Patent Office Issues Interim Guidance on Discretionary Denials

The US Patent and Trademark Office (USPTO) has issued new, binding interim guidance on the Patent Trial and Appeal Board’s (PTAB’s) discretionary denials of PTAB petitions. As the memo notes,

Congress designed the America Invents Act (AIA) post-grant proceedings "to establish a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs." … Parallel district court and AIA proceedings involving the same parties and invalidity challenges can increase, rather than limit, litigation costs. Based on the USPTO's experience with administering the AIA, the agency has recognized the potential for inefficiency and gamesmanship in AIA proceedings, given the existence of parallel proceedings between the Office and district courts.

The PTAB will consider the following factors (known as the Fintiv factors as they come from the case of https://www.uspto.gov/sites/default/files/documents/IPR2020-00019, Apple v. Fintiv, Paper 11 (3.20.20).pdf) when determining whether to institute an AIA post-grant proceeding where there is parallel district court litigation:

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;
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.

As the PTAB explained in Fintiv,

These factors relate to whether efficiency, fairness, and the merits support the exercise of authority to deny institution in view of an earlier trial date in the parallel proceeding.

In the memo, the USPTO clarified that:

the PTAB will not deny institution of an IPR or PGR under Fintiv

1. when a petition presents compelling evidence of unpatentability;
2. when a request for denial under Fintiv is based on a parallel ITC proceeding; or
3. where a petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition.

Additionally, when the PTAB is applying Fintiv factor two, the PTAB will consider the speed with which the district court case may come to trial and be resolved. The PTAB will weigh this factor against exercising discretion to deny institution under Fintiv if the median time-to-trial is around the same time or after the projected statutory deadline for the PTAB's final written decision. That said, even if the PTAB does not deny institution under Fintiv, it retains the right to deny institution for other reasons under 35 U.S.C. §§ 314(a), 324(a), and 325(d). For example, the PTAB may deny institution if other pertinent circumstances are present, such as abuse of process by a petitioner.

This interim guidance will apply to all proceedings pending before the USPTO and will remain in effect until further notice. The USPTO expects to replace this interim guidance with rules after it has completed formal rulemaking.