Exercise of Institution Discretion During Parallel AIA and District Court Challenges

By on April 15, 2020
Posted In Patents

The Patent and Trial Appeal Board (PTAB) Precedential Opinion Panel (POP) refused to revisit an earlier PTAB panel decision, reiterating that it remains within the discretion of a PTAB panel to deny institution on a patent challenge because of a pending trial in federal district court. Sand Revolution II, LLC v. Continental Intermodal Group – Trucking LLC, Case No. IPR2019-01393, Paper 18 (PTAB Apr. 6, 2020) (Iancu, Dir.; Hirshfeld, Comm’r; Boalick, CAPJ, sitting as POP); Sand Revolution II, LLC v. Continental Intermodal Group – Trucking LLC, Case No. IPR2019-01393, Paper 19 (PTAB Apr. 7, 2020).

After Sand Revolution petitioned for inter partes review (IPR) of Continental Intermodal Group’s (CIG’s) patent, CIG filed a preliminary response raising the issue of potential interference between any IPR proceeding and a pending district court proceeding. In a divided decision, a PTAB panel reasoned that the precedential PTAB decision NHK Spring (which permits consideration of several factors when exercising PTAB discretion to institute or decline institution on a petition) was controlling. The PTAB panel noted that the parallel related district court action involving the same patent and parties was well underway and scheduled for jury trial before a final written decision would have issued in any instituted IPR proceeding. In the interest of avoiding the issuance of advisory-type opinions, with no impact if the jury trial and district court proceeding already resolved all issues, the PTAB declined to institute the IPR. Sand filed a request for rehearing to the PTAB panel and requested POP reconsideration of the panel decision.

In addition to handling POP requests for review, the POP ordinarily operates at the discretion of the US Patent and Trademark Office (PTO) director to decide issues of exceptional importance to the PTAB (e.g., issues involving PTO policy or procedure). The default members of the POP are Under Secretary of Commerce for Intellectual Property and PTO Director Iancu, PTO Commissioner for Patents Hirshfeld and PTAB Chief Administrative Patent Judge Boalick.

In its brief decision, the POP denied the request for POP review and ordered that the original PTAB panel maintain jurisdiction over all matters, including the rehearing request.

Upon remand, the PTAB panel determined that further briefing was warranted on the application of the NHK Spring factors to facts of the case, and authorized supplemental briefing by the parties. The panel noted that the scheduled jury trial date in the parallel related district court case had changed twice since the panel’s earlier denial decision, to be delayed by at least three months. The PTAB referenced Apple v. Fintiv, Case No. IPR2020- 00019, Paper 11 (PTAB Mar. 20, 2020), as providing a non-exclusive list of factors that parties should consider in addressing trial dates in a related parallel district court action as a basis for denial under NHK:

  • 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 PTAB’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 in the IPR proceeding and the defendant in the parallel district court proceeding is the same party
  • Other circumstances that affect the PTAB’s exercise of discretion, including the merits.

The Sand v. CIG panel asked the parties to address these Apple factors in their supplemental briefing, as well as any other circumstances and facts that might affect the PTAB’s exercise of discretion to institute or deny institution, including the circumstances surrounding modification of the district court trial schedule.

Practice Note: In situations where there is overlap between the invalidity positions in district court litigation and in a PTAB challenge, petitioners should consider addressing both the NHK Spring factors and the Apple factors in their IPR petition. In already-filed petitions, petitioners should consider requesting additional briefing to address the Apple factors. As district court schedules change in relation to Coronavirus (COVID-19) impacts, these considerations could become more relevant (especially in cases where the timelines are close) and could affect the PTAB’s consideration when exercising its discretion to decline institution.