Intellectual Property

Taketh And Giveth

Whether the rocket docket/NHK-Fintiv interplay resulting in discretionary denial survives additional PTAB scrutiny is clearly up for debate at this point, and further developments beg a watchful eye.

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Unlike in staider areas of law such as ________ (fill-in-your-own blank on this one), patent litigation developments come at us in the IP world with the frequency, power, and fury of a Nazare megawave. Maybe that is an exaggeration, since not every development in the patent world is that momentous, but I think the wave imagery is appropriate. Because patent litigation can be a bumpy ride, even for the most frequent participants. Take the column I wrote less than a month ago, on Apple’s (and other Big Tech compadres’) struggle with the PTAB’s seemingly newfound predilection for issuing discretionary denials in certain IPRs — principally where there was parallel district court litigation that promised to finish sooner than the IPR process would. With Apple being an early example of the consequences of such a denial, as its attempt to avert a $500 million verdict — based in part on a pending IPR — was thwarted by the PTAB’s exercise of its discretionary denial power. The decision against Apple undoubtedly gave succor to other patent holders, particularly those fortunate enough to have secured early trial dates in their pending patent cases. But perhaps any such celebrations were premature, underscoring once again the ever-shifting nature of patent litigation practice, especially before the PTAB.

As anyone with an active PTAB practice knows, it is never really safe to try to predict how a particular panel will apply the various multifactor tests (e.g., NHK-Fintiv, General Plastic, etc.) that the PTAB is fond of establishing on precedential procedural issues. As a fee-driven entity dependent on petitioners deciding to initiate proceedings, the PTAB is surely sensitive to any scenario that discourages filers out of concern that they will not get a fair shake before the tribunal. Moreover, the PTAB has been rightfully praised for its performance during the COVID-19 pandemic, a performance that I highlighted (with the help of Lex Machina) in a column back in August. In fact, I continue to believe that even with the recent increased possibility of discretionary denials: “Pandemic or no pandemic, the PTAB’s outsized role in the patent ecosystem will continue apace.”

The continued attractiveness of the PTAB as a forum for patent defendants is an easy prediction to make, considering how quickly it has moved to dispel any suggestion that the rocket docket/NHK-Fintiv interplay will present an easy path to discretionary denial before the PTAB for patent owners. To illustrate the point, let’s consider a recent PTAB decision — in yet another the case involving Apple — where the PTAB refused to allow a discretionary denial request made by the patent owner, Parus Holdings, Inc., to deny institution of the IPR. Relying heavily on the PTAB’s post-Fintiv informative decision in Sand Revolution, the panel in Parus granted institution in Apple’s favor based on two key facts.

First, it found that COVID-19 uncertainty around the trial court’s (the ever-popular Judge Albright in the Western District of Texas) ability to stick with the proposed trial date cautioned against determining that the PTAB’s final written decision would come after trial would be conducted. Second, it noted that the strength of Apple’s position on the merits favored institution, especially where not much of value had already happened in the trial court related to validity. In short, despite what appeared to be a classic example of a favorable (at least for the defendant) rocket docket/NHK-Fintiv interplay, the PTAB still decided in the favor of the petitioner Apple.

While the result in Parus favored the petitioner, it would be folly to assume that the rocket docket/NHK-Fintiv interplay no longer presents any risk for IPR petitioners. Unsurprisingly, Parus itself moved for rehearing on the PTAB’s institution decision, arguing primarily that since Albright is currently conducting patent trials, the PTAB was mistaken in assuming that the Parus/Apple trial would not go off on its scheduled July 2021 (before the PTAB’s final written decision date) trial date — especially where Apple itself had agreed to that trial date. As of this writing, the PTAB had not yet ruled on the rehearing request. But it will undoubtedly be of interest to those who would to know just how viable the rocket docket/NHK-Fintiv interplay is as a strategy for avoiding IPR risk as a patent owner. Which means it will be important for any patent owner (and their lawyers, and litigation funders, too) considering whether and where to file its patent cases, at a minimum.

Ultimately, the two differing decisions in Apple-filed IPRs underscore the importance of counsel and their clients monitoring the PTAB closely for developments around the discretionary denial issue. While keeping in mind that the PTAB is set up for — and has proven — that it can handle the invalidity aspects of a case at least as well, if not better, than the various approaches to invalidity espoused by different district courts around the country. Whether the rocket docket/NHK-Fintiv interplay resulting in discretionary denial survives additional PTAB scrutiny is clearly up for debate at this point, and further developments beg a watchful eye. It is nice to start to handicap whether SCOTUS will rule for or against the PTAB in Arthrex. But for those practicing in the PTAB trenches, considering how the PTAB taketh and giveth on the discretionary denial issue is more of the moment.

Please feel free to send comments or questions to me at [email protected] or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

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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 [email protected] or follow him on Twitter: @gkroub.

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