Institution Archives

PTAB Designates Two Precedential Opinions for Evaluating Impact of District Court Litigations on Discretionary Denial under § 314(a)

In the wake of its May 13, 2020, precedential decision in Apple v. Fintiv, Inc., the Patent Trial and Appeal Board designated as precedential two additional decisions that weigh the Fintiv factors. In Fintiv, the Board articulated six factors for consideration when determining to exercise discretion to deny institution of an inter partes review (IPR) petition under § 314(a) in view of a parallel district court proceeding:

Existence of a stay pending IPR
Proximity of the court’s trial date to the Board’s deadline for issuing a final written decision
Expended investment in the parallel proceeding
Overlap between issues raised each proceeding
Whether the petitioner and the defendant are the same party
Other circumstances.

The two new precedential decisions provide further insight as to what circumstances may tip the balance for each factor. In each decision, the Board found that the circumstances of the parallel district court proceeding did not weigh in favor of a discretionary denial of institution.

In Sotera Wireless, Inc. v. Masimo Corp., Case No. IPR2020-01019, Paper 12 (USPTO Dec. 1, 2020 (Chagnon, APJ) (designated precedential as to § II.A on Dec. 17, 2020), the Board weighed the Fintiv factors and declined to deny institution based on the parallel district proceeding. In particular, the PTAB found that the already granted stay weighed strongly against exercising discretion to deny institution under the first factor. The Board rejected speculative arguments that if it declined review, the district court would lift the already granted stay and would set a trial date to pre-date the timeframe for issuing a final written decision in the IPR proceeding. The Board concluded that the second factor also weighed against denial because discovery was not complete and the district court had not issued a claim construction order or any other significant rulings. The Board also found that the fourth factor (issue overlap) weighed against denial because materially different invalidity grounds had been raised in the district court contentions as compared to the grounds at issue in the IPR petition.

In Snap, Inc. v. SRK Technology, LLC, Case No. IPR2020-00820, Paper 15 (USPTO Oct. 21, 2020 (Droesch, APJ) (designated precedential as to § II.A on Dec. 17, 2020), the Board again weighed the Fintiv factors and declined to deny institution based on the parallel district proceeding. Because the district court had not yet ruled on the motion to stay pending the outcome of the IPR, the Board found that the “stay factor” did not weigh for or against denying institution. As for the issue overlap factor, the Board found that a stipulation by the defendant to not pursue in district court any ground raised, or that could have reasonably been raised, in the IPR weighed strongly in favor of not exercising discretion to deny institution.

Covered Business Method Threshold Review Is Not Appealable

The US Court of Appeals for the Federal Circuit found that in view of the Supreme Court of the United States’ 2019 decision in Thryv v. Click-to-Call, the Patent Trial and Appeal Board’s threshold determination that a patent qualifies for covered business method (CBM) review is closely tied to the institution decision and is therefore not appealable. SIPCO, LLC v. Emerson Electric Co., Case No. 18-1635 (Fed. Cir. Nov. 17, 2020) (Chen, J.)

SIPCO owns a patent directed to a communication device that uses a two-step communications path, where a remote device first communicates through a low-power wireless connection to an intermediate node, which in turn connects to a central location. Emerson filed a CBM petition arguing that the claims were obvious over the prior art. The Board instituted a CBM review and issued a final written decision finding the challenged claims obvious over the prior art. SIPCO appealed.

SIPCO argued that the Board overstepped its authority to institute a CBM review because the patent was directed to a “technological invention” and was statutorily excluded from CBM review. The Federal Circuit initially found that the Board’s threshold analysis was flawed because it focused solely on the second portion of the “technological invention” definition set forth in 37 CFR § 42.301(b). The Court vacated the Board’s decision and remanded for it to consider both parts of the definition, and to reconsider whether the patent qualified for CBM review (IP Update, Vol. 22, No. 20).

Emerson filed a petition for a writ of certiorari in the Supreme Court, arguing that the Board’s decision to institute a CBM review is not appealable under the “no appeal” provision of 35 USC § 324(e). The Supreme Court granted the petition, vacated the Federal Circuit opinion and remanded for further consideration in light of the Supreme Court’s decision in Thryv, which found that the one-year time bar for instituting an inter partes review is bound up with the decision to institute and therefore is not appealable under a similar “no appeal” provision.

On remand, the Federal Circuit found that Thryv made clear that the Board’s threshold determination as to whether a patent qualifies for CBM review is a decision that is non-appealable. Availability of the CBM review process is conditioned on whether the patent qualifies for CBM review, and patents that are directed to “technological inventions” are excluded from CBM review. The Court concluded that the determination of whether a patent qualifies for CBM review is inextricably tied to the decision to institute and is thus not appealable. Turning to the merits, the Court found the Board’s claim construction correct and its obviousness determination supported by substantial evidence.

Practice Note: In a footnote, the Federal Circuit recognized that Thryv implicitly abrogated the Court’s prior practice of reviewing whether the Board’s institution determination breached the limits of the Board’s authority.