by Dennis Crouch
Last week, Acting USPTO Director Coke Morgan Stewart granted Director Review and vacated the PTAB’s decision instituting several inter partes reviews (IPRs) in Motorola Solutions, Inc. v. Stellar, LLC. [IPR2024-01205, -01206, -01207, -01208 Director Review Decision] Stewart’s March 28 decision applies the Fintiv factors more aggressively than the Board, signaling a shift toward increased discretionary denials under 35 U.S.C. § 314(a). This is a situation where denial seems appropriate in my opinion. The Stellar’s infringement lawsuit was filed in August 2024, with Motorola waiting 11 months to file IPR petitions. District Court Judge Sam Jordan (E.D.Tx) has has already issued Markman orders and parties have filed their summary judgment. A jury trial is set for July 2025.
In its now overturned February 13, 2025 institution decision for IPR2024-01205, the PTAB panel initially found that Fintiv factors 1, 2, and 5 favored discretionary denial because no stay had been requested in the parallel district court litigation, the trial date was close, and the petitioner and defendant were the same party. However, the Board ultimately declined to exercise discretion to deny institution after analyzing factors 3, 4, and 6. The Board reasoned that despite significant investment in the district court proceeding, Patent Owner’s infringement case involving “over 850 claim charts” would present “a substantial, if not overwhelming, burden on the district court’s resources” and that removing invalidity issues would reduce this burden. The Board gave significant weight to Petitioner’s Sotera stipulation not to pursue in district court any grounds raised or that reasonably could have been raised in the IPR. Importantly, the Board issued its decision here before the recent systemic changes made by Director Stewart that open the door to wider consideration of discretionary denials. Following the institution decision, Judge Jordan quickly granted a stay of litigation.
For reference: The Fintiv factors used when considering whether to exercise discretion to deny IPR institution when there is parallel district court litigation include:
- Whether a stay exists or is likely.
- Trial date proximity.
- Investment in parallel proceeding.
- Issue overlap.
- Party overlap.
- Other circumstances.
In addition, a Sotera stipulation will support institution when a petitioner stipulates that it will not pursue in district court the same grounds raised or any grounds that reasonably could have been raised in the IPR petition.
In her new order, Director Stewart reviewed the PTAB’s analysis of the Fintiv factors and found that “the Board’s analysis of factors 3 and 4, and overall weighing of the Fintiv factors was erroneous.” The decision effectively terminated Motorola’s challenges to four Stellar patents covering police body camera technology. This decision comes shortly after Stewart’s February 28 bulletin withdrawing former Director Kathi Vidal’s June 2022 guidance memo that had significantly curtailed discretionary denials. It also follows Stewart’s March 26 announcement of a new “Interim Process for PTAB Workload Management” that centralizes discretionary denial authority with the Director. These changes collectively suggest a significant shift toward a more patent owner-friendly approach at the USPTO.
Director Stewart particularly found that the Board misapprehended the extent of investment in the parallel district court proceeding. By the time Stellar filed its Preliminary Response, the parties had already:
- Served extensive infringement and invalidity contentions
- Served opening and rebuttal expert reports
- Filed claim construction briefs
- Conducted several depositions
- Participated in a claim construction hearing where the court had construed disputed terms
The Director emphasized that the district court and parties had “invested substantial time and resources in the parallel proceeding preparing for a . . . trial date—a date eleven months before the Board’s projected final written decision date.” She concluded that “given the substantial time and effort the parties and the district court had invested in the parallel proceeding, factor 3 strongly favors discretionary denial.”
Stewart rejected the Board’s reasoning that “Patent Owner’s infringement case alone . . . could present a substantial, if not overwhelming, burden on the district court’s resources,” noting that such analysis “could apply in most, if not all, cases and misapprehends the relevant inquiry.”
The Director also took a different view of Motorola’s Sotera stipulation, which promised not to pursue in district court any ground raised or that reasonably could have been raised in the IPR. While such stipulations typically mitigate concerns about duplicative efforts, Stewart found that in this case the stipulation “does not ensure that these IPR proceedings would be a ‘true alternative’ to the district court proceeding.”
The Director noted that “Petitioner’s invalidity arguments in the district court are more expansive and include combinations of the prior art asserted in these proceedings with unpublished system prior art, which Petitioner’s stipulation is not likely to moot.” This finding suggests closer scrutiny of the actual effect of Sotera stipulations going forward, rather than treating them as automatically dispositive. Going forward, an effective stipulation may require the petitioner to aver that it will not raise any novelty or obviousness claims asserting prior art that could have been asserted in the IPR.
Implications for Future PTAB Practice
The decision here shows the seriousness of Dir. Stewarts commitment to discretionary denials. Several key implications emerge, including:
- Greater deference to district court proceedings, especially early investment in parallel district court litigation.
- More skeptical view of Sotera stipulations.
- Petitioners may need to file their IPR petitioners earlier and immediately request stay of litigation pending institution.
The Director’s decision in Motorola v. Stellar represents a clear departure from former Director Vidal’s approach that disfavored discretionary denials.
By design, the statute does not permit appeal of institution decisions, either grant or denial. Rather, this decision is a non-reviewable administrative action — absent Cuozzo “shenanigans.” See Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016) (an appellate court may review “shenanigans” in the institution decision that are “outside statutory limits”).
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I just looked at one of the patents in the case – US Patent No. 9,912,914. The patent relates to a surveillance apparatus that continuously records video data from a camera into a circular buffer in local memory. The key innovation is how the system handles important footage: when a user triggers a “record signal” (via a button press, voice command, or automatically through sensors), the system write-protects both the video recorded before the trigger (the “pre-recorded subset”) and after the trigger (the “post-recorded subset”), preventing this segment from being overwritten during subsequent recording. Since the system is already continuously recording, it can retroactively save footage from before the user recognized something was worth saving. The protected segments can then be wirelessly transmitted to remote memory to free up local storage.