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  • Patent Trial And Appeal Board Awaits Ruling From Bankruptcy Court On Automatic-Stay Provision

    On February 1, 2018, the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office, faced with a motion to stay proceedings pending resolution of the patent owner’s bankruptcy filing, entered an order requiring further briefing and requiring the parties to report on the bankruptcy court’s view of whether the automatic-stay bankruptcy statute applies to inter partes review (IPR) proceedings.  Twitter, Inc. v. Youtoo Techs., LLC, case no. IPR2017-00829, paper no. 27. 

    Youtoo Techs., the patent owner, had moved the PTAB to stay four IPRs pending resolution of Youtoo’s bankruptcy filing, citing 11 U.S.C. § 362.  That section of the bankruptcy code provides, in part, that a bankruptcy filing “operates as a stay, applicable to all entities, of … the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title ….”  11 U.S.C. § 362(a)(1).  In its motion to stay the IPRs, Youtoo argued that IPRs are administrative proceedings against the patent owner, and so the stay provision should apply.  In its opposition, petitioner Twitter argued that IPRs are governmental proceedings concerning a public right, not actions concerning the private rights of the patent owner.

    The PTAB did not decide the issue; petitioner Twitter informed the PTAB that it would be filing a motion in the bankruptcy court seeking a determination that the automatic-stay provision does not apply, and it appears from its order that the PTAB is prepared to defer to the finding of the bankruptcy court. 

    The question of whether patent rights are private rights (as Youtoo’s motion suggests) or public rights (as Twitter argues) is one of the main themes of the debate in the Oil States case now pending and fully submitted in the United States Supreme Court.  The issue in Oil States is whether IPRs are permissible at all as a matter of constitutional law, but, based on the PTAB proceedings in Twitter v. Youtoo, it appears that another consequence of a Supreme Court finding that IPRs are constitutional may be that IPRs are not subject to the automatic-stay provision of the bankruptcy laws.  Although it may seem instinctive that an action to revoke a debtor’s patent rights should be subject to the same automatic-stay provisions as any other action against the debtor, practitioners will need to have this issue in mind when Oil States is decided, and follow the ongoing PTAB proceedings in Twitter v. Youtoo to see whether that instinct is correct.