The Federal Circuit’s divided decision in VirtualAgility Inc. v. Salesforce.com, Inc. is the first major decision from the Federal Circuit interpreting the discretionary stay provision of § 18(b)(1) of the America Invents Act (“AIA”) for post-grant review of covered business method (“CBM”) patents. 759 F.3d 1307 (Fed. Cir. July 10, 2014). In VirtualAgility, a majority of a Federal Circuit panel consisting of Judges Moore and Chen liberally interpreted the AIA’s guidance for reviewing a district court’s decision on a stay pending CBM review, easing the path to a stay at the district court level. See generally id.
In VirtualAgility, defendant Salesforce.com (“Salesforce”) moved to stay litigation in the Eastern District of Texas pending a CBM review. CBM review is available only for patents that “claim[] a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.” 37 C.F.R. 42.301(a). VirtualAgility (“VA”) filed suit in January 2013, alleging infringement of U.S. Patent No. 8,095,413 (the “‘413 patent”). VirtualAgility, 759 F.3d at 1308. In May 2013, Salesforce petitioned for CBM review, and less than a week later, Salesforce moved to stay pursuant to AIA § 18(b)(1). Id. at 1308-09. In November 2013, Salesforce’s petition was granted. Id.
In January 2014, shortly after the Patent Trial and Appeal Board granted Salesforce’s petition for CBM review of the ‘413 patent, Judge Gilstrap of the Eastern District of Texas denied Salesforce’s motion to stay. Id. at 1309. On appeal, the Federal Circuit reversed, finding that the factors enumerated in AIA § 18(b)(1) favored granting a stay. AIA § 18(b)(1) provides four factors on which the district court “shall” base a decision to stay pending CBM review:
(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.
The Federal Circuit addressed each of the four AIA § 18(b)(1) factors in VirtualAgility, in each case considering the district court’s methodology and conclusions. The district court concluded that the first § 18(b)(1) factor was neutral or weighed slightly against granting a stay. VirtualAgility, 759 F.3d at 1310. The district court reviewed the ‘413 patent’s prosecution history as well as Salesforce’s petition for CBM review, and was not convinced that all of the ‘413 patent’s claims would be canceled. Id. But the Federal Circuit found that the district court’s review of the PTAB’s decision was error as a matter of law, holding that any challenge to the PTAB’s determination that a patent’s claims are “more likely than not” invalid amounts to an improper collateral attack on the PTAB’s decision. Id. The stay determination is not the proper time or place for such a challenge. Id. Once removed from the calculus, the Federal Circuit reviewed the evidence of record and found that the first factor weighed heavily in favor of a stay. Id. at 1314. Because the PTAB determined that all claims of the lone asserted patent were more likely than not unpatentable on two independent grounds, the CBM review had the potential to dispose of the entire litigation—the “ultimate simplification of issues”—and the first factor weighed heavily in favor of a...