During a time of economic uncertainty, patent infringement lawsuits may increase as patent owners seek to monetize their assets and protect their market share. For the defendant, the time and costs of defending in a patent lawsuit can add to a litany of challenges to conserve capital and maintain a strong balance sheet. Fortunately, Congress created inter partes review (“IPR”) for the purpose of providing a timely, cost-effective alternative to litigation. Strategically, IPR can provide grounds for staying parallel litigation, thereby buying some time for a litigant to reserve capital that would otherwise be expended in litigation. This strategy is not without obstacles, however, as IPR petitioners must convince the Patent Trial and Appeal Board (“PTAB”) to institute IPR under 35 USC § 314(a). This article provides a brief review of the standard for instituting IPR set forth in 35 USC § 314(a), as well as factors considered by the PTAB in deciding whether to grant or deny a petition to institute IPR.
Generally speaking, under 35 USC § 314(a), the PTAB may institute an IPR upon a showing of “a reasonable likelihood that the petitioner would prevail with respect to at least [one] of the claims challenged . . . .” Even if a petitioner satisfies 35 USC § 314(a), however, the PTAB may deny IPR, especially in circumstances in which a parallel district court proceeding is scheduled to conclude prior to the PTAB issuing a decision. See NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential, designated May 7, 2019). In deciding whether to deny IPR in such circumstances, the PTAB has considered whether efficiency, fairness, and the merits support denying IPR. See Illumina, Inc. v. Natera, Inc., IPR2019-01201, Paper 19 at 6 (PTAB Dec. 18, 2019). In Apple v. Fintiv, the PTAB provided that following factors relate to whether efficiency, fairness, and the merits support denying IPR:
- whether a stay has been or will likely be granted by the district court if a proceeding is instituted;
- proximity of the district court’s trial date to the PTAB’s projected statutory deadline for a final written decision;
- investment in the parallel proceeding by the district 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 PTAB’s exercise of discretion, including the merits.
IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020).
Existence or Likelihood of a District Court Stay: A district court stay of litigation pending resolution of IPR weighs strongly against denying IPR. Id. (citing Precision Planting, LLC v. Deere & Co., IPR2019-01052, Paper 19 at 10 (PTAB Jan. 7, 2020); Apotex Inc. v. UCB Biopharma Sprl, IPR2019-00400, Paper 17 at 31‒32 (PTAB July 15, 2019)). Even when a motion to stay has been denied, a district court’s dismissal of the motion to stay without prejudice and willingness to consider a renewed motion or reconsider a motion to stay in the event a PTAB trial is instituted weighs against denying IPR. Id. Factors relevant to deciding the weight given to the district court’s decision to reconsider a stay include the temporal proximity of the district court’s trial date and the time invested by the district court and the parties in the parallel district court proceeding. Id. (citing DMF, Inc. v. AMP Plus, Inc., Case No. 2-18-cv-07090 (C.D. Cal. July 12, 2019).
Proximity of the District Court’s Trial Date to the PTAB’s Projected Statutory Deadline: The PTAB has generally favored denying IPR when the district court’s trial date is earlier than the PTAB’s projected statutory deadline for rendering a final written decision. Id. If the district court’s trial date is on or after the projected statutory deadline, the decision of whether to institute will likely implicate other factors, such as the resources invested in the parallel district court proceeding. Id.
Investment in the Parallel Proceeding by the Court and Parties: Generally speaking, denial of IPR tends to be favored when substantive work has been completed by the parties and the district court in the parallel district court proceeding at the time of the institution decision. The rationale for this relationship is that the parallel district court proceeding is viewed as more advanced, the likelihood of a district court stay decreases, and instituting IPR would lead to duplicative costs. For example, denial tends to be favored if, at the time of the institution decision, the district court has issued claim construction orders or substantive orders related to the patent at issue in the petition. See E-One, Inc. v. Oshkosh Corp., IPR2019-00162, Paper 16 at 8, 13, 20 (PTAB June 5, 2019); See Next Caller, Inc. v. TRUSTID, Inc., IPR2019-00963, Paper 8 at 13 (PTAB Oct. 28, 2019); and Thermo Fisher Scientific, Inc. v. Regents of the Univ. of Cal., IPR2018-01370, Paper 11 at 26 (PTAB Feb. 7, 2019). Conversely, the absence of such orders at the time of the institution decision weighs against denying IPR. See Facebook, Inc. v. Search and Social Media Partners, LLC, IPR2018-01620, Paper 8 at 24 (PTAB Mar. 1, 2019); Amazon.com, Inc. v. CustomPlay, LLC, IPR2018-01496, Paper 12 at 8‒9 (PTAB Mar. 7, 2019).
Overlap Between Issues Raised in the Petition and the Parallel Proceeding: Denial of IPR has been favored when the claims, grounds, arguments, and evidence presented in the petition are identical or substantially identical to the claims, grounds, arguments, and evidence presented in the parallel district court proceeding. See Next Caller, IPR2019-00963, Paper 8 at 11‒12; ZTE (USA) Inc. v. Fractus, S.A., IPR2018-01451, Paper 12 at 20 (PTAB Feb. 19, 2019). In contrast, the inclusion of grounds, arguments, and/or evidence in the petition that are materially different than those presented in the parallel district court tends to weigh against denying IPR. See Facebook, Inc. v. BlackBerry Limited, IPR2019-00899, Paper 15 at 12 (PTAB Oct. 8, 2019); Chegg, Inc. v. NetSoc, LLC, IPR2019-01165, Paper 14 at 11– 12 (PTAB Dec. 5, 2019). Note, however, that challenging non-overlapping claims does not necessarily weigh against denying IPR; rather, non-overlapping claim challenges are weighed for or against denying IPR based on the similarity between the claims challenged in the petition and those at issue in the district court proceeding, See Next Caller, IPR2019-00961, Paper 10 at 14.
Whether the Petitioner and the Defendant in the Parallel Proceeding are the Same Party: In general, denial of IPR has not been favored when the petitioner is unrelated to the defendant in an earlier district court proceeding. See Nalox-1 Pharms., LLC. v. Opiant Pharms., Inc., IPR2019-00685, Paper 11 at 6 (PTAB Aug. 27, 2019). Nonetheless, even when the petitioner is unrelated to the defendant, denial may be favored when the petition includes issues that are identical or substantially similar to those that are at issue in the district court proceeding or other circumstances weigh against duplicating the work of another tribunal. See Stryker Corp. v. KFx Medical, LLC, IPR2019-00817, Paper 10 at 27‒ 28 (PTAB Sept. 16, 2019). In such circumstances, discussing the reason that addressing the same or substantially the same issues would not be duplicative of the prior matter may be persuasive in the PTAB’s consideration of whether to deny IPR. See Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020).
Merits and Other Circumstances: Particularly strong merits of a ground raised in the petition have been weighed in favor of instituting IPR. Illumina, IPR2019-01201, Paper 19 at 8 (PTAB Dec. 18, 2019); Facebook, Inc. v. BlackBerry Ltd., IPR2019-00925, Paper 15 at 27 (PTAB Oct. 16, 2019); Abbott Vascular, IPR2019-00882, Paper 11 at 29‒30; Comcast Cable Communications., LLC v. Rovi Guides, Inc., IPR2019-00231, Paper 14 at 11 (PTAB May 20, 2019). By contrast, when coupled with other facts favoring denial, weaker merits of the grounds raised in the petition have been weighed in favor of denying IPR. E-One, IPR2019-00162, Paper 16 at 8, 13, 20.
Another consideration is the timing of a petition to institute IPR, particularly when the petitioner is a defendant in the parallel district court proceeding. Although one year is provided, failure to expeditiously file the petition to institute IPR has supported denying IPR. For example, denial may be favored where the petitioner waits until the district court trial has progressed significantly before filing a petition to institute IPR. It is often considered reasonable, however, for the petitioner to wait until learning which claims are being asserted against it in the parallel district court proceeding before filing a petition. See 157 Cong. Rec. S5429 (Sept. 8, 2011) (S. Kyl).
This information is provided by Bailey & Company, Attorneys & Counselors, P.A. (“Bailey & Company”), solely for informational purposes. This information does not form, nor should it be construed to form, an attorney-client relationship, or any other fiduciary relationship, with Bailey & Company or any attorney, agent, or employee of Bailey & Company. For additional information about the topic of this article, contact Drew Bailey.