Defendants in litigation seeking to take advantage of IPR must file a petition within one year of the date of service of the complaint alleging patent infringement. Defendants may be tempted to delay filing the IPR petition to avoid revealing strategy early in the litigation proceeding. Delaying the filing, however, may risk the granting of a stay of the related litigation, as highlighted by four district court decisions¹ issued last week.
Courts generally weigh three factors when deciding whether to stay litigation pending the outcome of IPR proceedings:
- whether a stay would unduly prejudice or provide a tactical disadvantage the patent owner;
- the status of discovery and trial in the district court; and
- whether a stay will simplify the issues before the court.
The timing of the IPR petition and motion to stay were considered in the context of factors (1) and (2). In Pragmatus Mobile LLC, the court noted that the timing of the Defendant’s petition filing “suggests that they may be seeking a tactical advantage, given they were aware of the prior art asserted in the IPR petition many months before filing the petition just three days before the statutory deadline.” The defendant in LakeSouth Holdings, LLC. filed an IPR petition within a month of the statutory deadline, alleging that it diligently prepared the petition after its Motion to Dismiss was denied. Despite this explanation, the court characterized “the nearly one-year-long delay” as “unreasonable,” holding that the timing of the stay request provided a tactical disadvantage to the patent holder.
All four decisions emphasized the stage of the litigation proceeding as weighing against granting (or maintaining) a stay. In Copy Protection LLC¸ for example, the parties were anticipated to complete claim construction briefing shortly after the motion to stay was filed, and a trial date had been set. Coincidently, the trial date fell around the same time that a final decision relating to the IPR petition would be expected. The Tire Hanger Corp. court acknowledged that the proceeding “is still in the early stages,” as the parties had not yet briefed claim construction, but suggested that the “case can still go to trial by the end of the year, resolving all of Plaintiff’s claims well before the PTAB makes a final determination.”
Defendants should consider the advantages of filing IPR petitions (and accompanying motions to stay) well before the one year statutory bar. Courts are generally more open to granting stays where an IPR has been instituted, and filing early provides an opportunity to correct defects in a petition within the one year window. Further, as illustrated by these decisions, the appearance of a tactical disadvantage to the patent holder and advanced status of the litigation proceeding weighs against the petitioner’s motion to stay.
¹ The Tire Hanger Corporation v. My Car Guy Concierge Services Inc. d/b/a Hoist Hanger et al, 5-14-cv-00549 (CACD June 16, 2015, Order) (Wright, J.); Pragmatus Mobile LLC v. Amazon.com Inc., 1-14-cv-00436 (DED June 17, 2015, Order) (Stark, J.); Copy Protection, LLC v. Netflix, Inc., 1-14-cv-00365 (DED June 17, 2015, Order) (Stark, J.); LakeSouth Holdings LLC v. Ace Evert Inc., 3-14-cv-01348 (TXND June 17, 2015, Order) (Godbey, J.)