by Dennis Crouch
The NHK-Fintiv Rule provides the PTAB with authority to deny institution of IPR proceedings when the challenged patent is already subject to pending parallel district court litigation. The rule stems from two PTAB decisions that were later designated as precedential.
- NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., IPR2018-00752, 2018 WL 4373643 (Patent Tr. & App. Bd. Sept. 12, 2018), designated precedential on May 7, 2019.
- Apple Inc. v. Fintiv, Inc., IPR2020-00019, 2020 WL 2126495 (Patent Tr. & App. Bd. Mar. 20, 2020), designated precedential on May 5, 2020.
IPR proceedings have two major decision points. Institution: After IPR petition is filed, the PTO Director determines whether or not to institute the IPR. The statute provides the director with discretionary authority on whether or not to institute the IPR, but does create a threshold — requiring that the petition show at least “a reasonable likelihood that the petitioner would prevail.” 35 U.S.C. 314. Also, the PTO Director has delegated their institution authority to the PTAB, and so a PTAB panel actually makes the decision. Final Decision: If the IPR is instituted then the PTAB is charged with holding a trial and reaching a final decision “with respect to the patentability of any patent claim challenged.” On the other hand, if institution is denied, the case is over and no appeal is permitted. “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 35 U.S.C. 314(d). Note here that “nonappealable” has been generally interpreted as ordinarily not appealable. See Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016) and Thryv, Inc. v. Click-To-Call Technologies, LP, 140 S. Ct. 1367 (2020).
With NHK-Fintiv, PTAB panels are able to use their discretionary authority to deny institution in situations involving parallel litigation guided by a six-factor test that generally dance around the overarching question of whether “instituting a trial would be an inefficient use of Board resources.”
- 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 v. Fintiv. The test has been used dozens of cases to deny institution, and litigants and district court judges have figured out strategic techniques to push these factors in their favored direction.
In a new petition to the U.S. Supreme Court, Apple has asked asked for relief, arguing that NHK-Fintiv “undermines access to IPR, contrary to Congress’s express design.” Apple v. Optis Cellular (Supreme Court 2021) (petition for writ of certiorari). Apple argues that the rule permitting denial “exceeds the PTO’s authority … is arbitrary or capricious, or was adopted without required notice-and-comment rulemaking.” Id.
After its IPR petition against an Optis Cellular patent was denied, Apple sought relief from the Federal Circuit who refused — holding that it had no power to hear the case either on appeal or via mandamus. Apple Inc. v. Optis Cellular Tech., LLC, 2021-1043, 2020 WL 7753630, at *1 (Fed. Cir. Dec. 21, 2020) (non-precedential order). The court more generally offered its reasoning in Cisco Systems Inc. v. Ramot at Tel Aviv University Ltd., 834 F. App’x 571 (Fed. Cir. 2020).
Meanwhile, the district court case against Apple proceeded in E.D. Tex. The jury found the Optis patent claims willfully infringed and not proven invalid and awarded $506 million in damages. Judge Gilstrap entered judgment for the damage award, but did not enhance the damages — finding in his view that the case lacked egregiousness. I believe that the case is awaiting judgment on Apple’s outstanding motions for new trial and JMOL.
The Petition for Certiorari: The petition is interesting primarily from an appellate and administrative procedure front. Here, the agency used a particular mechanism of rulemaking that appears to be done without notice + comment and that is not appealable. From that perspective it seems problematic.