ITC Section 337: Kiss of Death for PTAB Proceedings
When considering a petition for post-grant review (PGR) or inter partes review (IPR), the Patent Trial and Appeal Board (PTAB) has discretion to deny institution under 35 U.S.C. §§ 314(a) and 324(a). The PTAB’s Consolidated Trial Practice Guide provides that, when exercising its discretion, the Board may consider “events in other proceedings related to the same patent, either at the Office, in district courts, or the ITC.” As recent petitioners have found, a co-pending ITC Section 337 investigation virtually guarantees that the PTAB will exercise its discretionary power to deny institution.
For example, in an August 9, 2012 decision regarding a petition filed by Kiss Nail Products, the Board exercised its discretion and denied institution of PGR of a Lashify, Inc. patent directed to artificial eyelash extensions. The Lashify patent is involved in three parallel proceedings—an ITC Section 337 investigation, and two district court litigations (both of which have been stayed pending resolution of the ITC investigation). Relying on the PTAB’s precedential 2020 decision in Apple Inc. v. Fintiv, Inc., the Board in Lashify applied the “Fintiv factors” and determined that instituting a post-grant review would be an inefficient use of Board resources. Here are several key takeaways that highlight the importance and desirability, as a patent owner, of enforcing patent rights under Section 337 at the ITC.
The uniquely fast and compressed nature of an ITC Section 337 investigation strongly favors the PTAB exercising its discretionary authority to deny institution of a post-grant proceeding on a patent involved in a parallel ITC investigation. Unlike district court litigation, which can take several years to reach a trial date, a case filed before the ITC can proceed to an evidentiary hearing (the ITC trial equivalent) before an administrative law judge (ALJ) in eight to nine months. Moreover, because the ITC sets and adheres to a strict procedural schedule, the PTAB will be hard-pressed not to give substantial weight to a parallel ITC investigation when deciding whether to institute post-grant review, particularly when evaluating Fintiv factors 1-3.
Fintiv Factor 1: Whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted. Once an ITC investigation commences, it is extremely unlikely that the ITC will stay the investigation given the expediency with which an investigation advances. On the other hand, because district court litigation progresses slowly and follows a less predictable schedule prone to deadline extensions, district court judges often grant stays pending the outcome of a PTAB proceeding. Thus, a parallel ITC investigation weighs against institution under Fintiv factor 1.
Fintiv Factor 2: Proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision. Because the ITC can proceed to a trial in less than a year, this factor almost always weighs in favor of denying institution when there is a parallel ITC investigation. So long as the parallel ITC investigation is instituted prior to the Board’s decision on whether to institute post-grant review, the ITC will complete its evidentiary hearing according to the procedural schedule before the PTAB would issue a Final Written Decision. For this reason, a parallel ITC investigation weighs against institution under Fintiv factor 2.
Fintiv Factor 3: Investment in the parallel proceeding by the court and the parties. Because an ITC investigation likely will be on the eve of a hearing by the time the PTAB renders a decision on institution, the parties and the ALJ necessarily will have expended significant time and work at the ITC by that time. A parallel ITC investigation therefore weighs against institution under Fintiv factor 3.
In most instances, and particularly when compared to a parallel district court case, the existence of a parallel ITC Section 337 investigation will almost certainly weigh in favor of denying institution of a post-grant proceeding. For this reason, patent owners seeking to enforce their patent rights quickly should consider filing a Section 337 Complaint at the ITC, to avoid any potential delay and/or distraction associated with a parallel PTAB proceeding.