We have seen that decisions to institute an inter partes review (IPR) when the challenged patent is part of a parallel proceeding have become rare recently in light of the Fintiv factors. Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 at 5–6 (P.T.A.B. Mar. 20, 2020) (precedential).
This article will explore three IPR petitions filed alongside concurrent district court and ITC proceedings. Two were denied under the Fintiv factors, but one was instituted. We compare and contrast the Board’s analysis of the Fintiv factors for insight as to what led to the different outcomes.
To set the stage, RAI Strategic Holdings, the parent company of R.J. Reynolds, filed both a District Court complaint and an ITC Section 337 complaint against Philip Morris over its IQOS® heated tobacco stick product. In turn, Philip Morris filed IPR proceedings against some of the asserted patents.
Petitions 1 and 2 against ’123 Patent
Philip Morris filed a first IPR (IPR2020-00019) against U.S. Patent No. 9,901,123. The Board exercised its discretion under 35 U.S.C. § 314, and denied institution after analyzing the Fintiv factors. Yet five months later, the Board instituted Philip Morris’s second petition (IPR2020-01602) against the same patent after analyzing the same Fintiv factors.
So what differed between the two petitions to allow the Board to come to different outcomes on institution?
It appears the decisions turned on a lack of overlap in the challenged claims and in the invalidity arguments between the PTAB case and the ITC investigation, which the Board found compelling. Particularly when compounded with the “strong” merits of the IP case:
|Fintiv factor||Institution denied
|Existence or likelihood of stay||Neutral||neutral|
|Proximity of trial date to final written decision||+||+|
|Investment in parallel proceedings||-||+|
|Overlap in issues raised||+||-|
|Are the parties the same?||+||+|
|Other circumstances including merits||+||-|
(+ indicates factor found to favor exercising discretion; - indicates found to not favor exercising discretion)
We can see from the above that the differences in investment in and overlap between the parallel proceedings and the merits of the petitions are what differed between the proceedings and likely led to the difference in outcome. So we ask ourselves - how did the overlap between the claims and arguments at issue differ between the two IPR proceedings such that it flipped the outcome?
When Philip Morris filed its earlier unsuccessful petition (IPR2020-00019), RAI had asserted the ’123 Patent in both district court and at the ITC. In addition, Philip Morris’ Grounds challenged the same claims and used the same prior art as asserted in the ITC proceeding. Under these facts, the Board found the merits of these Grounds weak. Weighing the overlap between proceedings and lack of strength on the merits with the other Fintiv factors, the Board denied institution.
In contrast, by the time Phillip Morris filed its second petition (IPR2020-01602), Philip Morris had narrowed its invalidity arguments in the ITC proceeding, such that the challenged claims and Grounds at issue in the IPR petition did not overlap at all with those in the ITC case. And Patent Owner argued that Philp Morris’ actions in changing its invalidity defense at the ITC demonstrated "pure and utter gamesmanship" that "violates the spirit, if not the rule of Fintiv." But the Board, nonetheless, found the lack of overlap compelling: "[Philip Morris'] decision to limit its ITC invalidity case to claims and grounds that are not at issue in this proceeding mitigates to some degree concerns of duplicative efforts between the ITC and the Board, and mitigates any concerns about potentially conflicting decisions." The Board also found the merits of the arguments more compelling in the second petition.
Petition 3 against the ’915 Patent
The Board made a similar decision in January 2021, when it instituted IPR of a different RAI patent that was also involved in the same ITC proceeding (IPR2020-01094; U.S. Patent No. 9,930,915). In that IPR case, the Board again was swayed by a lack of overlap, this time only of arguments. While the claims at issue in each proceeding overlapped, the invalidity arguments did not. At the ITC, Philip Morris’ invalidity grounds relied on prior–art products—a challenge that cannot be reasonably raised in an IPR—whereas the IPR grounds were based on patents and printed publications. Again, the Board found that this difference between challenges “mitigates any concerns of duplicative efforts between the ITC and the Board, as well as concerns about potentially conflicting decisions.” The merits of the prior art printed publications also weighed in favor of institution.
These decisions to institute an IPR when filed in parallel with an ITC proceeding seemed to turn heavily on the lack of overlap between proceedings—whether claims, arguments, or both. So Petitioners and Patent Owners need to heed their guidance. For example, differences between the arguments and claims in parallel proceedings, or a lack thereof, can be persuasive in an overall weighing of Fintiv factors and a decision on institution.