Hulu, LLC v. Piranha Media Distribution, LLC

Informative decision only: persuasive authority, not binding precedent. When a district court has already entered a decision finding the challenged claims invalid under 35 U.S.C. § 101 before the Board's institution decision, the Director may deny institution (and vacate a prior grant of institution) because, although the Fintiv framework does not fit neatly, its efficiency and integrity-of-the-patent-system concerns are best served by denial. The petitioner may raise other invalidity grounds in district court on remand if the Federal Circuit reverses. The decision applies and stretches Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential), to a situation the framework was not built for, namely a district court that has already found the claims invalid rather than a parallel proceeding still in progress. A petitioner who has won a § 101 dismissal in court should expect that institution of an IPR on prior-art grounds is unlikely, and that an institution already granted can be vacated on Director Review. A patent owner has a new argument for denial: it can ask for Director Review to clarify that a district court judgment of invalidity favors denial under Fintiv. The text cites no Federal Circuit, CCPA or Supreme Court authority; it relies on Board decisions and Fintiv. LEGAL TEST OR STANDARD: The Director applied the Fintiv framework's efficiency and integrity-of-the-patent-system considerations, acknowledging that it generally addresses an ongoing parallel proceeding and so does not fit neatly where invalidity has already been determined. The text lists no numbered factors for this situation. It asks whether, given the other facts and circumstances, denial best serves the efficiency and integrity of the patent system. TRIGGERING FACTS: Petitioner moved to dismiss under Rule 12(b)(6) arguing the challenged claims were ineligible under § 101. Before the Board's institution Decision, the district court granted the motion and dismissed Patent Owner's infringement claim with prejudice (Ex. 2010). Patent Owner then sought Director Review, arguing the court had entered final judgment that the challenged claims are invalid. The IPR petitions raised patentability grounds other than § 101. KEY QUOTE: "Here, as explained above, where a district court already has found the challenged claims invalid, the efficiency and integrity of the patent system is best served by denying institution." (Paper 27, p. 3) PRIOR PRECEDENT AFFECTED: Follows and extends Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 at 5-6, 16 (PTAB Mar. 20, 2020) (precedential). Acknowledges Snap Inc. v. Sanderling Mgmt. Ltd., IPR2021-00781, Paper 20 at 10 (PTAB Nov. 9, 2021), and Snap Inc. v. Blackberry Ltd., IPR2020-00392, Paper 8 at 10 (PTAB July 13, 2020), for the point that Fintiv addresses parallel proceedings. PRACTICE TIP: Petitioners should not count on institution once a district court has found the challenged claims invalid under § 101, even on non-§ 101 grounds. They should address in the petition why proceeding is still efficient. Patent owners should promptly bring any such district court invalidity ruling to the Board in the preliminary response, and use Director Review if institution is granted.