As we reported a few weeks ago (article here), the PTAB recently designated two decisions as precedential that expand the Board's discretion to deny review of serial IPR petitions (Valve Corp v. Electronic Scripting Prods.) as well as to deny review when a parallel district court proceeding is nearing trial (NHK Spring v. Intri-Plex). This post focuses on the second issue.
The PTAB in NHK Spring used its discretion to deny institution under 35 U.S.C. § 325(d) and 35 U.S.C. § 314(a) because the grounds in the NHK's petition were redundant with arguments considered during prosecution, and because the parties' co-pending district court litigation, involving the same invalidity arguments set forth in NHK's petition, was scheduled to go to trial in a few months. IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018). Just a few weeks after NKH Spring's precedential designation, a panel of PTAB judges in E-One, Inc. v. Oshkosh Corp. followed suit and exercised their discretion to deny review when the parties' parallel court proceeding was set for trial in April 2020, but the PTAB's final written decision would not have been due until June of that year. IPR2019-00161, Paper 16 (PTAB May 15, 2019).
More specifically, the panel found the following facts as "present[ing] the same circumstances that supported denial of institution under § 314(a) in NHK Spring":
- Trial in the district court case is set to conclude in April 2020, whereas the PTAB's final written decision would not have been due until June 2020;
- The district court invested substantial resources in granting a motion for a preliminary injunction, as well as during claim construction, and the same terms that E-One proposed for construction in its petition were at play before the district court; and
- The obviousness arguments in E-One's petition substantially overlapped those presented during the preliminary injunction process, which the district court concluded did not raise a substantial question concerning validity.
In exercising its discretion to deny institution, it is certainly possible that the PTAB was heavily influenced by the court's consideration, and rejection, of overlapping validity issues during the preliminary injunction process. However, it is also possible that this decision may be indicative of a growing trend to deny institution when a parallel district court proceeding, considering similar invalidity issues, will go to trial before the PTAB must issue a final written decision.
In 2018, Docket Navigator reported that the average times to trial in the Eastern District of Texas, Central District of California, and District of Delaware (some of the most popular patent venues in the country) were 900 days, 918 days, and 1291 days, respectively. Thus, at least in the Eastern District of Texas and the Central District of California, if a petitioner delays filing their IPR to on or near the one-year bar date, the district court proceeding will likely outpace the PTAB. Note that the District of Delaware's 2018 numbers are approximately 140 days longer than the court's 5 year average (1,155), which is likely due to bench vacancies that have since been filled.
And in courts with quicker dockets, such as the Western District of Wisconsin and the Southern District of New York—which Docket Navigator reported in the third quarter of 2018 as having average times to trial of 743 days and 781 days, respectively—if a petitioner files an IPR more than approximately 6 months after being served with a complaint, the district court proceeding is likely to outpace the PTAB. Thus, for any case where trial is scheduled for two years (or less) from the complaint's filing, a petitioner may have only 6 months (or less) to get their IPR on file if they want to ensure that the PTAB's final written decision issues before the parties' parallel trial date.
Also consider that in many instances, summary judgment may not be decided until shortly before trial. If an IPR is denied institution because a parallel trial is set to outpace the PTAB, and the district court case reaches final judgment as a result of summary judgment of noninfringement, for example, the validity-expediency rational for denying institution may never come to fruition. That is, summary judgment may always be reversed by the Federal Circuit and, if based solely on noninfringement, the petitioner's validity arguments were not vetted by this district court, as anticipated, and the time for filing an IPR has long since passed.
For Patent Owners, the PTAB's NHK Spring and E-One decisions are certainly positive developments, but for those parties seeking IPR review, these decisions signal a potentially negative trend and reinforce the notation that IPR filing strategies must take into account the district court's trial schedule, including major milestones such as claim construction and summary judgment.
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