By Elissa Sanford
On March 9, 2021, ALJ Lord issued Order No. 6 denying a motion to stay the investigation pending resolution of inter partes review and post-grant review proceedings filed by Respondents Ocado Group plc, Ocado Central Services Ltd., Ocado Innovation Ltd., Ocado Operating Ltd., Ocado Solutions, Ltd., Ocado Solutions USA Inc., Tharsus Group Ltd., and Printed Motor Works Ltd. (collectively, “Respondents”) in Certain Automated Storage and Retrieval Systems, Robots, and Components Thereof (Inv. No. 337-TA-1228).

By way of background, this investigation was instituted on November 2, 2020 based on a complaint filed by AutoStore Technology AS, AutoStore AS and AutoStore System Inc. (collectively, “AutoStore”). Between November 30, 2020 and January 18, 2021, Respondents filed four IPR petitions and one PGR petition with the PTAB requesting cancellation of all of the asserted patents and claims. In support of their motion to stay, Respondents asserted that in recent months, the PTAB has denied institution of 19 IPR petitions where the parallel ITC investigation was not stayed, and that "in many of those denials, the PTAB stated that it was denying institution because the petitioner had not sought a stay from the ITC." Respondents further argued that staying the instant investigation pending resolution of their IPR and PGR petitions would preserve resources, simplify the issues presented in the investigation, and possibly eliminate the need for an investigation entirely.

As a threshold matter, according to the Order, AutoStore’s opposition was rejected for failure to follow the ground rules. Specifically, the opposition contained no page numbers or the required footer after the first page bearing the investigation number and title of the document. ALJ Dee Lord emphasized that during a pre-hearing conference she urged compliance with the ground rules especially in light of the fact that the Office of Administrative Law Judges must view pleadings and exhibits entirely online due to the ITC’s COVID-19 Action plan. ALJ Lord noted that “[t]he rules exist to facilitate getting the work done faster and better. A degree of cooperation is expected, as stated in the initial telephone conference. That cooperation was lacking in this instance.”

In determining whether a stay is appropriate, the Commission traditionally weighs the following five factors: (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 state of the PTO proceedings; and (5) the efficient use of Commission resources.

The State of Discovery and the Hearing Date

ALJ Lord found that the first factor weighed against a stay, noting that a hearing date was set by her November 16, 2020 order, and that the parties are presently engaged in discovery, had exchanged claim constructions, and filed initial Markman briefs. In addition, the ALJ noted that the target date for completion of this investigation is March 7, 2022, that there is no evidence that the PTAB’s review would be completed any time before that date, and that the expectation is currently that the PTAB’s review would be completed at a later date. ALJ Lord also noted that it would be impossible to predict whether either the ITC or the PTAB would extend the relevant dates.

Simplification of the Issues

ALJ Lord found that the second factor also weighed against a stay, noting that although there is the potential for the issues in this investigation to be simplified by the PTAB’s rulings, there is also a possibility that at least some, if not all, of the patents and claims will survive the PTAB review, in which case the investigation would be simpler but significantly delayed.

Undue Prejudice or Clear Tactical Advantage

ALJ Lord found that the third factor does not weigh heavily one way or the other, stating:  "To be sure, it is disturbing to contemplate the very real prospect of a complainant rushing to the ITC to head off PTAB review, knowing that the PTAB will not institute proceedings if there is an ongoing ITC investigation. On the other hand, the very real prospect of a respondent running to the PTAB to delay a newly filed investigation at the ITC also is disturbing."

Stage of the PTAB Proceedings

ALJ Lord found that the fourth factor to also weighed against a stay. Respondents argued that they invested greater resources in the PTAB proceedings in connection with the IPR and PGR petitions, and further asserted that AutoStore would have the chance to submit preliminary responses no later than February and the PTAB will make its institution decisions beginning in May. However, ALJ Lord noted that this line of argument ignores the effort that has gone into discovery during the investigation, as well as the fact that AutoStore must spend considerable resources putting together a complaint that conforms to the Commission’s rules. The ALJ further noted that even though Respondents asserted that they filed petitions at the PTAB promptly after being sued at the ITC, and that AutoStore had notice of the potential infringement for two years before the investigation was filed, these facts still do not compel the conclusion that the investigation should be stayed.

Efficient Use of Commission Resources

ALJ Lord found the fifth factor also weighed against a stay. Respondents argued that Commission resources would be spent unnecessarily if the PTAB were to cancel the asserted claims soon after the target date. The Order suggested that to mitigate such a situation, the agencies could seek a memorandum of understanding regarding how to proceed when the PTAB decides to institute review of patents that are subject to Section 337 investigations. The Order also noted that a unilateral decision staying an investigation whenever a party files for PTAB review would often result in long delays of proceedings under Section 337 which is in opposition to the statutory requirement to proceed at “the earliest practicable time.” ALJ Lord stated that granting a stay whenever a respondent seeks PTAB review after being named in a Section 337 complaint would not conform with the statutory requirements.

Other Considerations

ALJ Lord also discussed the public interest, noting that Section 337 permits excluding infringing products from importation into the U.S. and that private parties have an interest in such exclusion, but that the public interest in protecting domestic industries from unfair competition from abroad dominates. The ALJ reasoned that delaying such protection to preserve Respondents’ resources cannot be approved routinely. ALJ Lord also observed that Congress did not intend that petitions filed at the PTAB should result in a stay at the ITC, stating that when Congress enacted the AIA, Congress legislated with the ITC in mind, so the absence of a stay provision cannot be considered an oversight. While the Congressional purpose of the AIA may be thwarted by the PTAB’s refusal to institute review whenever an ITC investigation is ongoing, ALJ Lord suggested that this would argue for an adjustment in PTAB practices, rather than a stay of the proceedings under Section 337.