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What to Know About the PTAB’s Discretionary Denial Shakeups 

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The United States Patent and Trademark Office (USPTO) has recently made several significant changes that are reshaping discretionary denials at the Patent Trial and Appeal Board (PTAB). The shift in policy began in late February when the Office announced that it was rescinding former Director Vidal’s 2022 memorandum concerning discretionary denials in PTAB proceedings (known as the “Fintiv memo”). Now, the Chief Judge of the PTAB has issued guidance on the effect of that recission and the Office has made significant changes to the PTAB’s institution decision process.  

Guidance memo on effect of Fintiv memo recission 

On March 24, PTAB Chief Administrative Patent Judge Boalick issued a memo concerning the effect of the USPTO’s recission of the Fintiv memo. While the Fintiv memo was intended to provide guidance while the USPTO explored rulemaking, the Office never issued such rulemaking, so the recission of the memo restores PTAB policy to that in place before the Fintiv memo issued. Judge Boalick’s memo provides the following additional guidance: 

  • The recission applies to cases in which the Board has not yet issued an institution decision or where a request for rehearing or Director Review of an institution is pending. Absent extraordinary circumstances, the Board will not revisit decisions on institution if the time for seeking Director Review or rehearing has passed.  
  • The Board will apply the Fintiv factors when there is a parallel proceeding in the International Trade Commission (ITC). The Board will be more likely to deny institution when the ITC’s projected final determination date is earlier than the Board’s deadline to issue a final written decision.  
  • Timely filed Sotera stipulations are relevant but not dispositive.   
  • The Board may consider any evidence regarding the proximity of a District Court’s trial date, including median time-to-trial data.  
  • Compelling merits are not dispositive.  

Interim process for institution of AIA proceedings  

On March 26, the Office issued a memo concerning an interim process for institution of America Invents Act (AIA) proceedings. The Office explains that the new process is necessary to better manage workload needs, reduce the pendency of ex parte appeals, and ensure consistency in AIA institution decisions. The memo makes the following changes to PTAB practice and procedure: 

Bifurcated institution decisions  

Decisions on whether to institute inter partes review or post-grant review will now be bifurcated between (1) discretionary considerations and (2) merits and other non-discretionary considerations. The Director, in consultation with at least three PTAB judges, will first determine whether discretionary denial is appropriate. If it is not, then the Director will issue a decision declining to exercise her discretion to deny institution and refer the petition to a three-judge PTAB panel. The panel will then handle the case as normal, including by issuing a decision whether to institute on the merits.  

Briefing on discretionary denial 

The Office will now permit parties to file separate briefing on requests for discretionary denial. Within two months of the date the PTAB enters a Notice of Filing Date Accorded to a petition, a patent owner may file a brief explaining any applicable bases for discretionary denial of institution. The petitioner may file an opposition brief within one month of the patent owner’s brief. Reply brief(s) may be granted upon a showing of good cause. Discretionary denial briefs are limited to 14,000 words, while reply briefs are limited to 5,600 words.  

The parties are permitted to address all relevant considerations in their briefs, which may include: 

  • Whether the PTAB or another forum has already adjudicated the validity or patentability of the challenged patent claims 
  • Whether there have been changes in the law or new judicial precedent issued since issuance of the claims that may affect patentability  
  • The strength of the unpatentability challenge  
  • The extent of the petition's reliance on expert testimony 
  • Settled expectations of the parties, such as the length of time the claims have been in force 
  • Compelling economic, public health, or national security interests 
  • Any other considerations bearing on the Director’s discretion  

The Director may also consider the ability of the PTAB to comply with pendency goals for ex parte appeals, deadlines for AIA proceedings, and other workload demands in determining whether to discretionarily deny a petition.  

Takeaways  

While it is still too early to state definitively how these changes will play out, petitioners, patent owners, and post-grant practitioners should keep the following in mind: 

  • With the Director being involved in each institution decision under the bifurcated process, it is likely that the number of requests for Director Review of institution decisions will decline significantly. And because institution decisions are not appealable, the odds of a decision being reversed will be likely reduced.
  • Timing is more important than ever for both petitioners and patent owners. With the Board now allowing the parties wide latitude in their discretionary denial briefs, early collection of evidence is critical. This is especially true for patent owners, who now must provide discretionary denial arguments one month earlier than usual.  
  • While Fintiv factor 6 (compelling merits) is no longer dispositive, the new institution process invites patent owners to address “the strength of the unpatentability challenge” in their discretionary denial briefs. As such, petitioners should consider addressing this factor in their petitions and discretionary denial opposition briefs, while patent owners should consider the downsides of providing petitioners with a second opportunity to argue the merits in their opposition briefs. 
  • At face value, the new criteria addressing the settled expectations of the parties, such as the length of time the claims have been in force, seemingly allow both petitioners and patent owners to establish the position of the patent in the market.   
  • Parties will want to develop a foundation and themes to address economic, public health, or national security interests. 

Practitioners should also keep in mind that the Office has indicated that the new institution process is temporary in nature and is designed to meet the PTAB’s current workload needs. If those needs change, the Office may issue further updates to the Board’s institution decision process. We are closely monitoring this development and others at the PTAB and will provide additional commentary in due course.