Watching the Pot™ (Apr. 2021)

Following a previously unsuccessful IPR bid, in a second go-around, Philip Morris won an institution decision in an inter partes review of a vaping patent owned by rival R.J. Reynolds’ parent company, RAI Strategic Holdings. The battle between these companies is happening in the district court (currently stayed), at the ITC, and at the PTAB. What is interesting here is that the panel did not exercise its discretion under 35 U.S.C. 314 to deny this petition under the PTAB’s Fintiv factors, when it had done so just five months earlier in a prior proceeding on the same patent. So what are the differences between the cases that drove the decisions in opposite directions?

Three of the Fintiv factors were the same between the proceedings, but three differed. The three that differed include a lack of overlap in the challenged claims and in the invalidity arguments between the PTAB case and the ITC investigation, which the Board found compelling, particularly when compounded with the “strong” merits of the IP case:

So how did the overlap between the claims and arguments at issue differ between the two IPR proceedings such that it flipped the outcome between exercising discretion and not? When Philip Morris filed its earlier unsuccessful petition (IPR2020-00019), RAI had asserted the patent at issue (US 9,901,123) in both district court and at the ITC. In addition, Philip Morris’ grounds of challenge were to the same claims and used the same art as that in the ITC proceeding. Notably, the Board found the merits of these grounds weak. Weighing the overlap between proceedings and lack of merits with the other Fintiv factors, the Board exercised its discretion and denied institution.

In contrast, by the time it filed its second petition (IPR2020-01602), Philip Morris had narrowed its invalidity arguments in the ITC proceeding such that the claims and grounds at issue in the IPR petition did not overlap at all with those in the ITC case. Despite Patent Owner’s arguments that Philip Morris’ actions in changing its invalidity defense at the ITC demonstrated “pure and utter gamesmanship” that “violates the spirit, if not the rule of Fintiv,” the Board found the lack of overlap compelling: “[Philip Morris’] decision to limit its ITC invalidity case to claims and grounds that are not at issue in this proceeding mitigates to some degree concerns of duplicative efforts between the ITC and the Board, and mitigates any concerns about potentially conflicting decisions.”

The Board made a similar decision in January, when it instituted IPR of a different patent that was also involved in the same ITC proceeding (IPR2020-01904; US 9,930,915). In that case, the Board again was swayed by a lack of overlap, this time only of arguments. There, while the claims at issue in each proceeding overlapped, the invalidity arguments did not. At the ITC, Philip Morris’ invalidity grounds relied on an on-sale bar—which cannot reasonably be raised in an IPR—whereas, the IPR was based on patents and printed publications.

These two decisions to institute an IPR despite a parallel proceeding have become rare recently, in light of the Fintiv factors. But both seemed to turn heavily on the lack of overlap between proceedings—whether claims, arguments, or both. Petitioners and Patent Owners can both learn from these three decisions that differences between the parallel proceedings, or a lack thereof, can be persuasive one way or another in an overall weighing of Fintiv factors and a decision on institution.

This article appeared in the April 2021 issue of MarkIt to Market®. To view our past issues, as well as other firm newsletters, please click here.