We have previously written about the Patent Trial and Appeal Board’s (“PTAB”) precedential decision in Apple Inc. v. Fintiv, Inc., which set forth six factors the PTAB will consider when assessing whether to discretionarily deny an IPR petition in light of co-pending district court litigation.  Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (March 20, 2020).  The PTAB has been applying the Fintiv factors in subsequent IPRs, many of which involve a stayed district court litigation.  The PTAB has now designated as precedential a decision instituting IPR in Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (Dec. 1, 2020).  In this IPR, although the co-pending district court case was not stayed, Sotera Wireless (“Sotera”) filed a stipulation relinquishing all potentially duplicative arguments.  The PTAB allowed the IPR to proceed, noting that the stipulation avoided duplication and prevented conflicting results, chief components of the Fintiv factors.  More detail on this decision is below.

Sotera filed an IPR petition challenging a reissue patent owned by Masimo Corporation (“Masimo”) related to a medical alarm suspend system.  However, Sotera and Masimo were also involved in co-pending litigation involving the same patent, and others, in the Southern District of California.  Sotera, Paper 12 at 3, 13-14.  Importantly, Sotera filed a stipulation in the district court in which Sotera agreed to forgo duplicative arguments.  Masimo nevertheless argued that the PTAB should use its discretion to deny Sotera’s petition based on the status of the co-pending district court litigation.  Id. at 11.  The PTAB rejected this argument and declined to exercise its discretion to deny Sotera’s petition.  The PTAB’s decision emphasized Fintiv Factor 4, recognizing that there could be no overlap of issues between the IPR and district court matters since Sotera’s stipulation broadly relinquished all arguments that it would—or reasonably could—make in the IPR.  An overview of the Board’s analysis follows:

Factor 1: whether a stay exists or is likely to be granted if a proceeding is instituted: Sotera filed a motion to stay the district court proceeding, but the court had not yet granted the motion.  Therefore, the PTAB determined that this factor did not weigh either in favor of or against denying institution.  Id. at 14.

Factor 2: proximity of the court’s trial date to the Board’s projected statutory deadline: The district court trial is set to begin on November 30, 2021, the day before the IPR statutory deadline of December 1, 2021.  Id. at 15.  The PTAB explained that according to Fintiv, when the trial date falls around the same time as or after the statutory deadline, deciding whether to institute will likely implicate other Fintiv factors.  Id.  Therefore, the PTAB found this factor to be neutral.

Factor 3: investment in the parallel proceeding by the court and parties: While the parties had served infringement and invalidity contentions in district court, the PTAB found that the parties’ investment was nevertheless relatively limited, because all claim construction deadlines had been vacated and much other work remained.  Id. at 16-17.  The PTAB also determined that Sotera had acted expeditiously by filing the IPR petition two weeks before the statutory deadline, particularly given the presence of other patents in the district court case, early settlement negotiations, and difficulties related to the COVID-19 pandemic.  Id.  Therefore, the PTAB determined that this factor weighed in favor of instituting the IPR petition.

Factor 4: overlap between issues raised in the petition and in the parallel proceeding: In the district court, Sotera stipulated that, if IPR is instituted, it would not pursue any ground “that was raised or could have been reasonably raised in” the IPR.  Id. at 13-14, 18-19.  The stipulation explained that this meant Sotera would not pursue any grounds of invalidity arising under 35 U.S.C. §§ 102 and 103.  Id. at 18-19.  Therefore, the PTAB found the stipulation language sufficiently broad to allay concerns about possible duplication and concluded that this factor weighed strongly in favor of instituting the IPR.  Id.

Factor 5: whether the petitioner and the defendant in the parallel proceeding are the same party: Because the IPR petitioner and patent owner are the same as the co-pending litigation parties, the PTAB found that this factor weighed in favor of denying institution.  Id.

Factor 6: other circumstances and considerations that impact the Board’s exercise of discretion, including the merits: While the PTAB acknowledged that Sotera had demonstrated at the institution stage a reasonable likelihood of proving the challenged patent claims were unpatentable, the PTAB ultimately concluded that this factor was neutral.  Id. at 20.

Ultimately, the PTAB weighed all six factors and declined to exercise its discretion to deny the petition under 35 U.S.C. § 314(a) based on the co-pending district court litigation.  Id. at 20-21.  The PTAB reasoned that the timing of Sotera’s IPR petition was reasonable, there was relatively little investment in the parallel proceeding, and the stipulation ensured minimal overlap between the parallel proceedings.  Id. at 20.  This decision indicates that broad stipulations relinquishing potentially duplicative invalidity arguments may be useful to avoid discretionary denial in light of Fintiv.

Be sure to check out our blog’s original post on Apple v. Fintiv, along with our post on decisions applying the Fintiv factors that the PTAB has designated as informative.