INFORMATIVE: Acting Director Rescinds Institution Where Claims Held Invalid in District Court Case

by | May 7, 2025 | PTAB News, PTAB Trial Basics, Trial Institution

By David Linden, Dave Maiorana, and Sue Gerber –

On August 22, 2024, Hulu, LLC (“Hulu”) filed two separate petitions for inter partes review (“IPR”) of U.S. Patent No. 11,463,768 (“the ’768 Patent”), assigned to Piranha Media Distribution, LLC (“Piranha”).  The ’768 Patent describes digital media systems configured to insert and display advertisements within media content.  Each petition challenged the same claims as obvious under 35 U.S.C. § 103 in view of different prior art combinations.  Piranha had asserted the ’768 Patent against Hulu in the Central District of California, where in September the court entered a final judgment holding the challenged claims invalid under 35 U.S.C. § 101.  Piranha subsequently appealed the district court’s § 101 determination to the Federal Circuit.

In the IPR, the parties disagreed regarding the propriety of the two separate petitions challenging the same claims.  Hulu argued that the separate petitions were necessary due to the large number of challenged claims (28) and the material differences between the two petitions.  Piranha, however, stressed that the PTAB entertains separate petitions challenging the same claims only in rare instances—not merely when a petitioner presents different prior art combinations.  The PTAB agreed with Hulu, noting that the separate petitions “allow [Hulu] to present two substantively distinct challenges based on only two different prior-art references in each petition, while not overly burdening the Board because there are overlaps and similarities, including claim construction and discretionary denial issues, for example.”  Piranha also advanced an argument that a parallel request for ex parte reexamination (“EPR”) of the same patent brought by Unified Patents LLC (“Unified”)—an organization that includes Hulu as a member—further implicated concerns of fairness and efficiency.  The PTAB dismissed that argument, noting that Hulu is not a real party in interest with and does not have a special relationship with Unified.

Piranha also contended that the factors set forth in Apple Inc. v. Fintiv, Inc., IPR2020-0019 (PTAB Mar. 20, 2020) (“the Fintiv factors”) warranted discretionary denial, citing the district court’s final judgment under 35 U.S.C. § 101 of invalidity of all claims at issue.  The PTAB considered the six non-exclusive Fintiv factors, which include: 1) whether the court granted a stay or evidence exists that one may be granted if the 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.

The Board determined that the first five Fintiv factors favored not exercising discretion to deny institution.  The PTAB reasoned that the contested claims remain subject to further judicial review during appeal of the district court’s invalidity determination and that the parties had spent minimal investment in issues of discovery and claim construction.  The PTAB also noted that there were no concerns of inefficient duplication of efforts or inconsistent results and there was no overlap of issues pertaining to § 101, a statutory ground that could not have been raised before the PTAB.  The Board declined to evaluate the sixth factor, noting that the “compelling merits” factor is only evaluated when the other five factors favor discretionary denial.

The Patent Owner requested Director Review of that decision.  The Acting Director granted review, vacated the institution decisions, and denied the petitions.  Id. at 3.  The decision explained that “[b]ecause the patent claims already stand invalid, it is unnecessary to institute another proceeding to review them for patentability under other grounds.”  Id. at 2.  Because the District Court’s judgment remained subject to appellate review, the decision stated that “Petitioner may raise such invalidity arguments in the district court on remand” should that determination be reversed.  Id. at 2-3.  Recognizing that its analysis under Fintiv “does not fit neatly” in this circumstance, the decision cited “efficiency concerns” and concluded that the ”efficiency and integrity of the patent system is best served by denying institution.”  Id. at 3.  The decision rescinding institution has been designated as informative.

Takeaway

Patent Owners should use the procedural mechanisms currently available to identify circumstances where a PTAB trial may not be the most efficient expenditure of the legal system’s resources.

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David Maiorana

Partner at Jones Day
Dave Maiorana is a trial lawyer with a notable combination of significant experience as a United States Patent and Trademark Office (USPTO) Examiner and more than 25 years litigating complex intellectual property matters. He has represented clients as both plaintiffs and defendants around the country and in the International Trade Commission (ITC). Dave has experience in diverse technology areas, including e-cigarettes, teeth whitening, diapers, fem care, antibodies, self-inflating tires, oxygen concentrators, flash memory, and digital cameras.