Upon consideration of an issue of first impression, the U.S. Court of Appeals for the Federal Circuit addressed its limited jurisdiction to hear an interlocutory appeal on a motion to stay a district court proceeding under § 18 of the America Invents Act (AIA).  The Court, in a split decision, found that when a covered business method (CBM) review petition is pending before the PTAB, but the PTAB has not yet acted to institute review, there is no right to interlocutory review of a district court decision denying a stay motion.  Intellectual Ventures II LLC v. JPMorgan Chase & Co., et al., Case No. 14-1724 (Fed. Cir., Apr. 1, 2015) (O’Malley, J.) (Hughes, J., dissenting).

Plaintiff Intellectual Ventures (IV) sued JP Morgan Chase and related banking entities (collectively, JPMC) for infringement of five patents.  After the suit had been pending for close to a year, JPMC moved to stay the district court litigation based on the anticipated filing of four CBM petitions with the PTAB.  Once the motion to stay was on file, JPMC filed two of the four promised petitions.  The district court denied the motion, applying the four-factor test set forth in § 18(b)(1) of the AIA.  In doing so, the district court explained the benefits of moving the case forward, which included judicial efficiencies and accelerated resolution by holding a trial within less than a year.  JPMC appealed the denial of the motion to stay to the Federal Circuit.  Both at the time of the district court’s decision and during the pendency of the appeal, the PTAB had not acted on JPMC’s two CBM petitions.

JPMC noticed its appeal under § 18 of the AIA, a statutory provision carving out a grant of jurisdiction to the Federal Circuit to hear immediate interlocutory appeals of decisions on motions to stay “relating to a [CBM] proceeding for that patent asserted in the district court.” The majority recognized that it was not apparent from the language of the statute whether, for purposes of appeal, a “proceeding” at the PTAB began at the time the petition was filed or at the time the PTAB instituted review.

IV argued that a CBM “proceeding” does not begin until the PTAB institutes a review, while JPMC argued that the “proceeding” was live as soon as the CBM petition was filed.  In assessing whether it had jurisdiction over the district court’s stay decision, the majority began by revisiting the final judgment rule and clarifying that while motions to stay are not ordinarily appealable, the AIA confers a narrow exception for a CBM “proceeding.”  The majority noted that the AIA differentiated between a “petition” and a “proceeding” because a petition is a request for a CBM proceeding and is not itself the proceeding.  The majority next looked at the congressional record for the AIA, including statements made on the Senate floor that envisioned a CBM “proceeding” only being instituted once the petitioner had established a likelihood of invalidity.  The majority next looked at language in the Court’s earlier Virtual Agility decision, noting the previous suggestion that district courts wait until the PTAB instituted a CBM proceeding before ruling on a motion to stay.

In a lengthy dissent, Judge Hughes explained the reasons that he would find jurisdiction over interlocutory appeals on a stay motion prior to institution, although he clarified that in this case he would have affirmed the district court’s decision on the merits.  Referring to the majority’s approach as a “purely textual analysis,” Judge Hughes would apply a rationale that defers to the overall legislative purpose of § 18 of the AIA, which he reads to ensure uniformity of stay motion decisions by seeking immediate appellate review.  In particular, Judge Hughes disagrees with a perceived regime that divides review of CBM stay decisions into two categories.  The dissent warns of anomalous results by relying too heavily on the distinction between pre- and post-institution decisions.