PRECEDENTIAL: Trial Court Stay Weighs Strongly Against Fintiv Denial

by | Mar 5, 2021 | PTAB News, Trial Institution

By Jennifer Bachorik and Matt Johnson –

The USPTO designated Snap, Inc. v. SRK Tech. LLC, IPR2020-00820 (PTAB October 21, 2020) (Paper 15) (“Snap”) as precedential as to § II.A regarding its discretion under 35 U.S.C. § 314(a) to deny institution of inter partes review.  In Snap, the PTAB addressed the Fintiv factors, concluding that a district court stay that would remain in place until an inter partes review final written decision weighs strongly in favor of institution.

Snap, Inc. (“Petitioner”) filed a Petition to institute inter partes review of certain claims of U.S. Patent No. 9,930,159 B2 (“’159 Patent”), which is owned by SRK Technology LLC (“Patent Owner”) and relates to a computer implemented method and system for determining a communication mode for recording a media message on a communication device.  At the time of filing, a pending parallel district court proceeding, in which the ’159 Patent was the subject of litigation, was stayed.  See SRK Technology LLC v. Snap, Inc., Case No. 2:19-cv-02515-PSG–JPR (C.D. Cal) (“District Court proceeding”).  In response to the Petition, the Patent Owner argued that the PTAB should exercise its discretion to deny institution of inter partes review in view of the District Court proceeding.

The PTAB considered the following six Fintiv factors in determining whether to exercise its discretion under 35 U.S.C. § 314(a) to deny institution of an inter partes review in view of a parallel district court proceeding:

  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.

Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 at 5–6 (PTAB March 20, 2020) (precedential, designated May 5, 2020) (“Fintiv”).

In assessing the first Fintiv factor, the PTAB indicated that since a stay had been granted in the District Court proceeding, any concerns would be diminished regarding inefficiency and duplication of efforts should inter partes review be instituted.  Accordingly, the PTAB concluded that the first Fintiv factor weighed “strongly against exercising discretion to deny institution.”

Regarding the second Fintiv factor, the PTAB stated that the Patent Owner’s assertion that should institution be denied, the District Court proceeding would resume and trial would be held at or before the deadline for a final written decision, would amount to “unfounded speculation as to how the court might proceed.”  Thus, the PTAB concluded that the second Fintiv factor did not weigh in favor of exercising discretion to deny institution.

Next, the PTAB evaluated the third Fintiv factor, ultimately concluding that “the investment in the parallel proceeding by the court and the parties” weighed against exercising discretion to deny institution.  In doing so, the PTAB agreed with the Petitioner that the District Court proceeding was in its early stages prior to the stay, at least in part because the District court had not yet issued any substantive orders, a fact that, under Fintiv, weighs against exercising discretion.  Moreover, the PTAB emphasized that no claim construction orders have issued in the District Court proceeding, which, had they issued, may favor denial of institution.  In addition, discovery was not yet complete.  As indicated by the PTAB, “[w]here the District Court has not issued claim construction orders and the discovery process is not yet complete, the remaining investment of time and effort likely necessary to bring co-pending litigation to trial appears to far outweigh that which has already been invested.”  See Juniper Networks, Inc. v. Packet Intelligence LLC, IPR2020-00336, Paper 21 at 18 (PTAB Sept. 10, 2020).  In evaluating the third factor, the PTAB also considered the Petitioner’s diligence or delay in filing the petition, finding that “the Petition was filed neither expeditiously nor with delay.”  Taken together, these considerations, according to the PTAB, weighed against exercising discretion to deny institution.

Moving to the fourth factor concerning overlap between issues raised in the petition and in the parallel proceeding, the PTAB explained that, under Fintiv, strong concerns of inefficiency and the possibility of conflicting decisions would arise if the prior art and arguments in the parallel proceeding are substantially identical to those presented in a petition.  Fintiv at 12.  “Conversely, if the petition includes materially different grounds, arguments, and/or evidence than those presented in the district court, this fact has tended to weigh against exercising discretion to deny institution.”  Id. At 12-13.  Although the PTAB concluded that the prior art and arguments set forth in the Petition were materially different than those presented in the District Court proceeding, the PTAB would likely address patentability issues before invalidity issues are addressed at trial by the District Court, and therefore any concerns of inefficiency and conflicting decisions would be obviated.  Moreover, inter partes review may simplify issues for the District Court proceeding.  Thus, the PTAB concluded that the fourth Fintiv factor weighed against exercising discretion to deny institution.

Reasoning that the District Court proceeding is stayed and there is no substantial overlap between the invalidity contentions and the Petition challenges, the PTAB determined the fifth Fintiv factor to be “neutral or, at most, weighing slightly in favor of exercising discretion to deny institution.”  As to the sixth Fintiv factor, the PTAB concluded that the merits of Petitioner’s patentability challenges appear to be strong at this stage.

Accordingly, the PTAB determined that, based on a fact-driven analysis and holistic view of the six Fintiv factors, the circumstances weighed against exercising its discretion under § 314(a) to deny institution of inter partes review.

 

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Matthew Johnson

Partner at Jones Day
Matt Johnson is one of the Firm's primary contacts on practice before the PTAB. Currently co-chairing the Firm's PTAB subpractice and involved in proceedings at the Board since the first day of their availability in September 2012, Matt regularly represents clients as both petitioners and patent owners at the Board. He further works as an advocate for clients in appeals from Board proceedings at the Federal Circuit.