The U.S. Patent Office (“PTO”) has historically moved at a snail’s pace in conducting reexamination proceedings. The length of these reexamination proceedings have typically been the Achilles heel in getting a district court to issue a stay. If the District Court for the Central District of California is any guide, though, this may be changing due to the new time limits for post-grant patent review procedures, which became effective September 16, 2012 and are specified in the America Invents Act (“AIA”). In a recent order issued in Semiconductor Energy Laboratory Co., Ltd. v. Chimei Innolux Corp., et al., 8:12-cv-00021, (CACD December 19, 2012 Order), Judge Josephine Tucker granted defendants request for a stay, explaining as a basis for granting the stay that:
The delay caused by the new inter partes review (“IPR”) procedure is significantly less than the delay caused by the old procedure.
Based on the Court’s ruling, a practical consequence of the new IPR procedure is that the odds of getting the district court to enter a stay have improved. Here is why.
Semiconductor Energy Laboratory Co., Ltd. (“SEL”) sued Chimei Innolux Corp. (“CMI”) along with several other companies for infringement of six of patents covering LCD technology on January 5, 2012. In October and November of 2012, after answering the complaint, but before the case had proceeded too far substantively, CMI filed petitions with the PTO requesting review of the patents-in-suit under the new-AIA inter partes review (“IPR”) procedure. CMI, with Chimei Optoelectronics USA, Inc., Acer America Corp., Viewsonic Corp. and VIZIO, Inc., also requested a stay of the district court case pending the outcome of these IPR petitions. Judge Tucker granted this request.
In reaching this conclusion, Judge Tucker applied the standard three-part test in considering reexamination stay motions:
1) whether discovery is complete and whether a trial date has been set;
2) whether reexamination would simplify the issues; and
3) whether the patentee would be unduly prejudiced or whether the stay would present a clear tactical disadvantage to the patentee.
For the first factor, Judge Tucker found that even though a trial date had been set, the first factor weighed in favor of a stay, because considering the general time line of the patent litigation, there was more work ahead of the parties and the Court than behind the parties and the Court.
For the second factor, Judge Tucker found that the IPR proceedings could simplify the issues since the IPR petitions involved all of the patents-in-suit and even though only CMI filed the IPR petitions, the other the defendants agreed to be bound by the estoppel provisions of the IPR proceedings. Also of note, Judge Tucker continued on to explain that the amended standards under the AIA for granting IPR probably results in an even higher likelihood than under the prior standard that the issues considered by a district court will be simplified by reexamination/review. She added that since the inter partes request had not been granted by the PTO yet that if the PTO rejected the inter partes request, the stay would be relatively short.
For the third factor, Judge Tucker found that SEL would not be prejudiced by the stay. She explained that CMI did not unduly delay in filing its IPR petitions, that SEL had not sought a preliminary injunction and that SEL and CMI are not direct competitors. More significantly though, since under the new law the Patent Trial and Appeal Board must issue a final determination on IPR proceedings within one year of institution of the proceeding, with a possible six month extension for good cause, Judge Tucker explained, as an additional rationale for granting the stay, that any delay under the new IPR procedure would be significantly less than any delay under the old procedure.
Since many of the factors Judge Tucker considered in granting this stay are similar to factors many judges have considered in the past in denying a request for stay before the new IPR procedure, maybe the new stringent time limits (12-18 months from institution of the proceeding) in place for making a final determination in IPR proceedings and the more litigation-like characteristics of the new IPR proceedings made Judge Tucker feel more comfortable in granting a stay. If that is the case, we may see more district court judges issue stays where IPR petitions have been timely filed.