Alert March 31, 2021

Issue 33: PTAB Trial Tracker

Questions Regarding the Application of the Fintiv Factors Remain 

The Board has increasingly exercised its discretion to deny petitions in recent months, mainly due to the application of the Fintiv factors due to parallel litigation. Parties have recently challenged the application of the Fintiv factors in a number of ways seeking to curb the Board’s use of this analysis.

The Federal Circuit granted Janssen’s motion to dismiss Mylan’s appeal of the Board’s denial of institution based on the “NHK/Fintiv rule” in Mylan Laboratories Ltd. v. Janssen Pharmaceutica, N.V.  Case No. 2021-1071 (March 12, 2021). Janssen and the USPTO, as intervenor, argued that Mylan’s appeal should be dismissed for lack of jurisdiction because the Director’s institution decision is “final and nonappealable.” 35 U.S.C. § 314(d). Mylan maintained that judicial review remains available and subject to mandamus because the Board exceeded its congressional authority and violated Mylan’s due process rights by denying Mylan’s timely IPR petition as a result of applying the Fintiv factors. The Federal Circuit granted Janssen’s motion and dismissed the appeal, confirming that the Federal Circuit does not have jurisdiction to review Board decisions denying institution. While the court confirmed that it maintains mandamus jurisdiction over institution denials, such jurisdiction is limited to colorable constitutional claims, and Mylan failed to show it was entitled to such a drastic and extraordinary relief.

Parties have also asked district courts to assert authority over the PTAB regarding the determination of whether to exercise discretion to deny institution in light of parallel litigation. Apple, Google, Cisco, Intel, and Edwards Lifesciences have asked a California district court to declare application of the NHK/Fintiv rule unlawful and issue an injunction barring the USPTO director from instituting factor-based analysis without statutory authority. Apple Inc., et al. v. Iancu, 5:20-cv-06128-EJD; see Issue 30. US Inventor asked a Texas district court to bar the PTAB from instituting new proceedings until the USPTO undertakes formal rulemaking related to proceedings with parallel litigation. US Inventor Inc., et al. v. Hirshfeld, C.A. 2:21-cv-00047 (E.D.T.X.). 

Other petitioners have asked the PTAB’s Precedential Opinion Panel to specifically address how the NHK/Fintiv rule should apply to parallel ITC actions. See Garmin Int’l, Inc., et al. v. Koninklijke Philips NV, IPR2020-00754, Paper 13, Exhibit 3007; Regeneron Pharmaceuticals, Inc. v. Novartis Pharmaceuticals Corp. et al., IPR2020-01317, Paper 17, Exhibit 3003.

As noted in Issue 32, the USPTO is considering formal rulemaking regarding the application of the Board’s discretionary denial. The comment period closed, and comments are available here. 

Takeaway: Parties should be aware that the scope of the Board’s discretion to deny institution based on a parallel litigation is subject to change. While the Board has recently used its discretion liberally to deny institution where the challenged patent is involved in a parallel litigation, this analysis is under scrutiny and may change as a result of the recent challenges.

District Court Orders Prosecution Bar Should Apply in All Post-Grant Proceedings

In Decurtis LLC v. Carnival Corp., C.A. No. 20-22945 (S.D. Fla. Jan. 5, 2021), a district court considered a dispute over amending a protective order focusing on whether litigation counsel should be barred from participating in post-grant proceedings that challenge a currently asserted patent. The Court noted that there is a split among district courts on whether prosecution bars should include patent reexamination and reissue proceedings, with more recent cases typically holding that prosecution bars should extend to reexamination proceedings. The Court adopted this newer approach, explaining that “[a] prosecution bar serves little purpose if it bars only some of the activity that could lead to inadvertent use.” The Court also allowed defendant to seek leave from the Court for litigation counsel to participate in reexamination proceedings brought by plaintiff.  

Takeaway: Parties drafting protective order provisions in district court should be precise in the language that they use to define the scope. In the event that a dispute over the bar reaches the court, the court may choose to add clarifying language. Recent case law, as discussed in Decurtis, indicates that courts are likely to adopt a more expansive bar on litigation counsel’s ability to participate in post-grant proceedings that challenge the validity of an issued patent.

Voluntary Cessation by Patent Owner of Appeal of Non-Infringement Finding Moots IPR Appeal

In ABS Global, Inc. v. Cytonome/ST, LLC, the Federal Circuit considered whether, where patent owner Cytonome had disclaimed any appeal of a noninfringement finding as to the patent at issue in a district court litigation, ABS nonetheless had Article III standing to pursue its appeal of an IPR final written decision upholding the validity of some of the claims of the patent. The Court explained that mootness was the proper inquiry and that the voluntary cessation doctrine governed. The court found that Cytonome had demonstrated that it could not reasonably be expected to resume its enforcement efforts and that ABS had not offered any evidence of current activity or plans to engage in activity that would subject it to infringement liability. Therefore, there was no injury sufficient to support an ongoing case or controversy to support standing under Article III. The Court held that ABS’s appeal of the PTAB’s final written decision was moot and dismissed ABS’s appeal. 

Takeaway: Parties involved in parallel proceedings should be aware of the voluntary cessation doctrine and its potential impact on appeal. Where there has been a disclaimer of a party’s right to appeal and there is no live case or controversy remaining as to infringement issues in the district court, the dispute regarding invalidity in parallel PTAB proceedings will be mooted under this doctrine. In this situation, the parties will not have standing to appeal a PTAB final written decision.

Attorney Statement In Vacated Post-Grant Proceeding Is Binding Admission

In Sherwin-Williams Company v. PPG Industries, Inc., 2-17-cv-01023 (Jan. 21, 2021 W.D. Penn.) (Judge Conti), the district court held that an attorney statement on the scope of prior art made on behalf of the previous patent owner during a reexamination proceeding was a binding admission on behalf of the plaintiff, despite the reexamination having been vacated and a court previously finding that the reexamination proceeding had no preclusive legal effect. The court agreed with defendants that, although the decision in the reexamination proceedings had been vacated, the record had not been expunged. The court rejected patent owner’s arguments that estoppel doctrines did not apply in this context and held that “filings in the patent office represent positions of the party which have consequences.”

Takeaway: All statements made in post grant proceedings represent official positions of the parties and can be used as binding admissions in other proceedings and against successors-in-interest – even when the relevant post grant proceedings are vacated and are found to have no preclusive legal effects. Parties should remain mindful of the consequences of all post grant filings and limit their discussions to necessary issues to avoid risking an accidental or unnecessary admission.