IPR tricks of the trade: use of stipulations to overcome a Fintiv challenge in patent litigation
- Law Firms
August 26, 2021 - Post-grant validity challenges — inter partes review (IPR) and post-grant review (PGR) — at the Patent Trial and Appeal Board (PTAB) are frequent components of patent litigation disputes. As part of a defense strategy, district court patent infringement defendants often file IPRs or PGRs challenging the validity of the asserted patent(s).
The PTAB has broad discretion whether to institute an IPR or PGR and may deny institution for reasons other than the merits. For example, in recent years the PTAB has increasingly been using its discretion to deny institution when a district court will decide validity issues before the PTAB would. This development has become controversial, in part, because the PTAB has denied petitions based on the speed of the forum where the patent owner chose to bring its infringement action, a new consideration in forum selection.
This timing-based discretion came out of the PTAB's March 2020 precedential order in Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (Mar. 20, 2020). There, the PTAB set out six non-exhaustive factors that the PTAB considers when deciding whether to exercise its discretion to institute an IPR or PGR if the challenged patent is asserted in a co-pending district court litigation.
These factors seek to balance considerations of efficiency and fairness based on the advanced state of a co-pending proceeding. Two of the most impactful factors have proven to be (1) the proximity of the district court trial date to the PTAB's projected statutory deadline for issuing a final written decision, and (2) the degree of overlap between the issues raised in the IPR or PGR as compared to the issues involved in the co-pending case.
If a district court is scheduled to go to trial before the PTAB would issue a final written decision, that fact has typically weighed in favor of denying institution. Id. at 9.
Similarly, "if the petition includes the same or substantially the same claims, grounds, arguments, and evidence as presented in the parallel proceeding, this fact has favored denial." Id. at 12. On the other hand, "if the petition includes materially different grounds, arguments, and/or evidence than those presented in the district court, this fact has tended to weigh against exercising discretion to deny institution." Id. at 12-13. The PTAB explained that the overlap factor is intended to address "concerns [about] inefficiency and the possibility of conflicting decisions" between the PTAB and validity determinations in other tribunals. Id. at 12.
While IPR and PGR petitioners may not be able to overcome the proximity factor, as the trial schedule is solely within the discretion of the court, petitioners have attempted to overcome a Fintiv challenge by reducing overlap between an IPR or PGR petition, on the one hand, and an invalidity case at court, on the other. To reduce, or even eliminate overlap, petitioners have been stipulating to give up certain validity challenges in district court if the PTAB institutes an IPR or PGR. Put another way, petitioners are essentially stipulating to IPR estoppel (35 U.S.C. § 315(e)) before such estoppel would be statutorily triggered by a PTAB final written decision.
This strategy has, so far, proven to be somewhat effective in overcoming a Fintiv challenge. In Sand Revolution II, LLC v. Continental Intermodal Group—Trucking LLC, for example, the PTAB declined to exercise discretion to deny institution because the petitioner stipulated that "if the IPR is instituted, Petitioner will not pursue the same grounds in the district court litigation." IPR2019-01393, Paper 24 at 11-12 (June 16, 2020) (informative).
The PTAB found that the petitioner's stipulation "mitigated to some degree the concerns of duplicative efforts between the district court and the [PTAB], as well as concerns of potentially conflicting decisions." Id. at 12. The PTAB, however, explained that a "broader stipulation  might better address concerns regarding duplicative efforts and potentially conflicting decisions in a more substantial way," and that such a broader stipulation "might have tipped [the overlap] factor more conclusively in [petitioner's] favor." Id.
In Sotera Wireless, Inc. v. Masimo Corporation, the PTAB confirmed that the petitioner's broad stipulation "weighs strongly in favor of not exercising discretion to deny institution." IPR2020-01019, Paper 12 at 19 (Dec. 1, 2020) (precedential). There, the petitioner stipulated that it will not pursue the specific grounds asserted in its IPR petition or any other ground "that was raised or could have been reasonably raised in an IPR (i.e., any ground that could be raised under [35 U.S.C. §§ 102 or 103] on the basis of prior art patent[s] or printed publications)." Id. at 13-14, 18. The PTAB accepted the stipulation because its broad nature better addresses concerns of duplicative efforts and potentially conflicting decisions than a narrow stipulation would. The broad stipulation also ensures that an IPR is a "true alternative" to adjudicating the validity issues in the parallel district court proceeding. Id. at 19.
As a result of Sand Revolution and Sotera Wireless, petitioners have pursued two general strategies: (1) submit a narrow stipulation committing that the petitioner will not pursue the same invalidity grounds raised in its IPR or PGR; or (2) submit a broad stipulation committing that the petitioner will not pursue any ground of invalidity that the petitioner raised or reasonably could have raised in its IPR or PGR.
Narrow stipulations have met mixed results. In Nokia of America Corporation et al. v. IPCom, GmbH & Co., the petitioners' stipulation "to withdraw any identical grounds from the district court" weighed in favor of institution. IPR2021-00533, Paper 10 at 12-13 (Aug. 12, 2021). And, in Apple Inc. v. Koss Corporation, the petitioner's similarly framed stipulation also weighed in favor of institution. IPR2021-00255, Paper 22 at 19-20 (June 3, 2021).
On the other hand, in SharkNinja Operating LLC v. iRobot Corporation, the petitioner's narrow stipulation was found to be insufficient to overcome concerns over duplication. IPR2021-00544, Paper 7 at 10-12 (June 25, 2021). The PTAB reached the same conclusion in 3Shape Trios A/S v. Densys Ltd., IPR2021-00236, Paper 12 at 8-12 (May 20, 2021).
Petitioners submitting broad stipulations, however, have had more consistent success in overcoming a Fintiv challenge, even in view of a large gap between a district court trial date and the date for the PTAB's final written decision. For example, in Samsung Electronics Co. v. Acorn Semi, LLC, the petitioner's broad stipulation led to institution even though the district court's trial date was scheduled approximately 10 months before the PTAB would issue a final written decision. IPR2020-01207, Paper 21 at 34-35 (Feb. 10, 2021). Similarly, in Cosentino S.A.U. et al. v. Cambria Co. LLC, a similar broad stipulation overcame a Fintiv challenge where the district court's trial date was scheduled to occur seven months before the PTAB would issue a final written decision. IPR2021-00216, Paper 11 at 14-16 (May 18, 2021).
Stipulations limiting a petitioner's validity challenge in a co-pending litigation have become an important tool that can, under proper circumstances, overcome a Fintiv challenge. Parties accused of infringing patents should therefore consider whether to present a stipulation to the PTAB, and if so, whether to submit a narrow or broad stipulation. Broader stipulations, at least at this time, appear to be more effective in overcoming larger gaps between trial dates, but broader stipulations also may create more risk for invalidity positions.
This article reflects only the present personal considerations, opinions, and/or views of the authors, which should not be attributed to any of the authors' current or prior law firm(s) or former or present clients.