In Fiscal Year 2015, the Patent Trial and Appeal Board (“PTAB”) instituted inter partes reviews (“IPR”) on approximately 68% of petitions filed. Overcoming these odds, the PTAB recently instituted 17 out of 17 IPRs filed by Sheppard Mullin on behalf of TCL Communication Technology Holdings, LTD. Not only was this a 100% institution rate, but also the institutions resulted in the Eastern District of Texas staying a patent infringement case less than three weeks before trial.
In January of 2015, Ericsson, Inc. alleged that TCL infringed five patents related to cellular communications. See Eastern District of Texas Case No. 2:15-cv-00011. These patents are directed to different aspects of cellular communications technology. Ericsson has asserted these patents against multiple providers of cellular handsets, including TCL, Apple and others in the Eastern District of Texas and/or before the International Trade Commission.
The District Court set a relatively expedited pretrial schedule with trial scheduled for April 2016. In March 2015, Ericsson served infringement contentions alleging infringement of over 90 patent claims. Beginning in July of 2015 and extending through September 2015, TCL filed seventeen petitions requesting IPRs on all 90 asserted claims. Between January 27 and January 29, 2016, the PTAB granted the first seven petitions filed by TCL and instituted IPRs on every claim currently being asserted by Ericsson, on every invalidity ground raised by TCL. The following court day, TCL filed an emergency motion to stay the litigation in light of the instituted IPRs.
The general practice in the Eastern District of Texas is to deny pre-institution motions for a stay of litigation. See, e.g., Trover Group, Inc. v. Dedicated Micros USA, Eastern District of Texas Case No. 13-cv-1047 (March 11, 2015, J. Bryson by designation) (“This Court's survey of cases from the Eastern District of Texas shows that when the PTAB has not yet acted on a petition for inter partes review, the courts have uniformly denied motions for a stay.”) However, the PTAB generally takes six months to issue an institution decision, and then another twelve months to issue a final decision on the merits. This creates a scenario in fast-paced jurisdictions where the PTAB’s institution decision will not be made until trial is almost at hand. At this point, however, the patentee will almost certainly argue that staying the litigation will unduly prejudice it and that the impending trial will resolve validity issues well before the PTAB issues its final decision on the instituted IPR.
As anticipated, after TCL filed its emergency motion to stay, Ericsson opposed the motion and argued that the case had progressed too far such that a stay so close to trial would unduly prejudice Ericsson and provide a clear tactical advantage to TCL. While the motion was pending, the PTAB instituted the remaining ten IPR petitions . Thus, by the time the motion was decided, the PTAB had instituted a total of seventeen petitions brought by TCL covering every asserted claim – often on multiple invalidity grounds. In deciding the motion to stay, the District Court rejected Ericsson’s arguments and on March 23, 2016 – only three weeks before trial – the District Court stayed the litigation pending resolution of the IPRs.