`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`UNDER SECRETARY OF COMMERCEFOR INTELLECTUAL PROPERTY AND
`DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`DATE:
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`June 21, 2022
`
`MEMORANDUM
`
`TO:
`
`FROM:
`
`KatherineK.Vidal odin hu Vida
`
`Membersof the Patent Trial and Appeal Board
`
`UnderSecretary of Commercefor Intelleetyal|Property and
`ark Office (USPTO orthe Office)
`Director of the United States Patent and Trad
`
`
`SUBJECT:|INTERIM PROCEDURE FOR DISCRETIONARY DENIALS IN AJA POST-
`GRANT PROCEEDINGS WITH PARALLEL DISTRICT COURT
`LITIGATION
`
`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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`AIA proceedings 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 minimizepotential
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`conflict between the Patent Trial and Appeal Board (PTAB)anddistrict 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. y. Fintiv, Inc., PR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (designated
`precedential May 5, 2020).
`
`P.O. Box 1450, Alexandria, Virginia 22313-1450 - www.usPTO.Gov
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`1
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`MS-1012
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`1
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`MS-1012
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`
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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 thereis
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`parallel district court litigation:
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`1. whether the court granted a stay or evidence exists that one may be grantedif 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;
`
`3.
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`investment in the parallel proceeding by the court andthe parties;
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`4. overlap betweenissuesraisedin the petition and in the parallel proceeding;
`5. whether the 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 approachesto
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`exercising discretion on whetherto institute an AIA 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 severalclarifications need to be made to the PTAB’s
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`current application of Fintiv to discretionary institution wherethere is parallellitigation.
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`Asexplained 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 confirmsthat the precedential import of Fintiv is limited to facts of that case. Namely,
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`Fintiv involved institution of an AIA proceeding with a parallel district court litigation. The
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`* Discretionto 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
`CommentPeriod, 85 FR 73437 (Nov. 18, 2020).
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`2
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`3
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`
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`system .. . will give third parties a quick, inexpensive, andreliable 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 proceed at 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 unrebuttedin 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 PTABretains 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 of a petitioner’s challenge
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`when determining whetherto institute a post-grant proceeding in view ofparallel 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 presented at the institution stage presents a compelling
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`* Institution of an IPR is authorized by statute only when “the information presentedin the
`petition... and any response... showsthat there is a reasonable likelihood that the petitioner
`would prevail with respect to at least 1 of the claims challenged in thepetition.” 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).
`
`4
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`
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`unpatentability challenge, that determination alone demonstrates that the PTAB should not
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`discretionarily deny institution underFintiv.®
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`This clarification strikes a balance among the competing concernsof avoiding potentially
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`conflicting outcomes, avoiding overburdening patent owners, and strengthening the patent
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`system by 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 proceeding settles or fails 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 PTABissued 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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`
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`° The compelling evidencetest affirms the PTAB’s current approach of declining to deny
`institution under Fintiv where the evidence of record so farin the case wouldplainly lead to a
`conclusion that one or more claims are unpatentable. See, e.g., I/unina Inc. v. Trs. ofColumbia
`Univ., IPR2020-00988, Paper 20 (PTAB Dec.8, 2020) (declining to deny under Finfivin light of
`strong evidence on the merits even though four factors 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., Lid. , {PR2022-00241, Paper 10 (June 13, 2022) (Fintiv analysis
`concludes that “very strong” evidence on the merits outweigh concurrentlitigation involving
`earlier scheduledtrial date and significant overlap in proceedings).
`
`’ NHKSpringCo. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018)
`(precedential), This decision also based the denial of institution on Directordiscretion under 35
`U.S.C, § 325(d).
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`5
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`
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`use of PTAB’s resources. NHK Spring, Paper8 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 argumentfor
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`discretionary denial under NHK Spring dueto an earliertrial date. Fintiv, Paper 11 at S-6. The
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`Fintiv factors focus on the interplay between IPRs anddistrict court litigation. Through that
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`focus, the Fintiv factors seek to avoid duplicative efforts between the PTAB andfederaldistrict
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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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`describedin factorthree.
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`Although the Fintiv factors are directed to district courtlitigation and not ITC
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`proceedings,® the PTABhas,in the past, denied AIA reviews based on parallel 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 eitherthe Office ora district
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`court. See Tandon Corp. v. U.SL.T.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 either district court litigation ora PTAB proceeding to obtain patent cancellation. Thus,
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`denying institution because ofa parallel ITC investigation will not necessarily minimize
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`8 Fintiy 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, Finfiv states 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., IPR2020-00919, Paper 9
`(PTAB Nov.16, 2020).
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`6
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`
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`potential conflicts between PTAB proceedings and district court litigation. For the foregoing
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`reasons, the PTAB nolongerdiscretionarily denies petitions based on applying Fintiv to 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 “concernsofinefficiency and the possibility of
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`conflicting decisions.” Fintiv, Paper 11 at 12. Ifthe petition includes the same or substantially
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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 petitionerstipulates not to pursue in a parallel district court proceeding the same
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`groundsas in thepetition or any grounds that could have reasonably beenraised in the petition,it
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`mitigates concernsof potentially conflicting decisions and duplicative efforts betweenthe 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 PTAB resolves will differ from those present in 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 PGR in view ofparallel district court litigation wherea petitionerstipulates not to pursue ina
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`parallel district court proceeding the same groundsas in 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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`7
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`
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`between the PTABandthedistrict court and allows the PTABto review groundsthatthe 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 PTAB has generally weighedthis factor in 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 numberof commenters expressed concern with the useoftrial
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`dates as a factor.'' Stakeholders correctly noted that scheduled trial 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 for a final written decision.
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`Accordingly, when analyzing the proximity ofthe 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 In 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., JPR2020-00019, Paper 15 at 13 (May 13, 2020) (informative)
`(applying the Fintivfactors articulated in the precedential Fintiv decision),
`'l 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).
`
`8
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