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USPTO Director Vacates PTAB Decision, Denies Institution of Inter Partes Review in Motorola-Stellar Patent Dispute

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In a significant reversal for Petitioner Motorola Solutions, the Acting Director of the United States Patent and Trademark Office (USPTO) has granted Stellar LLC’s request for Director Review, vacated the Patent Trial and Appeal Board’s (PTAB) earlier decision instituting inter partes review of four patents, and denied institution.

The March 28, 2025 decision, affecting Stellar, LLC’s U.S. Patent Nos. 7,593,034, 9,485,471, 8,692,882, and 9,912,914, hinged on the application of the Fintiv factors, which guide PTAB discretion in instituting inter partes review when parallel district court proceedings exist. Acting Under Secretary Coke Morgan Stewart found that “the Board’s analysis of factors 3 and 4, and overall weighing of the Fintiv factors was erroneous” and that the Board “did not give enough weight to the investment in the parallel proceeding and gave too much weight to Petitioner’s Sotera stipulation.”

Substantial Investment in Parallel Proceeding

The Director emphasized that by the time Stellar filed its Preliminary Response, the parties had already “served extensive infringement and invalidity contentions, served opening and rebuttal expert reports, filed claim construction briefs, and conducted several depositions.” Additionally, “the court also had held a claim construction hearing and construed the disputed claim terms.” Importantly, the scheduled district court trial date of March 10, 2025, was “eleven months before the Board’s projected final written decision date.” Given these factors, the Director concluded that “factor 3 strongly favors discretionary denial.”

Limited Value of Sotera Stipulation

While Motorola had provided a Sotera stipulation (agreeing not to pursue in district court any ground it raised or reasonably could have raised in the IPR), the Director found this insufficient. The decision noted that “Petitioner’s stipulation does not ensure that these IPR proceedings would be a ‘true alternative’ to the district court proceeding.” The Director explained that “Petitioner’s invalidity arguments in the district court are more expansive and include combinations of the prior art asserted in these proceedings with unpublished system prior art, which Petitioner’s stipulation is not likely to moot.”

Practical Guidance for Practitioners

This decision offers several important lessons for patent practitioners:

  1. Timing is Critical: The substantial progression of the district court case played a decisive role. As the Director noted, by the time of the Preliminary Response, the parties had completed claim construction and expert reports, making factor 3 “strongly favor discretionary denial.” Potential IPR petitioners should file as early as possible to minimize this risk.
  2. Consider Trial Date Proximity: The eleven-month gap between the district court trial date and the projected PTAB final written decision heavily influenced the outcome. Practitioners should calculate and emphasize these timeframes in their arguments.
  3. Sotera Stipulations Have Limitations: The decision reveals that a Sotera stipulation is not a silver bullet. The Director’s finding that Motorola’s district court invalidity arguments were “more expansive” and included combinations with “unpublished system prior art” suggests that practitioners should carefully analyze the overlap between district court and IPR invalidity theories before relying on a stipulation.
  4. Director Review Is Consequential: This case demonstrates the significant impact Director Review can have on PTAB decisions. The Director’s willingness to overrule the Board on its application of discretionary factors suggests practitioners should consider Director Review as an important strategic option.
  5. Avoid Duplicative Invalidity Theories: The decision suggests that petitioners should develop clear separation between their district court and IPR invalidity theories early in litigation to strengthen arguments against discretionary denial under Fintiv factor 4.
  6. Beware of Generic Factor Analysis: The Director criticized the Board’s reasoning that “Patent Owner’s infringement case alone… could present a substantial, if not overwhelming, burden on the district court’s resources,” noting this “could apply in most, if not all, cases and misapprehends the relevant inquiry.” Practitioners should avoid such generic arguments and instead provide case-specific evidence for each Fintiv factor.

System Efficiency Considerations

Weighing all factors together, the Director concluded that “the stipulation does not outweigh the substantial investment in the district court proceeding or Fintiv factors 1, 2, and 5, which the Board found weighed in favor of denial.” The decision ultimately determined that “considering the Fintiv factors as a whole, the efficiency and integrity of the system are best served by denying review.”

The case underscores the USPTO’s continued commitment to applying the Fintiv factors and highlights the significant hurdles petitioners face when parallel district court proceedings are well advanced, offering valuable guidance for strategic planning in patent disputes.

The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Greg Cordrey at 949.623.7236 or GCordrey@jmbm.com.