district court proceedings pursuant to AIA § 18(b)(1). See Defendants’ Joint Motion To Stay Proceedings, , ECF No. 67. In August 2013, while this motion was pending, the district court issued a discovery order and held a scheduling conference, setting an April 2014 date for a claim construction hearing and a November 2014 date for jury selection. Also in August 2013, VA filed a Preliminary Response in opposition to Salesforce‘s petition at the PTAB pursuant to 37 C.F.R. § 42.207(a). In November 2013, the PTAB granted-in-part Salesforce‘s petition based on its conclusion that all claims of the ‘413 patent are directed to a covered business method, and are more likely than not patent-ineligible under 35 U.S.C. § 101 and invalid under § 102 as anticipated by U.S. Patent No. 5,761,674 (Ito). The PTAB also issued its own scheduling order, setting a July 2014 date for a trial on the validity of the ‘413 patent claims.

In early January 2014, the district court denied Defendants’ motion to stay the case pending CBM review. . Defendants timely filed an interlocutory appeal to this court, and also filed motions to stay district court proceedings pending the disposition of this appeal with the district court and this court. While these motions were pending, VA filed a Motion to Amend the ‘413 patent claims with the PTAB contingent on the claims’ invalidation. PTAB No. CBM2013-00024, Paper 26 (Jan. 28, 2014). In February, we issued an order staying proceedings in the district court pending our disposition of Defendants’ motion to stay pending appeal. , ECF No. 34. Pursuant to our order, the district court entered the stay pending appeal.

DISCUSSION

We have jurisdiction over this appeal under AIA § 18(b)(2), which provides that “[a] party may take an immediate interlocutory appeal from a district court‘s decision” granting or denying a motion to stay litigation pending CBM review. The statute instructs the district court to consider the following four factors when deciding whether to grant a stay:

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

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

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

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

AIA § 18(b)(1). The statute further provides that we “shall review the district court‘s decision to ensure consistent application of established precedent, and such review may be de novo.” Id. § 18(b)(2) (emphasis added).

I. Standard of Review

The parties dispute the standard of re-view that we should apply to this case. Defendants contend that the statute “encourages full de novo review where factual evidence and conclusions of law are reviewed fully and independently.” Appellant‘s Br. 15. VA responds that we should review the order denying a stay with deference because such decisions implicate district courts’ management of their own dockets, which is a matter traditionally left to their discretion. We note that prior to the AIA, district court decisions on motions to stay pending U.S. Patent and Trademark Office (PTO) proceedings were generally not appealable and, when they were, we reviewed them under the abuse of discretion standard. ; see also ; . We also note that the AIA expressly created an immediate right of appeal of stay decisions pending CBM review, gave us jurisdiction over the interlocutory appeals, and that the only standard mentioned in the statute is de novo review. Nevertheless, we need not resolve this dispute because we hold that, even under the abuse of discretion standard argued for by VA, the district court‘s decision to deny a stay pending the PTAB‘s review of the ‘413 patent claims under the CBM program must be reversed. Nothing in this opinion should be read as deciding the standard of review applicable to the ultimate stay decision or the individual factors. We leave it to a future case to resolve what Congress meant when it indicated that our “review may be de novo.”

II. Factors (A) and (D): Simplification of Issues and Reduced Burden of Litigation

The district court concluded that the first factor—simplification of the issues—was “essentially neutral, if not slightly against” granting a stay because it was “not convinced” by the PTAB‘s assessment that cancellation of some or all of the claims during CBM review was “probable.” . The district court reviewed the lengthy prosecution history that the ‘413 patent underwent before issuance. The court was persuaded that “there can be little dispute here about the thoroughness of the PTO‘s prior examination of the ‘413 patent, given the various grounds of invalidity and the breadth of prior art references considered by the PTO before issuing this patent.” . The court then performed its own evaluation of the bases upon which the PTAB granted the CBM petition. The court stated that, even though the Ito patent had never been before the PTO, it was not persuaded that Ito anticipates all of the claims given the PTO‘s extensive re-view of other prior art during “a lengthy prosecution process.” The court also concluded that the value of the PTAB‘s consideration of Ito was “marginal” be-cause Defendants introduced two other pieces of prior art in the district court proceedings—which, they represented, were “of particular importance“—that Salesforce did not include in its CBM petition. With regard to the PTAB‘s decision to review whether the ‘413 patent claims are patent-ineligible, the court observed that the claims were amended during prosecution to overcome an earlier § 101 rejection. Based on its assessment of the claims and the law of § 101, the court “was not per-suaded that the PTAB will likely cancel all claims of the ‘413 patent” as patent-ineligible. . In spite of the PTAB‘s grant of the CBM petition, finding that all the claims of the ‘413 patent were more likely than not invalid on two different grounds, the district court concluded that it was not convinced that the PTAB would cancel some or all of the ‘413 patent claims. The court further concluded that it was not convinced that the CBM review would sim-plify the issues in this case and that, there-fore, this factor was “neutral, if not slightly against, granting a stay.” .

The court determined that the parties’ arguments regarding the fourth factor—burden of litigation—“substantially overlap” with those presented under the first factor. It found that “the specific circumstances in the instant case present only a limited possibility” of a reduced burden on the court and the parties. . The court therefore concluded that the fourth factor “weighs only slightly in favor of a stay.”

After the court denied the motion for a stay, VA filed proposed claim amendments in the CBM review. Defendants filed a motion to, at least, stay district court pro-ceedings pending appeal of the denial of the motion to stay. Defendants argued that the fact that VA has already filed a motion to amend claims in the CBM pro-ceeding increased the likelihood that the CBM proceeding will simplify issues. In its decision denying the motion to stay pending appeal, the court observed that VA‘s proposed amendments to the ‘413 patent claims in the CBM proceeding were not a part of the record at the time of its decision on the motion now on appeal. See . On the merits, the court concluded that Defendants “made no attempt at showing how conditions trig-gering the amendments would likely arise” and have not “challenged [its] previous finding that cancellation of some or all the claims was unlikely.” . The court also noted that, “[t]o the extent any fur-ther statements [by VA] or amendments to claims may affect [its] claim construction, such is fully remediable with supplemental claim constructions.” . Thus, the court concluded that the fact that VA moved to amend the claims in the CBM proceeding did not affect its determination regarding the first and fourth factors.

On appeal, Defendants contend that the district court made “critical errors” in finding the first factor neutral or slightly against the stay. Defendants argue that CBM review will simplify and streamline issues for trial because the district court would not need to address any claims that are cancelled and because Defendants will be estopped from challenging the validity of the ‘413 patent in view of § 101 and the Ito patent after the review is concluded.2 Defendants further argue that claim amendments during CBM review may eliminate infringement arguments and give rise to intervening rights. They contend that the district court should not have second-guessed the PTAB‘s conclusion that all ‘413 patent claims are “more likely than not” anticipated by Ito and invalid under § 101.

Defendants also argue that the fourth factor likewise strongly favors a stay be-cause CBM review may spare Salesforce‘s customers, who have also been sued by VA, from discovery, while “the true par-ties in interest” focus on the validity of the ‘413 patent at the PTAB. They argue that a stay will further reduce discovery burdens on third parties. Finally, they contend that the district court erred by conflating the fourth factor with the first factor and by giving it too little weight.

VA counters that a stay will not signifi-cantly simplify this case or reduce the

burden on the court and the parties. As an initial matter, VA contends that we should not take into account its Motion to Amend because it was not a part of the record below. VA asserts that, while the motion to stay litigation pending CBM re-view was pending, it told Defendants that it might move to amend the claims. It contends that, because Defendants did not notify the district court about VA‘s possi-ble amendments, they waived any argu-ment about the Motion to Amend. On the merits, VA points out that the motion seeks to amend only seven of the twenty-one asserted claims and that the amend-ments may not necessarily be entered for any of the claims. It contends that the proposed amendments merely clarify the claim language and are not related to claim construction disputes currently be-fore the district court, and thus would not significantly impact the litigation.

VA also argues that a stay is unlikely to meaningfully simplify the case because in-validity issues not before the PTAB, as well as infringement and damages issues, will remain as long as a single claim sur-vives CBM review. It contends the PTAB‘s § 101 review is also unlikely to simplify the case because patent-eligibility analysis is generally not resource-inten-sive. VA contends that the district court‘s conclusion that the claims would likely sur-vive the PTAB‘s scrutiny was reasonable based on its assessment of § 101 law. Further, VA argues that there is a “palpa-ble risk” that we would vacate the PTAB‘S decision to initiate CBM review of the ‘413 patent under the Administrative Proce-dure Act (APA) because it is not a “cov-ered business method patent” within the meaning of § 18(d)(1) of the AIA. It ar-gues that Defendants’ assertion that PTAB review would simplify litigation is contrary to trial court experience, and that the district court therefore properly reject-ed Defendants’ “generic” arguments that a stay pending CBM review would promote efficient adjudication in this case. VA con-tends that Salesforce‘s arguments about its customer defendants and third parties were not properly preserved for appeal. It argues that, in any event, the customers are the true parties in interest because they partner with Salesforce, and that a stay would not reduce a burden on third parties because most third-party discovery has already taken place.

We conclude that it is proper for us to consider the fact that VA filed a Motion to Amend in our review of the district court‘s decision. Defendants did not waive the arguments regarding claim amend-ments. They argued to the district court that claim amendments during PTAB re-view are a distinct possibility and, in doing so, gave VA an opportunity to respond to this argument below. Defendants’ Joint Motion To Stay Proceedings at 7-8.

We also conclude that we are not improperly expanding the record on appeal if we consider the Motion to Amend. See (citing Fed. R.App. P. 10(a)). We are mindful that “[a]n appellate court may con-sider only the record as it was made be-fore the district court.” ; see also (“No matter how indepen-dent an appellate court‘s review of an issue may be, it is still no more than that—a review.“). Nevertheless, pursuant to Rule 201(b)(2) of the Federal Rules of Evidence, we may take judicial notice of the fact that a filing was made before the PTAB. See, e.g., (noting that, because the “record before the Board is a public record ... and thus capable of accurate and ready determination by re-sort to unquestionable sources,” judicial notice was appropriate). Cognizant of the limits imposed by Rule 201(b)(2), however, we reiterate that we consider only the fact that a Motion to Amend was filed—not the impact of the proposed amendments on the parties’ claim construction and infringe-ment arguments. The latter cannot be “accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b)(2). Moreover, the district court‘s ability to address the Motion to Amend in its ruling denying a stay of its proceedings pending appeal supports our consideration of the fact that VA filed proposed claim amend-ments because we are not faced with the uncomfortable task of doing so for the first time on appeal. Cf. .

Another preliminary issue concerns the relationship between the first and fourth factors. We agree with the district court that there is a great deal of overlap be-tween the parties’ arguments with regard to these two factors. We note, however, that the simplification of the issues factor and the burden of litigation factor are listed separately in the statute. Thus, even when both factors point in the same direction—in favor of or against the stay—they continue to be separate, individual factors which must be weighed in the stay determination. We cannot, as VA re-quests, collapse the four-factor test ex-pressly adopted by Congress into a three-factor test.

We conclude that the district court clearly erred in finding that the first factor was neutral or slightly against a stay, and that the fourth factor weighed only slightly in favor of a stay. We hold that these factors strongly favor a stay in this case. The district court erred as a matter of law to the extent that it decided to “review” the PTAB‘s determination that the claims of the ‘413 patent are more likely than not invalid in the posture of a ruling on a motion to stay. Under the statutory scheme, district courts have no role in reviewing the PTAB‘s determinations re-garding the patentability of claims that are subject to CBM proceedings.

Indeed, a challenge to the PTAB‘s “more likely than not” determination at this stage amounts to an improper collater-al attack on the PTAB‘s decision to insti-tute CBM review, and allowing it would create serious practical problems. As a preliminary matter, Congress made post-grant review more difficult to obtain than reexamination by raising the standard from “a substantial new question of patent-ability,” 35 U.S.C. § 303(a) (2012), to “more likely than not unpatentable,” id. § 324(a). Congress clearly did not in-tend district courts to hold mini-trials re-viewing the PTAB‘s decision on the merits of the CBM review. To do so would over-whelm and dramatically expand the nature of the stay determination. If the district court were required to “review” the merits of the PTAB‘s decision to institute a CBM proceeding as part of its stay determina-tion, it would undermine the purpose of the stay. When the stay decision is then appealed to this court, we would be re-quired to likewise review the PTAB‘s deci-sion to institute a CBM proceeding. This is clearly not how or when Congress in-tended review of the PTAB‘S CBM deter-minations to take place. See id. § 141(c) (“A party to a post-grant review who is dissatisfied with the final written deci-sion of the [PTAB] may appeal the Board‘s decision only to the United States Court of Appeals for the Federal Cir-cuit.“). The stay determination is not the time or the place to review the PTAB‘s decisions to institute a CBM proceeding.3

The district court‘s decision regarding the first and fourth factors was based pre-dominantly on its improper review of whether the PTAB was correct in its de-termination that the claims of the ‘413 patent were more likely than not invalid. After this review is removed from the calculus, the remaining evidence of record weighs heavily in favor of a stay. We find it significant that the PTAB granted CBM review on all asserted claims of the sole asserted patent. And it determined that all of these claims were more likely than not unpatentable on two separate, alterna-tive grounds. The statute allows for insti-tution of post-grant review if “it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.” 35 U.S.C. § 324(a). In this case, the PTAB expressly determined that all of the claims are more likely than not unpatent-able. This CBM review could dispose of the entire litigation: the ultimate simplifi-cation of issues. See (noting that “a stay would further the interests of judicial economy and the conservation of the parties’ re-sources, as well as that of the court” if a reexamination would “dispose of ... litiga-tion entirely“); cf. (denying a motion to stay and noting that “in addition to the 11 claims that Plaintiff has asserted in this case that are also at issue in the [inter partes review proceed-ings], the remaining 16 asserted claims are not at issue in any [inter partes review]“); (denying a stay pending reexamination in part because the complaint alleged “a variety of claims which are not linked to the patent infringe-ment claim, including claims of copyright and trademark infringement and unfair competition, all of which require a trial“). This weighs heavily in favor of granting the stay. We reach this conclusion with-out needing to consider the fact that VA moved in the CBM proceeding to amend claims of the ‘413 patent. This fact, if considered, could only weigh further in favor of granting the stay so as to avoid unnecessary claim construction of what could potentially be a moving target in terms of claim language.

VA‘s position that Salesforce‘s decision to save two pieces of its important prior art for district court proceedings instead of placing it before the PTAB has reduced efficiencies is not without support. The simplification argument would be stronger if all of the prior art or relevant invalidity issues were in the CBM review, as this would entirely eliminate the trial court‘s need to consider validity in the event that some claims survive CBM review. In this case, however, where CBM review has been granted on all claims of the only patent at issue, the simplification factor weighs heavily in favor of the stay. If Salesforce is successful, and the PTAB has concluded that it “more likely than not” will be, then there would be no need for the district court to consider the other two prior art references. This would not just reduce the burden of litigation on the par-ties and the court—it would entirely elimi-nate it.4

Failure to include other known prior art in the CBM petition could, as we will discuss below, create a potential tactical advantage for Defendants that would weigh against a stay under the third fac-tor. Cf. (observing that the district court “is the only forum for a complete consideration of [the defen-dant‘s] evidence of invalidity” and noting that this fact disfavors a stay pending re-examination); see also . We also agree with VA that Defendants’ arguments regarding customers and third parties were not raised before the district court and are therefore waived. Never-theless, on balance of the evidence in the record, we conclude that the first and fourth factors heavily favor a stay.

III. Factor (B): Whether Discovery Is Complete and Whether a Trial Date Has Been Set

The court found that the timing factor favored granting a stay because the parties had not yet filed their joint claim construction statement, the deadline to complete fact discovery was more than six months away, and jury selection was not until November 2014. ; see Docket Control Order, , ECF No. 91. But it con-cluded that “the benefits of a stay at this relatively early stage of the proceedings are outweighed by various other consider-ations as discussed elsewhere herein.” .

Defendants argue that the district court correctly concluded that the early stage of the litigation favors a stay. Defendants contend, however, that the district court did not weigh this factor heavily enough in favor of the stay because it erroneously considered the case‘s status at the time it ruled on the motion rather than at the time when the motion was filed—seven months earlier. They argue that, when considering a motion to stay, it does not make sense for a district court to take into account its added familiarity with the case developed during the pendency of the mo-tion. Defendants note that, at the time of the filing, there was no date for jury selec-tion and no discovery had taken place.

VA counters that the district court cor-rectly evaluated the status of the case on the date when it ruled on the motion rath-er than when the motion was filed because there was no indication that the PTAB would initiate CBM review when Defen-dants moved for a stay. VA notes that, at the time the district court ruled on the motion to stay, the parties were involved in fact discovery and were preparing for a claim construction hearing, which, it con-tends, indicates that the case was at an advanced stage. VA thus argues that the timing factor is neutral.

We hold that the timing factor heavily favors a stay. We note at the outset that it was not error for the district court to wait until the PTAB made its decision to institute CBM review before it ruled on the motion. Indeed, while some district courts ruled on motions to stay before the PTAB granted the petition for post-grant review, see, e.g., , others have waited until post-grant review was institut-ed, and still others denied as premature the motion to stay without prejudice to refiling after institution of post-grant re-view, see, e.g., . We express no opinion on which is the better practice. While a motion to stay could be granted even before the PTAB rules on a post-grant review petition, no doubt the case for a stay is stronger after post-grant review has been instituted.

In this case, the stay motion was filed in May 2013, almost immediately after Sales-force had filed its CBM petition with the PTAB. The PTAB granted the petition in November 2013. The district court denied the motion to stay in January 2014. As noted above, we see no error in the district court‘s decision to rule on the stay motion after the PTAB rendered its decision on the CBM petition. Furthermore, a district court is not obligated to “freeze” its pro-ceedings between the date that the motion to stay is filed and the date that the PTAB decides on the CBM petition. Of course, the court should make every effort to ex-peditiously resolve the stay motion after the PTAB has made its CBM review de-termination. To do otherwise would un-dermine the intent of Congress to allow for stays to prevent unnecessary duplication of proceedings.

As for the proper time to measure the stage of litigation, district courts have adopted the date of the filing of the motion to stay. See, e.g., (“The Court finds that this case is still in its early stages, with the Scheduling Order entered only a few months before this motion was filed.“); (“The most compelling justi-fication for denying defendant‘s motion to stay is the stage of the litigation at which it was filed.“) (emphasis added); (articu-lating the timing factor as “the stage of the litigation at which the motion was filed“). The cases cited by the dissent are not to the contrary and do not hold that the stage of litigation is measured as of any date other than the date of the mo-tion.5 In two of the cases cited by the dissent, the motion was decided within weeks of its filing, and thus the stage of litigation discussed was effectively the stage of the filing of the motion. (motion to stay filed in December 2013); (motion to stay filed in late September 2013). In the third case, it is clear that the district court used the time of the filing of the motion for a stay to evaluate the stage of litigation. . The court explained that the stage of litigation cuts against a stay because discovery is complete and the trial is scheduled to com-mence in May 2011. . Although it is not apparent from this portion of the opinion at what time the stage of litigation was measured, the district court later made clear that it looked at the time of the filing of the motion: “Cordis’ motion for

stay was filed on September 23, 2010, nearly one year after the untimely request for reexamination was made. As noted above [in the ‘Status of litigation’ section], a trial date had been set and fact discovery was complete at the time Cordis filed its motion for stay.” .

Generally, the time of the motion is the relevant time to measure the stage of liti-gation.6 In this case, we see no error in the district court‘s having waited until the PTAB granted the CBM review to rule upon the motion. Whether we consider the May 2013 date, when the motion to stay was filed, or the November 2013 date, when the PTAB granted CBM review, this factor heavily favors Defendants. At the time Defendants filed their motion in May 2013, the case was less than four months old. Discovery had not yet begun and no trial date had been set. As of the date the PTAB granted CBM review, there re-mained eight months of fact discovery, the joint claim construction statements had yet to be filed, and jury selection was a year away. The litigation at either time was still at its infancy, which favors granting the stay.

IV. Factor (C): Undue Prejudice or Tactical Advantage

The district court concluded that the undue prejudice factor weighed heavily against a stay. It found that, given “credi-ble evidence” that VA and Salesforce were direct competitors, VA would suffer irrepa-rable harm in the form of lost market share and consumer goodwill stemming from the delay in enforcing its patent rights. . The court noted that, for example, VA and Salesforce “took part in the same gov-ernment bid process at least once.” It determined that, even though CBM re-view must conclude by November 2014 (i.e., one year from institution of the pro-ceeding, see 35 U.S.C. § 326(a)(11)),7 VA would still suffer undue prejudice because it is a small company with limited re-sources and because a likely appeal would impose further delay. The court also found that VA would be unduly prejudiced “because certain identified witnesses are of an advanced age.” . Finally, the court refused to weigh the fact that VA did not move for a preliminary injunction against VA, stating that it was not “in a role to judge the parties’ litigation strate-gy.”

Defendants argue that the district court erred in concluding that a stay would un-duly prejudice VA. They contend that VA will not suffer undue prejudice because the timeframe for CBM review is short. They argue that, in any event, mere delay in having one‘s claim adjudicated does not constitute undue prejudice. Defendants argue that VA has not identified any actual risk of fading memories or potentially un-available evidence. Defendants further contend that VA could be adequately com-pensated by money damages. They argue that the district court clearly erred in find-ing that VA and Salesforce competed for the same bid, and that VA has not proven that it would lose market share or goodwill due to a delay in the resolution of its

infringement case. Defendants contend that the fact that VA did not move for a preliminary injunction suggests that VA is not truly concerned about a delay.

VA counters that a delay will subject it to undue prejudice by significantly harm-ing its business. It argues that the fate of the ‘413 patent claims would almost cer-tainly not be known until after the statuto-ry November 2014 deadline because of the likely appeal of the PTAB‘s decision and due to other potential delays. It contends that Defendants’ argument that VA and Salesforce are not true competitors is mer-itless in view of record evidence that the two companies compete in the same mar-ket. VA argues that expeditious enforce-ment of its patent rights against larger competitors like Salesforce is critical to protecting its market share, and that a permanent injunction would thus be “very likely” if it succeeded in proving infringe-ment. Appellee‘s Br. 48. It further ar-gues that the district court‘s fast schedule made it unnecessary to move for a prelimi-nary injunction. Finally, VA contends that the district court did not err in concluding that loss of evidence during the pendency of CBM review is likely and that, regard-less, Defendants waived the argument that loss of evidence was not a concern.

We conclude that the district court clearly erred in finding that the undue prejudice factor weighed heavily against a stay. At best, this factor weighs slightly against a stay. We agree with the district court that competition between parties can weigh in favor of finding undue prejudice. See, e.g., , abrogated on other grounds by (en banc) (“[D]irect evidence of a fact is not necessary.“). We do credit the dis-trict court‘s finding that loss of market share and consumer goodwill is high in the growing market of cloud-computing. See .

Of course, whether the patentee will be unduly prejudiced by a stay in the district court proceedings during the CBM review, like the irreparable harm-type inquiry, fo-cuses on the patentee‘s need for an expedi-tious resolution of its claim. A stay will not diminish the monetary damages to which VA will be entitled if it succeeds in its infringement suit—it only delays real-ization of those damages and delays any potential injunctive remedy. VA argues that it needs injunctive relief as soon as possible to prevent irreparable harm to its business, indicating that even a one-totwo-year delay in the adjudication of its infringement claims would subject it to undue prejudice because VA and Sales-force compete in the same market. See Appellee‘s Br. 49-50; VA‘s Response in Opposition to Defendants’ Joint Motion To Stay Proceedings Pursuant to Section 18(b) of the America Invents Act at 10-11, , ECF No. 72. Although this is not dispositive, we note that VA did not move for a preliminary injunction against Defen-dants. We acknowledge, as the district court did, that there could be a variety of reasons that a patentee does not move for a preliminary injunction. See, e.g., ; ; ; see also U.S. Magistrate Judge Morton Den-low, The Motion for a Preliminary In-junction: Time for a Uniform Federal Standard, 22 Rev. Lit. 495, 534 (2003). In this case, VA argues that it did not move for a preliminary injunction because it is a small company with limited resources and that the litigation process would move fast enough to make this unnecessary.

VA‘s arguments are rational reasons for not pursuing a preliminary injunction, but the fact that it was not worth the expense to ask for this remedy contradicts VA‘s assertion that it needs injunctive relief as soon as possible. We also note that VA, for some unexplained reason, waited near-ly a year after the ‘413 patent issued before it filed suit against Defendants. These facts weigh against VA‘s claims that it will be unduly prejudiced by a stay.

To the extent that the district court found that “the added risk of witness loss” could unduly prejudice plaintiff, we do not agree that this record supports a conclu-sion of undue prejudice. VA asserts that one potentially relevant witness is “over 60” and three others are “over 70.” Since when did 60 become so old? It is undoubt-edly true, as many courts have observed, that with age and the passage of time, memories may fade and witnesses may become unavailable. Without more, how-ever, these assertions here are not suffi-cient to justify a conclusion of undue preju-dice. There is no evidence that any of these individuals are in ill health, and at least one of the older witnesses has al-ready been deposed. In addition, Rule 27 of the Federal Rules of Civil Procedure allows for the perpetuation of testimony when facts suggest that such action may be necessary. This rule gives district courts the authority to grant a petition authorizing a deposition to perpetuate tes-timony even before a lawsuit has been brought, and also applies when a case is otherwise stayed. See (con-cerns over advanced age of a witness could be alleviated by permitting a deposition to preserve testimony, and did not prevent a stay). The advanced age of witnesses is a factor relevant to potential prejudice, but the prejudice can be reduced, when neces-sary, by preserving the testimony. We conclude that this record does not support. the conclusion that VA would be unduly prejudiced by the stay.

Finally, the district court did not find that a stay would give Defendants a clear tactical advantage, and we agree. There is no evidence that Defendants possessed a “dilatory motive,” which would have point-ed against a stay. See, e.g., . In fact, Salesforce filed its CBM petition less than four months after VA instituted this in-fringement action and moved to stay the district court proceedings almost immedi-ately after filing the petition. To the dis-trict court, VA argued that Salesforce “could have used but deliberately and tac-tically withheld from the post-grant pro-ceeding” the so-called “Oracle Projects” prior art. VA‘s Response in Opposition to Defendants’ Joint Motion To Stay Pro-ceedings at 1. Defendants responded that Salesforce did not include Oracle Projects in the CBM petition because it is “a pro-prietary software system, not strictly a printed publication of the type typically considered by the PTO,” and would re-quire testimony from “live third party wit-nesses at trial.” Defendants’ Reply In Support of Motion To Stay at 4, , ECF No. 74. Defendants also indicated that they had difficulties in obtaining evidence in connection with another piece of prior art “of particular importance” not used in CBM review, “Tecskor product,” necessi-tating a letter of request for international judicial assistance from Canada from the district court. Oral Argument at 42:12-45:26, available at http://oralarguments.cafc.uscourts.gov/default.aspx?fl&2014-1232.mp3; , ECF No. 104; see . In some circumstances, a defendant‘s decision to save key pieces of prior art for district court litigation in case its CBM challenge fails would weigh against a stay. Even though the “splitting” of prior art is al-lowed by statute in the sense that litiga-tion estoppel does not attach to art that could have been, but was not, raised in CBM review, such behavior can still give the movant a clear tactical advantage with-in the meaning of § 18.8 This record does not establish such a clear tactical advan-tage given the uncontradicted evidence that, at the time Salesforce filed its CBM petition, it did not have the evidence neces-sary to include the Oracle Projects and Tecskor prior art. Given these unusual circumstances, we conclude that there is no clear tactical advantage to Defendants of granting the stay.

On this record, the evidence of competi-tion is weak and the patentee‘s delays in pursuing suit and seeking preliminary in-junctive relief belie its claims that it will be unduly prejudiced by a stay. We conclude that the district court clearly erred in con-cluding that undue prejudice here weighs heavily against granting the stay. At best, under the clear error standard, this factor weighs slightly against a stay on this rec-ord.

*

*

*

*

*

*

Three of the four factors weigh heavily in favor of a stay in this case: simplifica-tion of the issues and streamlining of the trial, whether discovery is complete and a trial date has been set, and reduction of the burden of litigation on the parties and the court. The undue prejudice factor, at best, weighs slightly in favor of denying a stay. On this record, we conclude that the district court abused its discretion when it denied the stay.

CONCLUSION

We reverse the district court‘s order de-nying Defendants’ motion for a stay of the district court proceedings pending CBM review and remand with instructions to grant the motion. This decision moots Defendants’ motion to stay district court proceedings pending appeal.

REVERSED

No costs.

COSTS

NEWMAN, Circuit Judge, dissenting.

The America Invents Act permits but does not require the district court to stay earlier-filed litigation during later-request-ed post-grant PTO proceedings. Such a stay is not obligatory, but is consigned to the district court‘s discretion. During con-sideration of the proposed post-grant re-view legislation, there was extensive de-bate about the relation between concurrent infringement actions in the courts and post-grant patentability redeterminations in the PTO. After eight years of discus-sion, the America Invents Act adopted rules for concurrent proceedings in various circumstances. No statute or rule re-quires the district court to stay ongoing court proceedings after a petition for post-grant review is filed in the PTO. My colleagues’ contrary ruling today is also contrary to the legislation and its purpose.

The decision of a trial judge not to stay an infringement action in litigation, when the defendant requests a stay but the plaintiff wishes to proceed, is consigned to the discretion of the judge. Here the plaintiff objected to the stay and the dis-trict court exercised its discretion and de-nied the stay. Nonetheless my colleagues reverse the district court and grant the stay, although it is not shown that the district court abused its discretion.

The district court may choose to stay its proceedings when the interest of justice warrants, and the AIA lists several factors for the court to consider in deciding how to exercise its discretion in a particular case. However, a stay of litigation is not avail-able as a matter of right when a petition for post-grant review is filed in the PTO.1

See (“Article III, § 1 preserves to litigants their interest in an impartial and independent federal adjudi-cation of claims within the judicial power of the United States....“).

In this case, the district court applied the traditional stay factors as recorded in AIA Section 18(b), and ruled that stay of the ongoing judicial proceeding was inap-propriate. The district court exercised its discretion to continue with the trial, which was on a fast track to completion. This ruling is well within the district court‘s statutory and discretionary authority.

Although the Covered Business Method (CBM) statute provides that appellate re-view of a district court‘s decision to grant or deny a stay “may be de novo,” when the district court‘s decision is within its range of discretion, it warrants appellate respect. My colleagues on this panel do not identify any abuse of the district court‘s discretion; nor do they acknowledge the deference owed to a trial judge in rulings on matters of equity and the balance of interests.

I respectfully dissent.

DISCUSSION

A stay is an “intrusion into the ordinary processes of administration and judicial re-view, and accordingly is not a matter of right, even if irreparable injury might oth-erwise result to the appellant.” . Section 18(b)(1) of the America Invents Act authorizes the district court to stay the litigation of a patent for which CBM review in the PTO has been requested. Such a stay is not automatic; the statute authorizes the dis-trict court in its discretion to stay its pro-ceedings, on taking into account certain equitable factors as may exist in the par-ticular case.

In today‘s ruling the panel majority overrides the district court‘s discretion, and effectively creates a rule that stays of district court litigation pending CBM re-view must always be granted. Here the district court carefully considered the four factors set out in the statute, and conclud-ed that VirtualAgility is likely to be harmed disproportionately in both the liti-gation and the marketplace if the defen-dants are allowed to draw out this case for an extended period, all the while continu-ing to infringe a presumptively valid pat-ent. The district court considered the phase of the litigation, the completion of document production and much of discov-ery, and the early trial date, and exercised its discretion to proceed with the trial pro-ceedings. Whether or not my colleagues’ prolongation of the dispute by way of a potential multiplicity of administrative tri-als and appeals can be defended, the dis-trict court‘s evaluation of the equities is reasonable, is consistent with the analyses by other district courts, and warrants def-erence.

The near automatic grant of litigation stays today engrafted onto the statute tilts the legislated balance, for the statute rec-ognized that a stay pending CBM review may, depending on the circumstances, lead to inequity and tactical abuse. See (“Further, there may be tactical ad-vantages to the Vesdia Defendants in seeking a stay, the most apparent being delay.“); (“Resort to the reexamina-tion procedure should not be sanctioned through the issuance of a stay, however, where it is pursued for tactical advantage after substantial and costly discovery has been conducted or where trial is immi-nent.“).

Successive proceedings can add exten-sive delay to final resolution, while the patent life continues to expiration. The district court emphasized the heavy impact of delay on this patentee. Deference is owed to the district court‘s assessment, for the trial court is in a better position than either the PTO, or this court, to attune a request for stay to the particular situation.

The district court has discretionary au-thority to manage its cases, as well as to consider equitable factors. The Supreme Court has recognized this authority, see (discussing power and circum-stances of stay of proceedings, stating that: “Only in rare circumstances will a litigant in one cause be compelled to stand aside while a litigant in another settles the rule of law that will define the rights of both.“), as has the Federal Circuit, see (“The court is not required to stay judicial resolution in view of the reexaminations.“). Indeed, the party appealing denial of a stay historically faced a steeper burden because the appeal seeks “interference by an appellate court with management of proceedings entrusted to the district court.” .

Congress did not change this precedent in the America Invents Act, when it direct-ed the courts to apply the established precedent of litigation stays to the vast variety of possible situations in over-lapping district court and PTO post-grant proceedings.

In , the Supreme Court discussed the rationale for abuse of discretion review in the context of the Patent Act‘s fee-shifting provisions. The Court stated that as a matter of the sound administration of justice, the district court is better positioned to decide whether a case is exceptional because it has lived with the case over a prolonged period. The Court observed that the fee shifting question is “multifarious and novel,” and not susceptible to “useful generalization” of the sort that de novo review provides, but is more “likely to profit from the expe-rience that an abuse-of-discretion rule will permit to develop.” .

The Court‘s reasoning in Highmark ap-plies forcefully to a district court‘s exercise of discretion in deciding whether to stay pending litigation despite the patentee‘s objection. The inquiry created by the AIA‘s four factor test is highly fact specif-ic, not susceptible to “useful generaliza-tion;” the district court is better positioned to decide whether a stay serves the best balance of interests of the parties and the court. My colleagues on this panel ignore this reality.

Depending on the stage of the litigation, as the AIA provides, a court may conclude, within its discretion, that “the principle of maximizing the use of judicial and litigant resources is best served by seeing the case through to its conclusion.” . Several courts have expressed concern that a stay will interfere with their ability to manage their dockets and fulfill their judicial re-sponsibilities. For example, in response to a requested stay pending reexamination, a district court recently stated:

The Court is concerned that allowing the progress of its docket to depend on the status of proceedings elsewhere can in-terfere with its obligation “to secure the just, speedy, and inexpensive determina-tion of every action.” Fed.R.Civ.P. 1. “If litigation were stayed every time a claim in suit undergoes reexamination, federal infringement actions would be dogged by fits and starts. Federal court calendars should not be hijacked in this manner.” .

This consideration weighs against a stay. . The panel majority does not acknowledge these concerns.

AIA Section 18(b) lists four factors rele-vant to evaluation of a stay request. In this case the district court conscientiously applied this framework, and on consider-ation of the nature of the patent, this case‘s trial schedule, and the competitive relationship between the parties, the court concluded that the potential benefits of a stay are outweighed by the harm that VirtualAgility is likely to experience, in both the litigation and the marketplace, if a stay were granted.

The district court‘s analysis of the four factors represents a consistent application of precedent, and neither the appellants nor the panel majority have shown that the balance reached by the court is an abuse of discretion. I briefly review the four statutory factors set forth in AIA section 18(b)(1):

“(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial”

The district court found that “[t]his fac-tor is essentially neutral, if not slightly against, granting a stay.” (“DCt. Op.“). The court emphasized “the thor-oughness of the PTO‘s prior examination of the ‘413 patent, during which time more than sixty prior art references were con-sidered,” contrasting it to “more common business method patents” which Congress explained “have not been thoroughly re-viewed at the PTO due to a lack of the best prior art.” . The court stated that it was not persuaded that the single prior art reference at issue in this CBM review would invalidate all or a sub-stantial number of the asserted claims, and as a result the court would almost certain-ly need to consider other prior art refer-ences, including two which appellants have alleged are “of particular importance.”

The district court was also not persuad-ed that the PTAB would be likely to cancel all claims of the ‘413 patent under § 101, citing “even greater uncertainty with re-spect to the PTAB‘s § 101 determination.” . The court concluded that it was “not convinced that granting a stay will simplify the issues in this case.” .

The district court correctly recognized that if one claim were to survive CBM review, a stay would not simplify the litiga-tion issues in this case. There would still be full litigation of invalidity issues; the elimination of one reference of the almost fifty references that the defendants placed at issue in the district court would not simplify this case. In addition, the defen-dants in the district court litigation raised invalidity defenses under sections 103, 112, and 256, whereas the CBM proceeding in-volves only sections 101 and 102. Unless each and every claim is invalidated in the CBM review, the district court was correct that a stay will simply increase the burden on the parties.

The majority states that it reached its decision on this factor without considering possible amendment to the claims. The PTO record states that VirtualAgility‘s proposed amendments “are strictly contin-gent on the Board finding each respective original independent claim unpatentable.” Patent Owner‘s Contingent Motion to Amend, Dkt. No. 137-1. The district court undertook a detailed review of the pro-posed amendments, and concluded that in the unlikely event the amendments would affect the court‘s claim construction, sup-plemental claim construction could be con-sidered. The court stated:

Inconsistency would only arise under the narrow contingency that this Court sides with Defendants in construing ‘pro-cessor’ and ‘storage device,’ and the PTAB adopts Plaintiff‘s proposed substi-tute claim 28 after finding that the origi-nal claim 7 is unpatentable. If this does occur, the Court will consider holding a supplemental claim construction on these two terms to resolve the conflict. In any event, the proposed amendments would not alter the construction of the remaining seven disputed claim terms.

.

In sum, the district court fully and fairly considered whether the stay would simpli-fy the issues and streamline the trial, and concluded that it was not likely to do so.

“(B) whether discovery is complete and whether a trial date has been set”

The district court discussed the stage of document production and depositions, which were proceeding toward a trial date of November 2014, but were not yet com-plete. Precedent illustrates the reluctance of district courts to stay litigation that is well advanced. See (tim-ing factor weighs against stay when trial date is thirteen months away and “discov-ery is well underway with the parties hav-ing exchanged initial disclosures, infringe-ment and invalidity contentions, and some document productions“); (timing factor weighs against stay when claim construction hearing and close of fact discovery are four and five months away respectively, even though no trial date set); (timing factor weighs against stay when, although little discovery had occurred, trial date was twelve months away and court had expended substantial effort construing the claims).

The panel majority states that generally the time of filing the motion to stay is the relevant time to measure the stage of liti-gation. Maj. op. at 1316. The majority cites three district court cases in which the timing of filing the motion was mentioned, but in those cases there is no apparent difference in the state of discovery etc. between when the motion was filed and when it was decided. See, e.g., (granting stay when “[l]ittle discovery oth-er than initial disclosures and some prelim-inary document discovery has been ex-changed. No depositions have been taken, no interrogatories have been served, and no expert reports have been exchanged“). In , the timing of the motion was discussed only with respect to the prejudice factor.

In general, district courts consider the current stage of litigation in analyzing this factor. See, e.g., (“The parties are currently in the discovery phase of litiga-tion. They have provided their infringe-ment contentions and invalidity conten-tions to one another.“); (“The parties have already produced over five million pages of documents in this case and the discovery deadline is less than four months away. In addition, the parties have also fully briefed and argued the claim construction issues, and the Court is currently working on its claim construction order.“); (“The parties have already produced hundreds of thousands of pages of documents and millions of lines of source code and should complete discovery next month. As previously mentioned, the parties have also fully briefed and argued the claim construction issues, and the Court is currently working on its order construing the claims at issue.“).

The panel majority has acknowledged that the district court need not rule on a stay motion before the PTAB has actually instituted the CBM proceedings, and that the district court is not obligated to “freeze” the litigation proceedings while the PTAB is considering whether to pro-ceed. Maj. op. at 1316. It cannot be correct to hold that all interim activity must be ignored, and the stay decided as if nothing had occurred.2 Such a rule con-travenes the principle that when “the Court and the parties have already ex-pended significant resources on the litiga-tion, the principle of maximizing the use of judicial and litigant resources is best served by seeing the case through to its conclusion.” ; see also (denying stay, without prejudice to renewal of request after PTO action on petition for inter partes review); (denying stay pending inter partes review, observing that stay is never obligatory, but may be justified “where the outcome of the reexamination would be likely to assist the court“); (denying stay, explaining that the stage of litigation clearly cuts against a stay because discovery was complete, and stating that the reexamination is “fraught with the potential for multiple appeals“).

“(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving par-ty”

The district court held that the preju-dice factor “weighs heavily against grant-ing a stay.” DCt. op. at *7. The district court explained that courts are reluctant to stay proceedings where the parties are direct competitors, and observed that the “loss of market share and consumer good-will is particularly high in the growing market of enterprise cloud-computing, where contractors and governmental agen-cies are developing lists of preferred ven-dors.” (citing (“Years after infringement has begun, it may be impossible to restore a patentee‘s exclusive position by an award of damages and a permanent injunc-tion. Customers may have established re-lationships with infringers.“)).

The district court found that Salesforce and VirtualAgility compete in the same market and the same customer base, and stated that VirtualAgility, a small company with limited resources, “will be ‘forced to compete against products that incorporate and infringe’ its own invention.” DCt. op. at *6 (quoting ). The court concluded that granting a stay would unduly prejudice VirtualAgility both in the marketplace and in this litigation.

The district court found that Salesforce and VirtualAgility “directly compete in at least the enterprise cloud computing mar-ket targeting public sector entities.” DCt. op. at *6. The panel majority states that there was no evidence of direct competi-tion. That is contrary to the record.

VirtualAgility‘s President and Chief Ex-ecutive Officer stated that he has “person-ally had conversations with VirtualAgility customers and potential customers in which the customer or potential customer compares the functionality of VirtualAgili-ty‘s products with that of Salesforce‘s products.” Declaration of Stuart E. Ru-dolph (June 19, 2013) at J.A. 317. He stated that those customers include federal and state agencies, which he identified. The district court did not clearly err in finding that the parties directly compete in the enterprise cloud computing market targeting public sector entities.

The panel majority acknowledges the district court‘s undue prejudice findings, but gives them scant weight. Instead, my colleagues fault VirtualAgility for not mov-ing for a preliminary injunction. Maj. op. at 1319. The district court presented a perceptive analysis of this position:

A party‘s decision to seek or not seek a preliminary injunction often rests upon a variety of factors, including that par-ty‘s resources, the uncertainty of the outcome, or as part of an overall strate-gy to streamline the process and focus on other procedural steps in the litiga-tion. Not being in a role to judge the parties’ litigation strategy, the Court deems it unfair to hold VirtualAgility to a position based upon what is no more than a dubious implication.

DCt. op. at *7.

A preliminary injunction proceeding of-ten delays the litigation, and it is a truism that interim relief is not easy to obtain. The district court did not abuse its discre-tion in declining to hold VirtualAgility‘s reasonable choice against it. See (collecting cases on the significance of failure to seek a preliminary injunction).

The district court here gave weight to VirtualAgility‘s small size and limited re-sources, the competitive relationship be-tween the parties, and the high potential for loss of market share and consumer goodwill in the market in which they com-pete. The court concluded that a stay may cause “outsized consequences” to VirtualA-gility. DCt. op. at *5. The district court reasonably weighed the undue prejudice factor heavily against granting a stay.

“(D) whether a stay, or the denial thereof, will reduce the burden of liti-gation on the parties and on the court”

With the stay now imposed by my col-leagues, VirtualAgility will undergo an inter partes trial in the PTAB on some, but not all, of the invalidity issues that the defendants raised in the district court. Whichever side loses in the PTO then has the right first to request reconsideration by the PTAB, and then the right of judicial review of the PTO decision. Unless all of VirtualAgility‘s patent claims are finally eliminated in the PTO and that ruling sustained on appeal, the procedure could be repeated in the district court. The district court has discretion to consider this tactical reality, in exercising its discre-tion to weigh the burden of litigation on the parties and the court.

It is apparent that the district court did not abuse its discretion in weighing and balancing the statutory factors and declin-ing to stay its proceedings.

Conclusion

The panel majority has imposed greater rigor on “stay” considerations than the statute warrants. Post-grant review in the PTO is a useful tool, but the principle of post-grant review does not require elim-ination of judicial discretion to proceed with pending litigation. Indeed, the Amer-ica Invents Act contemplates such discre-tion. I must, respectfully, dissent from my colleagues’ distortion of the statutory plan.

STONCOR GROUP, INC., Appellant, v. SPECIALTY COATINGS, INC., Appellee.

No. 2013-1448.

United States Court of Appeals, Federal Circuit.

July 16, 2014.

Notes

1
When we refer to “Defendants,” we mean all defendants-appellants. When we refer to “Salesforce,” however, we mean only “Salesforce.com, Inc.” Compare 28 U.S.C. § 1659(a), giving a par-ty in district court the absolute right to a stay when there is a concurrent action in the In-ternational Trade Commission, provided only that the stay request is made 30 days after the party is named as a respondent, or 30 days after the district court action is filed, which-ever is later.
2
As the petitioner in the CBM proceeding, Salesforce is estopped from asserting at the district court that the ‘413 patent claims are “invalid on any ground that [it] raised during the proceeding.” AIA § 18(a)(1)(D). Although this provision does not apply to the other, non-petitioner defendants in this case, “all other defendants will agree to this same scope of statutory estoppel” if a stay pending CBM review is granted. Defendants’ Joint Motion To Stay Proceedings at 8.
3
It would also be inappropriate for the district court to evaluate the potential success of an APA challenge to the PTAB‘s determina-tion that the ‘413 patent is a “covered busi-ness method patent” when analyzing whether CBM review will simplify the issues and re-duce the burdens on the parties and the court. Like the district court‘s validity analysis, this inquiry would amount to an improper collater-al attack on the PTAB‘s decision to institute CBM review.
4
We note that, while the same pieces of evi-dence can often relate to both the first and the fourth factors as they do here, this may not always be the case. While simplifying issues would as a general matter always reduce the burdens of litigation on the parties and the court, the reduced burden of litigation factor may implicate other considerations, such as the number of plaintiffs and defendants, the parties’ and witnesses’ places of residence, issues of convenience, the court‘s docket, and in particular its potential familiarity with the patents at issue.
5
The dissent is correct that some cases dis-cuss the time of the motion in conjunction with the prejudice factor because those cases were considering whether defendants’ delays in seeking a stay would unduly prejudice the plaintiff—an entirely different issue. None of those cases suggests, however, that the stage of the litigation should be anything other than the time of the filing of the motion.
6
While district courts should generally con-sider “whether discovery is complete and whether a trial date has been set” as of the date of the stay motion, there was no error in also taking into account the stage of litigation as of the date that CBM review was granted. Similarly, the district court may consider evi-dence that develops after the date of the stay motion—for example, the fact that the PTAB granted the CBM petition, any claim amend-ments proposed or entered in the post-grant proceeding, further evidence of competition, and so on—as it pertains to the other three factors.
7
This period may be extended by no more than six months “for good cause shown.” 35 U.S.C. § 326(a)(11) (2012).
8
We note, however, that it may not be neces-sary, or even prudent, in some situations for the petitioner to provide all known prior art, no matter how irrelevant or redundant, to the PTAB during CBM review. Failure to ad-vance irrelevant or redundant prior art would not demonstrate a clear tactical advantage.
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