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Noted with Interest: The PTAB’s Discretionary Power to Deny Institution of IPRs

August 18, 2021
Business Litigation Reports


Since their creation in 2012, inter partes reviews (“IPRs”) have played an important role in patent litigation.  These proceedings are mini-trials at the Patent and Trademark Office (“PTO”)—complete with depositions, experts, and live argument, and provide unique opportunities for litigants to advance strategic interests rapidly and cost-effectively.  However, recent precedent in IPR proceedings has increased the hurdle for defendants petitioning for IPRs.  In particular, the Patent Trial and Appeal Board (“PTAB”), the PTO administrative body that hears IPR proceedings, has increasingly relied on its discretionary power to deny institution of IPR petitions, citing concerns related to efficiency and conservation of judicial resources in view of co-pending district court litigation.  The PTAB’s use of discretionary denial increased in 2020 and several of its decisions have been made “precedential”—a rare designation that makes PTAB decisions binding in future cases.  Large corporations who rely on IPRs as a tool to combat infringement suits have raised a number of challenges against the PTAB’s discretionary denial practice, arguing both for modification of its application as well as for its outright repeal.

IPR Overview

The America Invents Act established IPR proceedings in 2012.  These proceedings are held before the PTAB.  Congress created IPRs to provide a more efficient means for adjudicating the validity of issued patents.  To that end, IPRs permit only limited mandatory discovery (typically only expert depositions), and the PTAB must issue its patentability determination within one year of institution. 

IPR proceedings have played an increasingly important role in patent litigation since their inception, offering several strategic advantages to defendants in infringement actions.  For example, the PTAB’s patentability determinations have historically favored patent challengers.  According to statistics published by the PTO, in the period between October 2020 and March 2021 the PTAB invalidated at least one challenged claim in more than 82% of its final written decisions.  In addition, some district courts are willing to stay infringement actions pending the outcome of an IPR.  Accordingly, IPRs have become an important part of defensive strategy in patent cases. 

Discretionary Denial at the PTAB

However, recent PTAB precedent has increased the burden on Petitioners seeking to challenge patents in an IPR.  In particular, the U.S. code grants the PTAB some discretion to determine whether to institute an IPR challenge.  See 35 U.S.C. § 314(a).  Historically, the PTAB largely focused its institution decisions on the merits of a petition, infrequently invoking § 314(a) to deny petitions.  But recently the PTAB has relied on its discretionary authority to deny institution of IPR petitions.  In May 2020 the PTAB designated as precedential the Fintiv decision outlining six factors it weighs when considering discretionary denial under § 314(a):

  1. whether the district court granted a stay or evidence exists that one may be granted if an IPR proceeding is instituted;
  2. proximity of the court’s trial date to the PTAB’s projected statutory deadline for a final written decision;
  3. investment in the parallel proceeding by the court and the parties;
  4. overlap between issues raised in the petition and in the parallel proceeding;
  5. whether the petitioner and the defendant in the parallel proceeding are the same party; and
  6. other circumstances that impact the Board’s exercise of discretion, including the merits of the petition.

Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 at 5–6 (PTAB March 20, 2020) (precedential, designated May 5, 2020) (“Fintiv”).  In the year since, the PTAB has frequently relied on Fintiv to deny petitions.  According to some resources, discretionary denials increased 60% in 2020.  See (current as of August 10, 2021).  

PTAB Guidance Regarding Fintiv

Throughout 2020 the PTAB issued several precedential decisions clarifying its application of discretionary denial under Fintiv.  For example, in Sotera, the PTAB explained that Fintiv is meant to provide “a holistic view of whether efficiency and integrity of the system are best served by denying or instituting review.”  Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019 Paper 12 at 14 (PTAB December 1, 2020) (precedential, designated December 17, 2020) (“Sotera”).  Namely, the PTAB examines whether an IPR would merely duplicate efforts already undertaken in the co-pending litigation.  In Sotera the PTAB granted institution of IPR, citing petitioner’s stipulation that it would not pursue any invalidity grounds in the district court that were raised or could have been raised in its IPR petition.  Id. at 18-21.  The PTAB found that this stipulation “strongly” weighed in favor of institution, since it ensured that the IPR would serve as a “true alternative” to the district court litigation by eliminating overlapping arguments.  Id. at 19. 

In another precedential decision, Snap Inc., the PTAB considered, inter alia, the relative timing of proceedings in the district court and the IPR.  The PTAB found that the Fintiv factors weighed in favor of institution, noting that the co-pending district court litigation was stayed and, thus, the district court would not reach a validity determination before a final written decision at the PTAB.  See Snap, Inc. v. SRK Technology LLC, IPR2020-00820 Paper 15 at 9 (PTAB October 21, 2020) (precedential, designated December 17, 2020) (“Snap”).  The PTAB found that this factor weighed “strongly” in favor of institution.  Id.

The PTAB’s focus in its precedential decisions on the degree of overlap of issues and the relative timing of the proceedings is echoed in recent non-precedential cases.  For example, in Philip Morris the PTAB granted institution where a defendant before the International Trade Commission (“ITC”) completely dropped its validity defenses at the ITC for the patent claims challenged in its IPR petition.  Philip Morris Prods., S.A. v. RAI Strategic Holdings, Inc., IPR2020-01602 Paper 9 at 13 (PTAB April 2, 2021).  Thus, similar to Sotera, the PTAB reasoned that institution should be granted because overlap in issues across the proceedings was eliminated by petitioner’s withdrawal of its invalidity defense at the ITC.  Id. at 14-15.  In Teso on the other hand, the PTAB held that timing was a particularly significant factor in its decision to deny institution.  Teso LT, UAB v. Luminati Networks Ltd., IPR2021-00122 Paper 12 at 11 (PTAB April 20, 2021) (“Teso”).  In that case the parties had already made significant investments in the co-pending district court case and trial was scheduled to occur ten months before the PTAB would make its patentability determination.  Id. at 7-9.  This, combined with the overlap in prior art across proceedings weighed heavily in favor of denial.  Id. at 11.

Challenges to Fintiv

Several companies have raised a number of arguments challenging the legitimacy and application of Fintiv.  For example, Apple and Google filed suit seeking a declaratory judgment against the PTAB in the Northern District of California, arguing that the PTAB’s discretionary denial practice violates the America Invents Act.  Apple Inc. v. Iancu, 5:20-cv-06128-EJD, Dkt. 1 (N.D. Cal. August 31, 2020).  In particular, Apple and Google argue that the statute expressly allows defendants to file an IPR within one year of being served with a complaint for infringement.  Id. ¶ 6.  Thus, they conclude that the PTAB’s practice of denying petitions in view of the district court schedule—petitions that are otherwise timely-filed under the statute—violates the AIA.  Id.  Plaintiffs further argued that Fintiv amounts to improper rulemaking by the PTAB without providing a notice and comment period as required under the Administrative Procedures Act.  Id. ¶¶ 8-9.  This challenge remains pending in California.

In another challenge, Fitbit and Garmin have petitioned the PTAB’s precedential-setting panel (the Precedential Opinion Panel, or “POP”) to vacate Fintiv denials that are based on the schedule of co-pending ITC investigations.  Garmin Int’l, Inc. v. Koninklijke Philips N.V., IPR2020-00754, Paper 13 Ex. 3007 (December 1, 2020) (“Garmin”).  Fitbit and Garmin argue, inter alia, that the expedited nature of ITC proceedings would always weigh against institution.  Id. at 1-2.  Petitioners further argue that the PTAB should not consider ITC investigations in its Fintiv analysis, since the ITC lacks the authority to invalidate a patent.  Id. at 2.  The POP is still considering this request.