## Facts

- Versata sued Callidus in the District of Delaware for infringement of three patents relating to software for managing and tracking sales information in financial services (U.S. Patent Nos. 7,904,326; 7,908,304; 7,958,024).
- Callidus moved to dismiss or transfer, filed infringement counterclaims, and petitioned the PTAB for covered business method (CBM) review under AIA § 18.
- The district court denied the motions to dismiss and transfer and initially declined to consider a stay until the PTAB decided whether to institute CBM review.
- The PTAB instituted CBM review for each patent and found the challenged claims “more likely than not” unpatentable.
- Callidus renewed its motion to stay all district court proceedings pending CBM review.
- The district court stayed litigation only as to the ’326 patent (where all claims were under CBM review) and denied a stay as to the ’024 and ’304 patents (where not all claims were challenged), concluding the AIA § 18(b) factors weighed against a broader stay.
- Callidus took an interlocutory appeal under AIA § 18(b)(2).
- After the Federal Circuit issued its merits opinion, it later determined the appeal had become moot before issuance because the parties had filed a joint, unconditional dismissal of the district court action; the Federal Circuit vacated its merits opinion and dismissed the appeal.

## Issues

1. Whether the district court abused its discretion in denying a stay of litigation on the ’024 and ’304 patents pending CBM review under the four AIA § 18(b)(1) stay factors.
2. What standard of review applies to a district court’s stay decision under AIA § 18(b).
3. Whether the Federal Circuit must vacate an opinion when the appeal became moot before the opinion issued due to the parties’ voluntary dismissal.

## Decision

- On the merits (later vacated), the Federal Circuit held the district court clearly erred in applying the AIA § 18(b) factors and abused its discretion by denying a stay as to the ’024 and ’304 patents.
- On the merits (later vacated), the Federal Circuit reversed and remanded with instructions to stay the entire district court action pending CBM review.
- In a later order, the Federal Circuit held the parties’ voluntary dismissal mooted the appeal before the merits opinion issued, vacated the opinion, and dismissed the appeal for lack of constitutional authority to decide a moot case.

## Legal Principles

- AIA § 18(b)(1) requires district courts to consider: (1) simplification of issues; (2) stage of litigation; (3) undue prejudice or tactical advantage; and (4) reduction of litigation burden when deciding whether to stay litigation pending CBM review.
- Stay rulings under AIA § 18(b) are reviewed for abuse of discretion; subsidiary factual findings are reviewed for clear error.
- On the vacated merits reasoning: PTAB institution decisions, including “more likely than not” unpatentability determinations, can strongly support a finding that CBM review will simplify district court litigation even if not every asserted claim is identically challenged.
- On the vacated merits reasoning: the “burden of litigation” factor is assessed prospectively by the extent to which a stay can reduce future discovery, motion practice, and trial proceedings, not by how much work has already occurred.
- If an appeal becomes moot before an appellate opinion is issued, the court must vacate the opinion and dismiss the appeal because federal courts may not decide moot cases.

## Conclusion

The Federal Circuit’s merits decision directed a broader stay of patent litigation pending CBM review under AIA § 18(b), emphasizing simplification and a forward-looking burden analysis, but the court later vacated that opinion and dismissed the appeal after concluding the parties’ voluntary dismissal rendered the case moot before the opinion issued.


Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368 (Fed. Cir. 2014)