The Fintiv Deception: Leahy’s Legislative ‘Fix’ is Unwarranted in Light of Sotera Wireless

“There is simply no need for a legislative ‘fix’ to overrule and undo the Fintiv factors. Petitioners challenging patent rights already have it well within their power to circumvent Fintiv if they will just agree not to seek multiple bites at the same apple.” weeks ago, Senators Patrick Leahy (D-VT) and John Cornyn (R-TX) introduced the Restoring America Invents Act, which would reverse the reforms of the Patent Trial and Appeal Board (PTAB) introduced by former U.S. Patent and Trademark Office (USPTO) Director Andrei Iancu. The Senators claim that the legislation is necessary, among other reasons, to prevent undermining the Congressional intent in enacting the Leahy-Smith America Invents Act (AIA).

According to Senator Leahy specifically, Director Iancu’s reforms politicized inter partes review (IPR) decisions by exercising discretion not to institute every IPR challenge filed by petitioners. “[Andrei Iancu] took actions that were designed to undermine the IPR process,” Leahy explained at a ceremony in September commemorating the 10th anniversary of the AIA. “[The Iancu reforms] hamstring the ability of the public to challenge poor-quality patents.”

A Revisionist Narrative

The narrative that reforms and policies implemented by Director Iancu were not intended by Congress seems to relate to Senator Leahy’s belief that a discretionary refusal to institute an IPR to challenge a patent frustrates the purpose of Congress. “We have to ensure that future PTO Directors are not able to unduly influence the process,” Leahy said at the 10th anniversary ceremony.

The problem with the view that Director Iancu somehow circumvented Congressional intent, or neutralized patent challenges in some extra-statutory manner, is that it is both revisionist and directly contradicts the Supreme Court’s interpretation of the AIA. Indeed, the Supreme Court unequivocally determined that the AIA gives the USPTO Director discretion to institute a challenge, or not. See Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131 (2016) (“the agency’s decision to deny a petition is a matter committed to the Patent Office’s discretion.”); Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 138 S.Ct 1365 (2018) (“The decision whether to institute inter partes review is committed to the Director’s discretion.”) (citations and quotations omitted); SAS Institute Inc. v. Iancu, 138 S.Ct. 1348 (2018) (“§314(a) invests the Director with discretion on the question whether to institute review”). And the Director’s decision to institute, or not, is explicitly not appealable — see 35 U.S.C. 314(d) and 35 U.S.C. 324(e). Congress was heavily criticized at the time, and since, for granting such broad discretion to USPTO Directors, but the statute is clear on its face, and so too is the interpretation of the Supreme Court. Iancu merely exercised discretion specifically vested in his office by Congress.


Fintiv Frustration

Notwithstanding, one of the issues Senator Leahy seeks to address with the Restoring America Invents Act relates to what is referred to as discretionary denials of IPR petitions pursuant to the precedential Patent Trial and Appeal Board (PTAB) decision in Apple, Inc. v. Fintiv, Inc., Paper No. 11, IPR2020-00019 (March 20, 2020).

The Fintiv decision sets a series of factors for determining whether the USPTO should exercise its authority to refuse an IPR, as a matter of discretion, when there is an early trial date scheduled in a parallel litigation ongoing in federal district court.  According to Fintiv, the PTAB is to consider the following six factors when determining whether to exercise the discretion of the Director to institute an IPR challenge:

  1. whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
  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;
  4. overlap between issues raised in the petition and in the parallel proceeding;
  5. whether the petitioner and the defendant in the parallel proceeding are the same party; and
  6. other circumstances that impact the Board’s exercise of discretion, including the merits.

These factors are considered controversial in the view of IPR petitioners, who claim they should have the ability to have their patentability challenges reviewed by the Patent Office as envisioned by the AIA, something Leahy supports. Patent owners, on the other hand, argue that IPR petitioners who are defendants in ongoing federal district court litigation are merely attempting to frustrate the purpose of the AIA by increasing the costs associated with reaching a resolution to disputes. The intent of the AIA was to offer a lower cost, streamlined alternative, but how is that accomplished with duplicative efforts of multiple tribunals?

Sotera to the Rescue

IPR petitioners want their cake and to eat it too. They complain about Fintiv and argue that they are being prevented from having the PTAB review their patentability challenges. But that is simply not true. A second precedential PTAB decision in Sotera Wireless, Inc. v. Masimo Corporation, Paper 12, IPR2020-01019 (December 1, 2020), gives IPR petitioners the ability to completely neuter the Fintiv decision of their own accord if they file a stipulation that if an IPR is instituted they will not pursue in district court litigation any ground raised or that could have been raised in the IPR. With that stipulation in place there is no possibility the petitioner is merely looking for a second (or third or subsequent) bite at the apple arguing the same issues raised in parallel proceedings. There would be no overlap between the district court proceeding and any IPR instituted by the USPTO.

A petitioner stipulation that they will not raise issues in district court that were or could be raised in IPR “mitigates any concerns of duplicative efforts between the district court and the Board, as well as concerns of potentially conflicting decisions… ensur[ing] that an inter partes review is a ‘true alternative’ to the district court proceeding.” See Sotera Wireless. The precedential Sotera Wireless decision goes on to explain that such a stipulation “weighs strongly in favor of not exercising discretion to deny institution under 35 U.S.C. 314 (a).”

Avoiding Duplication is Not Anti-AIA

There is simply no need for a legislative “fix” to overrule and undo the Fintiv factors. Petitioners challenging patent rights already have it well within their power to circumvent Fintiv if they will just agree not to seek multiple bites at the same apple.

Short of harassment, what can the possible justification for the Restoring America Invents Act’s circumvention of Fintiv be? Aside from infringers who do not want to pay for technology they have misappropriated, who could possibly view such duplicative efforts as an appropriate use of agency or judicial resources?

Image Source: Deposit Photos
Author: nito103
Image ID: 124433204 


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Join the Discussion

5 comments so far.

  • [Avatar for Anon]
    October 19, 2021 04:06 pm

    Congressional capture is hardly new — but indeed is deplorable.

    We need a MASSIVE overhaul (starting with expressly abrogating Citizens United).

  • [Avatar for Pro Say]
    Pro Say
    October 19, 2021 12:07 pm

    “who could possibly view such duplicative efforts as an appropriate use of agency or judicial resources?”

    Why, Patrick “Big Tech” Leahy and John “Big Tech” Cornyn, of course.

    Hopefully all the other Senators and Representatives won’t fall for their American innovation choking, China-cheers bill of goods.

  • [Avatar for Jacek]
    October 19, 2021 09:46 am

    Who is the opponent of Mr. Leahy in the Next elections? I would like to send her/him my contribution.

    How a person acting as a Hired gun for Big Tech and against the best interest of his constituents (and His Country) can be elected again and again.
    And looking at them with a straight face? No shame at all?

  • [Avatar for mike]
    October 18, 2021 10:59 pm

    We still have the problem of different evidentiary standards in Article III vs PTAB, as expert stakeholders have pointed out. Congress should put their efforts there, making the standards the same.

  • [Avatar for Ron Katznelson]
    Ron Katznelson
    October 18, 2021 07:13 pm

    Thanks Gene for a good article.
    You correctly say “Avoiding Duplication is Not Anti-AIA”.
    Not only is it “not anti-AIA,” avoiding duplication was Congress’ express intent. Congress intended adversarial IPR proceedings to be an alternative to litigation — not in addition to litigation. H.R. Rep. No. 112-98, pt. 1, at 48 (2011) (The purpose of AIA trials is “providing quick and cost effective alternatives to litigation.”) (Emphasis added).

    That the PTO Director is vested with plenary authority to deny institution is also clear from his non-discretionary duty to ensure “the efficient administration of the Office, and the ability of the Office to timely complete proceedings.” 35 U.S.C. § 316(b). This is because denial of institution is the only way to meet these statutory requirements under floods of petitions to institute that would not otherwise be completed in time.