The PTAB Provides More Guidance on Denying Petitions with Parallel District Court Proceedings

December 23, 2020
Firm Publication

On December 17, the Patent Trial and Appeal Board (PTAB) designated as precedential two decisions concerning the PTAB’s discretion under 35 U.S.C. § 314(a) to deny institution of an inter partes review (IPR) when there is a parallel district court proceeding. The PTAB analyzes this issue using a set of factors—referred to as the Fintiv factors—which we have previously discussed here and here. Those factors include:

  1. Whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted.
  2. Proximity of the court’s trial date to the PTAB’s projected statutory deadline for a final written decision.
  3. Investment in the parallel proceeding by the court and the parties.
  4. Overlap between issues raised in the petition and in the parallel proceeding.
  5. Whether the petitioner and the defendant in the parallel proceeding are the same party.
  6. Other circumstances that impact the PTAB’s exercise of discretion, including the merits.

In both of the precedential decisions, the PTAB refused to use its discretion to deny institution. Although no single factor is determinative, in one case, the PTAB seemed persuaded by the district court granting a stay in the early stages of the litigation together with a lack of complete overlap between the invalidity contentions at the district court and the grounds in the IPR petition. And, in the other case, the PTAB seemed to emphasize the petitioner’s district court stipulation that if the IPR were instituted, they would not pursue any ground raised or which reasonably could have been raised in the IPR.

Snap, Inc. v. SRK Tech. LLC, Case IPR2020-00820, Paper 15 (P.T.A.B. Oct. 21, 2015) (precedential as to § II.A).

In Snap, the PTAB analyzed each Fintiv factor as follows:

Factors 1 and 2: Whether the court granted a stay and proximity of court’s trial date.

The PTAB found these factors weighed strongly against denying institution because the district court case was stayed. The PTAB was unconvinced by the patent owner’s argument that prior to the stay, the trial date was set for April 2021, and contended that “if the Petition is denied, it is likely that the trial court would ‘tighten up’ the dates and permit an expedient trial within ten months or less—a faster resolution than the 12 month period from institution to Final Written Decision pr[e]scribed by statu[t]e.”

Factor 3: Investment in the parallel proceeding by the court and the parties.

The PTAB found that this factor weighed against denying institution because the district court had not issued any orders related to the patent at issue, like Markman orders, and discovery was not yet complete. As part of this factor, the PTAB also considered the timing of when the petition was filed. Even though the petition was filed about one year after the district court litigation began, the PTAB held that the petition was filed neither expeditiously nor with delay because the petitioner only learned about the claims asserted at the district court approximately nine weeks before filing the petition and the petition was not filed close to any response by the patent owner to the invalidity contentions.

Factor 4: Overlap between the issues raised in the petition and in the parallel proceeding.

The PTAB found this factor to weigh against denying institution because of the stay granted at the district court and because the petition included materially different grounds in that three of the four references in the IPR were not used at the district court.

Factor 5: Whether the petitioner and defendant in the parallel proceeding are the same party.

The PTAB found that this factor weighed, at most, slightly in favor of denying institution because the petitioner and defendant were the same party.

Factor 6: Other circumstances and considerations that impact the Board’s exercise of discretion, including the merits.

The patent owner contended that denial was warranted because evidence of secondary considerations of nonobviousness could be better developed at the district court “where discovery is not subject to the limitations of PTAB practice.”  However, the PTAB was not persuaded by this argument. When weighing this factor, the PTAB also considered the merits, which the PTAB considered to be strong. The PTAB therefore considered this factor to weigh against denying institution.

After balancing all factors, the PTAB determined not to exercise its discretion to deny institution under § 314(a).

Sotera Wireless, Inc. v. Masimo Corp., Case IPR2020-01019, Paper 12 (P.T.A.B. Dec. 1, 2020) (precedential as to § II.A).

In this case, the PTAB weighed the Fintiv factors as follows:

Factor 1: Whether a stay exists or is likely to be granted if a proceeding is instituted.

Because the district court had not yet ruled on a pending stay motion, the PTAB determined this factor was neutral.

Factor 2: Proximity of the court’s trial date to the Board’s projected statutory deadline.

The PTAB also found this factor to be neutral because the district court trial was “scheduled to begin around the same time as [the PTAB’s] deadline to reach a decision.”

Factor 3: Investment in the parallel proceeding by the court and parties.

The PTAB found that this factor weighed against denying institution. The PTAB considered the progress at the district court and noted that the parties had served their respective infringement contentions and initial invalidity contentions, but that much work remained, including completing fact discovery and neither expert reports nor substantive motions were yet due.

The PTAB found the timing of the petition reasonable even though it was filed very close to the statutory deadline because the parties had spent six months discussing settlement and the petitioner needed to draft IPR petitions to challenge nine patents and 183 claims.

Factor 4: Overlap between issues raised in the petition and in the parallel proceeding.

The PTAB found this factor weighed against denying institution because the petitioner was challenging more claims in the IPR than in the district court and because the petitioner had stipulated in the district court that if the PTAB institutes the IPR, the petitioner would not pursue any ground raised or that could have been reasonably raised in the IPR.

Factor 5: Whether the petitioner and the defendant in the parallel proceeding are the same party.

The PTAB found that this factor weighed in favor of denying institution because the petitioner and the defendant were the same party.

Factor 6: Other circumstances and considerations that impact the Board’s exercise of discretion, including the merits.

The PTAB found that the petitioner had met its burden of demonstrating a reasonable likelihood that it would prevail in showing the challenged patent’s claims were unpatentable. As a result, the PTAB concluded this factor did not weigh for or against denying institution.

After taking a “holistic view of whether efficiency and integrity of the system are best served by denying or instituting review” under the Fintiv factors, the PTAB declined to exercise its discretion to deny institution under § 314(a).

Conclusion

Patent litigation defendants should carefully plan out their IPR-filing strategy to avoid the PTAB using its discretion to deny institution. The key to success is to file the petition as early as possible, before the district court invests significant resources, and to seek a stay. If it is not possible to file the petition early, then provide a reasonable explanation in the petition for the timing. Also, petitioners should make sure that the grounds used in the petition materially differ from the invalidity contentions at the district court. In fact, stipulating at the district court like the petitioner did in the Sotera case discussed above seems like a smart strategy.

If you have questions about what recent patent-related decisions mean for your business, please contact the authors.