By David Linden and Dave Maiorana –
On March 31, 2023, Zhuhai CosMX Battery Co., Ltd. (“Zhuhai”) filed a petition for inter partes review (“IPR”) of claims of U.S. Patent No. 11,329,352 (“the ’352 Patent”), assigned to Ningde Amperex Technology Ltd. (“Amperex”). The ’352 Patent relates to the structure of secondary batteries and is the subject of parallel litigation in the Eastern District of Texas involving the same parties. The IPR petition challenged several claims of the ’352 Patent as obvious based on various combinations of Chinese and United States patent documents.
After pleadings from both parties, the PTAB proceeded to apply the factors enunciated in Apple Inc. v. Fintiv, Inc., IPR 2020-00019 (PTAB Mar. 20, 2020) (“the Fintiv factors”) to determine whether institution of the IPR was appropriate in light of the parallel district court litigation. The Fintiv factors are set forth below together with the PTAB’s assessment of the respective factor:
1) whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted
The PTAB found the first Fintiv factor to be neutral, neither favoring nor disfavoring institution. The Board noted that neither party identified a request for a stay or evidence that a stay in the parallel district court proceeding was likely.
2) proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision
The projected statutory deadline for issuing a final written decision would have been October 2024. The parties disputed the projected trial date of the district court litigation. Zhuhai cited time-to-trial statistics for the Eastern District of Texas, claiming that trial would occur in June or July 2024 at the earliest. Amperex, however, noted that the court’s scheduling order placed trial eight to nine months before the PTAB’s final written decision deadline. The PTAB noted that, at any rate, a trial in the parallel district court litigation occurring months before the final written decision deadline “weigh[ed] heavily in favor of discretionary denial.”
3) investment in the parallel proceeding by the court and the parties
The PTAB considered that the parties had exchanged infringement and invalidity contentions, scheduled a claim construction hearing, and completed fact discovery and initial expert reports. The PTAB dismissed statements made in the petition that contended no investment in the parallel proceeding at that time. The pertinent time period, the decision explained, is “the time of the institution decision.” The Board thus found that the third factor also heavily favored denial of institution.
4) overlap between issues raised in the petition and in the parallel proceeding
Amperex pointed out that the primary prior art references asserted in the IPR were also asserted in the invalidity contentions in the parallel district court litigation. Zhuhai responded with a stipulation that it would not pursue the same invalidity grounds in the district court case that were included in the IPR. The PTAB noted that certain stipulations can preclude discretionary denial, provided they agree not to pursue the IPR grounds in a parallel district court proceeding, or any grounds that could have reasonably been raised in the petition. Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019 (PTAB Dec. 1, 2020). In contrast to these “Sotera-type” stipulations, Zhuhai’s proffered stipulation did not extend to any ground that could have been raised in the petition. Furthermore, the stipulation omitted the Chinese prior art reference of CN 104157914 A to Wang (“Wang”), which was a primary reference for every ground in the petition. Accordingly, the PTAB found that Zhuhai’s proffered stipulation obviated only some concerns of redundancy between the two proceedings and that the fourth Fintiv factor weighed only “somewhat against denial of institution.”
5) whether the petitioner and the defendant in the parallel proceeding are the same party
The parallel district court proceeding involves the same parties as the present IPR. The PTAB noted that the fifth Fintiv factor favors denial of institution if the district court trial will occur before the Board’s final written decision and will favor institution if the opposite is true. As discussed above, the PTAB determined that the parallel district court litigation would likely precede the final written decision in this case. The Board thus found that the fifth factor favored denial of institution.
6) other circumstances that impact the Board’s exercise of discretion, including the merits
The PTAB acknowledged that the first five Fintiv factors, taken together, favored denying institution. However, where a compelling case for unpatentability is present at the institution stage, the sixth factor alone may warrant institution. The PTAB proceeded to assess the merits with respect to obviousness of each challenged claim. The PTAB found persuasive Amperex’s arguments that there was insufficient motivation to combine the prior art references. Accordingly, the PTAB indicated that the sixth Fintiv factor did not weigh against discretionary denial.
Conclusion
The PTAB considered the Fintiv factors holistically, noting that “only factor 4 weighs against discretionary denial, factor 1 is neutral, and factors 2, 3, and 5 weigh in favor of discretionary denial of institution, with factors 2 and 3 weighing heavily in favor.” Furthermore, Zhuhai did not submit a Sotera-type stipulation or demonstrate compelling evidence of unpatentability, either of which would have rendered discretionary denial inappropriate. The PTAB thus exercised its discretion to deny institution of the IPR.
Takeaway:
The PTAB will consider the Fintiv factors as a whole when evaluating the appropriateness of a discretionary denial in light of a parallel district court proceeding. Even where the evidence otherwise favors denial, the PTAB may institute an IPR if the petitioner presents a compelling patentability challenge or a broad, Sotera-type stipulation.
David Maiorana
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