In an increasingly rare exercise of discretion, the PTAB denied institution of inter partes review under Fintiv in Zhuhai Cosmx Battery Co., Ltd. v. Ningde Amperex Technology Limited, IPR2023-00587. The PTAB reasoned that the late stage of the parallel district court litigation, substantial investment by the parties in that proceeding, and the lack of countervailing considerations, favored the denial of institution.
In its decision to deny institution, the PTAB considered the Fintiv factors: (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. The PTAB methodically reviewed each factor in turn.
First, the PTAB highlighted that there was no request for a stay or any indication that a stay was likely in the parallel district court proceeding, thus this factor was neutral.
Second, the PTAB assessed the parallel litigation's scheduling order for trial and determined the trial was likely to occur months before the due date of the final written decision. Moreover, the PTAB noted that the parties did not present evidence regarding the caseload of the assigned judge or whether extensions of time were sought that would alter the trial date. As a result, this factor heavily favored exercising discretion to deny the Petition.
Third, the PTAB determined that the district court proceeding had already advanced beyond fact discovery to the completion of initial expert reports. The PTAB rejected Patent Owner's argument that the district court litigation "is still in its early stages" and explained that the pertinent inquiry concerns the investment in the parallel proceeding "at the time of institution." Thus, this factor heavily favored denial of institution.
Fourth, the Patent Owner asserted that there is substantial overlap between the Petition and the parallel litigation because Nishikawa and Iwai, the sole primary prior art references in the proceeding, are also being asserted in the parallel litigation. However, Petitioner stipulated that it would "not pursue the same petitioned invalidity grounds in the related district court action ... nor will [Petitioner] pursue any invalidity ground that includes Nishikawa, Honda, or Iwai." In its assessment, the PTAB explained that Petitioner's stipulation was not a full Sotera-type stipulation because it did not extend to any ground "that could have been reasonably raised," but the Petitioner's stipulation still obviated some potential duplication or redundancy because the IPR proceeding challenged different claims from the parallel litigation. Thus, the PTAB determined that the fourth Fintiv factor weighed against denial of institution.
Fifth, the PTAB determined that given Petitioner is a defendant in the parallel district court litigation and the trial was likely to precede the final written decision by a significant period of time, this factor favored denial of institution.
Sixth, the PTAB considered whether there are compelling merits that would negate the other Fintiv factors. In its assessment of anticipation and obviousness by primary references Nishikawa and Iwai, the PTAB concluded that Patent Owner raised substantial issues with Petitioner's analysis of challenged independent claims and thus even if the PTAB were to determine that Petitioner met the lower threshold for instituting an IPR, the evidence does not plainly support Petitioner's position at this stage and thus was not a "compelling meritorious challenge." Thus, this sixth factor does not weigh against discretionary denial.
Ultimately, only factor four weighed against denial, factor one was neutral, and factors two, three, and five weighed in favor of discretionary denial, with factors two and three weighing heavily in favor. The PTAB also highlighted that the Petitioner did not submit a full Sotera-type stipulation that would make discretionary denial inappropriate and likewise did not show compelling evidence of unpatentability under factor six. As a result, the PTAB denied institution of an IPR.
Takeaway: Parties are reminded that a full Sotera-type stipulation that makes discretionary denial inappropriate should extend to any ground "that could have been reasonably raised." If a full Sotera-type stipulation is not included, the PTAB may still weigh that stipulation against denial of institution, but not to the same determinative extent.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
