Two NHK Spring Denials Apply Fintiv Factors

Discretionary denial of inter partes review under 35 U.S.C. § 314(a) is guided by the precedential decision NHK Spring Co. v. Intri-Plex Technologies, Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018). Denial under NHK is further guided by Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020), which provides the following factors for deciding whether to institute a discretionary denial: 

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

Recently, the Board issued two discretionary denials under NHK that applied the six Fintiv factors: Apple Inc. v. Maxell, Ltd., IPR2020-00597, Paper 9 (Sept. 24, 2020) and Cisco Systems, Inc. v. Ramot at Tel Aviv Univ. Ltd., IPR2020-00484, Paper 10 (Aug. 18, 2020).

Apple Inc. v. Maxell, Ltd., IPR2020-00597, Paper 9 (Sept. 24, 2020)

The Board found that a holistic assessment of the Fintiv factors weighs heavily in favor denial. As an initial matter, while the Board found that the district court’s flexibility to reconsider the motion to stay yields a neutral determination under the first Fintiv factor, the Board also found the remaining factors weigh in favor of denial. Id. at 7-17. For example, the Board noted that under an analysis of the second Fintiv factor, “the district court trial date, previously set for October 26, 2020, has been reset for December 7, 2020” and “a trial beginning this December would be completed about nine months before a final written decision would be due in this proceeding.” Id. at 8. That is, the trial date would still be completed well in advance of a Board decision (even with COVID-19 delays factored in). Moreover, the Board recognized under the third Fintiv factor, claim construction and expert discovery had already resulted in significant investment by the parties in the district court proceeding, and that it was imperative to avoid work duplication, favoring denial. Id. at 9. Furthermore, the Board concluded under the fourth Fintiv factor, examination of whether the invalidity grounds raised in the district court proceeding substantially overlapped the grounds raised in the petition would also be wasteful and duplicative, again weighing in favor of denial. Id. at 9-14. Applying the fifth Fintiv factor, the Board further favored discretionary denial because the Petitioner is the defendant in the litigation and since “the trial court may reach overlapping issues.” Id. at 15. With regard to a sixth Fintiv factor, the Board also noted that “a potential deficiency in Petitioner’s evidence” weighed in favor of denial (or at minimum, resulted in a neutral determination). Id. at 15-16. Therefore, since the foregoing factors either favored denial or were neutral, the Board exercised its discretion to deny institution under § 314(a).

Cisco Systems, Inc. v. Ramot at Tel Aviv Univ. Ltd., IPR2020-00484, Paper 10 (Aug. 18, 2020)

While Judge Crumbly dissented, the majority of the Board found that a holistic assessment of the Fintiv factors likewise weigh heavily in favor denial. The Court determined the first FinTiv factor as neutral because there was scant evidence to suggest granting of a stay in the district court proceeding. Id. at 7. With regard to the second FinTiv factor, however, the majority noted that “the district court trial is scheduled to begin on December 9, 2020,” and that “the Board may not issue a final decision in this proceeding until approximately August 2021—over eight months after the trial begins.” Id. at 8. Since the trial date was well in advance of the anticipated statutory deadline for issuing a final written decision in the IPR, the Board concluded that this factor favored denial. Id. at 7-8. Applying the third FinTiv factor, the majority determined that the district court case was in an advanced state favoring denial, based on progress made with invalidity contentions, claim construction briefing, and a Markman hearing. Id. at 8-9. With regard to the fourth FinTiv factor, the majority noted the “same claims, grounds, arguments, and evidence” results in substantial overlap which likewise favors denial. Id. at 9-10. Furthermore, because the Petitioner was the defendant in the parallel litigation, the majority concluded that the fifth FinTiv factor weighed in favor of denial. Id. at 10. Lastly, applying the sixth FinTiv factor, the majority determined that “no merits” of any grounds raised in the petition were sufficient to favor institution. Id. at 10-16. Thus, the majority found that the foregoing FinTiv factors overwhelmingly favored denial. Judge Crumbly argued in his dissent that the proximity to the district court trial date was not caused by the Petitioner, but rather by the Patent Owner’s amendment of the complaint and, therefore, should not be counted against the Petitioner. Nevertheless, the majority decided that foregoing Fintiv factors weighed against institution.