May 14, 2020Client Alert

Discretionary Denial of IPR to be Determined by Balanced Assessment of Six Factors

In Apple Inc. v. Fintiv, Inc., IPR2020-00019, the Patent Trial and Appeal Board (PTAB) issued a precedential opinion that lists six factors that must be balanced to determine whether a PTAB panel should deny institution of a petition for inter partes review under 35 U.S.C. 314(a) based on the status of parallel district court litigation.

Apple filed an IPR petition challenging certain claims of a patent owned by Fintiv.  In its Preliminary Response, Fintiv relied on NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential, designated May 7, 2019), to request that the Board exercise its discretion under 35 U.S.C. § 314(a) to deny institution because the court presiding over related district court litigation had set a trial date before the projected deadline for a final written decision in the IPR.

The Board ruled that the advanced state of the parallel district court litigation is one of six factors that must be considered when determining whether to deny institution under 35 U.S.C. § 314(a).  Because a trial date had not been set at the time Apple filed its petition, the Board ordered the parties to file supplemental briefings presenting facts of this case relevant to the six factors. 

The first factor is whether the district court has granted a stay or evidence exists that one may be granted if a proceeding is instituted.  If a stay has been granted or will likely be granted, this factor tends to weigh in favor of institution.

The second factor is the proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision.  If the court’s trial date is earlier than the projected statutory deadline, the Board has weighed this factor in favor of denying institution, as in NHK.  If the court’s trial date is around the same time as the projected statutory deadline or even significantly after the projected statutory deadline, the decision whether to institute will implicate other factors.

The third factor is how much time the court and the parties have invested in the parallel proceeding.  Examples of such investment include claim construction and other substantive orders, which weigh in favor of denial of an IPR petition. The third factor also encompasses whether the petitioner filed the IPR petition promptly upon learning which claims would be asserted in the litigation.

The fourth factor is the overlap between issues raised in the petition and in the parallel proceeding.  If the petition includes the same or substantially the same claims, grounds, arguments, and evidence as presented in the parallel proceeding, this factor weighs in favor of denying institution.

The fifth factor is whether the petitioner and the defendant in the parallel proceeding are the same.  Generally, when a petitioner is unrelated to a defendant in a related court proceeding, this factor weighs against denying institution.  Even when a petitioner is unrelated to a defendant, however, if the issues are the same as or substantially similar to those in the litigation, the Board may exercise its authority to deny institution. 

The sixth factor is whether there are other circumstances that impact the Board’s discretion.  For example, the Board may consider the strengths and weaknesses of the grounds raised, factors unrelated to the parallel proceedings, parallel petitions on the same patent, and other considerations implicated by 35 U.S.C. § 325(d).

Ultimately, balancing these six factors enables the Board to determine whether efficiency, fairness, and the merits support the exercise of authority to deny institution in view of an earlier trial date in the parallel proceeding.

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