The PTAB has discretion to deny inter partes review under 35 U.S.C. § 314(a). In a now-precedential decision—Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020)—the Board set forth six non-dispositive factors intended to guide that discretionary decision:

  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 Board’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; and
  6. other circumstances that impact the Board’s exercise of discretion, including the merits.

Earlier this week, the Board designated as informative two decisions that applied the Fintiv factors. These cases help clarify for practitioners how the Board may apply the factors in future cases.

Apple Inc. v. Fintiv Inc., IPR2020-00019, Paper 15 (PTAB May 13, 2020) (informative)

When Apple filed its petition for inter partes review of Fintiv’s patent, the parties had completed a case management conference in district court. A Markman hearing was scheduled, but trial was not. After the Markman hearing, the Board handed down its earlier, now-precedential decision and a trial date was scheduled. However, due to the COVID-19 pandemic, the trial date was reset.

Apple argued that the Board should not deny institution based on a parallel district court proceeding. Fintiv argued that the district court date is not dispositive and the Fintiv factors should be considered holistically. The Board noted that a parallel proceeding in an advanced state can serve as a basis to deny institution, independent of the Fintiv factors, but proceeded to consider the factors nonetheless.

Considering the second factor, the Board found that the jointly agreed-upon trial date, scheduled to occur two months before the statutory deadline for the PTAB’s Final Written Decision, weighed “somewhat” in favor of discretionary denial because the date was unlikely to be postponed again. The third factor also weighed in favor of denial, the Board found, because “much work remains in this case”—fact discovery was in its early stages, document production was just beginning, and substantive motion practice had yet to commence.

Addressing the fourth factor, the Board rejected Apple’s argument that, because its invalidity contentions in the district court contained more prior art than in the petition, the IPR should be instituted. Fintiv argued that Apple’s assertion of additional invalidity contentions in the district court case was irrelevant to the degree of overlap. The Board agreed, finding that Apple challenged identical claims on identical grounds, favoring denial.

The final factor, the merits of the case, did not tip the balance in the favor of petitioner, the Board found, because the patent owner pointed out that at least two of three independent claims were a close call. Fintiv identified a weakness in Apple’s challenge to one claim in explaining where the prior art discloses one step. Additionally, Fintiv argued that Apple failed to explain why another claim would be obvious.

On balance, the Board found that the factors weighed against institution. Thus, the Board exercised its discretion to deny institution under § 314 because it would be an inefficient use of Board resources.

Sand Revolution II, LLC. v. Continental Intermodal Group – Trucking LLC, IPR2019-01393, Paper 24 (PTAB June 16, 2020) (informative)

Sand Revolution filed a petition for inter partes review and a divided Board denied institution under 35 U.S.C. § 314(a). Sand Revolution II, IPR2019-01393, Paper 12 (PTAB Feb. 5, 2020). Sand Revolution then filed a Request for Rehearing. In light of new evidence, the Board reversed its previous decision.

In its rehearing request, Sand Revolution argued that the majority denied institution solely on the allegedly advanced stage of the parallel district court proceeding. Since the original denial of institution, Fintiv was issued and designated precedential. The Board thus ordered additional briefing on the Fintiv factors in relation to the uncertain and changing district court’s litigation trial schedule.

As to the first factor, neither party showed that a stay had been requested and the Board refused to attempt to predict how the district court litigation would proceed. Thus, the Board found the first factor to be neutral.

The second factor weighed “marginally” in favor of institution, the Board found, because the parties jointly moved to extend the scheduling order dates four times, the qualifier “or as available” was included for each calendared date, the currently scheduled trial was relatively close to the statutory deadline for the Final Written Decision, and the trial date was generally uncertain. The Board similarly found the third factor “weighs only marginally, if at all, in favor” of denying institution, because the district court produced only a two-page Markman Order and the district court’s remaining investment related to “ancillary matters untethered to the validity issue itself.”

The fourth factor, however, weighed slightly in favor of granting institution, the Board found. Although the patentability issues presented in the petition were a subset of the issues in the district court case, Sand Revolution stipulated that if institution were granted it would not pursue the same grounds in the district court litigation. Sand Revolution’s stipulation mitigated the Board’s concerns of duplicative efforts and potentially conflicting decisions.[i]

The Board found factor six to be in favor of granting institution—Sand Revolution made a sufficiently persuasive showing that the prior art references taught or suggested each limitation of most challenged claims.

A holistic view of the Fintiv factors, the Board found, weighed against invoking discretion to deny institution of Sand Revolution’s potentially meritorious petition. The Board thus instituted inter partes review.