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An Informative PTAB Decision on Fintiv Factors

The U.S. Patent Trial and Appeal Board (“PTAB”) recently designated its decision in Snap, Inc. v. SRK Technology LLC (§ II.A), IPR2020-00820, Paper 15 (Oct. 21, 2020) (“Snap”) as being informative regarding the Fintiv factors analysis.  The Fintiv “factors relate to whether efficiency, fairness, and the merits support the exercise of authority to deny institution in view of an earlier trial date in the parallel proceeding.” Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 at 6 (PTAB March 20, 2020).  The PTAB evaluates these factors taking “a holistic view of whether efficiency and integrity of the system are best served by denying or instituting review.” Id.

By way of background, SRK Technology sued Snap in U.S. District Court alleging willful infringement of two patents (U.S. Patent No. 8,996,059 and U.S. Patent No. 9,960,159).  Snap, in turn, filed two IPR’s challenging the claims of the asserted patents.  The Snap decision relates to the IPR challenging the claims of ‘159 patent.  SRK Technology is seeking to deny institution the IPR due to the pending parallel federal court proceeding.

The six Fintiv factors considered in the Snap decision, and the PTAB’s reasoning, are discussed below:

1. whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;

The PTAB agreed with Snap that the District Court’s stay of the litigation pending denial of institution or a final written decision in the IPRs in the alleviates any concerns about inefficiency and duplication of efforts.  So it seems that if a parallel court proceeding is already stayed, the PTAB may be reluctant to deny institution of a related IPR.  In this case, both parties stipulated to the stay of the litigation.  However, a patent owner seeking to avoid a potential IPR may want to redouble their efforts in the parallel litigation to prevent the court from staying the case.  

2. proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision;

3. investment in the parallel proceeding by the court and the parties;

The analysis for the second and third Fintiv factors is similar to each other.  The PTAB agreed with Snap that the parallel litigation was in the early stages considering that no substantive orders had been issued concerning the ‘159 patent.  Discovery was not completed, there were no claim construction orders issued by the District Court, and only a scheduling conference was held prior to the stay request. Accordingly, the PTAB determined that the second and third Fintiv factor did not weigh in favor of exercising discretion to deny institution.  A respondent being sued for patent infringement may not want to wait to file an IPR petition or else they risk that the PTAB will deny institution based on the work previously performed for the litigation.

4. overlap between issues raised in the petition and in the parallel proceeding;

The PTAB agreed with Snap’s position that the prior art and arguments included in the IPR petition are materially different than those presented in the litigation and thus incomplete overlap with the litigation.  Several new prior art references were included in the IPR petition and there were also new arguments presented.  Where the PTAB noted that there was overlap, they determined it may actually be beneficial for litigation by simplifying issues for trial.  A petitioner seeking IPR may want to include at least some new prior art references, and some new arguments, even if the best prior art references and strongest arguments were already presented in the parallel litigation.

5. whether the petitioner and the defendant in the parallel proceeding are the same party; and

There was no disagreement that the parties involved in the District Court litigation and the IPR petition are the same.  The PTAB considered this factor to be neutral or weight slightly in favor of SRK Technology.   While the analysis of Fintiv factor was straightforward in this case, it may be more important in situations where there are multiple parties being sued and only one party petitions for IPR.  In that case, the PTAB would be more likely to agree with the petitioner that the IPR should be instituted.

6. other circumstances that impact the Board’s exercise of discretion, including the merits.

The PTAB did not find SRK Technology’s arguments regarding the interests of justice to be persuasive.  The PTAB agreed with Snap’s patentability challenges presented in the IPR petition, which weighs against denying institution base on the merits.  While this sixth Fintiv factor may seem like a catch-all provision, certainly the PTAB’s view on the merits of the petition are a primary consideration on whether to institute or deny IPR.

In concluding the Fintiv analysis, the PTAB reiterates that no single factor is determinative.  The fact-base inquiry seemed to tilt in Snap’s favor for each factor except for the fifth factor, since both parties were the same.  The Snap decision provides considerations for both petitioners, and patent owners alike, on strategies for managing the filings of the inevitable IPRs resulting from patent litigation. 

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Brad M. Scheller is an experienced patent litigator and strategic counselor to start-up ventures and established businesses in the mechanical and electrical arts, with a focus in EV and battery technologies and advising clients on patent portfolio growth, management and enforcement. He represents clients before the United States Patent and Trademark Office and as lead counsel in federal district court and appellate litigation across the country.