The Patent Trial and Appeal Board (“Board”) recently designated two decisions as informative regarding discretionary denials of institution: Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, Paper 15 (May 13, 2020), and Sand Revolution II, LLC v. Continental Intermodal Group – Trucking LLC, Case IPR2019-01393, Paper 24 (June 16, 2020). These decisions show how the Board applied the Fintiv factors established in its recent Precedential Order to determine whether co-pending district court litigation should result in a discretionary denial of institution under AIA 35 U.S.C. § 314(a).
As we wrote about previously, the nonexclusive list of Fintiv factors are:
- whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
- proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision;
- investment in the parallel proceeding by the court and the parties;
- overlap between issues raised in the petition and in the parallel proceeding;
- whether the petitioner and the defendant in the parallel proceeding are the same party; and
- other circumstances that impact the Board’s exercise of discretion, including the merits.
In the Fintiv decision issued on May 13, the Board denied institution under § 314(a) after weighing the Fintiv factors and concluding that a trial would be an inefficient use of Board resources. Paper 15 at 17. The Board found that:
- Factor 1 did not weigh for or against discretionary denial because neither party requested a stay in the pending district court litigation. Id. at 12.
- Factor 2 weighed “somewhat in favor of discretionary denial” because the agreed trial date was two months before the Board’s deadline for a final decision. Id. at 13.
- Factor 3 weighed “somewhat in favor of discretionary denial” because although the district court invested and expended effort in resolving substantive issues in the case (e., claim construction was complete and the parties served final contentions), further effort would be expended on invalidity issues before trial (i.e., fact discovery was in early stages, document production was ongoing, expert reports were not yet due, and substantive motion practice was still to come). Id. at 13-14.
- Factor 4 weighed in favor of discretionary denial because the same claims and prior art were at issue in the petition and in district court. Id. at 15.
- Factor 5 weighed in factor of discretionary denial because the petitioner, and the defendant in the parallel district court proceeding were the same party. Id.
- Factor 6 weighed in favor of discretionary denial because the merits of petitioner’s challenges with respect to at least two out of three independent claims did not tip in favor of petitioner, in the Board’s preliminary assessment, with the Board noting that this factor does not require a full analysis of the merits. Id. at 15-17.
- Factor 1 did not weigh for or against discretionary denial because no stay had been requested or ordered in the pending district court litigation. Id. at 7.
- Factor 2 weighed against denying institution because it was unclear that the court would adhere to the current trial date, currently close to the final written decision deadline, because the district court already allowed the parties to extend the scheduling order several times. Id. at 9-10.
- Factor 3 weighed “marginally, if at all, in favor of exercising discretion” because the parties had not invested substantially in the merits of the invalidity positions and further effort remained to be expended in the district court case before trial. at 10-11. Although the parties completed claim construction and contention discovery, like the parties in Fintiv, the Board found the district court’s two-page claim construction Order “did not demonstrate the same high level of investment of time and resources” as the Fintiv court’s detailed 34-page claim construction Order. Id. at 10-11.
- Factor 4 “weigh[ed] marginally in favor of not exercising discretion to deny institution” because petitioner stipulated that if the IPR were instituted, it would “not pursue the same grounds in the district court litigation.” Id. at 11-12. The Board found that petitioner’s stipulation “mitigates to some degree the concerns of duplicative efforts between the district court and the Board, as well as concerns of potentially conflicting decisions.” Id. at 12. The Board noted that a broader stipulation, such as expressly waiving in the district court any overlapping patentability/invalidity defenses, would have “tipped this factor more conclusively in [petitioner’s] favor.” Id. at 12 n.5.
- Factor 5 weighed in favor of discretionary denial because the petitioner and the defendant in the parallel district court proceeding were the same party. Id. at 12-13.
- Factor 6 weighed in favor of not exercising discretion to deny institution because the Board found “Petitioner’s case [was] strong on most challenged claims.” Id. at 13 (quoting Fintiv, Paper 11 at 14-15 (“[I]f the merits of a ground raised in the petition seem particularly strong on the preliminary record, this fact has favored institution.”)).