Alert December 30, 2020

Issue 32: PTAB Trial Tracker

Application Of NHK/Fintiv Analysis Continues To Evolve

The Board’s application of its precedential NHK and Fintiv decisions to deny petitions based on parallel litigation continues to develop. The Board recently designated two decisions as precedential as to the sections that relate to application of the Fintiv factors:

  • Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (December 1, 2020) (precedential as to § II.A) — The Board held that a Petitioner’s broad stipulation not to pursue invalidity arguments in the parallel litigation that it raised, or reasonably could have raised in the IPR, weighed strongly in favor of institution.
  • Snap, Inc. v. SRK Tech. LLC, IPR2020-00820, Paper 15 (October 21, 2020) (precedential as to § II.A) — The Board held that a stay of the district court action through a final written decision in the IPR weighed strongly in favor of institution.

The Board has also applied the Fintiv factors to parallel ITC actions, finding recently that an ongoing ITC investigation raises many of the same inefficiencies as a parallel district court litigation. See, e.g., SK Innovation Co, Ltd. v. LG Chem, Ltd., IPR2020-00991, Paper 14 (November 30, 2020); Google LLC v. Ecofactor, Inc., IPR2020-00968, Paper 10 (November 18, 2020); Philip Morris Products, S.A. v. RAI Strategic Holdings, Inc., IPR2020-00919, Paper 9 (November 16, 2020). At least two Petitioners, however, have petitioned the Board’s Precedential Opinion Panel to exclude ITC cases from the Fintiv analysis. Garmin Int’l, Inc. v. Koninklijke Philips N.V., IPR2020-00754, Paper 12 (November 19, 2020).

Petitioners have also challenged the application of the Fintiv factors as unauthorized rulemaking. As discussed in Issue 30, several companies are challenging this analysis under the Administrative Procedures Act. When faced with a similar challenge fashioned as an appeal and petition for writ of mandamus, the Federal Circuit confirmed that it does not have the authority to review Board decisions denying institution decisions based on the Fintiv factors. In re: Cisco Sys. Inc., Case No. 2020-148 (October 30, 2020). The USPTO is currently pursuing formal rulemaking related to discretionary denials. Fed. Reg. Vol. 85, No. 203, 66502-506 (October 20, 2020).

TAKEAWAYParties involved in PTAB proceedings with parallel district court or ITC actions should be aware of the changing landscape of the PTAB’s use of its discretion to institute. Petitioners may be able to avoid denial through stays of litigation or stipulations that eliminate potential overlap between the proceedings.

Petitioner May Risk Denial If A Member Of Patent Defense Organization Files Prior IPRs

Two recent decisions by the PTAB have shed light on how membership in a patent defense organization might result in denial of an IPR. In RPX Corp. v. Applications In Internet Time LLC, IPR2015-01750, Paper 128 (PTAB October 2, 2020) (precedential), the Federal Circuit instructed the Board to determine on remand if the petitions were time-barred and whether Salesforce, who was a member of petitioner RPX’s organization, was a real party in interest in the proceedings. The Board examined numerous factors, including: (1) petitioner’s business model; (2) petitioner’s own alleged interest in the IPRs; (3) whether petitioner considered its client’s interests when determining whether to file an IPR; (4) petitioner’s relationship with its client; (5) the client’s interest in, and benefit from, the IPR and whether petitioner represented that interest; (6) relevance of overlapping board members; and (7) communications between the petitioner and its client. The Board held that under the present circumstances, most of the factors supported a finding that Salesforce was a real party in interest to the IPRs, and thus the petitions were time-barred.

In Netflix Inc. et al. v. DivX, LLC, IPR2020-00052, Paper 59 (PTAB October 20, 2020), the Board denied Patent Owner’s request for rehearing on the Board’s decision to institute, and found that the petition should not be denied in view of an earlier petition filed by Unified Patents, despite Petitioners being members of Unified Patents. The Board reconsidered its previous decision in view of the RPX decision (discussed above), but ultimately found that, despite the relationship between Unified Patents and Petitioners, there was no ground to deny institution based on the General Plastic analysis for multiple petitions. The Board noted that different claims had been challenged in each petition, different grounds had been raised, that the differences in arguments and deadlines between the proceedings did not present the opportunity for gamesmanship, and that none of the other General Plastic factors favored denial.

TAKEAWAY: Whether it is in the context of a real party in interest analysis or a serial petition analysis, membership in a patent defense organization can have important ramifications at the PTAB. Membership-based patent defense organizations should be careful in how they publicly describe their business models and relationships with their members. Members of such groups need to be aware that petitions filed by the member-based organizations may result in the denial of members’ later petitions under the General Plastic factors. Further, both member-based patent defense organizations and their respective members need to be proactive in monitoring relevant papers that other parties may file.

Federal Circuit Affirms Decision Applying Broadest Reasonable Interpretation Claim Construction For Expired Patents

In 2017, Ultratec Inc. appealed a PTAB ruling that found eight of its patents unpatentable. In August 2017, the Federal Circuit vacated and remanded the PTAB’s decision, ordering the Board to review inconsistencies in expert testimony. Ultratec, Inc. v. CaptionCall LLC, 872 F.3d 1267 (Fed. Cir. 2017). The patents expired a few days later, in September 2017. However, on remand, the PTAB reviewed its decision based on the broadest reasonable interpretation (“BRI”) claim construction standard, and again concluded that the patents could not be found patentable. See, e.g., CaptionCall, LLC et al v. Ultratec, Inc., IPR2013-00549, Paper No. 97 (PTAB April 10, 2019).

During oral argument, the Federal Circuit expressed concern that the PTAB had incorrectly applied the BRI standard for expired patents. Specifically, Judge Moore agreed with Ultratec that because the patents had expired on remand, the Board should have applied the narrower claim construction standard set forth in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005). Nevertheless, the Federal Circuit ultimately affirmed the Board’s Decision on Remand under Fed. Cir. R. 36.

Conduct At PTAB Can Support Exceptional Case Finding And Award Of Attorneys’ Fees In District Court

In Game and Tech. Co., Ltd. v. Wargaming Group, Ltd., No. 2:16-cv-06554, ECF No. 65 (C.D. Cal. October 20, 2020), the district court found Plaintiff’s conduct in an IPR proceeding and resulting appeal to be exceptional and awarded Defendant attorney’s fees. The specific activity was Plaintiff’s argument that Defendant was barred from filing the IPR petition under § 315(b) based on the service of a complaint more than one year before the petition was filed. Defendant argued, and the court agreed, that the complaint was not properly served, and therefore, did not trigger the one-year bar. In finding the case exceptional, the court noted that Plaintiff could have discovered that the complaint was not properly served, that Plaintiff continued its arguments after learning that the complaint was not properly served, and that Plaintiff’s shifting positions on appeal were unreasonable. The court awarded Defendant one third of its fees for the IPR and appeal, representing the time apportioned to the time bar issue.

TAKEAWAYAlthough damages and sanctions are not at issue in a PTAB proceeding, parties need to be aware that conduct at the PTAB that is connected to district court actions may subject the parties to penalties.

Precedential Opinion Panel Designates Opinions Precedential

The Precedential Opinion Panel designated the following decisions precedential:

  • SharkNinja Operating LLC v. iRobot Corp., IPR2020-00734, Paper 11 (October 6, 2020) — finding that no RPI analysis is necessary at institution unless there is an allegation of a time bar or estoppel based on an unnamed RPI.
  • Apple Inc. v. Uniloc 2017 LLC, IPR2020-00854, Paper 9 (October 28, 2020) — denying institution of a follow-on, copycat petition based on analysis of General Plastic factors.