Intellectual Ventures II LLC v. Jpmorgan Chase & Co.

United States Court of Appeals
for the Federal Circuit
______________________
INTELLECTUAL VENTURES II LLC,
Plaintiff-Appellee
v.
JPMORGAN CHASE & CO., JPMORGAN CHASE
BANK, NATIONAL ASSOCIATION, CHASE BANK
USA, NATIONAL ASSOCIATION, CHASE
PAYMENTECH SOLUTIONS, LLC,
PAYMENTECH LLC,
Defendants-Appellants
______________________
2014-1724
______________________
Appeal from the United States District Court for the
Southern District of New York in No. 1:13-cv-03777-AKH,
Judge Alvin K. Hellerstein.
______________________
Decided: April 1, 2015
______________________
ERIC F. CITRON, Goldstein & Russell, P.C., Bethesda,
MD, argued for plaintiff-appellee. Also represented by
THOMAS RICHARD BURNS, JR., Adduci, Mastriani &
Schaumberg, LLP, Washington, DC; MARC BELLOLI, IAN
NEVILLE FEINBERG, ELIZABETH DAY, NICKOLAS BOHL,
Feinberg Day Alberti & Thompson LLP, Menlo Park, CA.
2 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
MARK A. LEMLEY, Durie Tangri LLP, San Francisco,
CA, argued for defendants-appellants. Also represented
by CLEMENT ROBERTS; KENNETH R. ADAMO, Kirkland &
Ellis LLP, New York, NY; BRENT P. RAY, EUGENE
GORYUNOV, Chicago, IL; JOHN C. O'QUINN, WILLIAM H.
BURGESS, Washington, DC.
JAMES QUARLES, III, Wilmer Cutler Pickering Hale
and Dorr LLP, Washington, DC, for amicus curiae
Askeladden, L.L.C. Also represented by ROBERT ANTHONY
ARCAMONA, GREGORY H. LANTIER; RICHARD WELLS
O’NEILL, Boston, MA.
______________________
Before O’MALLEY, BRYSON, and HUGHES, Circuit Judges.
Opinion for the court filed by Circuit Judge O’MALLEY.
Dissenting opinion filed by Circuit Judge HUGHES.
O’MALLEY, Circuit Judge.
Intellectual Ventures II LLC (“IV”) brought suit
against JPMorgan Chase & Co.; JPMorgan Chase Bank,
National Association; Chase Bank USA, National Associa-
tion; Chase Paymentech Solutions, LLC; and Paymentech
LLC (collectively, “JPMC”) in the United States District
Court for the Southern District of New York, alleging
infringement of five patents. JPMC moved to stay the
action on grounds that it intended to file petitions seeking
covered business method reviews (“CBMR”) with respect
to some of the patents in suit. After two CBMR petitions
were filed by JPMC, but before the Patent Trial and
Appeal Board (“PTAB”) acted on them, the district court
denied JPMC’s motion to stay. JPMC then sought inter-
locutory review of that ruling. Because we do not have
jurisdiction to review the district court’s denial of JPMC’s
motion to stay, we dismiss.
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO. 3
I. BACKGROUND
IV alleged infringement of five patents: U.S. Patent
Nos. 6,715,084 (“the ’084 patent”); 6,314,409 (“the ’409
patent”); 5,745,574 (“the ’574 patent”); 6,826,694 (“the
’694 patent”); and 7,634,666 (“the ’666 patent”). 1 Approx-
imately one year later, on June 27, 2014, JPMC moved to
stay the case pending the result of, inter alia, four CBMR
petitions JPMC said it was planning to file. 2 Joint Ap-
pendix (“J.A.”) 166 (“JPMC itself shortly will be filing
requests asking the PTAB to institute a [CBMR] of four of
the Patents-in-Suit.” (emphasis added)). Shortly after
filing the motion to stay, JPMC did, in fact, file two
CBMR petitions for the ’409 and ’574 patents—on July 11
and 18, respectively. It has never filed the other two
promised petitions.
On August 11, 2014, the district court denied JPMC’s
motion to stay. The court applied the four-factor test set
forth in § 18(b)(1) of the America Invents Act (“AIA”), Pub.
L. No. 112-29, 125 Stat. 284, 329–31 (2011), expressly
1 IV also asserted the same five patents against six
other banking institutions in different district courts:
First National Bank of Omaha, No. 8:13-cv-167 (D. Neb.)
(complaint filed 5/29/2013); BBVA Compass Bancshares,
Inc., No. 2:13-cv-1106 (complaint filed 6/12/2013) (N.D.
Ala.); Commerce Bancshares, Inc., No. 2:13-cv-4160 (W.D.
Mo.) (complaint filed 6/20/2013); SunTrust Banks, Inc.,
No. 1:13-cv-2454 (N.D. Ga.) (complaint filed 7/24/2013);
U.S. Bancorp, No. 0:13-cv-2071 (D. Minn.) (complaint filed
7/31/2013); Huntington Bancshares Inc., No. 2:13-cv-785
(S.D. Ohio) (complaint filed 8/7/2013).
2 Although JPMC’s motion to stay was also based
on the filing of 12 inter partes review petitions—all by
third parties—JPMC does not argue that the stay ruling
relating to those petitions gives us jurisdiction to hear
this interlocutory appeal.
4 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
stating that it was assuming without deciding that
§ 18(b)(1) governed its consideration of the motion. The
district court first noted that, because there are multiple
patents and claims in suit, it would be inappropriate to
stay the entire litigation while waiting to see if the PTAB
would choose to initiate review of only two of the patents
at issue. The district court also concluded that it expected
the litigation to be resolved in less than a year. Since the
PTAB is authorized to take twelve months to complete a
CBMR, the PTAB could extend that time by another six
months, and those time periods would not begin to run
until a CBMR petition was actually granted, the court
concluded that the litigation would likely be resolved
more quickly than any extended CBM review. Ultimate-
ly, the district court concluded that JPMC’s argument
that the PTAB’s resolutions of the CBMR petitions would
reduce the court’s workload was largely speculative, and
was offset by IV’s right to a speedy trial.
JPMC filed a notice of appeal, arguing that the Fed-
eral Circuit has jurisdiction to hear an interlocutory
appeal of a denial of a motion to stay relating to CBMR
proceedings under § 18 of the AIA. 3 As of the date of oral
arguments, the PTAB had not acted on the CBMR peti-
tions at issue. 4
3 JPMC also filed a motion to stay the case pending
the interlocutory appeal, which the district court denied.
4 We have been informed that the PTAB instituted
a CBMR proceeding for all remaining claims in the ’409
patent on January 14, 2015 but denied the petition for the
’574 patent on January 29, 2015. J.P. Morgan Chase &
Co. v. Intellectual Ventures II LLC, No. CBM2014-160
(Pat. Tr. & App. Bd. Jan. 29, 2015); J.P. Morgan Chase &
Co. v. Intellectual Ventures II LLC, No. CBM2014-157
(Pat. Tr. & App. Bd. Jan. 14, 2015). This court previously
has taken judicial notice of post-appeal developments at
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO. 5
II. DISCUSSION
Consistent with the final judgment rule, this court
normally only has jurisdiction to review “a final decision
of the district court.” 28 U.S.C. § 1295(a)(1) (2012) (em-
the PTAB when assessing the propriety of a trial court’s
ruling on a motion to stay premised on the existence of a
pending CBMR proceeding. See VirtualAgility Inc. v.
Salesforce.com, Inc., 759 F.3d 1307, 1312–13 (Fed. Cir.
2014). This court was cautious in doing so, however,
“mindful that ‘an appellate court may consider only the
record as it was made before the district court.’” Id. at
1312–13 (quoting Ballard Med. Prods. v. Wright, 821 F.2d
642, 643 (Fed. Cir. 1987)). We explained that we felt
comfortable doing so, moreover, because the activities at
the PTAB had been raised with the district court in a
motion to reconsider the denial of the motion to stay,
allowing the parties and the district court to fully vet the
issue. And, notably, nothing about the facts noticed
related to the propriety of this court’s jurisdiction.
Neither party has requested that we take judicial no-
tice of the recent PTAB rulings in this case, and we de-
cline to do so sua sponte. Because these new facts arose
not only post-appeal, but post-briefing and argument,
these facts have never been presented to the district
court, even though they could be, and those facts might
well be relevant to the district court’s assessment of any
renewed motion to stay, we decline to expand the record
before us.
More importantly, we find these facts irrelevant to
our ability to exercise jurisdiction over this appeal. The
question we decide today is not whether a ruling on some
future motion to stay, predicated on a different set of facts
and procedural setting, would give rise to jurisdiction in
this court; we ask only whether we have jurisdiction to
consider the appeal from the order currently before us.
6 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
phasis added). The Supreme Court has consistently
reiterated the importance of the final judgment rule. E.g.,
Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374
(1981) (“[The final judgment rule] emphasizes the defer-
ence that appellate courts owe to the trial judge as the
individual initially called upon to decide the many ques-
tions of law and fact that occur in the course of a trial.
Permitting piecemeal appeals would undermine the
independence of the district judge as well as the special
role that individual plays in our judicial system.”); United
States v. Nixon, 418 U.S. 683, 690 (1974) (“The finality
requirement . . . embodies a strong congressional policy
against piecemeal reviews, and against obstructing or
impeding an ongoing judicial proceeding by interlocutory
appeals.”). Exceptions to the final judgment rule, wheth-
er statutory or arising from common law, are to be nar-
rowly construed. See Digital Equip. Corp. v. Desktop
Direct, Inc., 511 U.S. 863, 867–68 (1994) (“[W]e have also
repeatedly stressed that the ‘narrow’ exception should
stay that way and never be allowed to swallow the gen-
eral rule . . . that a party is entitled to a single appeal, to
be deferred until final judgment has been entered.” (in-
ternal citation omitted)); Coopers & Lybrand v. Livesay,
437 U.S. 463, 474 (1978) (stating that “Congress carefully
confined” the availability of immediate review of non-final
orders).
The parties agree that decisions on motions to stay
ordinarily are not immediately appealable under the final
judgment rule. See Gulfstream Aerospace Corp. v. Ma-
yacamas Corp., 485 U.S. 271, 277–78 (1988) (explaining
that a denial of a motion to stay is not appealable because
it is always subject to reconsideration and, thus, never
truly final). And, more specifically, the parties agree that
rulings on motions to stay premised on the institution of
inter partes review proceedings are not appealable under
this rule. See Appellant’s Br. 1–2. There is no doubt,
accordingly, that the AIA’s authorization for immediate
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO. 7
appellate review of stay rulings relating to CBMR pro-
ceedings is a statutory grant of jurisdiction to this court
which must be construed narrowly. See Digital Equip.,
511 U.S. at 867–68.
Section 18 of the AIA states in relevant part:
(b) REQUEST FOR STAY.—
(1) IN GENERAL.—If a party seeks a stay of a
civil action alleging infringement of a patent un-
der section 281 of title 35, United States Code, re-
lating to a [CBMR] 5 proceeding for that patent, the
court shall decide whether to enter a stay . . . .
(2) REVIEW.—A party may take an immediate in-
terlocutory appeal from a district court’s decision
under paragraph (1). The United States Court of
Appeals for the Federal Circuit shall review the
district court’s decision to ensure consistent appli-
cation of established precedent, and such review
may be de novo.
AIA § 18(b) (emphases added). In other words, we have
jurisdiction over an immediate interlocutory appeal from
a district court’s decision on a motion to stay “relating to a
[CBMR] proceeding for that patent.” Id. § 18(b)(1).
Because the district court’s order on JPMC’s motion to
stay considered two CBMR petitions pending before the
PTAB, we must decide whether the proper interpretation
of CBMR “proceeding” in § 18(b)(2) encompasses pending
5 Section 18 of the AIA is entitled “Transitional
Program for Covered Business Method Patents.” Based
on this title, the AIA refers to CBMR proceedings as
“transitional proceedings.” For consistency, we will
replace “transitional” with “CBMR.”
8 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
CBMR petitions on which the PTAB has not yet acted. 6
IV contends that a CBMR proceeding does not begin until
the PTAB institutes a review in response to a CBMR
petition. JPMC, on the other hand, argues that a CBMR
proceeding begins as soon a party files a CBMR petition.
In previous appeals where this court exercised jurisdiction
over an interlocutory appeal under § 18(b)(2) of the AIA,
the PTAB already had granted CBMR petitions and
instituted CBM reviews. See, e.g., VirtualAgility, 759
F.3d 1307. This is, therefore, an issue of first impression.
Our first step in construing the statute is to look to
the language of the AIA. Robinson v. Shell Oil Co., 519
U.S. 337, 340 (1997) (“Our first step in interpreting a
statute is to determine whether the language at issue has
a plain and unambiguous meaning with regard to the
particular dispute in the case.”). The AIA differentiates
between a petition for a CBMR proceeding (which a party
files) and the act of instituting such a proceeding (which
the Director is authorized to do). For instance, AIA
§ 18(a)(1)(B) refers to when a person may file a “petition
for a [CBMR] proceeding,” which suggests that a petition
is a request for a CBMR proceeding, not that the petition
itself is part of the proceeding. Section 18(a)(3)(B) uses
similar language—referring to “any petition for a [CBMR]
proceeding”—again suggesting that the petition is a
request that a proceeding be instituted, not that the
petition itself institutes a proceeding. Comparing this
6 While, as noted, no CBMR petitions were pending
as of the filing of the motion to stay, it is permissible for
the district court to consider the circumstances that exist
as of the court’s ruling on the motion before it. See Virtu-
alAgility, 759 F.3d at 1317 n.6. That is what the district
court did here, and the developments between the time of
the application for a stay and the court’s order denying
the application are part of the record before us on review.
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO. 9
language with that in § 18(a)(1)(E), which states that
“[t]he Director may institute a [CBMR] proceeding only
for a patent that is a covered business method patent,” is
telling. Because the Director decides whether to “insti-
tute,” or begin, a CBMR proceeding, and necessarily bases
that decision on the strength of the petition, the petition
itself cannot substitute for the exercise of the Director’s
discretion.
This interpretation is consistent with the use of “pro-
ceeding” in Chapter 32 of Title 35, which covers post-
grant reviews generally and to which § 18(a) expressly
refers. E.g., 35 U.S.C. § 325(d) (“In determining whether
to institute or order a proceeding under this chapter, . . .
the Director may take into account whether, and reject the
petition or request because, the same or substantially the
same prior art or arguments previously were presented to
the Office.” (emphases added)); § 326 (setting forth guide-
lines for discovery and oral argument for proceedings);
§ 327 (providing for termination of the proceeding if the
parties settle, “unless the Office has decided the merits of
the proceeding before the request for termination is
filed”). The uses of proceeding in the post-grant review
sections reinforce the distinction between a petition and a
proceeding, and indicate that the Director decides wheth-
er to “institute or order” a proceeding based on a party’s
“petition or request.” Id. § 325(d). The use of “proceed-
ing” in 35 U.S.C. § 135 for derivation proceedings is
likewise consistent with this interpretation. See, e.g., 35
U.S.C. § 135(a)(1) (“An applicant for patent may file a
petition with respect to an invention to institute a deriva-
tion proceeding in the Office.”).
The congressional record, while not terribly illuminat-
ing, supports a reading of § 18 which differentiates a
petition from the CBMR proceeding itself. See, e.g., 157
Cong. Rec. 3416–17 (2011) (statement of Sen. Schumer)
(“[CBMR] proceedings will only be instituted upon a high
up-front showing of likely invalidity. The proceeding is
10 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
limited to certain business method patents.” (emphasis
added)). Like the language in the statute, the legislative
history suggests that the CBMR proceedings will not
begin until the PTAB institutes the proceedings and the
PTAB will only institute a proceeding if a party’s petition
presents a “high up-front showing of likely invalidity.”
Id. 7 Senator Schumer added that, “[s]ince the denial of a
stay pending post-grant review under this amendment is
an extraordinary and extremely rare circumstance, the
filing of an interlocutory appeal should result in the stay
of proceedings in the district court pending appeal.” Id.
Because district courts would often deny a stay in the face
of a mere petition for CBMR—waiting to see what the
PTAB view of the merits of that petition are—that cir-
cumstance can hardly be the extraordinary and extremely
rare circumstance that Senator Schumer contemplated.
Indeed, in VirtualAgility, we said that “it [is] not error for
the district court to wait until the PTAB made its decision
7 Although the amici argues that the Senate codi-
fied the rationale in Broadcast Innovation, L.L.C. v.
Charter Communication Inc., No. 03-cv-2223, 2006 WL
1897165 (D. Colo. July 11, 2006)—which dealt with a stay
that was granted before the petition for a reexamination
was granted—the Senate only discussed the 4-part test
for whether a stay was appropriate from that opinion, not
when a motion for stay was eligible for interlocutory
appeal. See 157 Cong. Rec. 3416 (2011) (statement of Sen.
Schumer) (“Due to the low grant rates for stays in several
jurisdictions, this amendment instructs courts to apply
the four-factor test first announced in Broadcast Innova-
tion, L.L.C. v. Charter Communications when evaluating
motions to stay.”). The reference to the Broadcast Innova-
tion case for a different proposition does not override the
consistent use of the term “proceeding” in the statute and
elsewhere in the congressional record.
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
11
to institute CBM review before it ruled on the motion.” 8
759 F.3d at 1315. Similarly, when discussing the pro-
gram for covered business method patents, the House
Report on the bill that became the AIA anticipated that
“[a]ny party may request a stay of a civil action if a relat-
ed post-grant proceeding is granted.” H.R. Rep. No. 112-
98, at 54 (2011) (emphasis added).
This interpretation of the legislative history is con-
sistent with the apparent purpose behind taking the
unusual step of not only allowing interlocutory review of
this narrow class of trial court stay rulings, but allowing
for de novo review of the same. It was mainly for those
rare circumstances where a stay is denied even after the
PTAB has acted to institute a proceeding premised on a
showing of likely invalidity that Congress crafted an
exception to the final judgment rule and altered the
permissible standard of review. See AIA § 18(b)(2) (“The
United States Court of Appeals for the Federal Circuit
shall review the district court’s decision to ensure con-
sistent application of established precedent, and such
review may be de novo.”).
Because the language of the statutory scheme consist-
ently defines “proceeding” as beginning when the PTAB
institutes review, we adopt that interpretation. Robinson,
519 U.S. at 340 (“Our inquiry must cease if the statutory
language is unambiguous and the ‘statutory scheme is
coherent and consistent.’” (quoting United States v. Ron
Pair Enters., Inc., 489 U.S. 235, 240 (1989))). This narrow
8 If the dissent were correct that the automatic stay
provision applies to all petitions, an accused infringer
could immediately bring a halt to a case, regardless of the
merits of its challenge to the patent, by filing a CBMR
petition as soon as the patentee brings suit. We decline to
believe that is what either Senator Schumer or Congress
had in mind.
12 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
reading of the statute, moreover, is consistent with Su-
preme Court precedent counseling us to interpret narrow-
ly exceptions to the final judgment rule that expand the
scope of our jurisdiction and warning against review of
rulings that are never truly final. None of the non-
statutory arguments by JPMC and the amici persuade us
to depart from the interpretation the statute itself dic-
tates.
One such non-statutory argument is that the U.S. Pa-
tent and Trademark Office (“PTO”) has defined “proceed-
ing” more broadly in its regulations. See 37 C.F.R. § 42.2;
77 Fed. Reg. 48756. The PTO’s interpretation, however,
is trumped by the clear language of the AIA. See 35
U.S.C. § 2(b)(2) (“[The PTO] may establish regulations,
not inconsistent with law . . . .” (emphasis added)). The
PTO’s own regulations are inconsistent on this point,
moreover. Compare 37 C.F.R. § 42.2 (“Preliminary Pro-
ceeding begins with the filing of a petition for instituting
a trial and ends with a written decision as to whether a
trial will be instituted. Proceeding means a trial or
preliminary proceeding.”) with 37 C.F.R. § 42.101(b) (“The
petition requesting the proceeding . . . .” (emphasis added))
and 77 Fed. Reg. 48756 at 48765 (“[T]he Director may
institute a proceeding where a petitioner meets the
threshold standards.” (emphasis added)) and id. (stating
that “the Board may decline to institute a proceeding”
under certain circumstances). 9 Additionally, although we
9 Indeed, the PTO’s compliance with the timelines
dictated by the AIA is measured by reference to the date
on which a petition is granted and proceedings are insti-
tuted. 35 U.S.C. § 326(a)(11). If a proceeding actually
began with the filing of the petition, the PTO’s regula-
tions would seem to be in direct conflict with the congres-
sional record. Compare 37 C.F.R. § 42.300(c) (“A covered
business method patent review proceeding shall be ad-
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
13
may give deference to the PTO with respect to procedural
rules of conduct before the PTO itself, we see no reason to
afford deference to an agency’s interpretation to the
extent it purports to define the scope of an Article III
court’s appellate jurisdiction. Cf. Cooper Techs. Co. v.
Dudas, 536 F.3d 1330, 1335–36 (Fed. Cir. 2008) (explain-
ing that the PTO is authorized to establish “procedural”
rules, but cannot establish a “substantive” rule that
“‘effects a change in existing law or policy’ which ‘affect[s]
individual rights and obligations.’” (quoting Animal Legal
Def. Fund v. Quigg, 932 F.2d 920, 927 (Fed. Cir. 1991))).
The fact that some district courts have relied on the
PTO’s definition or used the same broad interpretation of
proceeding, which appellant now urges, does not dictate
our construction of a statute that expands our jurisdic-
tion. Not only do these district court decisions not bind
us, but § 18(b)(2) does not create jurisdiction for district
courts; they already had the authority to consider motions
to stay litigation before them under their broad equitable
powers, regardless of the existence of a “proceeding”
before the PTAB. District courts are therefore not subject
to the same jurisdiction-expanding considerations as this
court in interpreting § 18(b)(2). See Digital Equip., 511
U.S. at 867–68. Importantly, moreover, our conclusion
that we do not have jurisdiction over an interlocutory
appeal before the PTAB grants a petition and institutes a
CBMR proceeding does not affect the district court’s
ability to exercise its discretion in deciding a motion to
stay at any time; i.e., our holding does not prevent a
district court from choosing to decide a motion before the
ministered such that pendency before the Board after
institution is normally no more than one year.” (emphasis
added)) with 157 Cong. Rec. 3417 (2011) (statement of
Sen. Schumer) (“And the proceeding will typically be
completed within 1 year.”).
14 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
PTAB acts on a CBMR petition. See VirtualAgility, 759
F.3d at 1316 (“While a motion to stay could be granted
even before the PTAB rules on a post-grant review peti-
tion, no doubt the case for a stay is stronger after post-
grant review has been instituted.”).
Our construction of “proceeding,” moreover, does not
create inconsistent rights of appeal for the patentee.
Though a patentee cannot file an immediate appeal if a
district court grants a motion to stay before the PTAB
institutes a proceeding, as noted above, the patentee
never had the right to an interlocutory appeal over such
interim, discretionary rulings. The patentee can, if ap-
propriate, seek a writ of mandamus from this court, as it
always has been authorized to do.
JPMC contends that—even if we accept the fact that a
CBMR proceeding does not commence until the Director
acts to institute such a proceeding—a petition for a pro-
ceeding, or even the anticipation of the filing of a petition,
is sufficiently related to a proceeding to give rise to juris-
diction under § 18(b)(2). This interpretation of “relating
to,” however, is inconsistent with the language in the AIA.
The AIA grants us jurisdiction over interlocutory appeals
“from a district court’s decision” “[i]f a party seeks a stay
of a civil action alleging infringement of a patent . . .
relating to a [CBMR] proceeding for that patent.”
§ 18(b)(1)–(2) (emphases added). Under the only fair
reading of the AIA, this means that we only have jurisdic-
tion under § 18(b)(2) if the party’s motion to stay is
“relat[ed] to” a CMBR proceeding. Absent the existence of
a proceeding, jurisdiction is not conferred upon us by
§ 18(b)(2).
JPMC asks us to read the statute as granting this
court jurisdiction over any interlocutory appeal from a
decision on a motion to stay where the motion is predicat-
ed on “anything that relates to” a CBMR proceeding, even
a future intention to file a petition. Oral Argument at
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
15
10:50, Intellectual Ventures II LLC v. JPMorgan Chase &
Co., 2014-1724, available at http://oralarguments.cafc.
uscourts.gov/default.aspx?fl=2014-1724.mp3. This argu-
ment, however, is premised on a grammatically unsound
reading of the AIA. As stated above, we only have juris-
diction over a decision on a motion to stay that is related
to an actual CBMR proceeding, not a decision on a motion
to stay that is related to anything that relates—however
remotely—to a hoped-for CBMR proceeding.
III. CONCLUSION
For the foregoing reasons, we do not have jurisdiction
under § 18(b)(2) of the AIA to consider an interlocutory
appeal from a decision on a motion to stay until the PTAB
institutes a CBMR proceeding. We, therefore, dismiss
this appeal for lack of jurisdiction.
DISMISSED
United States Court of Appeals
for the Federal Circuit
______________________
INTELLECTUAL VENTURES II LLC,
Plaintiff-Appellee
v.
JPMORGAN CHASE & CO., JPMORGAN CHASE
BANK, NATIONAL ASSOCIATION, CHASE BANK
USA, NATIONAL ASSOCIATION, CHASE
PAYMENTECH SOLUTIONS, LLC,
PAYMENTECH LLC,
Defendants-Appellants
______________________
2014-1724
______________________
Appeal from the United States District Court for the
Southern District of New York in No. 1:13-cv-03777-AKH,
Judge Alvin K. Hellerstein.
______________________
HUGHES, Circuit Judge, dissenting.
The America Invents Act (AIA), Pub. L. No. 112-29,
125 Stat. 284 (2011), created a new transitional procedure
to challenge the validity of covered business method
(CBM) patents before the United States Patent and
Trademark Office. The AIA also permits parties to seek
stays of related district court litigation while CBM chal-
lenges are pending. See id. § 18. And to ensure uniform-
ity in stay decisions, the AIA gave this court the authority
2 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
to immediately review the district court’s grant or denial
of a stay. The majority improperly limits our review
authority to only stay decisions predicated on an already
instituted CBM proceeding. Because the majority’s
conclusion relies on an overly narrow textual analysis and
is at odds with the overall purpose of the AIA and the
specific purpose of the CBM procedure, I respectfully
dissent.
The AIA was “designed to establish a more efficient
and streamlined patent system that will improve patent
quality and limit unnecessary and counterproductive
litigation costs.” H.R. Rep. No. 112-98, pt. 1, at 40 (2011).
To these ends, Congress considered and enacted § 18, “one
of the [AIA’s] most important reforms,” to “crackdown on
low-quality business[-]method patents.” 157 Cong. Rec.
9952 (2011) (remarks of Rep. Grimm). According to
Congress, litigation over CBM patents placed a “substan-
tial burden” on the courts and the economy. 157 Cong.
Rec. 3416 (2011) (remarks of Sen. Schumer). Because
Congress sought to curb this litigation and the associated
costs, an explicit goal of the new program under § 18 was
to provide a cheaper, faster administrative alternative for
reviewing business method patents. Id. Indeed, Congress
repeatedly indicated that the program should be used
“instead of, rather than in addition to, civil litigation.”
Id.; see also 157 Cong. Rec. 2710 (2011) (remarks of Sen.
Hatch); 157 Cong. Rec. 3432–33 (2011) (remarks of Sen.
Kyl); 157 Cong. Rec. S5436–37 (daily ed. Sept. 8, 2011)
(remarks of Sen. Schumer).
To preserve the benefits of this alternative, § 18 au-
thorizes a stay of related district court proceedings, and
Congress intended stays to be granted in all but the
rarest of circumstances. 157 Cong. Rec. 3417 (2011)
(remarks of Sen. Schumer). It believed that “[t]oo many
district courts [were] content to allow litigation to grind
on while a reexamination [was] being conducted, forcing
the parties to fight in two fora at the same time.” Id. at
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO. 3
3416. That state of affairs was “unacceptable, and . . .
contrary to the fundamental purpose of [§ 18] to provide a
cost efficient alternative to litigation.” Id. at 2417. To
ensure consistent and rigorous application of the stay
provisions, § 18 allows for parties, “as of right, to have the
Federal Circuit closely review” a district court’s decision
on a request for a stay of a civil action relating to a transi-
tional proceeding. Id. Section 18 provides an “automatic
right to an interlocutory appeal,” which the district court
need not certify under 28 U.S.C. § 1292(b). Id. Congress
made clear that “the Federal Circuit may not decline to
hear an interlocutory appeal.” Id.Section 18(b)(1) of the AIA limits the stay provisions
in that section to infringement actions “relating to a
transitional proceeding.” The majority reads the phrase,
“relating to a transitional proceeding,” as confining the
district court’s authority to stay a case under § 18 to
instances where the Patent Office has already instituted a
CBM review, and thus confines our review authority in
§ 18(b)(2) to the same circumstances. The majority pro-
vides a reasonable textual analysis for its conclusion. But
given the overall purpose and legislative history of the
AIA and § 18, I do not believe that Congress had any
intent to so limit our jurisdiction by its choice of that
specific statutory language. Rather, I read the stay
provision in § 18(b)(1) as more broadly authorizing dis-
trict courts to stay a case based on a CBM review at any
stage in the CBM process, and consequently our review
extends to stay decisions issued at any stage in the CBM
process.
The majority’s purely textual analysis cannot be
squared with the overall legislative purpose of the AIA
and § 18. The meaning of statutory language “may vary
to meet the purposes of the law, to be arrived at by a
consideration of the language in which those purposes are
expressed, and of the circumstances under which the
language was employed.” Yates v. United States, 135 S.
4 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
Ct. 1074, 1082 (2015) (quoting Atl. Cleaners & Dyers v.
United States, 286 U.S. 427, 433 (1932)). Congress re-
peatedly stated its paramount goal of having § 18 serve as
a cheaper, faster alternative to be used instead of—rather
than in addition to—litigation in district court. If we
decline to review stay decisions before CBM review is
instituted, parties inevitably will be forced to simultane-
ously litigate in district court and at the Patent Office.
This is inconsistent with the purpose of § 18. Further, if
the petition is ultimately granted, the expenses incurred
at the district court from the time the petition was filed to
the time a subsequent stay request is granted become the
kind of “unnecessary and counterproductive litigation
costs” Congress sought to avoid. H.R. Rep. No. 112-98, pt.
1, at 40 (2011). Given the clearly expressed purpose of
§ 18 proceedings, Congress could not have intended to
create an exception for interlocutory orders, but then limit
our jurisdiction by way of the majority’s distinction be-
tween instituted proceedings and those where a petition
has been filed.
The majority’s decision is also inconsistent with Con-
gress’s desire for uniformity in stay decisions. As the
majority recognizes, and as we have previously held,
district courts may grant stays for CBM proceedings at
any time and are not precluded from granting a stay
based on the filing of a petition. See VirtualAgility Inc. v.
Salesforce.com, Inc., 759 F.3d 1307, 1316 (Fed. Cir. 2014).
Indeed, we have expressly noted the district court’s wide
latitude in the timing of these stay decisions. Id. (“[A]
motion to stay could be granted even before the PTAB
rules on a post-grant review petition . . . .”). If that is the
case, then we are left with a situation where district
courts could make stay decisions prior to institution that
are unreviewable. And therefore we could not ensure the
uniformity that Congress so clearly intended for such
decisions.
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO. 5
Although it is true, as the majority notes, that the
Supreme Court has stated that exceptions to the final
judgment rule within 28 U.S.C. § 1291 are to be construed
narrowly, I do not find that principle particularly relevant
here. Congress expressly granted a right to interlocutory
appeal in § 18(b)(2) that on its face is not limited. And to
read § 18(b)(1) in such a way as to infer a limitation is not
consistent with Congressional intent. Congress explicitly
intended to allow litigants to circumvent the interlocutory
appeal provisions of 28 U.S.C. § 1292(b) by invoking § 18.
See 157 Cong. Rec. 3417 (2011) (remarks of Sen. Schumer)
(“[T]he district court does not need to certify the appeal in
writing, as it would ordinarily need to do under 28 U.S.C.
§ 1292(b). Also, unlike the discretion typically afforded an
appellate court under 28 U.S.C. §1292(b), under this
amendment the Federal Circuit may not decline to hear
an interlocutory appeal.”). When read in the context of
the surrounding legislative history, this strongly suggests
that Congress sought to have district court litigation
“disrupted by interlocutory review” and subject to the
“premature demise” the Supreme Court has been con-
cerned with when considering interlocutory appeals.
Coopers & Lybrand v. Livesay, 437 U.S. 463, 474 (1978).
The result of the majority’s interpretation is a curious
parsing of the statute. It creates a needlessly complicated
regime that divides CBM stay decisions and our review
authority into two categories: § 18(b)(1) stays, which can
only occur after a CBM proceeding has been instituted;
and stays based on the district court’s inherent stay
power for any stay requested between the filing of a
petition for CBM review and the formal institution of a
CBM proceeding. And apparently this is true even if the
district court’s decision is expressly based on the filing of
a petition and expressly weighs the § 18(b)(1) factors.
Without something more explicit in the statute, I can-
not believe Congress intended this result. The majority
would seemingly require Congress to explicitly reference
6 INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO.
the petition stage of the CBM proceeding for it to be
covered under § 18(b)(1) and thus for us to have jurisdic-
tion under § 18(b)(2). I do not believe that is correct.
Rather, the more natural reading of § 18(b) is a specific
authorization of district courts to consider stay requests
relating to CBM challenges based on the stay factors
identified in § 18, regardless of whether the Patent Office
has actually instituted a CBM proceeding. Indeed, the
stay factors in § 18(b)(1) are drawn from a case in which a
district court was considering a stay at the petition stage
for a similar proceeding. See 157 Cong. Rec. 3416 (2011)
(remarks of Sen. Schumer) (“this amendment instructs
courts to apply the four-factor test first announced in
[Broadcast Innovation, L.L.C. v. Charter Communications
Inc., No. 03-cv-2223, 2006 WL 1897165 (D. Col. July 11,
2006)] when evaluating stay motions”). And that is
exactly how most district courts have been applying § 18,
which, perhaps not coincidentally, also furthers the
uniformity of stay decisions in cases where CBM patents
may be at issue. See, e.g., buySAFE, Inc. v. Google, Inc.,
No. 3:13CV781-HEH, 2014 WL 2714137, at *3 (E.D. Va.
June 16, 2014); Market-Alerts Pty. Ltd. v. Bloomberg Fin.
L.P., 922 F. Supp. 2d 486, 490 n.5 (D. Del. 2013). The
majority’s more complicated, two-standard regime con-
flicts with the AIA’s overall purpose of establishing a
more efficient and streamlined patent system.
Further, the majority’s distinction between pre- and
post-CBM review institution decisions may create anoma-
lous situations. If our jurisdiction is determined by
whether the Patent Office has instituted CBM review, it
is not clear how or even whether we should handle “hy-
brid” cases where a stay motion is predicated on one
patent for which CBM review has been instituted and
another patent for which a petition for CBM review is
pending. Presumably we would possess jurisdiction
because the stay decision is predicated on at least one
instituted CBM proceeding, but that raises even further
INTELLECTUAL VENTURES II LLC v. JPMORGAN CHASE & CO. 7
questions about how our review should proceed. If the
district court’s decision is based on not only the instituted
proceeding, but also a pending petition or petitions, can
we consider those pending petitions in reviewing the
propriety of the stay decision? If the majority is correct
that the district court’s authority to stay cases under
§ 18(b)(1) only extends to instituted proceedings and our
jurisdiction is coextensive to that, then what would be the
basis for our review of the decision at least so far as it
extends to pre-institution proceedings? And the majori-
ty’s decision makes it less clear how or whether a party,
the district court, or this court is to handle reconsidera-
tion of a stay which was granted before CBM review is
instituted, after the Patent Office has instituted CBM
review. To be sure, the majority’s decision will not fur-
ther the establishment of a “more efficient and stream-
lined patent system.”
Finally, it is inconsistent to hold that a party request-
ing a stay has the benefit of our review only after CBM
review is instituted, while a party requesting a stay
before that time does not, even though significant fac-
tors—e.g., expenditure of the court’s and the parties’
resources—favor a stay more so in the latter situation.
Given these practical considerations and the difficulty in
applying the majority’s rule, and without any convincing
congressional intent to so limit our review authority, I
conclude that we have jurisdiction over any stay decision
related to a CBM proceeding, regardless of whether the
stay request was filed at the petition stage or after insti-
tution.
I would find that we possess jurisdiction to review the
district court’s denial of the stay. And on the merits, I
would affirm the district court’s decision.
Accordingly, I respectfully dissent.