What Court Stipulations Persuade the PTAB in Petitioners’ and Patent Owners’ Favor on Discretionary Denial

By: Jay Bober (summer associate) and Jason D. Eisenberg

Petitioners and Patent Owners alike have started filing stipulations in district court and at the International Trade Commission to leverage the Fintiv[1] factors in their favor on the issue of discretionary denial at the Patent Trial and Appeal Board (PTAB). In essence, the Board will decide whether a PTAB proceeding is an efficient use of Board resources or not, and thus whether denying institution is justified. We first reported on an example district court stipulation in a previous article from January 2021. For review, the Fintiv factors include:

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;
3. Investment in the parallel proceeding by the court and 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.[2]

We have observed that Fintiv factor four carries notable weight in the PTAB’s discretionary denial decisions. Factor four considers whether “the petition includes the same or substantially the same claims, grounds, arguments, and evidence as presented in the parallel proceeding.”[3] This article will present a guide for how a petitioner or a patent owner should navigate the Fintiv factors, with a focus on swaying factor four with court stipulations.

Petitioner’s Perspective

Since 2012, patent challengers have found PTAB invalidity proceedings more favorable for killing patents than court proceedings. Under the new Fintiv regime, petitioners must show that the issues in the parallel court and PTAB proceedings are not aligned. Therefore, a petitioner’s stipulation must demonstrate that the issues in the two proceedings will not overlap. To date, there are two main lines of cases: Sand Revolution-type stipulations and Sotera-type stipulations.

A Sand Revolution-type of stipulation indicates that the petitioner “will not pursue the same grounds in the district court litigation.”[4] The PTAB held this type of stipulation to marginally favor institution. Notably, the PTAB commented that the petitioner should have made a stipulation to abandon grounds that were raised or that could have been reasonably raised in an IPR. If the petitioner’s stipulation broadly confronted “concerns regarding duplicative efforts,” it “might have tipped this factor more conclusively in [Petitioner’s] favor.”[5] While the petitioner ultimately prevailed at obtaining institution, the petitioner faced higher risk by using a narrow stipulation.

A Sotera-type stipulation better persuades the PTAB by promising “not [to] pursue in [the District Court] the specific grounds [asserted in the inter partes review], or on any other ground . . . that was raised or could have been reasonably raised in an IPR.”[6] The PTAB instituted trial in Sotera because the petitioner’s stipulation mitigated any concerns of duplicative efforts and conflicting decisions. In contrast with Sand Revolution, the PTAB concluded that “Petitioner’s broad stipulation ensures that an inter partes review is a ‘true alternative’ to the district court proceeding,” so the stipulation weighs “strongly in favor of not exercising discretion to deny institution.”[7] As a result, a broad stipulation appears to be most effective at obtaining institution.

Practice Tip:

Petitioners should file a broad Sotera-like stipulation in a parallel proceeding because it will strongly influence how the PTAB evaluates the Fintiv factors. To prompt institution, petitioners should use language like: “Petitioner stipulates that they will not raise at the parallel proceeding any ground raised or that could have been reasonably raised in the IPR.” Petitioners should stipulate as soon as possible because timely filing will further persuade the PTAB.

Patent Owner’s Perspective

Opposite to petitioners, patent owners want to stay out of PTAB proceedings at all costs. So patent owners aggressively use any available arguments to deny institution, especially discretionary denial. With respect to stipulations, patent owners should argue that the parties are invested in the initial venue and demonstrate as much overlap between issues as possible. To gain favor with the PTAB, the patent owner can even stipulate to limit themselves in court.

SK Innovation Co., Ltd. v. LG Chem, Ltd. illustrates a successful strategy for the patent owner. In this case, the patent owner argued that there was significant overlap between the petition’s validity issues and the parallel ITC investigation. After making this argument, the patent owner also stipulated, “contingent upon the Board’s denial of institution in this proceeding under Fintiv,” that it would limit the district court litigation “in the following respect: any Challenged Claim presented for the district court trial will not extend beyond those addressed in the ITC’s Final Determination.”[8] The PTAB appreciated the patent owner’s concession and held Fintiv factor four to weigh in favor of denying institution.

So, although most stipulation cases to date are based on petitioner court filings, SK Innovation demonstrates that patent owners can also benefit by filing court stipulations.

Practice Tip:
Patent owners should file a stipulation with language like “To remove any doubt and spare duplicative efforts, Patent Owner will not extend the challenged claims in the parallel proceeding beyond those already addressed.” And while there might be a viable strategy in waiting to file the stipulation so that parties appear more invested in the parallel proceeding, SK Innovation indicates that a speedy stipulation filing will likely earn stronger favor with the PTAB.

[1] See Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020).

[2] Id. at 6.

[3] Id. at 12.

[4] Sand Revolution II, LLC v. Cont’l Intermodal Group-Trucking LLC, IPR2019-01393, Paper 24 at 12 (PTAB June 16, 2020).

[5] Id.

[6] Sotera Wireless, Inc. v. Masimo Corporation, IPR2020-01019, Paper 12 at 13-14 (PTAB Dec. 1, 2020).

[7] Id. at 19.

[8] SK Innovation Co., Ltd. v. LG Chem, Ltd., IPR2020-01239, Paper 14 at 18 (PTAB Jan. 12, 2021).