Intex v. Bestway: The PTAB Does Not Always Conduct A Claim-By-Claim Analysis At The Institution Stage, And Evidence From A Parallel Litigation May Increase The Likelihood That The PTAB Will Institute A Review Of All The Challenged Patent Claims

The PTAB’s recent institution decision in Intex v. Bestway (IPR2016-00180) is notable for two reasons: (1) it demonstrates that the PTAB does not always conduct a claim-by-claim analysis of every challenged claim in a petition before electing to institute a post-grant review; and (2) it shows that providing information to the PTAB about a parallel district court litigation may increase the likelihood that the PTAB institutes review as to all the claims challenged by a petitioner.

(1) Under 35 U.S.C. § 314(a), the PTAB may institute an IPR if it determines that “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”  A similar threshold standard applies to PGRs and CBMs under § 324(a), requiring the petitioner to show that “at least 1 of the claims challenged in the petition is unpatentable.”

Although the AIA thus authorizes the PTAB to institute a post-grant review upon determining that “at least 1 of the claims challenged in the petition” satisfies the applicable statutory threshold, the PTAB ordinarily conducts a claim-by-claim analysis at the institution stage to determine whether the petitioner has met the threshold as to each and every challenged claim.  In Intex v. Bestway, however, the PTAB made a decision to institute based on a threshold determination as to only one challenged claim, independent claim 1.  As explained by the PTAB, “having decided that [the prior art] Blomquist [reference] evinces a reasonable likelihood that at least one of the claims challenged in the Petition is unpatentable, we exercise our discretion under 37 C.F.R. § 42.108 to have the review proceed on all of the challenged claims.”  IPR2016-00180, Paper No. 13 at 8 (emphasis in original).  The PTAB further observed that claim 1 “recites the key feature” of the alleged invention, and that “[t]here is commonality of invention among the claims, as the other independent claims—claims 5 and 10—include this same feature.”  Id. at 10.  The PTAB thus instituted the IPR on all of challenged claims 1-14 (and on all the proposed grounds of unpatentability based on Blomquist) based on the petitioner’s threshold showing as to just one claim (claim 1).  Id.

The PTAB made a similar decision instituting the IPR as to all of challenged claims 1-14 in view of an additional prior art ground of unpatentability based on the petitioner’s prior art showing (regarding the Intex Video) as to just a single claim (claim 10).  Id. at 11-12.

(2)  In its decision instituting the IPR as to all the challenged claims in Intex v. Bestway, the PTAB observed that

Congress, in enacting the Leahy-Smith America Invents Act (AIA), contemplated that, “[i]deally,” inter partes review “will completely substitute for at least the patents-and-printed publications portion of the civil litigation.” 157 Cong. Rec. S1376 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl) (emphasis added).  But, where the Board grants review of some of the challenged claims and not others, “[t]he validity of claims for which the Board [does] not institute inter partes review can still be litigated in district court.” Synopsys, Inc. v. Mentor Graphics Corp., 814 F.3d 1309, 1316 (Fed. Cir. 2016)

IPR2016-00180, Paper No. 13 at 8-9.

In deciding to conduct the IPR as to all the claims challenged in the petition in Intex v. Bestway, the PTAB expressly referenced a parallel district court litigation.  The district court had preliminarily stayed the action (by agreement of the parties) pending the PTAB’s institution decision regarding the asserted patent.  The PTAB recognized that the district court might lift the stay, resulting in duplicative proceedings, if the PTAB were to address in the IPR fewer than all the challenged claims:

[A] partial institution could very well result in a serial or parallel process where the Board reviews some claims of the challenged patent and the district court reviews other claims.  Indeed, that could be the outcome here because the district court, in the related litigation, has made clear that “should the USPTO institute review of some, but not all of the Challenged Claims, the parties should prepare to move forward and expeditiously litigate this action.” Ex. 3001, at 2 n.2.  Thus, anything short of institution on all of the challenged claims in the instant proceeding may result in the district court lifting the current stay and reviewing at least the non-instituted claims in parallel with our review of the instituted claims.

IPR2016-00180, Paper No. 13 at 9.  Citing Synopsys, 814 F.3d at 1313, the PTAB also concluded that “maintaining the stay at the district court and instituting review on all of the challenged claims will avert the potential for an ‘improper collateral attack’ on our findings and conclusions.”  IPR2016-00180, Paper No. 13 at 9-10.

Under the circumstances here, in view of the parallel litigation, the PTAB ultimately determined that reviewing all the challenged claims in the IPR was necessary to achieve the “central purpose” of the AIA:

[L]est we undermine the AIA’s central purpose of achieving finality of validity review at the Board instead of the district court, efficiency and fairness dictate that we exercise our discretion, in this particular case, to institute review on all of the claims and on all of the grounds on which Blomquist serves as the primary basis for unpatentability.

Id. at 10.  Instituting the IPR on all of the challenged claims in this factual scenario, according to the PTAB, “will save the district court and the parties from possibly having to address the same validity issues in a parallel or serial action.”  Id. at 12.

Practice Tip

If there is parallel district court litigation involving the challenged patent, the petitioner should consider submitting information to the PTAB demonstrating that all the challenged claims are at issue in the litigation.  Doing so may increase the likelihood that the PTAB will institute a post-grant review of all the challenged claims.  This is particularly true if, as in Intex v. Bestway, the district court has conditioned a stay of the parallel litigation on the PTAB conducting a review of all the challenged claims.

Intex Recreation Corp. v. Bestway Inflatables & Material Corp., IPR2016-00180 (Jun. 6, 2016) (Paper 13).

By: John Marlott