United States: Fintiv Discretionary Denials Remain In Play

F5 Networks, Inc. (“Petitioner”) filed a Petition requesting an IPR.  WSOU Investments, LLC d/b/a/ Brazos Licensing and Development (“Patent Owner”) filed a Preliminary Response.  Here, the PTAB exercised its discretion under 35 U.S.C. § 314 to deny institution of the IPR based on an analysis of the Fintiv factors because of a parallel district court litigation, despite the Petitioner's Factor Four stipulation.

Under the first Fintiv factor, the PTAB considers whether the court granted a stay or whether evidence exists that one may be granted if a proceeding is instituted.  Here, the district court had recently denied Petitioner's motion to stay the case pending this and other IPR proceedings.  The PTAB found that this factor weighed towards denying institution.

Under the second Fintiv factor, the PTAB considers the proximity of the court's trial date to the PTAB's projected statutory deadline for a final written decision.  Since the current trial date in the district court litigation is over six months before the expected date of the PTAB's final written decision, this factor favors exercising authority to deny institution.

Under the third Fintiv factor, the PTAB considers the investment in the parallel proceeding by the court and the parties.  Here, the PTAB did not consider a two-day Markman hearing and resulting claim construction order important because neither party contended that the merits of the Petition turn on any claim construction order.  However, the PTAB found the underlying litigation was advanced because the opening and rebuttal invalidity report deadlines had passed in the parallel district court litigation.  This factor also required the PTAB to consider whether the Petitioner unreasonably delayed filing the IPR.  Here, Petitioner did not file the IPR petitions on the patents until nearly a year the underlying litigation was transferred to the current district court.  Accordingly, on the whole, this factor weighs in favor of discretionary denial.

Under the fourth Fintiv factor, the PTAB considers the overlap between issues raised in the petition and in the parallel proceeding.  At least two references asserted in the IPR are the same as in the district court proceedings.  But Petitioner stated that, if the PTAB instituted the IPR, it would not rely on these two references in the underlying litigation.  The PTAB found Petitioner's proposed stipulation was broad because Petitioner's stipulation included any grounds involving the two references, and not just the grounds asserted in the Petition.  The PTAB found that this factor as a whole weighed against exercising discretion to deny institution.

The PTAB found that the fifth Fintiv factor favors exercising discretion to deny institution because the Petitioner is a defendant in the underlying litigation.

The sixth Fintiv factor requires the PTAB to consider other circumstances that impact the PTAB's exercise of discretion, including the merits.  Here the PTAB stated this factor was neutral.

The PTAB denied institution under a holistic view of the Fintiv factors stating that Petitioner's alleged stipulation was the only thing that weighed toward institution.

Takeaway:

In recent times, a Factor Four stipulation is often sufficient for avoiding a discretionary denial.  But this decision illustrates that strategy is not a 100% sure thing.

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