Volkswagon Group of America, Inc. v. Arigna Technology Ltd., IPR2021-01321, Paper 10 (PTAB Feb. 15, 2022).
Before: Baer, Fenick, and Ahmed

The Board instituted an inter partes review against a challenged patent that was asserted in a parallel International Trade Commission (ITC) Section 337 Investigation. In doing so, the Board rejected Patent Owner's arguments that the Board should exercise its discretion and deny institution under 35 U.S.C. § 314(a).

Central to the Board's analysis was its precedential decision in Apple Inc. v. Fintiv Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential) (Fintiv), which identifies a non-exclusive list of factors parties may address when there is a related, parallel court or ITC action to determine whether such action provides a basis for discretionary denial. The factors include:

  1. whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
  2. proximity of the court's trial date to the Board'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.

When Fintiv arguments are made, the Board takes a &ldquldquo;holistic view" in evaluating the factors in deciding whether "efficiency and integrity" are best served by denying or instituting review.

In the large majority of Board decisions evaluating the Fintiv factors in view of a parallel ITC investigation, the Board has discretionarily denied institution. This is because ITC proceedings move rapidly, with most investigations fully completed less than 18 months after the complaint was filed. By comparison, an instituted IPR proceeding is not complete for at least 18 months after the petition was filed. Accordingly, unless the petitioner were to proactively file an IPR petition before being named in an ITC complaint, the ITC investigation will almost always be finished before the IPR proceeding. Coupling this with the fact that the ITC will not stay an investigation while an IPR is pending, and the result is that Board panels reviewing the Fintiv factors in view of a parallel ITC investigation usually found they favored denying institution. See, e.g., Regeneron Pharma., Inc. v. Novartis Pharma AG, IPR2020-01217, Paper 15 (PTAB Jan. 15, 2021) (holding the Fintiv factors justified denying institution even though the IPR petition was filed less than one month after the petitioner was named in an ITC complaint).

In the present IPR, the Board took a decidedly different approach. In considering the Fintiv factors, the Board found that: (1) the fact that the ITC had not stayed the investigation was a neutral factor; (2) the completion of the ITC investigation would be three months before the Board's final written decision if the IPR were instituted, which the Board found "only slightly" favored denying institution; (3) the parties' significant investment in the ITC proceeding was offset by the fact that the petitioner had filed its IPR petition "almost immediately" after institution of the ITC investigation, rendering the third Fintiv factor neutral; (4) the petition challenged more claims than were asserted at the ITC, which the Board held weighed against denying institution; (5) the parties in both proceedings were the same, which favors denying institution; and (6) the Board found the merits of the petition to be strong, weighing in favor of institution.

Of note, the Board considered persuasive the petitioner's argument that the ITC "lacks the authority" to invalidate patent claims. Yet, this has been an argument that other Board panels have rejected in the past. See, e.g., Fintiv, Paper 11 at 9 (dismissing argument because "as a practical matter, it is difficult to maintain a district court proceeding on patent claims determined to be invalid at the ITC"). The Board thus rejected the Patent Owner's argument that the Fintiv factors supported discretionary denial, proceeded to analyze the merits of the petition, and finding them sufficiently strong, instituted IPR.

As a takeaway, petitioners faced with a parallel ITC proceeding may maximize their chances of the petition surviving discretionary denial by: filing the IPR petition as soon as possible after being named a proposed respondent in an ITC complaint; if possible, challenging more claims in the petition than are asserted at the ITC; and highlighting to the Board that ITC decisions directed to the validity of patent claims have no preclusive effect. Further, even though one was not at issue in this matter, petitioners should also consider offering a Sotera stipulation, agreeing that they will not raise in any ITC or district court proceeding the grounds raised, or reasonably could have been raised, in the IPR if instituted. See Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (PTAB Dec. 1, 2020) (precedential); SharkNinja Operating LLC v. iRobot Corp., IPR2021-00544, Paper 13 (PTAB Nov. 17, 2021) (instituting IPR and rejecting Fintiv arguments based on parallel ITC proceeding due in part to petitioner's stipulation to avoid any overlap between the invalidity issues in the PTAB and at the ITC).

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