USPTO Director Again Reverses Patent Board

USPTO office

Katherine K. Vidal, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO) has again reversed a decision of the Patent Trial and Appeal Board (PTAB).

We discussed an earlier decision by Vidal involving abuse of the inter partes review (IPR) process in this article. As we explained there, Vidal’s order

arose out of the US Supreme Court’s 2021 Arthrex decision, in which the Court found the IPR system unconstitutional because it gave too much authority to the Patent Trial and Appeal Board (PTAB) administrative judges.

The Court resolved the problem by taking authority from the PTAB and giving it to the head of the USPTO, who is nominated by the President and confirmed by the Senate.

The January matter was the first time that Vidal had issued sanctions against a patent challenger for abusing the patent system.

In February the PTAB issued a Decision Granting Institution of inter partes review. The PTAB then declined to exercise its discretion to deny institution under 35 U.S.C. § 314(a), in view of Apple Inc. v. Fintiv, Inc. and the USPTO Memorandum, Interim Procedure for Discretionary Denials in AIA PostGrant Proceedings with Parallel District Court Litigation (“Guidance Memo”) of June 21, 2022.

The PTAB explained that it declined to exercise its delegated discretion under 35 U.S.C. § 314(a) because the Petitioner presented compelling unpatentability challenges.

As Director Vidal explained,

where the Board “determines that the information presented at the institution stage presents a compelling unpatentability challenge, that determination alone demonstrates that the PTAB should not discretionarily deny institution under Fintiv.”

In determining whether there’s a compelling unpatentability challenge, the PTAB evaluates whether the Petition presents challenges “in which the evidence, if unrebutted in trial, would plainly lead to a conclusion that one or more claims are unpatentable by a preponderance of the evidence.”

The compelling merits standard is a higher standard than the standard for institution set by statute, said Vidal. She noted that “[a] challenge can only ‘plainly lead to a conclusion that one or more claims are unpatentable’ if it is highly likely that the petitioner would prevail with respect to at least one challenged claim.”

As Vidal explained,

The compelling merits test seeks to strike a balance among the competing concerns of avoiding potentially conflicting outcomes, avoiding wasteful parallel proceedings, protecting against patent owner harassment, and strengthening the patent system by allowing the review of patents challenged with a sufficiently strong initial merits showing of unpatentability. The patent system and the public benefit from instituting challenges where there is a showing of unpatentability by compelling merits, but it is only a finding under this higher standard that would compel the Board to review claims for the public benefit when other considerations favor discretionary denial.

In this case, she said, the PTAB assessed compelling merits without first determining that the other Fintiv factors favor discretionary denial.

The PTAB erred, she said, in not providing “sufficient reasoning” for finding the reasons to deny institution were compelling.

The PTAB must provide “sufficient reasoning” for its denial so that the parties may challenge the PTAB’s decision and so that this decision can be reviewed.

Categories: Patents