The Patent Trial and Appeal Board designated as precedential two opinions with opposite outcomes on the issue of discretionary denial of inter partes review (IPR) petitions under 35 U.S.C. §314(a) in July.  In Apple Inc. v. Finitiv, Inc., IPR2020-00019, Paper 15 (May 13, 2020), the Board denied institution of an IPR due to a parallel district court proceeding in the Western District of Texas, whereas in Sand Revolution II, LLC v. Continental Intermodal Group-Trucking LLC, IPR2019-01393, Paper 24 (June 16, 2020), the Board instituted an IPR despite a parallel district court proceeding also occurring in the Western District of Texas.  In NHK Spring Co. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential, designated May 7, 2019) (discussed here), the Board identified six factors relevant to its discretion to deny an IPR under section 314(a).  Both of the two opinions newly designated as precedential apply the NHK factors, thus shedding light on which facts influence the application of the factors and which do not.

The six factors, as well as how the Board weighed each factor in the Apple and Sand Revolution opinions, are as follows:

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

In both Apple and Sand Revolution, the Board found that this factor did not weigh in favor of either exercising or not exercising discretion to deny institution under section 314(a).  In both cases, no party requested a stay of the district court cases nor had a stay been ordered.  In both cases, the Board noted that it would not attempt to predict whether the district court would order a stay because a variety of circumstances and facts to which the Board is not privy could influence the district court’s determination.

  1. Proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision.

In Apple, the Board weighed this factor somewhat in favor of discretionary denial.  The Board stated that it generally “take[s] courts’ trial schedules at face value absent some strong evidence to the contrary.”  Despite the fact that the trial date had already been postponed by several months due to complications from the coronavirus pandemic, the fact that the trial was scheduled to begin two months before the Board’s deadline to reach a final decision caused the Board to weigh this factor in favor of discretionary denial.  In contrast, in Sand Revolution, the Board found this factor to weigh marginally in favor of not exercising discretion to deny institution.  Although the district court trial was initially scheduled to occur at least five months before any final decision by the Board, the parties had jointly moved for and the district court had agreed to extend the scheduling order dates, the court qualified each calendar date as being “or as available” due to the coronavirus pandemic, and a degree of uncertainty continued to surround the scheduled trial date.  In contrast, the Board noted that it continued to be fully operational despite the coronavirus pandemic and continued to conduct hearings on schedule.

  1. Investment in the parallel proceeding by the court and the parties.

In Apple, the Board weighed this factor somewhat in favor of discretionary denial where the court had issued a 34-page claim construction order construing seven claim terms and initial and final infringement and invalidity contentions had been exchanged by the parties.  In Sand Revolution, the Board weighed this factor only marginally, if at all, in favor of exercising discretion to deny institution where the court had issued only a two-page claim construction order, which the Board specifically identified as being less detailed than the claim construction order in the Apple parallel proceeding, even though the parties had exchanged infringement and invalidity contentions.

  1. Overlap between issues raised in the petition and in the parallel proceeding.

In Apple, the Board weighed this factor in favor of discretionary denial because identical claims were challenged based on the same prior art.  In Sand Revolution, the Board weighed this factor marginally in favor of not exercising discretion to deny institution where, although the patentability of issues presented before the Board were a subset of the issues in the district court case, the petitioner stipulated to counsel for the patent owner that, if the IPR were instituted, the petitioner would not pursue the same grounds in the district court litigation.

  1. Whether the petitioner and defendant in the parallel proceeding are the same party.

In both Apple and Sand Revolution, the Board weighed this factor in favor of discretionary denial because the parties in the respective district court cases were the same parties.

  1. Other circumstances that impact the Board’s exercise of discretion, including the merits.

In Apple, the Board weighed this factor in favor of discretionary denial, noting that the petitioner’s case with at least two of the three independent claims would be a close call.  In contrast, in Sand Revolution, the Board weighed this factor in favor of not exercising discretion to deny institution, determining on the preliminary record that the petitioner had set forth a reasonably strong case for the obviousness of most challenged claims.

Practitioners who need to argue for or against discretionary denial of an IPR petition should make note of a few key takeaways from these decisions.  With respect to the first factor, an argument that a court may grant a stay of the parallel proceeding should only be made if there is specific evidence of that potential; merely alleging generally that courts often issue stays will not persuade the Board.  With respect to the second factor, the Board seems undecided on how to handle the uncertainty the coronavirus pandemic presents district court trial schedules but confident in its own ability to work remotely and stay on schedule. The parties in Apple and Sand District had parallel proceedings in the same district court (the Western District of Texas), and while the district court did not add the parenthetical “or as available” to its trial date setting in Apple as it had in Sand Revolution, the district court was presumably experiencing the same level of uncertainty regarding pending trial dates across all cases.  Should the pandemic continue to wreak havoc on trial schedules, a practitioner could point to the Board’s own ability to remain fully operational and on schedule “even in the extraordinary circumstances under which the entire country is currently operating” as a reason the Board should not deny institution.  Finally, with respect to the fourth factor, the petitioner may avoid a discretionary denial if it stipulates it will not pursue the same grounds in a district court litigation as in the IPR.