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Responding to Growing Criticisms, PTAB Expands Discretion to Deny Institution

Faced with criticism from legislators and patent owners for perceived serial harassment by patent challengers, on May 7, 2019, the Patent Trial and Appeal Board (“the PTAB” or “the Board”) designated two decisions as “precedential” that arguably expand its discretion to deny petitions in PTAB proceedings.

Previously, in General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha, Case IPR2016-01357, slip op. at 15–16 (PTAB Sept. 6, 2017) (Paper 19) (precedential), the Board articulated a non-exhaustive list of factors to be considered in determining whether to exercise discretion to deny a petition under § 314(a).  Those factors include the following:

  1. whether the same petitioner previously filed a petition directed to the same claims of the same patent;
  2. whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it;
  3. whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition;
  4. the length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;
  5. whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent;
  6. the finite resources of the Board; and
  7. the requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review.

Id. at 16.  The two recent precedential decisions build upon the General Plastic factors and the circumstances that may warrant denial under § 314(a).

First, in Valve Corp. v. Electronic Scripting Prods., Inc., Case IPR2019-00062, -00063, -00084, Paper 11 (PTAB Apr. 2, 2019) (precedential), the PTAB considered whether its discretion under § 314(a) is limited to instances where multiple petitions are filed by the same petitioner.  The PTAB concluded that it was not, and found that follow-on petitions filed by “similarly situated” petitioners may also be denied under § 314(a).  The PTAB explained that “when different petitioners challenge the same patent, we consider any relationship between those petitioners when weighing the General Plastic factors.”  Id. at 9.  Valve and the earlier petitioner, HTC, were co-defendants in district court litigation and were accused of infringing the same claims of the same patent challenged in Valve’s petitions and HTC’s earlier petition.  The PTAB had denied HTC’s petition before Valve filed its own petitions.  The Board concluded that Valve waited until after the denial and then filed its three additional petitions and that Valve had a significant relationship with HTC.  According to the panel, which included Director Iancu, “[t]hese serial and repetitive attacks implicate the efficiency concerns underpinning General Plastic” and agreed with the Patent Owner that Valve’s petitions were “unfair” follow-on petitions.  Id. at 15.

Second, in NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., Case IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential), the PTAB exercised its discretion to deny institution under 35 U.S.C. §§ 314(a) and 325(d) because the grounds in the petition were redundant with the arguments considered during prosecution.  The PTAB also noted that the co-pending district court litigation was scheduled to go to trial in a few months based on the same arguments and evidence advanced in the petition.  In denying institution under § 325(d), the Board explained that the asserted art was a subset of the same prior art that the Examiner applied in rejecting the claims during prosecution and Petitioner’s arguments were substantially similar to the Examiner’s rejections, which Patent Owner overcame during prosecution.  Further, in denying institution under § 314(a), the Board noted that a 5-day jury trial was set to begin on March 25, 2019, whereas a trial before the PTAB on the same asserted prior art would not have concluded until September 2019, and thereby would have failed to provide an effective and efficient alternative to district court litigation.

In view of these designations, it is clear that discretionary bases for denying institution will play a central role in patent owner preliminary responses.  As the PTAB focuses on addressing criticisms regarding serial harassment of patent owners and unfair follow-on petitions that use patent owner responses or institution decisions as a roadmap, prospective petitioners should ensure that petitions are filed as early as possible both in the context of the progression of parallel district court litigation and of the progression of earlier filed PTAB proceedings initiated by similarly situated petitioners.  In most cases, prospective petitioners should file their petitions prior to the filing of the patent owner’s preliminary response in an earlier filed petition to avoid any allegations of gamesmanship.