Federal Circuit Has No Jurisdiction to Hear Interlocutory Appeal of Stay Decision Until PTAB Institutes CBMR Proceeding | Practical Law

Federal Circuit Has No Jurisdiction to Hear Interlocutory Appeal of Stay Decision Until PTAB Institutes CBMR Proceeding | Practical Law

In Intellectual Ventures II LLC v. JPMorgan Chase & Co., the US Court of Appeals for the Federal Circuit dismissed JPMorgan's appeal because it lacked jurisdiction to consider an interlocutory appeal from a decision on a motion to stay based on the filing of petitions to the US Patent Trial and Appeal Board (PTAB) to institute a covered business method review (CBMR) proceeding but before institution of such a proceeding.

Federal Circuit Has No Jurisdiction to Hear Interlocutory Appeal of Stay Decision Until PTAB Institutes CBMR Proceeding

by Practical Law Intellectual Property & Technology
Published on 02 Apr 2015 • USA (National/Federal)
In Intellectual Ventures II LLC v. JPMorgan Chase & Co., the US Court of Appeals for the Federal Circuit dismissed JPMorgan's appeal because it lacked jurisdiction to consider an interlocutory appeal from a decision on a motion to stay based on the filing of petitions to the US Patent Trial and Appeal Board (PTAB) to institute a covered business method review (CBMR) proceeding but before institution of such a proceeding.
On April 1, 2015, in Intellectual Ventures II LLC v. JPMorgan Chase & Co., the US Court of Appeals for the Federal Circuit dismissed JPMorgan Chase & Co.'s (JPMC) notice of appeal for lack of jurisdiction. The Federal Circuit held that Section 18 of the America Invents Act (AIA) did not grant it jurisdiction to hear an interlocutory appeal of a denial of a motion to stay in view of the filing of petitions to institute a covered business method review (CBMR) proceeding but before the institution of such a proceeding (No. 2014-1724, (Fed. Cir. Apr. 1, 2015)).
Intellectual Ventures II LLC sued JPMC in the US District Court for the Southern District of New York for infringing five of its patents. JPMC moved to stay those proceedings on the ground it intended to file petitions seeking CBMR concerning some of the patents. After JPMC filed two CBMR petitions but before the US Patent Trial and Appeal Board (PTAB) acted on them, the district court denied JPMC's motion to stay. JPMC appealed to the Federal Circuit and sought interlocutory review of the district court's ruling.
On appeal, the Federal Circuit dismissed JPMC's appeal because it lacked jurisdiction to review the district court's denial. The court noted that although it normally only has jurisdiction to review a district court's final decision, Section 18 of the AIA provides jurisdiction over an immediate interlocutory appeal from a district court's decision on a motion to stay in connection with a [CBMR] "proceeding" (AIA § 18). The court reviewed the statute to determine whether its jurisdiction over a [CBMR] "proceeding" as set out in Section 18(b)(2) included JPMC's two pending CBMR petitions, upon which the PTAB had not yet acted. It concluded that it did not because:
  • The statutory language of the AIA:
    • suggests that a petition for a CBMR proceeding is a request that a proceeding be instituted, not that the petition itself institutes a proceeding (AIA § 18); and
    • reinforces the distinction between a petition and proceeding when considering how "proceedings" is used in connection with post-grant reviews and derivation proceedings (35 USC §§ 135(a)(1) and 325(d)).
  • The legislative history supports differentiating a petition from the CBMR proceeding itself.
The court also noted that narrowly interpreting the AIA to distinguish between a petition and proceeding so that the Federal Circuit does not have jurisdiction over an interlocutory appeal before the PTAB grants a petition and institutes a CBMR proceeding is consistent with US Supreme Court precedent counseling the court to narrowly interpret exceptions to the final judgment rule.
Judge Hughes dissented arguing that the majority's conclusion relies on an overly narrow textual analysis and is at odds with:
  • The AIA's overall legislative purpose to have § 18 serve as a cheaper, faster alternative to litigation in district court.
  • The CBMR's specific purpose for uniformity in stay decisions.