On July 13th, the US Patent Trial and Appeal Board designated two cases regarding use of the Fintiv factors as Informative. The Fintiv factors are a nonexclusive list of factors the Board considers in determining whether to institute an inter partes review when there is a parallel, co-pending court proceeding. These newly designated cases provide insight into how the Board will weigh the Fintiv factors in the future and help litigants determine whether the Board is likely to deny institution in view of parallel court litigation.
The Board denied institution of an inter partes review after weighing the Fintiv factors in Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, Paper 15 (May 13, 2020) (informative).
Conversely, the Board instituted an inter partes review after weighing the Fintiv factors in Sand Revolution II, LLC v. Continental Intermodal Group – Trucking LLC, Case IPR2019-01393, Paper 24 (June 16, 2020) (informative).
The Fintiv Factors
The Fintiv Factors arise out of the Patent Trial and Appeal Board’s authority to deny institution of inter partes review under 35 U.S.C. § 314(a). In NHK Spring Co., LTD., v. Intri-plex Technologics, Inc., IPR2018-00752, Paper 8 (Sept. 12, 2018) (precedential) the Board exercised its discretion under 35 U.S.C. §§ 314(a) and 325(d) and denied institution of the associated inter partes review. After weighing the 35 U.S.C. § 325(d) factors and denying institution, the Board stated that “simply because we exercise our discretion to deny the Petition under § 325(d) does not mean that we cannot consider and weigh additional factors that favor denying institution under § 314(a).” The Board went on to find that the advanced state of a parallel district court proceeding in that inter partes review weighed in favor of denying institution under § 314(a).
Subsequent to NHK, the PTAB issued an Order that identified six nonexclusive factors it will consider when exercising its discretion to deny institution in view of a parallel, co-pending district court proceeding in Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, Paper 11 (Mar. 20, 2020) (precedential). In the Order, the Board asked the parties to submit additional briefing addressing these factors to help the Board determine whether to institute the associated inter partes review. These factors are the Fintiv factors and include:
- Whether the Court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
- Proximity of the Court’s trial date to the Board’s projected statutory deadline for a final written decision;
- Investment in the parallel proceeding by the Court and the parties;
- Overlap between issues raised in the petition and in the parallel proceeding;
- Whether the petitioner and the defendant in the parallel proceeding are the same party; and
- Other circumstances that impact the Board’s exercise of discretion, including the merits.
Apple Inc. v. Fintiv, Inc. (Designated Informative July 13, 2020)
After receiving the briefing Ordered in Paper 11 (see above), the Board analyzed the Fintiv factors and denied institution in Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, Paper 15 (May 13, 2020) (informative).
Specifically, weighing the Fintiv factors, the Board concluded that instituting the trial would be an inefficient use of Board resources where:
- Neither party has requested a stay of the co-pending district court case;
- The district court trial is scheduled to begin two months before the Board would reach a final decision;
- The District Court has issued a 34-page claim construction order, the parties have exchanged final infringement and invalidity contentions, and discovery is under way;
- Identical claims are challenged based on the same prior art in both the District Court and the proposed inter partes review;
- The inter partes review petitioner and the district court defendant are the same party; and
- In its preliminary assessment of the Petition for inter partes review, the Board found that the Petitioner’s arguments contained some weaknesses and “the merits, taken as a whole, [did] not tip the balance in favor of Petitioner and instead also weigh[ed] in favor [of] discretionary denial.”
Accordingly, the Board exercised its discretion under 35 U.S.C. § 314(a) and denied institution.
Interestingly, the Board rejected Petitioner’s argument that the advanced state of a parallel case is not sufficient in itself to deny institution, stating instead that “a parallel proceeding in an advanced state implicates considerations of efficiency and fairness, which can serve as an independent reason to apply discretion to deny institution.” See Id. at 11.
Sand Revolution II, LLC v. Continental Intermodal Group – Trucking LLC (Designated Informative July 13, 2020)
In Sand Revolution II, LLC v. Continental Intermodal Group – Trucking LLC, Case IPR2019-01393, Paper 24 (June 16, 2020) (informative), the petitioner requested rehearing after the Board had initially denied institution of the associated inter partes review. Here, in contrast with Apple Inc. v Fintiv, the Board decided to institute the inter partes review.
Specifically, after weighing the Fintiv factors, the Board instituted inter partes review despite co-pending district court litigation where:
- No stay has been requested or ordered in the co-pending litigation;
- The trial date of the co-pending litigation is uncertain due to numerous jointly filed extensions and the currently scheduled district court trial date is relatively close to the expected inter partes review final decision date;
- The District Court and the parties have invested little in the merits of the case aside from the District Court issuing a two-page Markman Order stating that the proper construction for each disputed claim term is the term’s plain and ordinary meaning;
- Petitioner stipulated that it would not raise the same patentability issues in the district court litigation if the inter partes review is instituted;
- The parties to the proposed inter partes review are the same as those in the related district court litigation; and
- The Board noted that Petitioner has set forth a reasonably strong case for the obviousness of most challenged claims.
The Board concluded, “we are not persuaded that the interests of the efficiency and integrity of the system would be best served by invoking our authority under 35 U.S.C. § 314(a) to deny institution of a potentially meritorious Petition.”
An Evolving Area of Law
These two cases provide practitioners with examples where the Board has either instituted or denied institution based on a reasoned analysis of the Fintiv factors, and can help practitioners determine whether the Board is likely to institute their proceeding as this area of law evolves.
- NHK Spring Co., LTD., v. Intri-plex Technologics, Inc., IPR2018-00752, Paper 8 (Sept. 12, 2018) (precedential)
- Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, Paper 11 (Mar. 20, 2020) (precedential)
- Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, Paper 15 (May 13, 2020) (informative)
- Sand Revolution II, LLC v. Continental Intermodal Group – Trucking LLC, Case IPR2019-01393, Paper 24 (June 16, 2020) (informative)
- 35 U.S.C. § 314(a)
- 35 U.S.C. § 325(d)