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`UNITED STATES PATENT AND TRADEMARK OFFICE
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`UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND
`DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE
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`DATE:
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`June 21, 2022
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`MEMORANDUM
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`TO:
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`FROM:
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`Membersof the Patent Trial and Appeal Board
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`KatherineK,Vidal Lorne\ Lu )
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`UnderSecretary of Commerce forIntellectyél|Property and
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`Director ofthe United States Patent and Trademark Office (USPTOorthe Office)
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`SUBJECT:
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`INTERIM PROCEDURE FOR DISCRETIONARY DENIALSIN AIA POST-
`GRANT PROCEEDINGS WITH PARALLEL DISTRICT COURT
`LITIGATION
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`Introduction
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`Congress designed the America Invents Act (AIA) post-grant proceedings “to establish a
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`moreefficient and streamlined patent system that will improve patent quality and limit
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`unnecessary and counterproductivelitigation costs.” H.R. Rep. No. 112-98,pt. 1, at 40 (2011),
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`2011 U.S.C.C.A.N.67, 69; see S. Rep. No. 110-259, at 20 (2008). Parallel district court and
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`AIAproceedings involving the same parties and invalidity challenges can increase, rather than
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`limit, litigation costs. Based on the USPTO’s experience with administering the AIA, the agency
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`has recognized the potential for inefficiency and gamesmanship in AIA proceedings, given the
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`existence ofparallel proceedings between the Office and district courts. To minimize potential
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`conflict between the Patent Trial and Appeal Board (PTAB)and district court proceedings, the
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`Office designated as precedential Apple Inc. v. Fintiv, Inc.'! This precedential decision articulates
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`' See Apple Inc. v. Fintiv, Inc., 1PR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (designated
`precedential May 5, 2020).
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`P.O. Box 1450, Alexandria, Virginia 22313-1450 —www.usPTo,.cov
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`1
`1
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`LGE 1018
`LGE 1018
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`the following set of nonexclusive factors (the Fintiv factors) that the PTAB considers on a case-
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`specific basis in determining whetherto institute an AIA post-grant proceeding where there is
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`parallel district court litigation:
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`1. whetherthe court granted a stay or evidence exists that one may be granted if a
`proceedingis instituted;
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`2. proximity of the court’s trial date to the Board’s projected statutory deadline for a
`final written decision;
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`investmentin the parallel proceeding by the court and the parties;
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`4, overlap betweenissuesraised in the petition and in the parallel proceeding;
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`5. whetherthe petitioner and the defendantin the parallel proceeding are the same
`party; and
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`6. other circumstances that impact the Board’s exercise of discretion, including the
`merits.
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`The Office issued a Request for Comments (RFC)? on the PTAB’s current approaches to
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`exercising discretion on whetherto institute an ATA proceeding, including situations involving
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`parallel district court litigation. The Office received 822 comments from a wide range of
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`stakeholders. In light of the feedback received, the Office is planning to soon explore potential
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`rulemaking on proposed approaches through an Advanced Notice of Proposed Rulemaking. In
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`the meantime, I have determined that several clarifications need to be made to the PTAB’s
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`current application of Finfiv to discretionary institution where there is parallellitigation.
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`As explained below, to benefit the patent system and the public good, the PTAB will not
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`rely on the Fintiv factors to discretionarily deny institution in view ofparallel district court
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`litigation where a petition presents compelling evidence of unpatentability. This memorandum
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`also confirms that the precedential import of Fin/iv is limited to facts of that case. Namely,
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`Fintiv involvedinstitution of an AIA proceeding with a parallel district court litigation. The
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`* Discretion to Institute Trials Before the Patent Trial and Appeal Board, 85 FR 66502 (Oct. 20,
`2020); Discretion to Institute Trials Before the Patent Trial and Appeal Board; Extension of
`Comment Period, 85 FR 73437 (Nov.18, 2020).
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`plain language of the Fintiv factors is directed to district court litigation and does not apply to
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`parallel U.S. International Trade Commission (ITC) proceedings, as the ITC lacks authority to
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`invalidate a patent and the ITC’s invalidity rulings are not binding on the Office oron district
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`courts.
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`Consistent with Sotera Wireless, Inc.,> the PTAB will not discretionarily deny institution
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`in view ofparallel district court litigation where a petitioner presents a stipulation not to pursue
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`in a parallel proceeding the same grounds or any groundsthat could have reasonably been raised
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`before the PTAB. Additionally, when considering the proximity of the district court’s trial date
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`to the date when the PTABfinal written decision will be due, the PTAB will consider the median
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`time from filing to disposition of the civil trial for the district in which the parallel litigation
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`resides.’ This memorandumclarifies those practices.
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`This memorandum is issued under the Director’s authority to issue binding agency
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`guidance to govern the PTAB’s implementation of various statutory provisions, including
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`directions regarding how thosestatutory provisions will apply to sample fact patterns. See, e.g.,
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`35 U.S.C. 3(a)(2)(A); PTAB Standard Operating Procedure (SOP) 2 at 1—2.
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`Compelling Merits
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`Analysis
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`In the AIA, Congress established post-grant proceedings, including IPR, PGR, and
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`covered business method (CBM) proceedings to improve and ensure patent quality by providing
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`“quick and cost-effective alternatives to litigation” for challenging issued patents. H.R. Rep. No.
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`112-98, pt. 1, at 48; see also S. Rep. No. 110-259, at 20 (explaining that the “post-grant review
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`3 Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (PTAB Dec.1, 2020)
`(precedential as to § IA).
`4 https://www.uscourts.gov/statistics-reparts/analysis-reports/federal-court-management-statistics
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`system... will give third parties a quick, inexpensive, and reliable alternative to district court
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`litigation to resolve questions of patent validity”). Congress granted the Office “significant
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`powerto revisit and revise earlier patent grants” as a mechanism “to improve patent quality and
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`restore confidence in the presumption of validity that comes with issued patents.” Cuozzo Speed
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`Techs., LLC y, Lee, 579 U.S. 261, 272 (2016) (quoting H.R. Rep. No. 112-98, pt. 1, at 45, 48).
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`Given those objectives, compelling, meritorious challenges will be allowed to proceedat the
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`PTABeven wheredistrict court litigation is proceeding in parallel. Compelling, meritorious
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`challenges are those in which the evidence, if unrebutted in trial, would plainly lead to a
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`conclusion that one or more claims are unpatentable by a preponderance of the evidence. That
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`said, the PTAB retains discretion to deny institution for proceedings where abuse has been
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`demonstrated.
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`Fintiv factorsix reflects that the PTAB considers the merits ofa petitioner’s challenge
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`when determining whetherto institute a post-grant proceeding in view of parallel district court
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`litigation. Where the information presented at the institution stage is merely sufficient to meet
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`the statutory institution threshold, the PTAB has the authority, where warranted, to exercise
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`discretion to deny institution in view of the other Fintiv factors. In contrast, where the PTAB
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`determines that the information presentedat the institution stage presents a compelling
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`* Institution of an IPR is authorized by statute only when “the information presented in the
`petition... and any response. .
`. showsthat there is a reasonable likelihood that the petitioner
`would prevail with respectto at least 1 of the claims challengedin the petition.” 35 U.S.C.
`§ 314(a) (2018). Similarly, institution of a PGR, including a CBM,is authorized only when “the
`information presented in the petition ... , if such information is not rebutted, would demonstrate
`that it is more likely than not that at least 1 of the claims challenged in the petition is
`unpatentable” Jd. § 324(a).
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`unpatentability challenge, that determination alone demonstrates that the PTAB should not
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`discretionarily deny institution under Fintiv.°
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`This clarification strikes a balance among the competing concerns of avoiding potentially
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`conflicting outcomes, avoiding overburdening patent owners, and strengthening the patent
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`systemby eliminating patents that are not robust and reliable. Consistent with Congress’s giving
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`the Office the authority to revisit issued patents, the PTAB will not deny institution based on
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`Fintiv if there is compelling evidence of unpatentability. This approach “allows the proceeding
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`to continue in the event that the parallel proceedingsettles orfails to resolve the patentability
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`question presented in the PTAB proceeding.” Fintiv, Paper 11 at 15, The patent system and the
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`public good benefit from instituting compelling unpatentability challenges.
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`ITC and Fintiv
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`In 2018, the PTAB issued a decision in NHK Spring.’ There, the PTAB held that the
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`advancedstate of a parallel district court litigation involving similar validity disputes could be a
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`factor weighing in favor of denying institution of an IPR because of concerns overthe inefficient
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`° The compelling evidencetest affirms the PTAB’s current approachofdeclining to deny
`institution under /infiv where the evidence of record so far in the case would plainly lead to a
`conclusion that one or more claims are unpatentable. See, e.g.,lumina Inc. y. Trs. ofColumbia
`Uniy., IPR2020-00988, Paper 20 (PTAB Dec.8, 2020) (declining to deny under Fintivin light of
`strong evidence on the merits even thoughfourfactors weighed in favor of denial and remaining
`factor was neutral); Synthego Corp. v. Agilent Techs., Inc., IPR2022-00402, Paper 11 (May 31,
`2022) (granting institution as efficiency and integrity of the system would not be served by
`denyinginstitution of petition with particularly strong evidence on the merits); Samsung Elecs.
`Co. v. Scramoge Tech., Ltd., IPR2022-00241, Paper 10 (June 13, 2022) (Fintiv analysis
`concludesthat “very strong” evidence on the merits outweigh concurrentlitigation involving
`earlier scheduled trial date and significant overlap in proceedings),
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`’ NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018)
`(precedential). This decision also based the denial of institution on Director discretion under35
`U.S.C. § 325(d).
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`use of PTAB’s resources. NHK Spring, Paper 8 at 19-20. Later, in 2020, the PTAB announced
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`the Fintiv factors, which the PTAB considers when a patent ownerraises an argument for
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`discretionary denial under NHK Spring due to an earliertrial date. Fintiv, Paper 11 at 5-6. The
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`Fintiv factors focus on the interplay between IPRsanddistrict courtlitigation. Through that
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`focus, the Fintiv factors seek to avoid duplicative efforts between the PTAB andfederal district
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`courts. For example, Fintiv factor one asks whetherthe “court” has granted a stay or if one may
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`be granted. Similarly, Fintiv factor two looks at the proximity of the “court”trial date.
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`Likewise, Fintiv factor three concerns the amount of investmentin the parallel proceeding by the
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`“court” and the parties. Fintiv factors five and six refer to the same parallel proceeding
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`described in factorthree.
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`Although the Fintiv factors are directed to district court litigation and not ITC
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`proceedings,® the PTAB has,in the past, denied AIA reviewsbasedonparallel ITC
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`investigations.’ Important differences, however, distinguish ITC investigations from patent
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`invalidity trials in federal district courts. Unlike district courts, the ITC lacks authority to
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`invalidate a patent and its invalidity rulings are not binding on either the Office ora district
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`court. See Tandon Corp. v. U.S.LT.C., 831 F.2d 1017, 1019 (Fed. Cir. 1987). Therefore, an ITC
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`determination cannot conclusively resolve an assertion of patent invalidity, which instead
`requires eitherdistrict court litigation or a PTAB proceeding to obtain patent cancellation. Thus,
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`denying institution because of a parallel ITC investigation will not necessarily minimize
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`* Fintiv refers to ITC proceedings in discussing factor one. Fintiv, Paper 11 at 8-9. Addressing
`the situation where district court litigation is stayed pending an ITC investigation, Fintivstates in
`dicta that “it is difficult to maintain a district court proceeding on patent claims determined to be
`invalid at the ITC,” Jd, at 9,
`” See, e.g., Philip Morris Prods. S.A. v. Rai Strategic Holdings, Inc.,PR2020-00919, Paper 9
`(PTAB Nov. 16, 2020),
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`potential conflicts between PTAB proceedings anddistrict court litigation. For the foregoing
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`reasons, the PTAB nolongerdiscretionarily denies petitions based on applying Fintivto a
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`parallel ITC proceeding. This memorandum memorializes that practice. The PTAB will not
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`discretionarily deny petitions based on applying Fintiv to a parallel ITC proceeding.
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`Sotera Stipulations
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`Fintiv factor four looks at the overlap between the issues raised in the IPR petition and in
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`the parallel proceeding in order to evaluate “concerns of inefficiency and the possibility of
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`conflicting decisions.” Fintiv, Paper 11 at 12. If the petition includes the same orsubstantially
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`the same claims, grounds, arguments, and evidence as presented in the parallel proceeding, this
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`fact has favored denial. Jd. at 12. Conversely, if the petition includes materially different
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`grounds, arguments, and/or evidence than those presented in the district court, this fact has
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`tended to weigh against exercising discretion to deny institution. Jd. at 12-13.
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`Whena petitioner stipulates not to pursue in a parallel district court proceeding the same
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`groundsas in the petition or any grounds that could have reasonably beenraised in the petition,it
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`mitigates concerns of potentially conflicting decisions and duplicative efforts between the district
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`court and the PTAB. See Sotera, Paper 12 at 18-19. With suchastipulation, if an IPR or PGR
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`is instituted, the grounds the PTABresolves will differ from those presentin the parallel district
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`court litigation. For these reasons, the PTAB will not discretionarily deny institution of an IPR
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`or PGRin view ofparallel district court litigation where a petitioner stipulates not to pursue in a
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`parallel district court proceeding the same groundsasin the petition or any grounds that could
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`have reasonably beenraised in the petition. This clarification avoids inconsistent outcomes
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`between the PTABandthedistrict court and allows the PTABto review groundsthat the parallel
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`district court litigation will not resolve.
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`Trial Date
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`Fintiv factor two considers the proximity of the court’s trial date to the Board’s projected
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`statutory deadline for a final written decision. When applying this factor, the PTAB has taken
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`the “courts’ trial schedules at face value absent somestrong evidenceto the contrary.”!° Thus,
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`the PTABhas generally weighed this factorin favor of exercising discretion to denyinstitution if
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`the trial date is scheduled before the projected statutory deadline for a final written decision.
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`In response to the RFC, a number of commenters expressed concern with the use oftrial
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`dates as a factor.'! Stakeholders correctly noted that scheduledtrial dates are unreliable and
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`often change. A court’s scheduledtrial date, therefore, is not by itself a good indicator of
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`whetherthe district court trial will occur before the statutory deadline fora final written decision.
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`Accordingly, when analyzing the proximity of the court’s trial date underfactor two of
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`Fintiv, when otherrelevant factors weigh against exercising discretion to deny institution or are
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`neutral, the proximity to trial should not alone outweighall of those other factors, See Jn re
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`Genentech, Inc,, 566 F.3d 1338, 1347 (Fed Cir. 2009), Parties may present evidence regarding
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`the most recent statistics on median time-to-trial for civil actions in the district court in which the
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`'0 Apple Inc. v, Fintiv, Inc., IPR2020-00019, Paper 15 at 13 (May 13, 2020) (informative)
`(applying the Fintiv factors articulated in the precedential Fintiv decision).
`" See USPTO Executive Summary ofPublic Views on Discretionary Institution ofAIA
`Proceedings (Jan. 2021) (available at https://www.uspto.gov/sites/default/files/documents/
`USPTOExecutiveSummaryofPublicViewsonDiscretionaryInstitutiononAIAProceedingsJanuary2
`021.pdf).
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`parallellitigation resides!” for the PTAB’s consideration. Where the parties rely on time-to-trial
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`statistics, the PTAB will also consider additional supporting factors such as the numberof cases
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`before the judge in the parallel litigation and the speed and availability of other case dispositions.
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`See id.; Inre Google LLC, No. 2021-178, 2021 WL 5292267 at *3 (Fed. Cir. 2021),
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`Conclusion
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`In summary, the PTAB will not deny institution of an IPR or PGR under Fintiv(i) when a
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`petition presents compelling evidence of unpatentability; (ii) when a request for denial under
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`Fintiv is based on a parallel ITC proceeding;or(iii) where a petitioner stipulates not to pursue in
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`a parallel district court proceeding the same groundsasin the petition or any grounds that could
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`have reasonably beenraised in the petition. Additionally, when the PTAB is applying Fintiv
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`factor two, the PTAB will consider the speed with which the district court case may cometotrial
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`and be resolved. The PTAB will weigh this factor against exercising discretion to deny
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`institution under Fintiv if the median time-to-trial is around the sametimeorafter the projected
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`statutory deadline for the PTAB’s final written decision. That said, even if the PTAB does not
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`deny institution underFinfiv, it retains the right to deny institution for other reasons under 35
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`U.S.C. §§ 314(a), 324(a), and 325(d). For example, the PTAB may denyinstitution if other
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`pertinent circumstances are present, such as abuse of processbya petitioner.
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`This interim guidance appliesto all proceedings pending before the Office. This interim
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`guidance will remain in place until further notice. The Office expects to replace this interim
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`guidance withrules after it has completed formal rulemaking.
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`!2 The mostrecentstatistics are available at: htips://www.uscourts.eov/statistics/table/na/federal-
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`vourt-management-statistics/2022/03/31-1.
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