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Versata Software, Inc. v. Callidus Software, Inc.

United States Court of Appeals, Federal Circuit

November 20, 2014

VERSATA SOFTWARE, INC., VERSATA DEVELOPMENT GROUP, INC., AND VERSATA, INC., Plaintiffs-Appellees,
v.
CALLIDUS SOFTWARE, INC., Defendant-Appellant

Appeal from the United States District Court for the District of Delaware in No. 1:12-cv-00931-SLR, Judge Sue L. Robinson.

CONOR M. CIVINS, Bracewell & Giuliani LLP, of Austin, Texas, argued for plaintiffs-appellees. With him on the brief were MICHAEL CHIBIB and BRIAN C. NASH.

DEBORAH E. FISHMAN, Dickstein Shapiro, LLP, of Palo Alto, California, argued for defendant-appellant. With her on the brief were ASSAD H. RAJANI and MICHAEL S. TONKINSON.

Before CHEN, MAYER, and LINN, Circuit Judges.

OPINION

Page 1369

Chen, Circuit Judge.

Callidus Software Inc. appeals from the district court's denial of a stay pending the United States Patent and Trademark Office's (Patent Office) covered business method review of the patents-in-suit. For the reasons set forth below, we reverse and remand with instructions to stay the action.

Page 1370

Background

Versata Software, Inc., Versata Development Group, Inc., and Versata, Inc. (collectively, Versata) brought suit against Callidus on July 19, 2012, alleging infringement of U.S. Patent Nos. 7,904,326 (the '326 patent); 7,908,304 (the '304 patent); and 7,958,024 (the '024 patent). The asserted patents each concern the management and tracking of sales information by a financial services company.

In September 2012, Callidus filed a motion to transfer the case from the District of Delaware to the Northern District of California and a separate motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). In May 2013, seven months after briefing on these motions had concluded,[1] the district court issued orders denying both.

Shortly thereafter, Callidus answered the complaint and counterclaimed, asserting three of its own patents against Versata. It informed Versata that it would file petitions for post-grant review of Versata's asserted patents at the Patent Office under the Transitional Program for Covered Business Method (CBM) Patents. See America Invents Act (AIA), Pub. L. No. 112-29, § 18, 125 Stat. 284, 329-31 (2011). In early August 2013, Callidus also informed the district court that it intended to file CBM petitions and to seek a stay of all proceedings in the litigation pending the Patent Office's resolution of those petitions. Later that month, Callidus filed a first set of CBM petitions with the Patent Office challenging every claim of the '326 patent, every independent claim of the '024 and '304 patents, and several dependent claims of those two patents, all under 35 U.S.C. § 101. At that time, Versata had not yet identified its asserted claims in the litigation. Callidus simultaneously sought a stay of the district court proceedings.

The district court declined to consider a stay until the Patent Trial and Appeal Board (PTAB) had made a decision to institute CBM review. It set a Markman hearing for June 2015, and scheduled trial for October 2015. In the interim, Versata identified its asserted claims in December 2013, some of which were dependent claims of the '024 and '304 patents that Callidus had not included in its first set of CBM petitions.

On March 4, 2014, the PTAB instituted CBM review for each patent, finding each challenged claim more likely than not directed to unpatentable subject matter under § 101. See Callidus Software, Inc. v. Versata Software, Inc., Nos. CBM2013-00052, CBM2013-00053, CBM2013-00054 (P.T.A.B. Mar. 4, 2014) (decisions instituting CBM review). Callidus renewed its motion to stay the district court proceedings. In April 2014, Callidus also prepared and filed a second set of CBM petitions, challenging the validity of all of the remaining claims of the '024 and '304 patents under § 101 that Callidus had not raised in the first set of CBM petitions.

On May 8, 2014, two months after the PTAB instituted CBM review for the first set of petitions, the district court granted a stay as to the '326 patent but denied it as to the '024 and '304 patents. Callidus filed an interlocutory appeal from the district court's denial of the stay in part.

During the pending appeal, the PTAB instituted CBM review of Callidus's second set of petitions, finding every remaining claim of the '024 and '304 patents more likely than not unpatentable under § 101. See Callidus Software, Inc. v. Versata Software, Inc., Nos. CBM2014-00117, CBM2014-00117 (P.T.A.B. Oct. 2, 2014)

Page 1371

(decisions instituting CBM review). We have jurisdiction over interlocutory appeals from decisions granting or denying stays pending CBM ...


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