[00:00:04] Speaker 04: Okay, the next case is related to court, back at number 141724, Intellectual Ventures. [00:00:11] Speaker 04: This is J.P. [00:00:12] Speaker 04: Morgan Chase & Company. [00:00:14] Speaker 04: This is an appeal from the District Court of the Governor's District of New York. [00:00:20] Speaker 04: Mr. Lemley, you want three minutes for rebuttal? [00:00:24] Speaker 00: Yes, please, Your Honor. [00:00:25] Speaker 04: Okay. [00:00:28] Speaker 03: All right, you may begin. [00:00:30] Speaker 00: Thank you, Your Honor. [00:00:31] Speaker 00: May it please the Court? [00:00:33] Speaker 00: Intellectual Ventures filed seven suits asserting the same five patents against different defendants in seven different courts. [00:00:39] Speaker 00: Six of the judges stayed the cases pending IPR and CBM review proceedings, which have now been instituted for all or part of the claims of all five patents. [00:00:47] Speaker 00: Only Judge Hellerstein refused. [00:00:49] Speaker 00: As he put it, quote, whatever is done in the patent office, you do. [00:00:53] Speaker 00: But it is not cause to ask for delay in my court. [00:00:55] Speaker 00: That is my policy. [00:00:57] Speaker 00: If something happens in the patent office that supersedes something I do, so be it. [00:01:01] Speaker 00: But I don't wait for other people. [00:01:03] Speaker 00: The district court's policy against stays is at odds with Section 18 of the AIA, which strongly encourages stays pending CBM reviews and sets out a four-factor test for evaluating the grant or denial of a stay. [00:01:14] Speaker 04: Let me ask you about our jurisdiction. [00:01:17] Speaker 04: I don't have any doubt that a district court would have the authority to enter a stay based on a threatened business method review proceeding or even the fact that a petition might be filed. [00:01:33] Speaker 04: But I have a more difficult time with the concept that we have jurisdiction over an appeal when no proceeding has actually been instituted. [00:01:44] Speaker 00: Understood, Your Honor. [00:01:45] Speaker 00: I think if we accept the first part of that statement, Your Honor, it concludes the jurisdiction question. [00:01:51] Speaker 00: The statute, section 18B2, says this court has jurisdiction of, quote, an immediate interlocutory appeal from a district court's decision under paragraph 1. [00:02:01] Speaker 00: So the only jurisdictional question is, was the district court's ruling a ruling under paragraph 1? [00:02:07] Speaker 00: Was it a ruling on a CBM state petition? [00:02:09] Speaker 00: If it is, the statute gives this court jurisdiction. [00:02:12] Speaker 05: Would it be your view that even to take part of Judge O'Malley's question, even in a case in which the prospective petitioner, the defendant in the case, had said, I'm going to file a CBMR petition, but hadn't filed it yet. [00:02:29] Speaker 05: Would that give the district court and us jurisdiction over the denial of the stay? [00:02:35] Speaker 05: The district court says, we'll see when you file, but I'm going to deny the stay for now. [00:02:41] Speaker 05: Would we have jurisdiction over that? [00:02:43] Speaker 00: While I think that would be a somewhat closer case, I think the answer is yes, Your Honor, and that's true for... It's already a proceeding? [00:02:50] Speaker 00: Well, I don't think so, Your Honor. [00:02:53] Speaker 00: The definition of what the statute says with respect to the district court's jurisdiction is, does it relate to a transitional proceeding? [00:03:01] Speaker 00: Now the PTO in its regulations has defined the word proceeding as, quote, beginning with the filing of a petition for instituting a trial. [00:03:11] Speaker 00: So at that point, I think under the PTO's definition, until we file a petition seeking institution of a CBM, there's no proceeding yet. [00:03:20] Speaker 00: But at that point, the question in the statute is, does it relate to such a proceeding? [00:03:26] Speaker 00: And I think if you said, we're about to file something in the PTO, Your Honor, and we don't want to wait any longer, so let's start the stay motion. [00:03:34] Speaker 00: It would be reasonably conclude that that the motion relates to the proceeding that's about to be filed. [00:03:40] Speaker 04: Maybe I misspoke earlier when I said I had no doubt that a district court could entertain a motion because the district court has broad equitable discretion always to consider a state no matter what the circumstances are that are presented. [00:03:54] Speaker 04: That's different than necessarily saying that it is under these provisions of the AIA. [00:04:00] Speaker 04: And if you go through all of the relevant provisions of the AIA, including the ones that incorporate the post grant review procedures, there is always a distinction between a petition seeking a proceeding [00:04:17] Speaker 04: and the institution of a proceeding. [00:04:20] Speaker 00: Absolutely, Your Honor. [00:04:20] Speaker 00: But I think in this case, the statute clearly confers jurisdiction at the point of the filing of the petition. [00:04:27] Speaker 00: And leaving aside Judge Bryson's hypothetical about acts before the filing of the petition. [00:04:32] Speaker 04: Well, OK, we do have. [00:04:32] Speaker 04: It's not really hypothetical. [00:04:34] Speaker 04: You're arguing that just threatening the filing is enough. [00:04:38] Speaker 04: You can argue that at least in your brief. [00:04:41] Speaker 00: Your Honor, yes. [00:04:41] Speaker 00: I think we do not need to prevail on that point to establish jurisdiction here, right? [00:04:46] Speaker 00: Because jurisdiction was clearly present in the district court under our interpretation as of the time we had filed the CBMs, which was well before the court heard the stay motion. [00:04:56] Speaker 00: The court heard the stay motion. [00:04:57] Speaker 00: It considered the factors under the four factor test, and I think clearly treated this as if it were a CBM motion. [00:05:05] Speaker 00: But with respect to the question of when the jurisdiction attaches. [00:05:09] Speaker 01: That doesn't necessarily answer the question, though. [00:05:11] Speaker 01: I mean, because the district court obviously has jurisdiction to entertain a stay motion separate from the AISA provision. [00:05:20] Speaker 00: And you don't have jurisdiction to review that. [00:05:22] Speaker 00: Absolutely right, Your Honor. [00:05:23] Speaker 01: Even if they're applying these factors, it doesn't necessarily mean that [00:05:30] Speaker 01: it's getting its authority under this. [00:05:33] Speaker 01: I think we still really do have to look at paragraph one which talks about relating to a transitional proceeding. [00:05:39] Speaker 01: I don't think any of this is all that clear in one way or another because it does reference petitions in part and it does separate them out from a transitional proceeding. [00:05:51] Speaker 01: Did you look at the legislative history? [00:05:54] Speaker 01: Because it's a little sparse, and this may not be altogether that relevant, but there are at least statements from Senator Schumer in the record that really seem to talk about the point of this interlocutory review provision being [00:06:12] Speaker 01: if a district court denies a stay when a proceeding has been instituted by the Patent Office. [00:06:20] Speaker 01: So clearly, they're talking about one that's actually been accepted. [00:06:23] Speaker 01: Then we're going to give the Federal Circuit jurisdiction to review that denial when they normally wouldn't. [00:06:29] Speaker 01: Now, obviously, there's all kinds of canons about taking one statement or one legislator out of context. [00:06:36] Speaker 01: But at least it helps me [00:06:39] Speaker 01: fill out the purpose in this exception to our normal rule against interlocutory review of denial of a stay, and that is they really wanted us to take a strong second look at a denial of a stay when a CPM petition had been instituted. [00:06:56] Speaker 00: I understand that, Your Honor, and I think that it's certainly the case that the case for review is even stronger in those circumstances. [00:07:03] Speaker 00: But there are four reasons, I think, why jurisdiction attaches in this case under the statute as it is written. [00:07:09] Speaker 00: The first is the PTO regulation. [00:07:11] Speaker 00: The PTO regulations define the word proceeding as, quote, beginning with the filing of a petition for instituting a trial. [00:07:17] Speaker 04: But those come after the statute is written. [00:07:20] Speaker 04: And PTO can't confer jurisdiction on this court. [00:07:23] Speaker 04: Only Congress can. [00:07:26] Speaker 00: So that's correct, Your Honor. [00:07:27] Speaker 00: But this is an interpretation of Congress's statute. [00:07:31] Speaker 00: And the PTO's definition of a term in a statute [00:07:33] Speaker 00: detailing the conduct of an administrative proceeding before that office is entitled to Chevron deference under this case, court's decision in vendor versus duties. [00:07:41] Speaker 00: And I think the PTO's regulations are absolutely clear on that point. [00:07:45] Speaker 00: Even if they weren't, I think looking at the statutory language also supports this for two additional reasons. [00:07:50] Speaker 00: The first is that if you don't interpret the term as starting with the time you file your petition, the PTO has no authority to institute, to create regulations for deciding whether to open a proceeding, to initiate a proceeding at all. [00:08:04] Speaker 00: So the AIA gives the PTO the authority to issue regulations establishing and implementing a CBM proceeding for review. [00:08:11] Speaker 00: And it asked the PTO to issue regulations determining what patents are eligible for such a proceeding, quote, to assist in implementing the transitional proceeding. [00:08:21] Speaker 00: Now, if the transitional proceeding doesn't start until the institution itself, the PTO has no authority under a literal reading of those terms to decide what things can come in in the first place. [00:08:33] Speaker 00: That's a nonsensical reading of the statute. [00:08:35] Speaker 00: I think the only logical way to read it is that Congress was thinking about the proceeding as a whole. [00:08:40] Speaker 00: Third, even if that were ambiguous, the statute doesn't say you get jurisdiction on appeal only with respect to a transitional proceeding. [00:08:49] Speaker 00: It says anything that relates to a transitional proceeding is subject to the statute. [00:08:56] Speaker 00: Well, we don't know exactly what it means, Your Honor, but I guess I would suggest the following. [00:09:00] Speaker 00: Relate to is broad language, and it's awfully hard for me to see how a petition for a transitional proceeding couldn't relate to a transitional proceeding. [00:09:08] Speaker 04: That certainly seems like something that would... But the problem is you have a petition asking for a transitional proceeding, and then you have repeated language that talks about the director's authority to institute a transitional proceeding. [00:09:22] Speaker 04: So until they institute a transitional proceeding, there's not actually a transitional proceeding. [00:09:28] Speaker 00: Well, Your Honor, I think at a minimum, the petition has to relate to that transitional proceeding. [00:09:34] Speaker 00: But I also think both the PTO and the logical reading of the statute have to give the PTO authority to make regulations and to make rules from the outset of the filing of that petition. [00:09:45] Speaker 04: Under your theory, though, if we're going to talk about logic, [00:09:50] Speaker 04: That means that somebody could just file anything, even a bogus CBM, and go to the district court. [00:09:58] Speaker 04: The district court says, this is ridiculous. [00:10:00] Speaker 04: There's no way they're ever going to be instituting a proceeding, even though you're not supposed to look behind, apparently, the question of whether they will. [00:10:07] Speaker 04: But it's obvious on its face that they'll never be proceeding instituted. [00:10:11] Speaker 04: And then you delay the whole thing by coming up here. [00:10:13] Speaker 04: And we automatically have jurisdiction just because something got filed. [00:10:17] Speaker 00: Well, but it wouldn't automatically delay it, Your Honor. [00:10:19] Speaker 00: If, in fact, it was a bogus petition, the district court would deny the stay motion. [00:10:23] Speaker 00: And the case would proceed in the district court. [00:10:25] Speaker 00: It is true that one could appeal. [00:10:28] Speaker 00: And if people file frivolous appeals, I suspect this court has the authority to deal with that appropriately. [00:10:34] Speaker 00: But I don't think that the fact that the statute says that you can have an appeal from a district court decision under paragraph one, and district court decision under paragraph one is anything that relates to a transitional proceeding, means that you must have the proceeding actually instituted before this jurisdiction. [00:10:55] Speaker 00: I note that every court to have considered this issue, both in the district court and in this court, has implicitly assumed the opposite. [00:11:03] Speaker 00: In both virtual agility and Versada in this court, the court took jurisdiction of appeal from a district court proceeding, even though at the time the district court acted, the CBMs had either not been instituted at all or not been fully instituted. [00:11:17] Speaker 03: Not in virtual agility. [00:11:18] Speaker 03: The CBMs were instituted. [00:11:20] Speaker 00: No, Your Honor. [00:11:20] Speaker 00: The original petition was filed before the CBMs were instituted, and the district court delayed it. [00:11:24] Speaker 00: But I think that on intellectual ventures theory, right, that district court decision would not have been relating to a transitional proceeding and it wouldn't have created CBM jurisdiction because it was filed before the CBM was granted. [00:11:38] Speaker 04: But the district court didn't rule until the CBM was initiated. [00:11:41] Speaker 00: That's correct. [00:11:41] Speaker 04: It was in the same position that we're essentially arguing to you here, which is [00:11:46] Speaker 04: that there wasn't a CBM, there wasn't a proceeding to address. [00:11:50] Speaker 00: Your Honor, the other thing to note about virtual agility is that virtual agility affirmatively said that district courts had the power to grant stays under Section 18 before a CBM petition was granted. [00:12:02] Speaker 04: Now, to make sure, I'm sorry, go ahead. [00:12:05] Speaker 04: It said they had the authority to grant states for the same reason that I've said before. [00:12:09] Speaker 04: It didn't say specifically have authority to grant states under 18. [00:12:14] Speaker 00: Your Honor, the entire case arose under Section 18. [00:12:16] Speaker 04: Well, that's because the proceeding was an instituted. [00:12:19] Speaker 00: Well, so it is, that's correct, Your Honor, but I think the question of jurisdiction seems to me to attach directly on the [00:12:29] Speaker 00: on the question of when the decision is made under paragraph one. [00:12:36] Speaker 00: In this case, the district court made a decision under paragraph one. [00:12:40] Speaker 00: In virtual agility, the district court made a decision under paragraph one. [00:12:43] Speaker 00: The court in virtual agility here was talking about the authority of judges under paragraph one to make decisions. [00:12:50] Speaker 00: And it said there are various things you can do. [00:12:52] Speaker 00: You can decide to grant a stay even before the CBM petition is instituted. [00:12:57] Speaker 00: You can wait and see. [00:12:58] Speaker 00: You can tell the parties to come back later. [00:13:03] Speaker 01: The one thing it didn't say... When you keep saying that the district court made a decision under paragraph one, you're presuming the answer to our question. [00:13:14] Speaker 01: Understood, Your Honor. [00:13:16] Speaker 01: our interpretation of paragraph one is correct, that it only applies after transitional proceeding, or supposes, I'm not saying one way or another, I find this baffling, but if the interpretation we're offering as a hypothetical is correct, then the district court, even if it says they're making the determination under paragraph one, isn't making a determination under paragraph one. [00:13:40] Speaker 01: It wouldn't be allowed to do so. [00:13:44] Speaker 00: So, Your Honor, I think that set of statements is logically internally consistent. [00:13:50] Speaker 00: I guess what I would say is I don't think that it actually comports with either the statute or the regulations interpreting that statute. [00:13:59] Speaker 05: Well, could I segue into the merits? [00:14:01] Speaker 05: Please, Your Honor. [00:14:02] Speaker 05: I was just going to say, let's give you a few minutes to talk about your other topic. [00:14:06] Speaker 05: The first thing I want to get from you is, what is, in your view, the pertinent time to look at, when we're reviewing the district court's denial of a stay, what's the pertinent time to look at? [00:14:18] Speaker 05: I take it from your brief that we look at the time of the application for a stay for purposes of determining how far along the case had gone. [00:14:27] Speaker 05: Yes. [00:14:27] Speaker 05: But for determining what the state of play is in other respects, isn't it the date that the district court actually makes this decision? [00:14:34] Speaker 00: Well, so what this court has said is that for purposes of the second factor, how far along is the case, it's the date of application. [00:14:41] Speaker 05: So the district court can't wait until the day before trial and say, oh, well, say it's denied. [00:14:45] Speaker 05: Right. [00:14:45] Speaker 05: All right, understood. [00:14:46] Speaker 05: But the critical question for me is, isn't it the case that when we're reviewing, trying to decide whether the district court has made an error or not in denying the state, we look at the state of play [00:14:56] Speaker 05: with respect to what's going on in the PTO as of the day of the decision. [00:15:00] Speaker 05: Disregard everything that's happened after that. [00:15:02] Speaker 00: No, Your Honor. [00:15:03] Speaker 00: I think, interestingly, what this Court has said in both virtual agility and Versada is we can and do take judicial notice of PTO decisions that occur afterwards. [00:15:13] Speaker 05: We've taken judicial notice. [00:15:14] Speaker 05: But if we are trying to say that the District Court review the District Court's determination, suppose, for example, there had been no [00:15:26] Speaker 05: petition, no petition had been instituted. [00:15:31] Speaker 05: And as in the case we were talking about earlier, and the district court said, of course I'm not going to grant a stay. [00:15:36] Speaker 05: And then an appeal was filed. [00:15:37] Speaker 05: And in the time between the district court's decision and the time the appeal is heard, not only does the PTO [00:15:47] Speaker 05: grant the petition. [00:15:49] Speaker 05: They also decided in favor of the defendant. [00:15:53] Speaker 05: Does that make the district court's ruling erroneous? [00:15:56] Speaker 00: I think it indicates that the district court's opinion should be reversed. [00:16:00] Speaker 00: Part of that, I think, relates to this. [00:16:02] Speaker 05: Wouldn't you find a way to handle that? [00:16:03] Speaker 05: You just say we affirm the district court without prejudiced you going back and making an argument now as to the changed circumstances. [00:16:10] Speaker 00: Your honor, I think that's not what this court has said. [00:16:13] Speaker 00: What this court has done is said we will take account of what has happened in the PTO sense. [00:16:18] Speaker 00: that may be bound up with the question of standard of review. [00:16:21] Speaker 00: The question is not, did the district judge abuse his discretion? [00:16:24] Speaker 00: And I believe, but this case is at least potentially subject to de novo review. [00:16:30] Speaker 00: But it is the case. [00:16:31] Speaker 00: It may be subject to de novo review, whatever that means. [00:16:33] Speaker 00: Well, it's a good question, Your Honor, although I guess what I would suggest is that the fact that they mentioned de novo review and only de novo review in the statute has to mean something. [00:16:43] Speaker 00: If you just apply a traditional abuse of discretion standard, that language is rendered [00:16:47] Speaker 00: nullity. [00:16:48] Speaker 00: The statute also says that the point of having the appeal is to ensure consistent application of precedent. [00:16:55] Speaker 00: That also would be furthered only by the novel review, particularly here when the same patents, the same party filing the lawsuit, six judges go one way and only Judge Hellerstein goes the other way. [00:17:08] Speaker 05: Why does that matter? [00:17:10] Speaker 05: Why does it matter that there are other cases out there that have [00:17:14] Speaker 00: Well, for two reasons, Your Honor. [00:17:16] Speaker 00: I think at first it's indicative of the fact that Judge Hellerstein's decision here is outside the norm, and even if one were to apply an abuse of discretion, I think he abused that discretion. [00:17:28] Speaker 00: It's also specifically relevant [00:17:31] Speaker 04: What are the facts of different in those cases? [00:17:34] Speaker 04: I mean, there were different patents, and there were different proceedings. [00:17:37] Speaker 00: There were not different patents, Your Honor. [00:17:38] Speaker 00: They were the same patents. [00:17:40] Speaker 00: They're at issue. [00:17:41] Speaker 00: There are 15. [00:17:42] Speaker 04: But different proceedings that were at issue. [00:17:45] Speaker 00: All of the IPRs and CBMs filed by multiple parties are the same set of IPRs and CBMs at issue in all of the cases. [00:17:53] Speaker 04: The only ones you have filed. [00:17:55] Speaker 04: are the CBS. [00:17:57] Speaker 00: That's correct. [00:17:58] Speaker 05: And the other parties agreed effectively by filing them, if I understand it, to be bound by the consequences. [00:18:03] Speaker 05: You, as I understand it, have not. [00:18:05] Speaker 00: Each party that files a petition is bound by the consequences of that petition. [00:18:18] Speaker 00: We filed a CBM because we filed on section 101 grounds. [00:18:22] Speaker 00: We filed on section 101 grounds immediately after Alice when we decided that there were grounds to do so on section 101 for some of these patents. [00:18:31] Speaker 00: Now, the Intellectual Ventures alleges that we've engaged in a conspiracy to allocate. [00:18:38] Speaker 00: That is an absolutely false statement. [00:18:40] Speaker 05: Well, it may not be a conspiracy, but you've elected not to be bound by those IPRs. [00:18:45] Speaker 05: Is that correct? [00:18:46] Speaker 05: Your Honor, we didn't file the IPR. [00:18:48] Speaker 05: Your position is that you're not bound. [00:18:50] Speaker 05: That's correct. [00:18:51] Speaker 05: If you want to tell us now that you will not be bound, go ahead. [00:18:54] Speaker 05: Feel free. [00:18:55] Speaker 00: It is correct that we did not file the IPRs, and therefore we will not be bound. [00:18:58] Speaker 05: And you are now taking the position that you will not be bound. [00:19:01] Speaker 00: Right, we will be bound by the CBM proceeding. [00:19:03] Speaker 05: That seems to me to be a factor that is legitimate for the district court to take into account in deciding whether the IPRs filed by others that bind them should be, you should be the beneficiary. [00:19:15] Speaker 00: Absolutely, Your Honor, but I will note that the district court did not, in fact, take that into account. [00:19:19] Speaker 00: The district court said, oh, well, any benefit is speculative. [00:19:23] Speaker 00: And in this case, because this court has said we look at the subsequent acts of the PTO, as it stands before us, all or part of the claims of all five of the patents have been granted. [00:19:35] Speaker 00: IPRs have been granted. [00:19:37] Speaker 00: And there's a substantial likelihood that almost all of this case will go away as a result of IPR proceedings. [00:19:44] Speaker 05: Well, one of the patents, I guess, [00:19:45] Speaker 05: one claim that was granted which has been cancelled. [00:19:47] Speaker 00: And they have cancelled it and has also a CBM proceeding pending on that claim. [00:19:52] Speaker 05: But in your brief you say you think that it's likely that the CBMs will be granted why? [00:19:58] Speaker 05: Because I believe our argument to be correct. [00:20:03] Speaker 00: We do not have any evidence from the PTO that causes us to believe that. [00:20:10] Speaker 05: But there's no other reason other than [00:20:14] Speaker 00: No, Your Honor. [00:20:15] Speaker 00: No, Your Honor. [00:20:16] Speaker 00: That's right. [00:20:17] Speaker 00: But I would say this, Your Honor, that even if the CBMs were to be denied, the state of play right now is that the majority of all the claims that issue in this case are subject to instituted IPR proceedings, which means the PTO has decided that there's a reasonable likelihood those claims are invalid. [00:20:37] Speaker 00: There is no prejudice whatsoever to intellectual ventures under this court's ruling in virtual agility. [00:20:41] Speaker 00: And the case was in its infancy as of the time we filed the motion. [00:20:45] Speaker 00: And so even if you were to conclude that you thought the CBMs were going to be denied, the factors set out in section 18, I think, line up pretty strongly in favor of granting a stay. [00:20:55] Speaker 00: And Judge Hellerstein, sorry. [00:20:59] Speaker 04: Can I ask a question? [00:21:01] Speaker 04: It's slightly different. [00:21:03] Speaker 04: Assume that we agree with you on some points and disagree on others. [00:21:07] Speaker 04: So assume we agree that the mere filing of a petition is enough to give us jurisdiction and that we're looking at the factors under the CBM provision. [00:21:19] Speaker 04: But that we disagree with you, that that brings with it [00:21:23] Speaker 04: all of the other IPR proceedings and our ability to consider the denial as it relates to the existence of the other IPR proceedings that we disagree that your 1292B certification cases really would match up in this context. [00:21:40] Speaker 04: So all we're left with is the CBM petition. [00:21:44] Speaker 04: Would that alone justify a stay? [00:21:47] Speaker 00: It would justify a stay. [00:21:49] Speaker 00: It would certainly make our case harder. [00:21:51] Speaker 00: But I think when you couple it with the fact that the case is in its infancy, that there is no prejudice, and to return to the legislative history of Senator Schumer, the indication there that the intent of Congress was that it would require an extraordinary and extremely rare set of circumstances to deny a stay, I think the answer is there ought to be a stay. [00:22:12] Speaker 01: again that legislative history related it's extraordinary that i think it would have been understood your i i i think that to me the problem your merit argument here [00:22:27] Speaker 01: At least, as I read this, the whole point of this de novo review was probably to make sure that the district court's granted states when proceedings had been granted. [00:22:38] Speaker 01: But it's a far harder question for me whether we're going to apply de novo review before the proceeding has been granted or whether we would apply a more deferential standard of the district court on just the possibility of CBM review [00:22:55] Speaker 00: Understood, Your Honor, although I think that even under that more deferential standard, we ought to prevail under the fact of this case. [00:23:03] Speaker 00: Now, to do that, I do have to respond to Judge O'Malley's point, because I think it is absolutely right to say that we have to include the full state of affairs. [00:23:14] Speaker 00: The statute talks about [00:23:16] Speaker 00: staying an action because of a pending CBM proceeding, not staying the parts of an action that are subject to CBM review, it would be, I think, nonsensical for the courts to say, well, I can't look at the entirety of the action in deciding whether it's appropriate to grant a stay. [00:23:36] Speaker 00: both in the district court, but also in this court, it is incumbent on the court to look at the entire state of play in deciding whether or not a state is appropriate. [00:23:44] Speaker 00: And that state of play includes the fact that IPRs have been granted on a majority of the patents here. [00:23:52] Speaker 04: We're way over. [00:23:53] Speaker 00: Thank you, Your Honor. [00:23:55] Speaker 04: We're going to restore your three minutes of rebuttal. [00:24:04] Speaker 04: We've got about an extra eight minutes. [00:24:06] Speaker 02: I'll do my best not to use it. [00:24:09] Speaker 02: May it please the court, Eric Citron for Intellectual Avengers. [00:24:13] Speaker 02: When the district court was asked to grant a stay in this case, there were no proceedings of any kind that had been instituted with respect to four of the five patents at issue. [00:24:20] Speaker 05: Well, that brings us to the question that I guess I was the one that asked Mr. Lindley, and that is, at what date, as of what date do we look at the correctness or not of the district court's order? [00:24:34] Speaker 05: Mr. Lindley says, today, or if we decide this case next week, next week, or if we decide this case in five months, five months from now. [00:24:43] Speaker 05: It does appear that this court, at least in Kaleidos, and I think there's a reference [00:24:51] Speaker 05: virtual agility, to the events that transpired after the district court's ruling. [00:24:58] Speaker 05: What's your take on that question? [00:25:00] Speaker 02: I'd like to answer it in two ways. [00:25:01] Speaker 02: I think the right approach is the ordinary rule, which is when you're reviewing what a district court has done, you review the record before the district court. [00:25:09] Speaker 02: That's the only thing that's fair to the district court, and it's the only way that the record is actually appropriately built. [00:25:15] Speaker 02: for an appellate proceeding. [00:25:16] Speaker 02: But I think also the question indicates that this appeal is premature for the reasons that we say, both jurisdictionally and on the merits. [00:25:26] Speaker 02: Because it's precisely by coming up here before we have a CBM grant, before we have a fixed store, that we end up in this position of trying to take account of things that are happening in the middle of the proceeding. [00:25:38] Speaker 05: I'll tell you, the same thing could happen if you had a grant and then [00:25:42] Speaker 05: additional grants came in and so forth. [00:25:44] Speaker 05: I mean, in this case, had there been one grant, actually I guess there was one grant prior to the district court's order. [00:25:52] Speaker 05: It happens that there have been a number since. [00:25:55] Speaker 05: There would be jurisdiction at least with respect to the granted petition, right? [00:26:01] Speaker 02: That's right. [00:26:02] Speaker 02: If it had been a CBM grant. [00:26:03] Speaker 02: I understand it wasn't a CBM, but had it been a CBM, there would be. [00:26:06] Speaker 02: That's right. [00:26:07] Speaker 02: But I think that suggests also that there's an element on the merits of prematurity as well. [00:26:12] Speaker 02: What Versada says in so many words is that it is appropriate for a district court to wait and see what happens at the PTAB before deciding whether it's going to stay proceedings in the case or not. [00:26:24] Speaker 02: That would apply even if it wants to see what happens in some other IPR proceedings or CBN proceedings after one has been granted, because it wants to know what the landscape is before it decides how to go forward. [00:26:36] Speaker 02: And that certainly facilitates appellate review in this court. [00:26:39] Speaker 02: Otherwise, you're going to have situations like, I don't want to be extreme about it, but on Friday, we expect the first determination from the PTAB about one of the CBN proceedings in this case, which means that if this court were to write an opinion tomorrow, it might already be outdated on the next day. [00:26:54] Speaker 02: This is the problem that comes from having appellate jurisdiction attached to the near-file line. [00:26:58] Speaker 04: Do you agree that in the normal court, if a stay is denied based on the filing of a petition, but then a CBM is granted, that the party who lost the stay petition could go back to the district court and then renew the motion for stay? [00:27:16] Speaker 02: Absolutely. [00:27:17] Speaker 02: That's the reason Gulfstream says. [00:27:19] Speaker 04: But if, in fact, a CBM is granted, [00:27:21] Speaker 04: say Friday or whenever, because we've deprived the lower court of jurisdiction over those questions, could they go back and renew the motion for stay at that point? [00:27:32] Speaker 02: I think that's a complicated question. [00:27:35] Speaker 02: It suggests that what this court should do is not deprive the district court of jurisdiction so that it can make the first instance determination about what kind of state it would institute. [00:27:44] Speaker 02: That's why I think the better reading of the statute, although I agree with Judge Hughes, it can be read maybe both ways. [00:27:50] Speaker 02: The better reading is that appellate jurisdiction attaches only after there's a CBN grant. [00:27:54] Speaker 04: What do you do with the language relating to? [00:27:57] Speaker 02: Sure. [00:27:59] Speaker 02: the right way to understand the language relating to is that it allows you one-step removal, not two-steps removal. [00:28:06] Speaker 02: This is a case where they want to say, we have a petition for a CBM stay that relates to a proceeding, and then we have, oh, sorry, we have a petition that relates to the proceeding, and then we have a request for a stay that relates to the petition, that relates to the proceeding, and so it all relates to the proceeding. [00:28:20] Speaker 04: What do you mean by two-step removal, one-step removal? [00:28:23] Speaker 04: So what does relating to mean? [00:28:24] Speaker 02: I think relating to would have to be relates to an actual instituted proceeding. [00:28:29] Speaker 04: But couldn't the language have been much clearer if that was the case? [00:28:33] Speaker 04: Couldn't Congress have simply said if you seek to say a proceeding upon institution? [00:28:39] Speaker 02: It could have been clearer either way. [00:28:42] Speaker 02: You could read it that way, but it's not the better way to read it. [00:28:44] Speaker 02: This problem comes up a lot in Supreme Court cases about Orissa, where they talk about the breadth of relating to and they say, you know, literally everything relates to everything. [00:28:52] Speaker 02: You can read it as broadly as you want. [00:28:54] Speaker 02: What you want to do is talk about the purposes of the statue. [00:28:57] Speaker 02: And the purpose of the statutes here are better served by having appellate jurisdiction attached only after a CBM grant exists. [00:29:04] Speaker 02: Because otherwise, as they admitted, you're going to be taking their word for it that it's a meritorious CBM petition that has any prospect of being granted. [00:29:12] Speaker 02: Conversely, I think as your questions about Senator Schumer's statements suggest, [00:29:18] Speaker 02: What you really wanted was a determination from the PTAB that it was more likely than not that a claim was going to be canceled, which is only true in CDM review, not for IPR review. [00:29:30] Speaker 02: And once you have that determination, that's where you no longer want to leave it up to the discretion of the district court, unfettered by any appellate review, whether to grant a stay or not. [00:29:38] Speaker 02: But until we reach that point, and there actually is a grant, all we have is a filing, a mere piece of paper from the party that wants a stay. [00:29:46] Speaker 04: I think if we have jurisdiction on the merits, one of the things that bothers me the most is that Mr. Lemley quoted a lot of these statements that the trial court, what we're supposed to do is review an exercise of discretion. [00:30:02] Speaker 04: It appears that the trial court didn't exercise any kind of discretion here. [00:30:07] Speaker 04: The trial court decided in advance that it was never going to grant a say on anything, and that was the end of the inquiry. [00:30:13] Speaker 02: I think the appropriate place to look for Judge Hallerstein's reasoning is his order. [00:30:18] Speaker 02: I think there's a lot of quotes from things he said at status conferences. [00:30:22] Speaker 02: We wouldn't expect Supreme Court review of what happens in this court to happen based on what gets said at oral argument by judges. [00:30:29] Speaker 02: And I admit Judge Hallerstein is more dispositionally disinclined to stay cases with some other district judges, but this is the kind of [00:30:39] Speaker 02: This is the kind of case management decision that is left to the discretion of district courts. [00:30:45] Speaker 02: It's not odd that they would have different instincts. [00:30:47] Speaker 02: And it's not at all, you know, objectionable. [00:30:49] Speaker 02: It's in fact, audible. [00:30:51] Speaker 02: The district court wants to move the cases forward. [00:30:53] Speaker 01: But if we were in a different situation, and this had all happened after the institution of the proceeding, and he had still refused to stay it, [00:31:01] Speaker 01: and just said, I'm not going to say this case no matter what the AIA says, then I think we'd probably be looking at a far different posture than we are now and looking at whether we'd defer or not. [00:31:14] Speaker 02: Absolutely, because I think then the decision not to take account of the facts would demonstrate error with respect to all of the prongs of AIA Section 18 or the state standard that governs discretionary states, which you certainly had discretion to enter. [00:31:29] Speaker 02: I agree with Judge O'Malley. [00:31:31] Speaker 02: we're not arguing at all that the district court has jurisdiction to enter or stay. [00:31:36] Speaker 02: The district court has jurisdiction to enter or stay at any point. [00:31:39] Speaker 02: That is much more to his discretion. [00:31:42] Speaker 02: But if there were a CBM grant, I'm not suggesting that an order setting forth, I don't grant stays would be an objection. [00:31:50] Speaker 05: Let me ask you to clarify something that I'm not sure I heard right, but I just want to make sure. [00:31:55] Speaker 05: I think earlier in response to a question, you alluded to the question of whether the district court would have ongoing jurisdiction over the case while an appeal from the denial of the state was pending. [00:32:07] Speaker 05: Surely the district court would have ongoing jurisdiction to [00:32:10] Speaker 05: handle matters in the case, correct? [00:32:12] Speaker 02: Well, yeah, I suppose that's right, because this is just an interlocutor. [00:32:15] Speaker 02: It's not an appeal order. [00:32:16] Speaker 02: An appeal order, preliminary injunction. [00:32:18] Speaker 02: That's right. [00:32:18] Speaker 02: That's right. [00:32:19] Speaker 02: But you would not want to find yourself in a situation where this proceeding could be mooted by something that was happening in the district court. [00:32:26] Speaker 05: Right. [00:32:26] Speaker 05: But that's when the Court of Appeals can grant a stay of the district court proceedings if it's applied for and granted, if the urgency is such that it cannot happen. [00:32:35] Speaker 05: The normal course, I take it, would be that things keep going in the district court, not withstanding the appeal, unlike appeals from a final order, where the mandate moves from the district court to the court of appeals upon the filing of a notice of appeal, right? [00:32:49] Speaker 02: That's right, but in your typical 1292B certified order situation, you wouldn't expect the district court to entertain [00:32:55] Speaker 02: a motion for reconsideration of the order that's being appealed on 1292B, even if there were dissents. [00:33:02] Speaker 05: I might not expect it, but I'm not sure. [00:33:04] Speaker 02: Would there be any prohibition against it? [00:33:06] Speaker 02: I suppose not. [00:33:07] Speaker 02: But it's an indication, right, that if you have a situation where the district court doesn't even have discretion not to entertain that kind of order, you have a jurisdictional problem. [00:33:18] Speaker 02: And I just want to point out, you don't have to take my word for the fact that they could go back to the district court and seek a stay. [00:33:24] Speaker 02: They say, if they don't get the answer that they want in this court, and they later obtain a CBM grant, they are going back to the district court and coming back here to ask for a different result. [00:33:36] Speaker 04: But let me ask you. [00:33:36] Speaker 04: There was something interesting that Mr. Lamley said that I didn't really pick up from the brief, but that I think could be meaningful here. [00:33:44] Speaker 04: And that is, if we agree that we have jurisdiction, at least as it relates to a CBM petition, based on a CBM petition, [00:33:53] Speaker 04: Even if we think we wouldn't have jurisdiction to review a denial of a stay that was based solely on a post-grant proceeding, wouldn't it still be true that in reviewing the merits of the CBM ruling that we can't ignore the overall [00:34:15] Speaker 04: picture of the case, so that even if we disagree with Mr. Levine that his 1292B cases would give us independent jurisdiction, it doesn't matter. [00:34:26] Speaker 04: Because how can you turn a blind eye to what's going on in the entirety of the circumstances? [00:34:32] Speaker 02: This is a fine point, so I just want to make sure I say it clearly. [00:34:34] Speaker 02: I agree this court has to make a real world determination based on the facts surrounding the litigation. [00:34:42] Speaker 02: And so if it's true that some of the patents are subject to IPR proceedings that have been instituted, the court wants to take account of that. [00:34:49] Speaker 02: It should note also that the IPR standard is much lower than the CBM standard. [00:34:53] Speaker 02: It's akin to probable cause, reasonable likelihood of it being canceled. [00:34:57] Speaker 02: Not CBM, like in Versada, where the PTATs already decided it's more likely than not. [00:35:02] Speaker 02: But you have to take account of the real world facts. [00:35:05] Speaker 02: In order to reverse the district court, there needs to be error in the decision respecting CBM review. [00:35:11] Speaker 02: If you think there's no error, that it was appropriate for him to wait until the PTAB had actually granted on the merits, then the fact that there are other facts that support a stay aren't going to be enough to allow you to reverse. [00:35:25] Speaker 02: Otherwise, what we have is just a bootstrap IPR stay appeal. [00:35:29] Speaker 02: Because all they're saying is, in his purely discretionary review of whether or not to grant a stay respecting IPRs, he erred. [00:35:37] Speaker 02: He should have said these IPR proceedings are enough. [00:35:39] Speaker 02: And that's not the kind of thing that Congress wanted to grant. [00:35:42] Speaker 02: Precisely because the standard is lower and we don't have the same certainty, that's more likely than not that some claim is going to be canceled. [00:35:50] Speaker 02: If there are no further questions. [00:35:54] Speaker 04: Thank you. [00:36:02] Speaker 00: Thank you for the time back, Your Honor. [00:36:06] Speaker 00: I'd like to make just a couple of points. [00:36:07] Speaker 01: I had just a practical question. [00:36:09] Speaker 01: I mean, there's a lot of difficult issues here, but if we're going to get decisions from the PCAP on these CDMs within the next days or months, probably before we can get a decision out, [00:36:26] Speaker 01: Does it really matter what we do here? [00:36:29] Speaker 01: Because you're going to go, if the CDM proceedings are instituted, you're going to go back and ask for a stay anyway, based upon the instituted proceedings. [00:36:40] Speaker 00: I guess I would like to do that if I have no other choice, Your Honor. [00:36:45] Speaker 00: We did not say in the brief that we would do that. [00:36:47] Speaker 00: What we said was that if this Court concludes there is no jurisdiction over this appeal, then we would of course have to have, there ought to be jurisdiction at some later point. [00:36:57] Speaker 00: But as I understood it from Judge Hellerstein, he didn't say come back if there's a CBM, he said you're done. [00:37:03] Speaker 01: So I don't think you certainly have the right to go back if there's a CDM and if he denies it again, then you're going to be up here again. [00:37:11] Speaker 01: I guess you want to short circuit that and reverse him based upon his ruling before proceeding for instituting. [00:37:19] Speaker 00: I guess I would say, Your Honor, that the point of having a proceeding that allows for stays is lost if the answer is, we're going to have to go back down, have him deny because he's got a policy against stays, and then come back up again, even with some effort to expedite this appeal. [00:37:35] Speaker 00: It still took us six months to get here. [00:37:37] Speaker 00: Meanwhile, we're all spending a lot of unnecessary money. [00:37:39] Speaker 00: The point, it seems to me, of the stay proceeding is to avoid that. [00:37:44] Speaker 00: If, in fact, you were to conclude that what's critical is that the CBM be granted, then this court should certainly wait until February 3rd. [00:37:53] Speaker 00: It's not actually this Friday. [00:37:54] Speaker 00: That date is inaccurate. [00:37:56] Speaker 00: But February 3rd, both of the CBM decisions are due. [00:37:59] Speaker 00: This court could certainly wait and say, if the CBMs are instituted, de novo review is appropriate, taking account of later PTO rulings is appropriate, and a stay is now appropriate. [00:38:11] Speaker 00: But I think to send it back and say, let the district court exercise his discretion once again, presupposes that that's what the district court is doing. [00:38:19] Speaker 01: And if you look at A9 in the record and what the court actually says, can't we, I mean, I find it troubling the suggestion that [00:38:28] Speaker 01: that we can just wait and see what the key tab is done and then just make our own kind of de novo determination on that stay. [00:38:34] Speaker 01: It seems like at most we would, if those decisions happen before we get an efficient, we're going to come to a decision on the stay and even if we agree with his denial that he didn't abuse his discretion there, we would know that we take judicial notice of this and would probably suggest that it can be reconsidered. [00:38:54] Speaker 00: I understand, Your Honor, and I don't think that weighting is the appropriate thing to do. [00:38:59] Speaker 00: I think it would set a bad precedent in general for CBM review. [00:39:02] Speaker 00: But I think at a minimum, given the closeness in time, it would potentially change the factors of court. [00:39:09] Speaker 05: So be clear about the state of play now. [00:39:11] Speaker 05: And I know it's fluid, but maybe not as fluid as we thought before, thinking at the end of the week something would change. [00:39:17] Speaker 05: Soon, there'll be some new information here. [00:39:21] Speaker 05: But right now, as we sit here, there is no, if I understand correctly, there is no CBM proceeding that has been granted with respect to any claim of any patent that is still in the case. [00:39:34] Speaker 05: Is that correct? [00:39:34] Speaker 00: That's correct. [00:39:35] Speaker 00: There are IPR proceedings that have been granted as to all of the claims of three of the patents and some of the claims of two others. [00:39:41] Speaker 00: And indeed, one of those claims has already been canceled by Intellectual Ventures. [00:39:44] Speaker 05: Wasn't there one? [00:39:46] Speaker 05: Was there one patent as to which there were no pending IPRs? [00:39:54] Speaker 00: The 084 patent has no pending IPRs. [00:39:58] Speaker 00: IPR has been granted as to some but not all of the claims. [00:40:01] Speaker 00: So some part of one of the five patents. [00:40:04] Speaker 00: And denied as to the other. [00:40:07] Speaker 00: That's right. [00:40:07] Speaker 00: That's right. [00:40:08] Speaker 00: So some part of one of the patents will survive. [00:40:10] Speaker 05: Something's presumably going forward. [00:40:12] Speaker 00: That's correct. [00:40:12] Speaker 05: But the question is not whether the case will go forward, but whether the case will go forward in a much diminished form. [00:40:17] Speaker 00: Exactly, Your Honor. [00:40:18] Speaker 00: Whether we'll simplify the issues in question and streamline the trial, whether we'll reduce the burden on the parties and the court, which are the factors that the statute says we are to consider. [00:40:26] Speaker 04: OK. [00:40:27] Speaker 04: Thank you, Your Honor. [00:40:28] Speaker 04: The cases will be submitted. [00:40:29] Speaker 04: Court is adjourned.