Interplay Between Inter Partes Reviews (IPRs) And ITC Section 337 Proceedings

Until recently, IPRs have not played a significant role in International Trade Commission (“ITC”) Section 337 investigations. While the ITC is unlikely to stay a Section 337 investigation, pending IPRs will likely have an increasing impact at the ITC, especially when an IPR proceeding reaches an advanced stage before or during the pendency of a Section 337 investigation. This article examines the limited interplay to date between IPRs and Section 337 proceedings and discusses potential implications for future investigations.

IPR’s under AIA

The AIA narrowed the bases on which an alleged infringer or third party can challenge patent validity in IPRs as compared to those available in district court or at the ITC. A party through an IPR can challenge validity based on anticipation (35 U.S.C. § 102) and on obviousness (35 U.S.C. § 103) grounds. However, an IPR can be based only on prior art patents or printed publications; IPRs cannot be based on a commercial device or system. Therefore, a party accused of infringement cannot use IPRs to challenge patent validity on other bases, such as indefiniteness (35 U.S.C. § 112) or patentability (35 U.S.C. § 101).
The different standards of proof used in IPR proceedings have resulted in validity challenges having a higher success rate in comparison to district court proceedings. For example, according to the PTO’s most recent statistics, of the IPRs reaching final written decision, 67 percent have resulted in all claims cancelled, 16 percent resulted in a partial finding of invalidity, and 17 percent resulted in no finding of invalidity.

Stays in District Court versus the ITC

A significant advantage of IPRs for an accused infringer is that defendants can often obtain a stay of a district court infringement case based upon filing or institution of an IPR. Although the success of motions to stay varies based upon the particular district and judge, district courts as a whole have granted approximately 58-81 percent of stay requests based on IPRs. Moreover, even if stays are denied preliminarily they are denied without prejudice and later may be granted. District courts are more likely to grant stays after an IPR has been instituted.
Another important fact is the typical timeline of an IPR proceeding compared to that of a Section 337 investigation. The normal timeline for an IPR proceeding is roughly 18 months, with institution often occurring approximately six months after the petition is filed.
The ITC uses a multi-factor test in assessing whether to grant a stay, including at least the following factors:
1. the state of discovery and hearing date;
2. whether a stay will simplify the issues;
3. undue prejudice to any party;
4. the stage of PTO proceedings; and
5. Efficient use of Commission resources.
In Semiconductor Chips, the Commission reversed the decision of an ITC Judge who granted a stay based on near final ex parte reexaminations. The Commission emphasized its statutory mandate to complete 337 investigations “as soon as practicable.”

Potentials for IPR

The ITC gave weight to a final PTAB decision, issued after the Judge’s Initial Determination, rejecting two claims of the one of the asserted patents that the Commission had found infringed. The Commission held that, “in light of the advanced posture of the IPR proceeding the Commission has determined to exercise its discretion and suspend enforcement of the remedial orders as to the asserted claims of the ’934 patent” pending Federal Circuit appeal of the PTAB decision. Interestingly, the ITC suspended remedy enforcement not only as to the two claims rejected in the PTAB decision, but also as to a third claim that was not subject to the PTAB decision.

Future applications

Barring a final Federal Circuit appeal of an IPR that completely invalidates all asserted claims occurring during the pendency of a Section 337 investigation, a stay of a Section 337 investigation remains unlikely. However, recent decisions indicate that IPR proceedings are having an increasing impact at the ITC. Given the high percentage of district court cases stayed in view of IPRs, patent owners are increasingly turning to the ITC as an alternative forum to assert their patents in parallel to IPR proceedings. Thus, there is an increasing likelihood that the ITC will see more complaints where IPR proceedings are already underway and where PTAB decisions may have issued. In view of this development, the Commission and Judges have recognized the interplay between pending investigations and IPRs and have begun to accord some evidentiary weight to the PTAB’s decisions.
In Certain Composite Aerogel Insulation Materials, Inv. No. 337-TA-1003, the presiding ITC Judge recently reopened the evidentiary record after the hearing to receive two PTAB decisions denying institution of the respondents’ IPRs.