By: Levent Hergüner and and Blaney Harper – In a recent order, the ITC denied a motion to stay after ALJ Bullock found that the balance of the Semiconductor Chips factors weighed against granting the motion. See In re Certain Memory Modules And Components Thereof, Inv. No. 337-TA-1089, Order No. 49 (April 11, 2019). Respondents SK hynix moved to stay the investigation pending resolution of inter partes review (“IPR”) proceedings against the asserted patents. In the alternative, Respondents moved to set the evidentiary hearing for a date after the conclusion of the IPRs.
After noting that the ITC has the power to stay Section 337 proceedings in the “appropriate circumstances,” ALJ Bullock determined that three of the five Semiconductor Chips factors supported denying Respondents’ motion.
To determine whether a stay is appropriate, the ITC considers the factors established in Certain Semiconductor Chips with Minimized Chip Package Size & Prods. Containing Same, Inv. No. 337-TA-605, Comm’n Op. at 3 (May 27, 2008). These factors include: (1) the state of discovery and the hearing date; (2) whether a stay will simplify the issues and hearing of the case; (3) the undue prejudice or clear tactical disadvantage to any party; (4) the stage of the PTO proceedings; and (5) the efficient use of Commission resources. Prior to applying these factors to the facts of this investigation, ALJ Bullock noted that stays are generally disfavored, in part, because Congress has mandated that Section 337 investigations be expeditiously adjudicated.
ALJ Bullock determined that a balance of the Semiconductor Chips factors did not support a stay. Particularly, he found that the first factor, “the state of discovery and the hearing date,” heavily weighed against a stay because the ITC investigation was in an advanced stage – discovery was concluded and the hearing had already begun on March 11, 2019. As a result, there were “nominal resources left to conserve.” ALJ Bullock also found that the third factor, “the undue prejudice or clear tactical disadvantage to any party,” heavily weighed against a stay because Section 337 relief is prospective only. He noted that delaying the hearing would deprive Complainant Netlist, Inc. of possible relief since the accused products would continue to be imported and sold unless any exclusion or cease and desist orders were issued. ALJ Bullock added that Respondents would not be prejudiced by denying a stay because the ITC has shown willingness to suspend the enforcement of any remedial orders pending final resolution of written decisions. ALJ Bullock further found that the fourth factor, “the stage of the PTO proceedings,” also weighed against a stay because Complainant indicated it would appeal the PTAB decision, which meant it was not reasonable to expect a decision from the Federal Circuit prior to the February 21, 2020 target date, as set by Order No. 48.
ALJ Bullock determined that only the second factor “whether a stay will simplify the issues and hearing of the case,” weighed in favor of a stay because a Federal Circuit decision upholding possible claim cancellations from the IPR would be dispositive. Additionally, ALJ Bullock acknowledged that records of IPR proceedings constitute intrinsic evidence to asserted patents, meaning a stay until the IPR record is fully developed could be warranted. Finally, ALJ Bullock noted that a failure to invalidate the claims would prevent Respondents from asserting the same invalidity grounds at the ITC. However, ALJ Bullock did not believe this second factor outweighed the other three. ALJ Bullock added that the fifth factor, “the efficient use of Commission resources,” did not weigh one way or the other. Accordingly, ALJ Bullock held that the balance of the factors did not support a stay, and denied Respondents’ motion.
This decision is a reminder of the factors that the ITC considers when determining whether a stay is appropriate in light of parallel IPR proceedings and the difficulty of obtaining such a stay. Parties should weigh the Semiconductor Chips factors when determining whether to request a stay in ITC proceedings. This decision highlights that a motion to stay has a higher likelihood of success if the ITC proceeding is in the earlier stages, while the parallel IPR proceeding is in a more advanced stage.