Shearman & Sterling LLP | IP Blog | PTAB Exercises Its Discretion To Deny <em >Inter Partes</em > Review Institution Because Of The Advanced Stage Of Parallel District Court Litigation<br >  
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  • PTAB Exercises Its Discretion To Deny Inter Partes Review Institution Because Of The Advanced Stage Of Parallel District Court Litigation
    On September 12, 2018, the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office issued a decision exercising its statutorily authorized discretion to deny institution of a petition for inter partes review (IPR).  NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., IPR Case No. 2018-00752 (PTAB Sept. 12, 2018).  In doing so, the PTAB ruled that the IPR petition’s reliance on substantially the same arguments that the patent owner overcame during original prosecution justified a discretionary denial in this instance, as did the advanced stage of a parallel litigation involving the same parties.

    The PTAB relied on two statutory provisions to deny the IPR petition, 35 U.S.C. § 325(d) and 35 U.S.C. § 314(a). 

    35 U.S.C. § 325(d) provides the PTAB with express discretion to deny an IPR petition when “the same or substantially the same prior art or arguments previously were presented to the Office.”  The PTAB has created a series of factors to make this determination:  (a) the similarities and material differences between the asserted art and the prior art involved during examination; (b) the cumulative nature of the asserted art and the prior art evaluated during examination; (c) the extent to which the asserted art was evaluated during examination, including whether the prior art was the basis for rejection; (d) the extent of the overlap between the arguments made during examination and the manner in which the petitioner relies on the prior art or patent owner distinguishes the prior art; (e) whether the petitioner has pointed out sufficiently how the Examiner erred in its evaluation of the asserted prior art; and (f) the extent to which additional evidence and facts presented in the petition warrant reconsideration of prior art or arguments.

    In this case, the PTAB determined that denial under Section 325(d) was warranted because petitioner made effectively the same arguments and relied on substantively the same prior art as the Examiner did during original prosecution.

    35 U.S.C. § 314(a) provides that an IPR may not be instituted unless the petition “shows there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”  This provision has been interpreted to provide the PTAB with complete discretion to deny institution.  See, e.g., Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016) (finding that the PTAB’s “decision to deny a petition is a matter committed to the Patent Office’s discretion,” and noting there is “no mandate to institute review” under Section 314(a)).

    In this case, the PTAB determined that instituting an IPR proceeding would be an inefficient use of the PTAB’s limited resources because a parallel district court litigation, in which petitioner “asserts the same prior art and arguments, is nearing its final stages” and will reach trial before an IPR proceeding would conclude.  The PTAB also noted that a discretionary denial on this basis was consistent with Congressional intent, which created IPRs “to provide an effective and efficient alternative to district court litigation.”

    One IPR strategy used by patent challengers has been to time parallel PTAB and district court proceedings in a way that maximizes the chance of obtaining rulings from both decision-makers; thus, if the district court does not find a patent invalid, the PTAB still may.  This ruling, in which the PTAB in effect elected to defer to the district court, makes that strategy riskier.