United States Court of Appeals
for the Federal Circuit
______________________
BENEFIT FUNDING SYSTEMS LLC AND
RETIREMENT CAPITAL ACCESS MANAGEMENT
COMPANY LLC,
Plaintiffs-Appellants,
v.
ADVANCE AMERICA CASH ADVANCE CENTERS
INC. AND CNU ONLINE HOLDINGS, LLC, formerly
known as Cash America Net Holdings, LLC,
Defendants-Appellees.
-----------------------
BENEFIT FUNDING SYSTEMS LLC AND
RETIREMENT CAPITAL ACCESS MANAGEMENT
COMPANY LLC,
Plaintiffs-Appellants,
v.
REGIONS FINANCIAL CORPORATION,
Defendant-Appellee.
-----------------------
BENEFIT FUNDING SYSTEMS LLC AND
RETIREMENT CAPITAL ACCESS MANAGEMENT
COMPANY LLC,
Plaintiffs-Appellants,
v.
2 BENEFIT FUNDING SYSTEMS v. ADVANCE AMERICA CASH
US BANCORP,
Defendant-Appellee.
______________________
2014-1122, -1124, -1125
______________________
Appeals from the United States District Court for the
District of Delaware in Nos. 1:12-CV-00801, 1:12-CV-
00802, and 1:12-CV-00803, Judge Leonard P. Stark.
______________________
Decided: September 25, 2014
______________________
CASEY L. GRIFFITH, Klemchuk Kubasta LLP, of Dal-
las, Texas, argued for appellants.
MATTHEW J. DOWD, Wiley Rein LLP, of Washington,
DC, argued for all defendants-appellees. With him on the
brief for U.S. Bancorp were ANTHONY H. SON and RYAN M.
CORBETT. On the brief for Regions Financial Corporation
were MEREDITH MARTIN ADDY, PAUL A. GENNARI, and
GRETCHEN P. MILLER, Steptoe & Johnson LLP, of Chicago,
Illinois. On the brief for Advance America, Cash Advance
Centers, Inc. were LEWIS S. WIENER, ANN G. FORT and
STEPHANIE G. STELLA, Sutherland Asbill & Brennan LLP,
of Atlanta, Georgia. On the brief for CNU Online Hold-
ings, LLC were JOHN A. LEJA and MARK T. DEMING,
Polsinelli PC, of Chicago, Illinois. Of counsel was
GRAHAM L.W. DAY, Of St. Louis, Missouri.
______________________
Before PROST, Chief Judge, LOURIE and HUGHES, Circuit
Judges.
BENEFIT FUNDING SYSTEMS v. ADVANCE AMERICA CASH 3
PROST, Chief Judge.
Appellants, Benefit Funding Systems LLC and Re-
tirement Capital Access Management Company LLC,
appeal from the district court’s stay of patent infringe-
ment litigation pending covered business method review
of the asserted claims. For the reasons set forth below,
we affirm the district court’s order staying the case.
BACKGROUND
Appellants sued Appellees, Advance America Cash
Advance Centers, Inc., Regions Financial Corporation,
CNU Online Holdings, and U.S. Bancorp, alleging that
they infringed U.S. Patent No. 6,625,582 (“’582 patent”).
The ’582 patent covers a “system and method for enabling
beneficiaries of retirement benefits to convert future
benefits into current resources to meet current financial
and other needs and objectives.” ’582 patent col. 8 ll. 35–
38.
About ten months into the litigation, U.S. Bancorp
filed a petition with the Patent Trial and Appeal Board
(“PTAB”) for post-grant review of the asserted claims
under the Transitional Program for Covered Business
Method Patents. See America Invents Act, Pub. L. No.
112-29, § 18, 125 Stat. 284, 329–31 (2011) (“AIA”). All
Appellees then filed motions to stay litigation pending
review. The district court denied those motions.
Subsequently, the PTAB instituted the requested cov-
ered business method (“CBM”) review on the sole basis of
subject matter eligibility under 35 U.S.C. § 101, holding
that “it is more likely than not that the challenged claims
are unpatentable.” U.S. Bancorp v. Ret. Capital Access
Mgmt. Co., No. CBM2013-00014, slip op. at 2 (P.T.A.B.
Sept. 20, 2013) (order instituting review). Appellees
renewed their motions to stay, and the district court
orally granted the motions. Appellants filed an interlocu-
4 BENEFIT FUNDING SYSTEMS v. ADVANCE AMERICA CASH
tory appeal and we have jurisdiction under Section 18(b)
of the AIA.
ANALYSIS
Section 18(b) of the AIA governs stays pending resolu-
tion of a CBM review. It identifies the following four
factors that a district court should consider when deciding
whether to grant a stay:
(A) whether a stay, or the denial thereof, will sim-
plify the issues in question and streamline the
trial;
(B) whether discovery is complete and whether a
trial date has been set;
(C) whether a stay, or the denial thereof, would
unduly prejudice the nonmoving party or present
a clear tactical advantage for the moving party;
and
(D) whether a stay, or the denial thereof, will re-
duce the burden of litigation on the parties and on
the court.
AIA § 18(b)(1).
The district court considered the above factors in
granting the motions to stay and concluded that “the
factors all strongly favor a stay.” Oral Argument Hearing
at 47, Benefit Funding Sys. LLC. v. Advance Am. Cash
Advance Ctrs., Inc., No. 1:12-cv-801 (D. Del. Oct. 25, 2013)
(“Hearing Transcript”). As to the first factor, the district
court determined that simplification of the issues was
likely. It noted that “all of the asserted claims are the
subject of the CBM review” and, given the PTAB’s conclu-
sion that the challenged claims are more likely than not
unpatentable, “[t]here is a likelihood then that all of the
asserted claims will be invalidated.” Id. at 41. The
district court also recognized that even if the PTAB finds
the claims directed to patentable subject matter, “this
BENEFIT FUNDING SYSTEMS v. ADVANCE AMERICA CASH 5
case will still be simplified as this Court will not have to
resolve the Section 101 defense.” Id. at 42.
As to the second factor, the district court pointed to
the fact that “[d]iscovery is not complete and the trial date
has not been set.” Id. at 43. Specifically, “[w]hile docu-
ment discovery may be substantially complete, no deposi-
tions have been taken, and we haven’t gotten to expert
discovery yet.” Id. According to the district court, “it’s
very likely that the CBM reviews would finish much
sooner than this case.” Id. The district court thus con-
cluded that the second factor also “strongly favors a stay.”
Id. at 44.
The district court found that the third factor also
strongly favors a stay. It noted that “[t]he plaintiffs do
not practice the patents and are not competitors of the
defendants.” Id. The district court pointed out that there
may be some tactical advantage for defendants in a PTAB
review, such as a reduced burden of proof concerning
validity, but noted that any such tactical advantage is “a
direct result of the statute.” Id. at 46. It also concluded
that any negative effects on Appellants’ licensing efforts
were “far more due to the PTAB’s decision to initiate a
CBM review than my decision today to stay the litiga-
tion.” Id. at 45.
As to the fourth factor, the district court noted that
the burden on the court would be reduced due to the likely
and substantial simplification resulting from the CBM
review. Id. at 46. And the burden on the parties would be
reduced because there would be no ongoing litigation
during the review, which would also be narrowly focused
on § 101 issues. Id. The district court concluded that this
factor also strongly favors a stay. Id. at 47.
6 BENEFIT FUNDING SYSTEMS v. ADVANCE AMERICA CASH
I. Standard of Review
Traditionally, we have reviewed district court deci-
sions on motions to stay pending U.S. Patent and Trade-
mark Office proceedings under the abuse of discretion
standard. VirtualAgility Inc. v. Salesforce.com, Inc., No.
2014-1232, 2014 WL 3360806, at *2 (Fed. Cir. July 10,
2014). The AIA, however, provides this court with the
authority to conduct more searching review of decisions to
stay pending CBM review. Specifically, the AIA provides
that this court “shall review the district court’s decision to
ensure consistent application of established precedent,
and such review may be de novo.” AIA § 18(b)(2).
II. Argument on Appeal
Appellants’ argument on appeal rests on the single
premise that the PTAB is not authorized to conduct CBM
review based on § 101 grounds. Consequently, according
to Appellants, the district court would not be bound by the
results of the CBM review and, as such, “the PTAB’s
review of the ’582 patent cannot simplify this case.”
Appellants’ Br. 5. Instead, in Appellants’ view, a stay will
unduly prejudice Appellants, present a clear tactical
advantage to Appellees, and increase—not decrease—the
burden of litigation.
Appellants raised essentially this same argument
with the district court, which found the argument unper-
suasive. Specifically, the district court acknowledged the
risk that “there is a definitive legal ruling that Section
101 is not a proper basis for a CBM review” and the CBM
review thus simplifies very little. Hearing Transcript at
42. Still, the district court concluded that “[such] risk is
relatively small and certainly is not big enough to cause
this first factor to disfavor a stay.” Id. at 43.
We also find Appellants’ argument unpersuasive. The
argument that § 101 cannot support CBM review is a
collateral attack similar to ones that we have recently
BENEFIT FUNDING SYSTEMS v. ADVANCE AMERICA CASH 7
held impermissible. Specifically, in VirtualAgility we held
that a district court should not “‘review’ the PTAB’s
determination that the [contested claims] are more likely
than not invalid in the posture of a ruling on a motion to
stay.” 2014 WL 3360806, at *5. Such review “amounts to
an improper collateral attack on the PTAB’s decision to
institute CBM review, and allowing it would create seri-
ous practical problems,” including “mini-trials” that would
“overwhelm and dramatically expand the nature of the
stay determination.” Id. Further, other similar collateral
attacks are also impermissible:
It would also be inappropriate for the district
court to evaluate the potential success of an APA
challenge to the PTAB’s determination that
the ’413 patent is a “covered business method pa-
tent” when analyzing whether CBM review will
simplify the issues and reduce the burdens on the
parties and the court. Like the district court’s va-
lidity analysis, this inquiry would amount to an
improper collateral attack on the PTAB’s decision
to institute CBM review.
Id. at *5 n.3. In short, “[t]he stay determination is not the
time or the place to review the PTAB’s decisions to insti-
tute a CBM proceeding.” Id. at *5.
Similarly, Appellants’ argument questioning the
PTAB’s authority to conduct the CBM review is also an
impermissible collateral attack. A district court, in the
context of a stay determination, need not and should not
analyze whether the PTAB might, at some later date, be
determined to have acted outside its authority in institut-
ing and conducting the CBM review. Such an analysis
would, among other things, be antithetical to the efficien-
cy goals of such a stay. This is not to say that a patent
owner could never attack the PTAB’s authority to conduct
CBM review. Indeed, Appellants might potentially chal-
lenge that authority in the context of a direct appeal of
8 BENEFIT FUNDING SYSTEMS v. ADVANCE AMERICA CASH
the PTAB’s final decision. 1 See 35 U.S.C. § 141(c) (“A
party to . . . a post-grant review who is dissatisfied with
the final written decision of the [PTAB] . . . may appeal
the [PTAB’s] decision only to the United States Court of
Appeals for the Federal Circuit.”). They simply cannot
mount such a challenge as a collateral attack in opposi-
tion to a stay. Having rejected Appellants’ argument as
an impermissible collateral attack, we do not address the
underlying merits of that attack, namely whether § 101 is
a valid ground for CBM review.
It is undisputed that CBM review was instituted and
that such review addresses whether the claims are di-
rected to patentable subject matter. If the claims are
ultimately determined to be directed to unpatentable
subject matter, “[t]his CBM review [will] dispose of the
entire litigation: the ultimate simplification of issues.”
VirtualAgility, 2014 WL 3360806, at *5. If, on the other
hand, the claims are determined to be directed to patent-
able subject matter, Appellees will be estopped from
challenging that determination in district court. 35
U.S.C. § 325(e)(2) (“The petitioner . . . may not assert . . .
in a civil action . . . that the claim is invalid on any
ground that the petitioner raised or reasonably could have
raised during that post-grant review.”); Hearing Tran-
script at 16–18, 42 (stipulations by non-petitioner Appel-
lees to be estopped from raising the issue in district
court). In the context of this case, where the only real
argument against a stay concerns the authority of the
PTAB to conduct the CBM review, those circumstances
are sufficient for the district court to conclude that the
1 On August 22, 2014, the PTAB issued its final de-
cision and held the contested claims “unpatentable under
35 U.S.C. § 101.” U.S. Bancorp v. Ret. Capital Access
Mgmt. Co., No. CBM2013-00014, slip op. at 21 (P.T.A.B.
Aug. 22, 2014).
BENEFIT FUNDING SYSTEMS v. ADVANCE AMERICA CASH 9
first and fourth factors favor staying the case. Further,
Appellants present no other basis for challenging the
conclusion that the second and third factors also favor a
stay.
Having rejected Appellants’ sole argument on appeal,
we conclude that the district court did not abuse its
discretion in granting the stay. Further, consistency with
established precedent was not at issue in this case and no
other compelling reason for a more searching review was
presented.
CONCLUSION
We conclude that the district court properly granted
the stay pending CBM review and therefore affirm.
AFFIRMED