The Race Is On

A relatively recent development in modern patent litigation has quickly become a hot-button issue.

One of the ongoing debates in the patent litigation world relates to whether the deck is too stacked against patentees in this age of Alice and IPRs. What makes it a debate is that there are valid arguments on both sides, vociferously voiced in the media and the halls of Congress by stakeholders pressing their respective positions. At the same time, there is a slower-moving, but very important for both patent owners and accused infringers, real-time game of chess being played out in the various judicial fora entertaining patent disputes. The combatants are often sophisticated (and oftentimes well-funded) nonpracticing entities going up against Silicon Valley stalwarts, themselves practiced in the art of modern patent defense. And the battlefield frequently extends across district courts and the USPTO, with each side looking to press every advantage in order to prevail.

None of the above is news to this readership. That said, it is worth focusing on a relatively recent development in modern patent litigation that has quickly become a hot-button issue — as well as the subject of a recently filed lawsuit pitting four tech giants (Apple, Google, Cisco, and Intel) against the USPTO. For a great laying out of the issues at play I commend Professor (and former interviewee on these pages) Saurabh Vishnubhakat’s Patently-O piece. As he puts it, the plaintiffs are challenging the recent USPTO policy that “allows the PTAB to deny institution of an inter partes review petition based on how far a parallel U.S. district court proceeding on the same patent has already gone.” Also known as the “NHK-Fintiv rule” after the cases that established the policy, since it was articulated patent owners have argued successfully to the PTAB that “it would be best to conserve USPTO resources rather than undertake a largely or entirely duplicative review.”

While I urge consideration of Vishnubhakat’s analysis of the merits of the new lawsuit by readers, the purpose of this column is not to offer thoughts on whether the NHK-Fintiv rule is a good or bad one. Instead, I think it is interesting to focus on why the rule has met such immediate resistance from the plaintiffs in the USPTO lawsuit, while also taking a look at a recent PTAB decision applying the rule to the disfavor of one of the plaintiffs.

First, why the rule is an immediate problem for alleged infringers. Simply put, there is no doubt that having an IPR pathway open is critical to modern patent defense strategies. One of the main benefits to IPRs to petitioners is the potential for quicker resolution of the patent validity questions at issue. And in cases where an IPR is filed in response to a district court lawsuit, a stay request to the district court can — if granted — confer even more benefits to the defense. Patentees hoping to counter that result, however, have found a savior in the form of judges, such as the Western District of Texas’ Judge Albright, who have shown a willingness to get patent cases to trial quickly. Critically, these judges will issue scheduling orders that often feature a trial date that predates the PTAB’s 18-month deadline from petition filing to issue a final written decision in an IPR. Armed with such a quick time-to-trial scheduling order, patentees can argue that IPR petitions should be denied under the NHK-Fintiv rule. An argument that some PTAB panels have accepted, to the immediate detriment of the IPR filer.

One recent example illustrates this interplay while also underscoring why frequent patent defendants have serious concerns about the NHK-Fintiv rule. Back in August, Apple was hit with a $500 million verdict by an East Texas jury. Back in February (before Fintiv, which also featured Apple, was decided), Apple filed an IPR petition against PanOptis’ asserted ‘833 Patent. Post-Fintiv, the panel assigned to the ‘833 Patent IPR petition ordered the parties to brief whether the upcoming August trial date between the parties warranted discretionary denial of Apple’s IPR petition. In a decision dated September 17, 2020, the panel decided against Apple, denying its petition under the NHK-Fintiv rule. Unsurprisingly, the fact that trial had already occurred and that there would be a “thirteen-month gap between the date of the district court jury verdict and the projected due date for a final written decision in this proceeding” the panel found “strongly favors exercising our discretion to deny institution.” In short, perhaps one of Apple’s best chances to avoid a half-billion dollars of liability was blocked, because of the timing circumstances of the case filed against it.

Now, Apple can surely afford to pay PanOptis, assuming it is unsuccessful in its Federal Circuit appeal from the jury verdict. What it can’t do, however, is appeal the PTAB’s IPR denial decision, a circumstance that perhaps contributed to its decision to file suit against the USPTO for its exercise of the NHK-Fintiv rule. On the other hand, patentees welcome every opportunity presented to them for a chance at speedy adjudication of their infringement claims — a process that is often frustrated by the granting of stays pending IPR by district courts. For PanOptis, and other patentees forced to run (and find a way to pay the substantial cost of) the gauntlet of winning in both the district court and the PTAB, the NHK-Fintiv rule contributes to giving patent owners a puncher’s chance of success.

Ultimately, the PTAB’s application of the NHK-Fintiv rule, the rush to secure speedy times-to-trial by patentees, and the pending lawsuit against the PTO all contribute to a heady mix of things to watch for patent litigators and their clients. For its part, PanOptis provides an example of a patent owner who successfully won the race to (and at) trial against a tech giant, while also benefiting from the NHK-Fintiv rule allowing it to block Apple’s shot at the IPR goal. Meanwhile, Apple — together with its fellow tech titans — is doing its best to aim for eliminating the NHK-Fintiv rule as quickly as possible. When it comes to patent litigation today, the race is on.

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Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.


Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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