“Discretionary” Institution Of Inter Partes Review Petitions Will Almost Always Be Granted by the Patent Trial and Appeal Board

“Discretionary” is beginning to mean “nearly always” in the world of Inter Partes Reviews (IPR).  See, e.g., Is the U.S. Patent Trial and Appeal Board Still a Patent “Death Squad”​? | LinkedIn (discussing extremely high IPR/PGR institution rate).

Sotera Wireless, Inc. v. Masimo Corp., one of the latest decisions from the Patent Trial and Appeal Board (PTAB), was recently designated as precedential with respect to “discretionary” institution of an inter partes review (IPR) petition under 35 U.S.C. §314(a) regarding U.S. Reissue Patent No. RE353, entitled Alarm Suspend System (a physiological measurement and patient treatment system).  IPR2020-01019, Paper 12, (PTAB December 1, 2020) (“Sotera”).

Sotera and other recent PTAB cases suggest that the bar is relatively low to have an IPR instituted in favor of a Petitioner challenging a patent, even though 35 U.S. Code § 314 provides that an IPR may be instituted only upon a showing that “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”

Applying the so-called FintivNHK Spring Co. factors to weigh institution, the Sotera PTAB granted institution of the IPR notwithstanding a closely timed, parallel district court proceeding in the Southern District of California, Masimo Corp. v. Sotera Wireless, Inc., Case No. 3:19-cv-01100 (S.D. Cal.).  See Apple, Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential) and NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential). 

The Sotera decision is not surprising in light of other recent cases such as Sand Revolution II, LLC v. Continental Intermodal Group-Trucking LLC, IPR2019-01393, Paper 24 (June 16, 2020) (instituting an IPR despite a parallel District Court proceeding).  Accordingly, Sotera furthersolidifies PTAB precedent that, regardless of the FintivNHK Spring Co. factors, the PTAB considers 35 U.S.C. §314(a) paramount.  In practice, if even one challenged claim appears likely to be invalidated and if there is a sliver of daylight between the docket calendars of an IPR and a parallel District Court proceeding, the PTAB will institute the IPR.

In Sotera, the PTAB considered “each of the factors set forth in the Fintiv Order… weigh[ed] the factors and take[s] a holistic view of whether efficiency and integrity of the patent system are best served by denying or instituting review.”  Sotera, Paper 12 at 14.

As applied in Sotera, here are summaries of the six FintivNHK Spring Co. factors:

1. Factor 1: whether a stay exists or is likely to be granted if a proceeding is instituted. Sotera, Paper 12 at 14.

The PTAB found that this factor weighed neither in favor of instituting nor denying the IPR under section 314(a) because the District Court judge in the parallel case “had not ruled” on a pending motion to stay.  Id.

2. Factor 2: proximity of the court’s trial date to the Board’s projected statutory deadline. Id. at 15.

The PTAB found that this factor did not weigh in favor of instituting or denying the IPR because “the trial [in the District Court] is scheduled to begin around the same time as our deadline to reach a final decision.”  Id.

3. Factor 3: investment in the parallel proceeding by the court and parties. Id. at 16.

Despite the facts that “the parties have already served their respective infringement contentions and initial invalidity contentions [in the District Court case]” and “that Petitioner “waited until just before the statutory deadline to file its Petition,” the PTAB found that this factor did not weigh against institution of the IPR.  Id. at 16-17 (internal citations omitted).  This determination is particularly notable since the PTAB acknowledged that the “Petitioner filed its Petition approximately two months after serving its initial invalidity contentions [in the District Court case], and approximately two weeks before the [one year] statutory deadline [to file the IPR petition],” id. at 17 (emphasis added), and “recognizes that ‘notwithstanding that a defendant has one year to file a petition, it may impose unfair costs to a patent owner if the petitioner, faced with the prospect of a looming trial date, waits until the district court trial has progressed significantly before filing a petition at the Office.’” Id. (citing Fintiv).  Here, the PTAB reasoned that “although the parties and the District Court have invested some effort in the parallel proceeding to date, further effort remains to be expended in this case before trial.” Id. at 16 (citing cases) (emphasis added) and concluded that there had been a “relatively limited investment in the parallel proceeding to date” to weigh in favor of the IPR.  Id. at 17.  The clue as to when expended effort and “investment” in a District Court might tip the scales against an IPR is found at page 16 of the decision: “See Sand Revolution 11; Fintiv DI 14; see also Fintiv Order 10 (“If, at the time of the institution decision, the district court has not issued orders related to the patent at issue in the petition, this fact weighs against exercising discretion to deny institution under NHK.”).”

4. Factor 4: overlap between issues raised in the petition and in the parallel proceeding. Id. at 18.

The PTAB found that this factor “strongly” favored IPR institution due to the Petitioner’s “broad stipulation” in the District Court case that, should the IPR be instituted, it would “not pursue in the District Court Litigation any ground raised or that could have been reasonably raised in an IPR.” Id. at 18-19.

5. Factor 5: whether the petitioner and the defendant in the parallel proceeding are the same party.  Id. at 19.

Because the parties are the same in the IPR and the District Court case, the PTAB found that this factor weighed against IPR institution as the proceedings would essentially duplicate efforts.  Id.

6. Factor 6: other circumstances and considerations that impact the Board’s exercise of discretion, including the merits.  Id. at 20.

Somewhat counterintuitively, the PTAB found, after conducting an extensive “preliminary” patentability analysis of the patent claims, id. 20-51, that this factor weighed neither in favor of instituting nor denying the IPR even though “Petitioner has met its burden of demonstrating a reasonable likelihood that it would prevail in showing that claims of the RE353 patent are unpatentable.”  Id. at 20.  This actually makes sense since the PTAB, in the present decision, was ostensibly only deciding to institute the IPR “on this preliminary record,” and not making a final decision on the merits.  Id.  Nevertheless, the PTAB’s extensive patentability analysis to make its preliminary decision becomes somewhat unfairly prejudicial for the patent owner as it will now have to address the PTAB’s preliminary holding of likelihood of unpatentability in addition to its normal arguments.  The takeaway here is that the burden is on the Petitioner to provide evidence to show that at least one claim may be unpatentable.  If that burden is met and this factor becomes “neutral,” it actually creates a further disadvantage for the patent holder.

Sotera, Fintiv, NHK Springs and their burgeoning progeny suggest that the PTAB will most likely institute IPRs even in the face of a parallel District Court proceeding, barring some clear-cut overlap, conflict, or duplication between the IPR and the District Court proceeding.  Effectively, if (1) a District Court “has not issued orders related to the patent at issue in the petition,” Sotera at 16, (2) the Petitioner can show just one claim might be rendered invalid in view of prior art, and (3) the Petitioner stipulates that it will not pursue the same grounds in a District Court litigation as in the IPR, the Petitioner will get its IPR.

If you or your company have been accused of patent infringement or you are a Patent Owner with an infringed patent, I invite you to call me to discuss options such as federal litigation or IPR/PGR proceedings. You can reach me at 864.351.2468 or Ben@Thrive-IP.com.  Please also visit us at www.Thrive-IP.com.