Late last month, USPTO Director Kathi Vidal issued an interim guidance on the NHK-Fintiv rule, limiting the Patent Trial and Appeal Board’s (PTAB’s) ability to discretionarily deny institution in America Invents Act (AIA) reviews based on the status of parallel litigation. The PTAB has now issued its first batch of institution decisions applying that guidance, in each case declining to discretionarily deny institution based on those new restrictions—including one limitation meant to address concerns over the most controversial of the NHK-Fintiv factors, as detailed in RPX’s new Q2 in Review.

Under that hotly debated factor (factor two), the PTAB may reject a petition if the district court’s scheduled trial date falls too close to the deadline for the Board’s final written decision (FWD). This can be especially problematic from a strategic perspective because it forces petitioners to file as early as possible—effectively, further compressing the one-year window defendants already have to file an inter partes review (IPR)—based on an aspect of litigation, trial scheduling, that is inherently outside of a petitioner’s control. Moreover, critics of this factor (among them Senator Thom Tillis (R-NC), otherwise an NHK-Fintiv supporter) have faulted the Board for relying on the date when trials are scheduled as opposed to when they ultimately take place, since scheduled dates can often get pushed back due to a variety of factors—a particular problem during the early days of the COVID-19 pandemic.

Vidal’s new guidance acknowledges those concerns, agreeing with critics that because scheduled dates are “unreliable” and frequently change, such a date is “not by itself a good indicator of whether the district court trial will occur before the statutory deadline for a final written decision”. As a result, Vidal established that trial time alone cannot tip the scales toward denial under NHK-Fintiv: “when other relevant factors weigh against exercising discretion to deny institution or are neutral, the proximity to trial should not alone outweigh all of those other factors”. Moreover, Vidal declared that trial dates should be considered based on the district’s actual, median time to trial, alongside other factors including the caseload of the judge in the parallel litigation as well as the “speed and availability of other case dispositions”.

Time to trial was one of the key NHK-Fintiv issues addressed in four IPRs from this first batch of petitions evaluated based on the guidance. Two of those petitions were instituted on July 11 (IPR2022-00302, IPR2022-00324) and two on July 15 (IPR2022-00253, IPR2022-00281), all filed by Samsung against Staton Techiya, LLC, and each naming Synergy IP Corporation, that entity’s coplaintiff in a parallel Eastern District of Texas lawsuit, as a real party in interest. As detailed in the first two IPRs’ institution decisions, the parties disputed the proper basis for determining when the district court trial would likely occur. Samsung, citing the most recent available statistics from the official, government source cited in the guidance, argued in a supplemental brief that based on the Eastern District’s median time to trial of 24.2 months for the year ending on March 31, 2022, “the expected trial date would be in approximately November 2023, well after the Board’s FWD deadline in this case (no later than July 13, 2023)”.

In contrast, Staton Techiya asserted in its own brief that it was “not in serious dispute” that the FWD would come after the jury trial, arguing primarily that based on the district court’s docket control order requiring “good cause” to change the scheduled trial date of June 26, 2023, the date “will not be changed absent good cause” (emphasis added). Apparently in the alternative, Staton Techiya further argued that the proper metric from the federal time-to-trial database was the “historical” median time to trial “[o]ver the preceding six years”, which for the Eastern District is “approximately 19.7 months”. The patent owner further contended that the longer time-to-trial for the year ending March 31, 2022, as cited by Samsung, is an “anomaly is easily attributable to measures taken in response to the COVID-19 pandemic”, based on the notion that the court vacating COVID-related standing orders as a result of “the wide availability of vaccines and changed precautionary guidelines” has purportedly allowed it “to conduct more trials in the year ending March 31, 2022 than in any of the five years before”. Additionally, Staton Techiya argued that the “availability of other case dispositions” contemplated by the guidance included summary judgment, noting that the parallel litigation could be disposed of in that manner as well.

The PTAB’s institution decision adopted Samsung’s positions on each of those points, weighing factor two against institution. Most importantly, it agreed with the petitioner that the “most recent statistics” establish a median time-to-trial for the Eastern District as 24.2 months—implicitly defining “most recent” to refer to the median for the most recent year rather than the most recent available dataset (which encompasses just the six years that the patent owner included in its average). As a result, the panel also concluded that the trial would occur in November, which it noted “is several months later than the July 2023 due date for our final written decision in this case”. The Board further rejected Staton Techiya’s alternative arguments, stating that it does “not agree” that the median data are irrelevant due to the “good cause” requirement for changing the scheduled trial date. Furthermore, the panel was not convinced that the “possibility that the district court might grant summary judgment weighs in favor of exercising discretion to deny institution, particularly because Patent Owner has not provided any reason why summary judgment is likely in this case”.

Additionally, the panel decided NHK-Fintiv factor five—contemplating “whether the petitioner and the defendant in the parallel proceeding are the same party”—as also weighing against denial based on the same time-to-trial comparison from factor two, citing prior PTAB decisions reaching that same conclusion when the Board’s “statutory deadline falls before the Court’s expected trial date based on the most recent median time-to-trial statistics”.

Another NHK-Fintiv factor addressed by the guidance—and, in turn, applied in these two decisions—was factor four, under which the Board may deny a petition if it contains the “same or substantially the same claims, grounds, arguments, and evidence” as a district court invalidity challenge. In the guidance, Vidal gave her seal of approval to the PTAB’s practice of allowing parties to stipulate around that factor, a practice developed in the wake of two prior PTAB decisions. In Sand Revolution II v. Continental Intermodal Group – Trucking (issued May 2020; designated as informative that July), the PTAB granted institution after the petitioner agreed not to assert the same invalidity grounds in district court that it did in its IPR petition. That same December, the Board accepted an even broader type of stipulation in its Sotera Wireless v. Masimo decision (designated as precedential two weeks later), after the petitioner informed the district court that it would not pursue “any ground raised or that could have been reasonably raised in an IPR” after institution. Vidal endorsed the latter category (calling them “Sotera [s]tipulations”, described in related materials as “Sand/Sotera stipulations”), explaining that these “mitigate[] concerns of potentially conflicting decisions and duplicative efforts between the district court and the PTAB”. As a result, Vidal stated that “the PTAB will not discretionarily deny institution of an IPR or PGR in view of parallel district court litigation where a petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition”.

In its analysis of factor four for the two Samsung petitions instituted on July 11, the PTAB noted that Samsung had agreed to the narrower “Sand Revolution type of stipulation”, under which it would not assert any grounds from the petition in the district court litigation (but did not refer to those it “reasonably could have raised”, per Sotera). While the Board found that the “narrowness of Petitioner’s stipulation here diminishes the weight that the stipulation carries, relative to the stipulation proffered in Sotera”, it nonetheless found that the “stipulation causes this factor to weigh against discretionary denial”. Here, the PTAB approvingly noted Samsung’s argument that overlap with the district court litigation would be further reduced by the statutory estoppel that would likely follow from a final written decision under 35 USC Section 315(e)(2), which would bar the petitioner from asserting, in the district court case, “any ground that the petitioner . . . reasonably could have raised during” the IPR.

The PTAB dispensed with the same NHK-Fintiv issues much more briefly in the other two Samsung IPRs instituted on July 15, briefly reiterating its conclusions that factors two and five weighed against denial due to the “relevant ‘trial date’ of November 2023” coming after the Board’s FWD deadline, while the petitioner’s agreement to be bound by a Sand stipulation made factor six weigh against denial as well.

With respect to stipulated estoppel, while the Samsung decisions analyzed the substantive impact of the narrower Sand-type of stipulation, the broader Sotera stipulations have received briefer treatment in early decisions applying the guidance—likely as a result of its explicit mandate that the PTAB “will not discretionarily deny institution of an IPR” if a party stipulates to broader, Sotera-type estoppel.

For instance, in one IPR filed by LinkedIn against eBuddy Technologies (IPR2022-00165), instituted on July 13, the institution decision cited the guidance in concluding as follows:

Because Petitioner has represented to the Board that if inter partes review is instituted it will not pursue in the parallel litigation any ground that is raised or that could have reasonably been raised in an IPR, we decline to deny the Petition discretionarily.

The panel resolved that same issue with comparable brevity in its July 8 decision to institute an IPR filed by Nabors Drilling Technologies against Motive Drilling Technologies (IPR2022-00289), observing additionally that while the parties agreed that the petitioner’s stipulation fell under Sotera, the patent owner still argued that this stipulation should not be dispositive over the other NHK-Fintiv factors. (Note, however, that the guidance states that “the PTAB will not discretionarily deny institution of an IPR” in the event that the petitioner agrees to a Sotera stipulation” (emphasis added).)

For more on the new NHK-Fintiv guidance, including a companion study released by the USPTO providing data on discretionary denials, see RPX’s second-quarter review. Details on the Staton Techiya/Synergy IP litigation can be found here and here.