Trials@uspto.gov
`571-272-7822
`
`Paper 9
`Date: November 16, 2020
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`PHILIP MORRIS PRODUCTS, S.A.,
`Petitioner,
`v.
`RAI STRATEGIC HOLDINGS, INC.
`Patent Owner.
`
`IPR2020-00921
`Patent 9,814,268 B2
`
`Before JO-ANNE M. KOKOSKI, ELIZABETH M. ROESEL, and
`MICHELLE N. ANKENBRAND, Administrative Patent Judges.
`PER CURIAM
`
`DECISION
`Denying Institution of Inter Partes Review
`35 U.S.C. § 314
`
`Philip Morris Products, S.A.
`Exhibit 2020
`RJR v. PMP
`IPR2021-00826
`
`Ex. 2020-001
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`
`INTRODUCTION
`I.
`A. Background and Summary
`Philip Morris Products, S.A. (“Petitioner”) filed a Petition (Paper 2,
`“Pet.”) seeking inter partes review of claims 16 and 17 (“the challenged
`claims”) of U.S. Patent No. 9,814,268 B2 (Ex. 1001, “the ’268 Patent”).
`RAI Strategic Holdings, Inc. (“Patent Owner”) filed a Preliminary Response.
`Paper 6 (“Prelim. Resp.”). With the Board’s prior authorization, the parties
`filed additional briefs limited to the issue of discretion to institute pursuant
`to NHK1/Fintiv2 and 35 U.S.C. § 325(d). Paper 7 (“Pet. Reply”); Paper 8
`(“PO Sur-reply”).
`We have authority to determine whether to institute an inter partes
`review. 35 U.S.C. § 314 (2018); 37 C.F.R. § 42.4(a) (2020). After
`considering the parties’ arguments addressing § 325(d), we decline to
`exercise discretion to deny institution under that statute. In view of the
`proximity of the district court’s anticipated trial date to the projected
`statutory deadline for issuing a final decision and other factors, institution is
`denied under § 314(a) and Fintiv.
`
`B. Real Parties in Interest
`Petitioner identifies Philip Morris Products, S.A.; Philip Morris
`International, Inc.; Altria Client Services LLC; and Philip Morris USA as
`real parties in interest. Pet. 5. Petitioner additionally states that Altria
`Group, Inc. is not a real party in interest but nevertheless agrees to be bound
`
`
`1 NHK Spring Co. v. Intri-Plex Technologies, Inc., IPR2018-00752, Paper 8
`(PTAB Sept. 12, 2018) (precedential).
`2 Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020)
`(precedential).
`
`2
`
`Ex. 2020-002
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`by any final written decision in this proceeding. Id. (citing 35 U.S.C.
`§ 315(e)).
`Patent Owner identifies RAI Strategic Holdings, Inc.; R.J. Reynolds
`Vapor Company; RAI Innovations Company; and R.J. Reynolds Tobacco
`Company as real parties in interest. Paper 5, 1 (Mandatory Notice).
`
`C. Related Matters
`The parties identify the following district court action in which Patent
`Owner is asserting the ’268 Patent: RAI Strategic Holdings, Inc. v. Altria
`Client Services LLC, No. 1:20-cv-393 (E.D. Va. filed Apr. 9, 2020). Pet. 5;
`Paper 5, 2.
`The parties also identify IPR2020-00919 involving U.S. Patent
`No. 9,901,123 (“the ’123 Patent”), which is related to the ’268 Patent.3
`Pet. 5–6; Paper 5, 2.
`
`D. The ’268 Patent (Ex. 1001)
`The ’268 Patent describes and claims a tobacco-containing,
`electrically-powered smoking article. Ex. 1001, codes (54), (57), 1:19–20,
`32:41–42, 34:13–14 (preamble of independent claims 1 and 16). One
`objective is “to provide a smoking article that provides a smoker with an
`ability to enjoy using tobacco without the necessity of burning any
`significant amount of tobacco.” Id. at 4:27–29.
`A first embodiment is depicted in Figure 1, reproduced below:
`
`
`3 The ’268 Patent and the ’123 Patent both claim the benefit of Application
`No. 11/550,634, filed October 18, 2006, through a series of continuation
`and/or division applications.
`
`3
`
`Ex. 2020-003
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`
`
`
`Figure 1 of the ’268 Patent is a longitudinal cross-sectional view of an
`electrically powered, tobacco-containing smoking article. Ex. 1001,
`8:28–30, 19:31–35.
`As shown in Figure 1, smoking article 10 includes outer container or
`housing 20 that is generally tubular in shape and has distal end 13 and
`mouth-end 15. Ex. 1001, 19:40–44, 19:53–55. “[T]he mouth-end comprises
`an opening adapted for egress of an aerosol generated within the smoking
`article and the distal end comprises an opening adapted for intake of air into
`the smoking article 10.” Id. at 19:55–58. Within outer container 20 is
`electric power source 36, such as a battery. Id. at 20:6–7.
`As shown in Figure 1, smoking article 10 includes controller 50
`having microchips that provide control of time of operation, current, and
`electrical resistance heat generation. Ex. 1001, 20:27–28, 20:31–36, Figs. 4,
`5. Smoking article 10 also includes sensor 60 for sensing draw, i.e., intake
`of air by the user of the smoking article. Id. at 20:43–46, 20:61–63.
`Controller 50 and sensor 60 are powered by battery 36 and function in
`concert as a puff-actuated controller for regulating the flow of current
`through the resistance heating elements. Id. at 20:36–37, 20:53–54, 20:57–
`61.
`
`4
`
`Ex. 2020-004
`
`

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`IPR2020-00921
`Patent 9,814,268 B2
`Smoking article 10 of Figure 1 includes electrical resistance heating
`elements 70, 72, which are configured to allow airflow through the heating
`elements. Ex. 1001, 21:10–11, 21:21–22. First electrical resistance heating
`element 70 heats drawn air passing through the smoking article from distal
`end 13 of outer housing 20. Id. at 21:11–15. Second electrical resistance
`heating element 72 heats an aerosol-forming material supported by or in
`close proximity to the heating element. Id. at 21:26–40. Aerosol-forming
`material can be transferred to the heating element by the wicking action of a
`high surface area absorbent material that either forms the heating element or
`is in close proximity to the heating element. Id.
`Smoking article 10 of Figure 1 includes cartridge 85, which has
`upstream segment 95 composed of tobacco filler or processed tobacco filler
`material 89 incorporating aerosol-forming material and downstream
`segment 98 composed of substrate 101 carrying flavors and/or aerosol-
`forming material. Ex. 1001, 21:58–59, 21:63–21:1, 22:8–14. The ’268
`Patent discloses that “smoking article 10 is assembled such that a certain
`amount of aerosol-forming material and tobacco components can be wicked
`or otherwise transferred to heating element 72 or the region in close
`proximity to the heating element.” Id. at 22:14–18. As shown in Figure 1,
`“extreme mouth end region of cartridge 85 is sealed, and as such, tobacco
`components and aerosol-forming material have a tendency to travel
`upstream towards the resistance heater 72.” Id. at 22:19–22.
`Smoking article 10 of Figure 1 has mouth-end piece 120, which is
`“typically removable” and can be maintained in place by friction fit or
`complementary threaded screw mechanisms on the mouth-end piece and
`outer housing. Ex. 1001, 23:63–24:1.
`Another embodiment is depicted in Figure 2, reproduced below:
`
`5
`
`Ex. 2020-005
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`
`
`
`Figure 2 of the ’268 Patent is a longitudinal cross-sectional view of an
`electrically powered, tobacco-containing smoking article. Ex. 1001,
`8:28–30, 24:42–43. According to the ’268 Patent, the smoking article of
`Figure 2 has “certain components comparable to” the Figure 1 embodiment;
`“[h]owever, the smoking article is adapted to incorporate a cigarette 150.”
`Id. at 24:45–49.
`The ’268 Patent discloses that cigarette 150 has a charge or roll of
`tobacco 89 wrapped in wrapping material 160 so as to form a generally
`cylindrical cigarette rod or tobacco rod. Ex. 1001, 24:50–53, 25:1–3.
`According to the ’268 Patent, “wrapping material 160 is formed into a
`generally tubular shape, and the tobacco is positioned within the hollow
`region within that tube,” and “wrapping material 160 is formed such that
`each end of the tobacco rod is open to expose the tobacco contained therein,
`and to allow the passage of drawn air therethrough.” Id. at 25:3–9.
`As shown in Figure 2, cigarette 150 has a type of cartridge 85 at its
`distal end within the wrapping material 160 and in fluid communication with
`the tobacco rod. Ex. 1001, 25:21–24. Cartridge 85 contains aerosol-
`
`6
`
`Ex. 2020-006
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`generating material composition 101 and has a tubular shape with open ends
`such that air can flow through the cartridge. Id. at 25:24–25, 25:31–32. The
`’268 Patent describes an alternative embodiment in which cartridge 85 is not
`incorporated within cigarette 150 and the region of cigarette 150 that is
`wrapped in paper wrapper 160 is composed entirely of tobacco material and
`aerosol-forming materials, which are not necessarily arranged in a
`segmented fashion. Id. at 26:43–52.
`As shown in Figure 2, cigarette 150 has filter element 200 composed
`of filter material 215 wrapped in circumscribing plug wrap 218 and attached
`to the tobacco rod using tipping material 222 that circumscribes the length of
`the filter element 200 and an adjacent region of the tobacco rod at its
`downstream end. Ex. 1001, 26:53–61. The ’268 Patent discloses that
`tubular mouth-end piece 120 can act as a support for filter element 200 of
`cigarette 150, and can be removably attached to outer housing 20. Id. at
`26:62–27:7.
`Another embodiment is depicted in Figure 3, reproduced below:
`
`Figure 3 of the ’268 Patent is a longitudinal cross-sectional view of an
`electrically powered, tobacco-containing smoking article. Ex. 1001,
`8:28–30, 27:28–29. According to the ’268 Patent, the smoking article of
`
`
`
`7
`
`Ex. 2020-007
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`

`IPR2020-00921
`Patent 9,814,268 B2
`Figure 3 has “certain components comparable to” the Figure 1 embodiment
`and is “adapted to incorporate a type of cigarette 150.” Id. at 27:30–35.
`In the Figure 3 embodiment, smoking article 10 has tube-shaped third
`resistance heating element 300 that fits snuggly around a portion of tobacco
`rod 89 and provides heat to at least a portion of tobacco 89 of cigarette 150.
`Ex. 1001, 27:49–51, 27:63–28:2. First, second, and third resistance heating
`elements 70, 72, 300 can each be separately controlled in response to timing
`mechanisms, switching mechanisms, and/or sensing mechanism 60 so that
`each resistance heating element can provide differing amounts of heat and
`during differing periods. Id. at 28:6–26. As shown in Figure 3, second
`resistance heating element 72 can have an elongated portion that extends
`into tobacco segment 89 and is “in close contact with a significant amount of
`substrate and aerosol-forming material within the tobacco.” Id. at 28:28–35.
`As shown in Figure 3, thermally insulated region 400 circumscribes
`resistance heating element 300 of smoking article 10. Id. at 28:36–40.
`
`E. Illustrative Claim
`The ’268 Patent includes 17 claims. Claims 16 and 17 are challenged
`in the Petition. Claim 16 is representative of the challenged subject matter
`and is reproduced below:
`16. A tobacco-containing, electrically-powered smoking
`article comprising:
`(a) a tubular outer housing having a mouth-end and an end
`distal to the mouth-end, the housing comprising an opening
`adapted for intake of air into the smoking article;
`(b) an electrical power source within the outer housing;
`(c) a controller adapted for regulating current flow through
`the heater;
`
`8
`
`Ex. 2020-008
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`(d) a rod-shaped carrier device removably engaged with
`the mouth-end of the outer housing and comprising a tubular
`mouth-end piece and a tubular cartridge with two open ends
`allowing air to flow therethrough, wherein the cartridge includes
`a tobacco material and an aerosol-generating material; and
`(e) an electrical resistance heater in contact with the
`tobacco material and the aerosol-generating material and adapted
`for heating at least a portion of the tobacco material and the
`aerosol-generating material.
`Ex. 1001, 34:13–31.
`
`F. Asserted Grounds and Evidence
`Petitioner asserts the following grounds of unpatentability:
`Claim(s)
`Challenged 35 U.S.C. Reference(s)
`16
`§ 103(a)4 Morgan,5 Collins,6 Adams,7 Brooks8
`17
`§ 103(a) Morgan, Collins, Adams, Brooks, Counts-9629
`16 and 17
`§ 103(a)
`Counts-962, Brooks
`Petitioner relies on a Declaration of Seetharama C. Deevi, Ph.D. Ex. 1003.
`
`
`4 The Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29, 125
`Stat. 284, 287–88 (2011), amended 35 U.S.C. § 103, effective March 16,
`2013. Because the ’268 Patent issued on an application that is a division of
`an application filed before this date, the pre-AIA version of § 103 applies.
`Ex. 1001, code (60).
`5 Ex. 1005, US 5,249,586, issued Oct. 5, 1993.
`6 Ex. 1006, US 5,865,185, issued Feb. 2, 1999.
`7 Ex. 1007, US 2007/0102013 A1, published May 10, 1997.
`8 Ex. 1009, US 4,947,874, issued Aug. 14, 1990.
`9 Ex. 1008, US 5,144,962, issued Sept. 8, 1992.
`
`9
`
`Ex. 2020-009
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`
`II. ANALYSIS
`A. Patent Owner’s Argument for Discretionary Denial under § 325(d)
`Patent Owner argues that the Board should deny institution under
`35 U.S.C. § 325(d). Prelim. Resp. 35–58. Patent Owner argues that all of
`Petitioner’s references were presented to the Examiner during prosecution
`and identifies various ways the asserted references or equivalent teachings
`would have been brought to the Examiner’s attention, including listing the
`references on an Information Disclosure Statement (“IDS”). Id. at 37–47.
`Patent Owner argues that the Examiner already considered Petitioner’s
`arguments regarding the “electrical resistance heater” element and
`Petitioner’s arguments based on Adams. Id. at 47–53. According to Patent
`Owner, the Petition does not even attempt to demonstrate that the Office
`materially erred in issuing the claims. Id. at 53–58.
`The statute provides that, in determining whether to institute an inter
`partes review, “the Director may take into account whether, and reject the
`petition or request because, the same or substantially the same prior art or
`arguments previously were presented to the Office.” 35 U.S.C. § 325(d).
`The Board’s most recent precedential decision addressing § 325(d)
`provides the following two-part framework:
`(1) whether the same or substantially the same art previously was
`presented to the Office or whether the same or substantially the
`same arguments previously were presented to the Office; and
`(2) if either condition of first part of the framework is satisfied,
`whether the petitioner has demonstrated that the Office erred in
`a manner material to the patentability of challenged claims.
`Advanced Bionics, LLC v. MED-EL Elektromedizinische Geräte GmbH,
`IPR2019-01469, Paper 6 at 8 (PTAB Feb. 13, 2020) (precedential).
`
`10
`
`Ex. 2020-010
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`Advanced Bionics explains that the Becton, Dickinson factors10 provide
`“useful insight” into how to apply the statutory framework and address
`“challenging factual questions, such as when a ground of unpatentability
`presents ‘substantially the same prior art or arguments’ previously presented
`to the Office.” Id. at 9.
`Applying the Advanced Bionics two-part framework to Patent
`Owner’s arguments, we determine that the art presented in the Petition is the
`same as the art previously presented to the Office during examination
`because all of Petitioner’s references were cited in an IDS and are listed as
`cited art on the front face of the ’268 Patent. Ex. 1001, code (56); Ex. 1002,
`100–03, 107, 401–404, 408.
`Under the second part of the Advanced Bionics framework, we find
`that Petitioner has demonstrated that the Office erred in a manner material to
`the patentability of challenged claims.
`Other than initials on a lengthy IDS, nothing in the record indicates
`that the Examiner substantively considered Morgan, Adams, Brooks, or
`Counts-962. In that regard, Petitioner shows that the asserted references
`
`
`10 Becton, Dickinson identifies the following non-exclusive factors: (a) the
`similarities and material differences between the asserted art and the prior art
`involved during examination; (b) the cumulative nature of the asserted art
`and the prior art evaluated during examination; (c) the extent to which the
`asserted art was evaluated during examination, including whether the prior
`art was the basis for rejection; (d) the extent of the overlap between the
`arguments made during examination and the manner in which petitioner
`relies on the prior art; (e) whether petitioner has pointed out sufficiently how
`the examiner erred in its evaluation of the asserted prior art; and (f) the
`extent to which additional evidence and facts presented in the petition
`warrant reconsideration of the prior art or arguments. Becton, Dickinson and
`Co. v. B. Braun Melsungen AG, IPR2017-01586, Paper 8 at 17–18 (PTAB
`Dec. 15, 2017) (precedential as to § III.C.5, first paragraph).
`
`11
`
`Ex. 2020-011
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`were among “an extremely large number of references” listed on an IDS and
`that applicant did not respond to the Examiner’s request that applicant point
`out “any particular reference or portion of a reference in the list which the
`examiner should take [sic] pay particular attention to.” Ex. 1002, 99–111,
`389; Pet. 13; Pet. Reply 1. Petitioner shows that the Examiner rejected the
`pending claims over Counts-52511 and that applicants overcame the rejection
`after amending the claims and arguing that Counts-525 did not disclose two
`features—a “tubular outer housing” and a heater “in contact with” the
`tobacco and aerosol-forming materials. Ex. 1002, 390, 392–93, 427, 431–
`432, 452; Pet. 13–14; Pet. Reply 2. Petitioner shows that Petitioner’s
`asserted primary references (Morgan and Counts-962) teach the two features
`applicant argued were absent from the Counts-525. Pet. 31, 53–55, 62–63,
`68–69; see also Pet. 60 (arguing that “Counts-962 discloses the two features
`the applicants argued were absent from Counts-525—a battery within a
`tubular outer housing and a heater in contact with the medium it heats”);
`Pet. Reply 1–2 (identifying teachings of Morgan and Counts-962 that the
`Examiner overlooked).
`Patent Owner contends that the relevant teachings of Morgan and
`Counts-962 would have been brought to the Examiner’s attention by virtue
`of Counts-525’s incorporation by reference of Counts-962 and Counts-525’s
`incorporation by reference of Fleischhauer’s12 heating elements that Patent
`Owner contends are equivalent to Morgan’s heating elements. Prelim.
`Resp. 41–47; PO Sur-reply 3. Although Patent Owner argues that the
`Examiner “would have naturally turned to” the portions of Counts-525 that
`
`
`11 Ex. 1010, US 5,692,525, issued Dec. 2, 1997.
`12 Ex. 2002, US 5,591,268, issued Jan. 7, 1997.
`
`12
`
`Ex. 2020-012
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`incorporate by reference Counts-962 and Fleishhauer (Prelim. Resp. 43, 47),
`the Examiner requested that applicant point out the relevant teachings of the
`references listed on the IDS. Ex. 1002, 389 (“If the applicant and/or
`applicant’s representative are aware of any particular reference or portion of
`a reference in the list which the examiner should take pay particular
`attention to it is requested that it be specifically pointed out in response to
`this Office action.”).
`Patent Owner argues that applicant’s amendment and argument during
`prosecution would have brought Counts-962 and Fleischhauer to the
`Examiner’s attention. Prelim. Resp. 42, 46. If that is true, then applicant’s
`amendment and argument during prosecution also would have brought
`Counts-962 and Fleischhauer to the attention of the author of the
`amendment and argument. If applicant was aware of the relevant teachings
`of Counts-962 and Morgan (or Fleischhauer) during prosecution, then they
`should have pointed those out in response to the Examiner’s request.
`Ex. 1002, 389. If applicant was not aware of the relevant teachings of
`Counts-962 and Morgan (or Fleischhauer) during prosecution (see
`PO Reply 2), then Patent Owner cannot now impute such awareness to the
`Examiner in support of its § 325(d) argument.
`Patent Owner argues that the Examiner already considered
`Petitioner’s arguments, presenting essentially the same arguments as it relies
`upon to counter Petitioner’s showing on the merits. Compare Prelim. Resp.
`49–52 & n.9 (distinguishing claimed heater elements from Morgan and
`Counts-962), with id. at 64–66 (same). We are not persuaded by Patent
`Owner’s arguments for the reasons discussed in Section II.B.6 below.
`
`13
`
`Ex. 2020-013
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`Accordingly, Petitioner has shown that the Office erred by allowing
`the claims over Morgan and Counts-962.13 For these reasons, we decline to
`exercise our discretion to deny institution under § 325(d).
`
`B. Patent Owner’s Argument for Discretionary Denial in view of the
`Parallel District Court Case
`Patent Owner argues that the Petition should be denied because trial in
`the related district court case “will . . . occur some eight to nine months
`before a Final Written Decision would be due in this proceeding.” Prelim.
`Resp. 58–59 (citing Fintiv, Paper 11; NHK, Paper 8). According to Patent
`Owner, “[e]ach of the six Fintiv factors favors denial of institution in light of
`the co-pending district court case.” Id. at 60–62.
`Petitioner argues that “[a] ‘holistic’ evaluation [of the Fintiv factors]
`reveals that institution furthers the Board’s considerations of ‘efficiency,
`fairness, and the merits.’” Pet. Reply 3 (citing Fintiv, Paper 11 at 6).
`The Board’s precedential Fintiv order identifies the following factors
`that should be considered and balanced when the patent owner raises an
`argument for discretionary denial under NHK due to an earlier trial date:
`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;
`
`
`13 As discussed above, the Office error may be attributed, at least in part, to
`applicant’s failure to respond to the Examiner’s request to identify the
`relevant references and portions of the references.
`
`14
`
`Ex. 2020-014
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`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.
`Fintiv, Paper 11 at 5–6. According to Fintiv, these factors relate to
`“efficiency, fairness, and the merits” and require the Board to take “a
`holistic view of whether efficiency and integrity of the system are best
`served by denying or instituting review.” Id. at 6. Our analysis of the Fintiv
`factors is set forth below.
`
`1. Factor 1—Likelihood of a Stay
`Neither party presents persuasive evidence that a stay of the district
`court action is either likely or unlikely. See Prelim. Resp. 60; Pet. Reply 7.
`Therefore Fintiv factor 1 is neutral. See Sand Revolution II, LLC, v.
`Continental Intermodal Group – Trucking LLC, IPR2019-01393, Paper 24
`at 7 (PTAB June 16, 2020) (informative) (where no stay was requested or
`ordered in the related district court litigation, Fintiv factor 1 does not weigh
`in favor of either exercising or not exercising discretion to deny institution);
`Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 15 at 12 (PTAB May 13,
`2020) (informative; hereinafter “Fintiv DDI”) (same).
`
`2. Factor 2—Trial Date Versus FWD Due Date
`No day certain for a trial has been set yet in the related district court
`action. The court’s August 10, 2020, scheduling order provides that a final
`pretrial conference will be held January 15, 2021, and that “trial . . . will be
`set for a day certain, within 4–8 weeks of the final pretrial conference.”
`Ex. 2009. The parties agree that the anticipated trial date is eight to nine
`months before the projected statutory deadline for a final decision in this
`proceeding. Prelim. Resp. 60; Pet. Reply 7.
`
`15
`
`Ex. 2020-015
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`

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`IPR2020-00921
`Patent 9,814,268 B2
`Patent Owner argues that Fintiv factor 2 favors denial. Prelim.
`Resp. 60. Petitioner argues that Fintiv factor 2 should be evaluated on a
`“sliding scale” that takes into account the Petition’s filing date relative to the
`one-year statutory deadline for filing an IPR. Pet. Reply 7 (citing Apple Inc.
`v. Seven Networks, IPR2020-00506, Paper 11 at 9 & n.6 (PTAB Sept. 1,
`2020) (discussing sliding scale and finding that Fintiv factor 2 weighs
`moderately in favor of Patent Owner in view of uncertainty as whether trial
`will begin on scheduled date); Apple Inc. v. Maxell, Ltd., IPR2020-00204,
`Paper 11 at 18–19 (June 19, 2020) (instituting inter partes review despite
`trial date nine months before final decision deadline)). Petitioner argues that
`it was “exceptionally diligent,” filing its Petition less than one month after
`Patent Owner filed its complaint in the district court, “when eleven of its
`allotted twelve months still remained.” Id. at 3, 7.
`This factor looks at the proximity of the district court’s trial date to the
`expected statutory deadline for the Board’s final decision. Fintiv, Paper 11
`at 9. This proximity inquiry is a proxy for the likelihood that the trial court
`will reach a decision on validity issues before the Board reaches a final
`written decision. Here, even though no day certain has been set for trial, the
`parties agree that the anticipated trial date is eight to nine months before the
`projected statutory deadline for a final decision. In this situation, the
`efficiency and system integrity concerns that underlie the Fintiv analysis are
`relatively strong. Thus, we find that Fintiv factor 2 weighs in favor of denial
`of institution.
`
`3. Factor 3—Investment in Proceedings
`Patent Owner recognizes that the district court action is “at an early
`stage” but argues that the Eastern District of Virginia (“EDVA”) is “fast-
`
`16
`
`Ex. 2020-016
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`paced,” “[d]iscovery has already opened,” and “before the Board would
`have issued its decision on whether to institute here by November 2020, the
`district court action will have undertaken significant work.” Prelim.
`Resp. 61.
`Addressing Fintiv factor 3, Petitioner argues that its “exceptional
`diligence also ensures there will be the minimum possible investment in the
`EDVA case” at the time of institution. Pet. Reply 5.
`Petitioner informs us that the district court recently adopted
`Petitioner’s proposed discovery schedule. Pet. Reply 5 (citing Ex. 1035,
`25–26 (parties’ proposed discovery schedules); Ex. 1036 (district court’s
`Sept. 8, 2020 order adopting defendant’s proposed timetable for discovery)).
`Pursuant to that schedule, a claim construction hearing was set for
`November 10–13, 2020; the close of fact discovery was set for
`November 13, 2020; opening expert reports were due November 20, 2020;
`responsive expert reports were due December 18, 2020; and the close of
`expert discovery was set for January 8, 2021. Ex. 1035, 26. Our review of
`the district court’s docket reveals a subsequent clarification and some
`changes to that schedule.14 The parties also inform us they have not yet
`exchanged invalidity contentions in the district court action. Prelim.
`Resp. 62; Pet. Reply 4.
`The statutory deadline for issuing this decision is November 17, 2020.
`
`
`14 A claim construction hearing is currently set for November 18, 2020.
`Both fact and expert discovery are set to close on January 8, 2021. Opening
`expert reports are due November 27, 2020, and responsive expert reports are
`due December 28, 2020. See Ex. 3001 (EDVA docket entry 308, Brief in
`support of Plaintiffs’ Motion to Modify Scheduling Order). Patent Owner
`(plaintiff in the district court) seeks to postpone the expert report deadlines
`until after the Court’s claim construction order. Id.
`
`17
`
`Ex. 2020-017
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`The Board’s precedential Fintiv order provides the following
`guidance:
`[I]f, at the time of the institution decision, the district court has
`issued substantive orders related to the patent at issue in the
`petition, this fact favors denial. Likewise, district court claim
`construction orders may indicate that the court and parties have
`invested sufficient time in the parallel proceeding to favor denial.
`If, at the time of the institution decision, the district court has not
`issued orders related to the patent at issue in the petition, this fact
`weighs against exercising discretion to deny institution under
`NHK.
`Fintiv, Paper 11 at 9–10. The Fintiv order explains that “[t]his investment
`factor is related to the trial date factor, in that more work completed by the
`parties and the court in the parallel proceeding tends to support the
`arguments that the parallel proceeding is more advanced, a stay may be less
`likely, and instituting would lead to duplicative costs.” Id. at 10.
`In this case, there is no evidence that the district court has issued any
`substantive order related to the ’268 Patent. The parties have completed
`some work, e.g., claim construction briefing, but much remains to be
`completed in advance of trial.
`We also find that Petitioner’s diligence in filing the Petition less than
`one month after Patent Owner filed its complaint in the related district court
`action weighs against exercising discretion to deny institution. Fintiv,
`Paper 11 at 11 (“If the evidence shows that the petitioner filed the petition
`expeditiously, such as promptly after becoming aware of the claims being
`asserted, this fact has weighed against exercising the authority to deny
`institution under NHK.”).
`Accordingly, Fintiv factor 3 weighs against exercising discretion to
`deny institution. Fintiv, Paper 11 at 10.
`
`18
`
`Ex. 2020-018
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`4. Factor 4—Overlap of Issues
`Patent Owner argues that this factor favors denial of institution, noting
`that it “has asserted at least claim 16 of the ’268 patent in the district court
`action[, and] that is the only independent claim at issue here.” Prelim.
`Resp. 62. Petitioner argues that Fintiv factor 4 weighs strongly in favor of
`institution because “Petitioner stipulates that it will not pursue any IPR
`grounds in the EDVA case if the Board institutes.” Pet. Reply 4 (citing
`Ex. 1037). Patent Owner responds that “Petitioner’s narrowly crafted
`stipulation would still allow it to pursue substantially overlapping arguments
`in the district court, using identical prior art references, if those references
`are combined in different ways.” PO Sur-reply 6–7.
`Fintiv factor 4 evaluates “concerns of inefficiency and the possibility
`of conflicting decisions” when substantially identical prior art is submitted
`in both the district court and the inter partes review proceedings. Fintiv,
`Paper 11 at 12.
`Because Petitioner has not yet disclosed its invalidity contentions in
`the district court action (see Prelim. Resp. 62; Pet. Reply 4), it is impossible
`to determine the extent of any overlap. Cf. Fintiv DDI, Paper 15 at 15
`(“[B]ecause the identical claims are challenged based on the same prior art
`in both the Petition and in the District Court, this factor weighs in favor of
`discretionary denial . . . .”). We agree with Patent Owner’s characterization
`of Petitioner’s stipulation as “narrowly crafted.” PO Sur-reply 7; Ex. 1037.
`Nevertheless, the stipulation will lessen to some degree the concerns about
`duplicative efforts and the possibility of conflicting decisions. See Fintiv,
`Paper 11 at 12.
`
`19
`
`Ex. 2020-019
`
`

`

`IPR2020-00921
`Patent 9,814,268 B2
`Accordingly, Fintiv factor 4 weighs marginally against exercising
`discretion to deny institution. See Sand Revolution, Paper 24 at 11 & 12 n.5
`(similar finding in view of petitioner’s narrow stipulation).
`
`5. Factor 5—Identity of Parties
`The parties agree that the district court action involves the same
`parties as this proceeding. Pet. Reply 7; Prelim. Resp. 62 (Patent Owner
`asserts only that “Petitioner is a named defendant in the district