PTAB Expands Equitable Considerations to Deny AIA Trial Petitions
Stage of Litigation & Similarly Situated Litigants Now General Plastic Factors?
As I have mentioned on a few CLE panels as of late, the recent changes to the Patent Trial & Appeal Board’s (PTAB) Trial Practice Guide invite parties to suggest additional General Plastic factors. These factors are applied by the Board to determine whether to exercise its discretion to deny institution under § 314(a) in applicable cases. With the efficacy of 325(d) now muted after SAS (given it’s ground-by-ground based application), the potential “kill shot” offered by 314(a) has attracted more attention in recent Patent Owner Preliminary Responses.
With the new Trial Guide update barely a month old, the Board has already begun to expand its General Plastic factors. Two September decisions highlight the degree to which the Board may be more open to considering parallel litigation dynamics as additional factors.
First, in Shenzhen Silver Star Intelligent Technology Co. Ltd., v iRobot Corp. (here) the Board denied an IPR petition under 314(a) at least in part, on the basis that it followed on the heels of a failed petition of an unrelated defendant. In this regard, the concurrence explained:
" If one were to synthesize our [General Plastics] analysis of the facts of this case and their application to the General Plastic factors, one could come to the following conclusion:
Given petitions filed by two or more similarly situated defendants, there is a rebuttable presumption that a later-filed petition will be denied under General Plastic if that later-filed petition is filed after an earlier-filed petition has received a preliminary response or a decision on institution.
The concept behind this is that, all things being equal, if two or more co-defendants are sued around the same time, they should, within reason, file their petitions around the same time; it is generally unfair for one defendant to wait for a “test case” to go through the inter partes review process by another defendant before filing their own petition. This strongly evokes aspects of existing Factors 3 (filing timing) and 5 (adequacy of explanation), upon which we largely base our decision. Factor 4 (knowledge of prior art timing) weighs toward denial in this case, but misses the true issue here, which is the nature of the petitioners’ status as similarly situated co-defendants, charged with infringement of the [subject] patent at or about the same time, more than the identity of the prior art.
I propose that an additional factor would be useful to provide guidance and emphasis on how strongly filing timing issues may dictate the outcome when there are similarly situated defendants. Those defendants, even without coordination, could be gaining an unfair advantage by the tactical filing of petitions. I do not find it in the interests of fairness or of the Board’s highly burdened resources to entertain such petitions, outside a reasonable and sufficient explanation. Accordingly, I propose the following new factor:
8. the extent to which the petitioner and any prior petitioner(s) were similarly situated defendants or otherwise realized a similar-in-time hazard regarding the challenged patent.
(underlining added, italics in original)
In a second case decided just yesterday in NHK Spring Co. Ltd. v. Intri-Plex Technologies Inc. (here) the Board considered the advanced stage of a parallel litigation under the General Plastic factors, explaining:
" Patent Owner argues that instituting an inter partes review “ultimately would be inefficient,” given the status of the district court proceeding between the parties. In particular, Patent Owner directs us to the Scheduling Order in the district court proceeding, which sets a trial date of March 25, 2019. Patent Owner further notes that because the {subject] patent has expired, we will apply the same standard for claim construction as the district court (which already has construed the [subject] patent claim terms). Patent Owner also represents that Petitioner relies on the same prior art (Braunheim and the AAPA) and arguments in its district court invalidity contentions as asserted in the Petition. Thus, Patent Owner argues, the district court proceeding will analyze the same issues and will be resolved before any trial on the Petition concludes. Id. at 39. Patent Owner asserts that such inefficiency supports denying the Petition.
We agree. . . . ¶ Patent Owner argues persuasively that instituting a trial under the facts and circumstances here would be an inefficient use of Board resources. The district court proceeding, in which Petitioner asserts the same prior art and arguments, is nearing its final stages, with expert discovery ending on November 1, 2018, and a 5-day jury trial set to begin on March 25, 2019. A trial before us on the same asserted prior art will not conclude until September 2019. Institution of an inter partes review under these circumstances would not be consistent with “an objective of the AIA . . . to provide an effective and efficient alternative to district court litigation.” Accordingly, we find that the advanced state of the district court proceeding is an additional factor that weighs in favor of denying the Petition under § 314(a).
(internal citations omitted)
While these decisions are currently non-precedential, given the Director’s focus on PTAB matters, this may very well change in the short-term.
If universally adopted, the NHK factor may create some strategic opportunities for patent owners already attracted to the ITC for its aversion to PTAB stays. Given the ITC’s speed, the forum may have added value going forward as a potential thwart to PTAB attack altogether. Other speedy dockets such as Virginia’s “rocket docket” could also see increased interest.
With respect to Shenzhen, awaiting the outcome of a co-defendant’s IPR is obviously disfavored by the Board in multi-defendant scenarios. As such it would seem that these filings are more likely to be filed going forward as clusters (before the time of the first POPR).
Scott A. McKeown is an author of the Patents Post Grant.