On March 26, 2025, Acting Under Secretary of Commerce for Intellectual Property and Acting Director of the United States Patent and Trademark Office Coke Morgan Stewart issued a memorandum that makes several significant changes to how the USPTO and Patent Trial and Appeal Board (“PTAB”) will evaluate whether to discretionarily deny institution of petitions for inter partes review (IPR) and post-grant review (PGR). The changes are “temporary in nature due, in part, to the current workload needs of the PTAB.” The memorandum does not explain when the changes will end.
The changes do not affect any IPRs already instituted.
I. Existing Framework
Prior to this memorandum, the PTAB had designated as precedential several decisions that address discretionary denial considerations. A pair of those decisions, Apple v. Fintiv, IPR2020-00019 (Paper 11) (Mar. 20, 2020) (designated May 2020), and Sotera Wireless v. Masimo Corp., IPR2020-01019 (Paper 12) (December 1, 2020) (designated December 2020) have been of particular focus since their designation. Fintiv sets forth six factors the PTAB must consider when determining if discretionary denial is warranted based on co-pending proceedings. These factors are (1) whether a stay is likely in the co-pending proceeding, (2) the proximity of the trial date in the co-pending proceeding to the Board’s projected statutory deadline for a final written decision, (3) investment in the co-pending litigation, (4) overlap in issues raised in the co-pending litigation and the petition, (5) whether the parties are the same as those in the co-pending litigation, and (6) other considerations, including the merits. In Sotera Wireless v. Masimo Corp., the PTAB applied the Fintiv factors and found that where a petitioner filed a stipulation agreeing to “not pursue in the District Court Litigation any ground raised or that could have been reasonably raised in an IPR” if the IPR was instituted, the Fintiv factor regarding “overlap between issues raised in the petition and in the parallel proceeding” would weigh strongly in favor of not exercising discretionary denial. This type of stipulation became known as a Sotera stipulation.
II. Changes in Director Guidance on the application of Fintiv
In June 2022, then-Director of the USPTO Kathi Vidal issued a memorandum addressing four points as to how Fintiv would be applied. Under this memorandum, (1) Fintiv would not apply to co-pending ITC proceedings, (2) petitions would not be discretionarily denied where petitioners had filed a Sotera stipulation in the co-pending proceeding, (3) where a Sotera stipulation had not been filed, the PTAB would consider the median time-to-trial in the district for the co-pending litigation, and (4) discretionary denial would not occur where a petition presented compelling merits.
On February 28, 2025, the USPTO rescinded this memorandum. On March 24, 2025, Chief Administrative Patent Judge Scott Boalick issued a memorandum addressing the recission. In this memorandum, Judge Boalick explained that (1) Fintiv factors would be applied to petitions where there is a parallel ITC proceeding, (2) a Sotera stipulation would be highly relevant to, but not dispositive of, discretionary denial, (3) the Board may consider median time-to-trial statistics in the co-pending litigation, and (4) the merits of a petition are still relevant to evaluating Fintiv discretionary denial, but compelling merits are not dispositive.
III. March 26, 2025 Memorandum from Acting Director Stewart
The March 26 memorandum bifurcates the decision on whether to institute an IPR or PGR into two separate processes. First, in a change to prior procedure where each three-member PTAB panel considering a petition would consider discretionary denial, under the March 26 memorandum, the Director and at least three PTAB judges will consider whether to discretionarily deny institution. Second, if the Director determines discretionary denial is not warranted, the petition will be referred to a three-member panel of the PTAB to address whether institution is warranted on the merits.
a. New Procedures
The March 26 memorandum provides a new procedure for briefing discretionary denial issues. If it chooses to raise discretionary denial, the patent owner can separately file a brief addressing discretionary denial issues within two months of receiving a Notice of Filing Date Accorded. Petitioner can then file an opposition brief within one month. Each of these briefs can include up to 14,000 words. The parties can seek leave to file further briefing for good cause, and reply briefs, if any, would be limited to 5,600 words.
For pending petitions where the deadline to file a discretionary denial brief has passed, but the deadline to file a Patent Owner Preliminary Response has not passed, patent owner can file a discretionary denial brief by April 26. The memorandum does not state a deadline for petitioners to respond in this scenario.
b. Considerations for discretionary denial
The March 26 memorandum states that parties seeking discretionary denial may address issues beyond the factors found in precedential PTAB decisions. These additional factors include at least whether there have been changes in the law or new judicial precedent issued since issuance of the claims that may affect patentability; 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; and compelling economic, public health, or national security interests. The memorandum also notes the Director will consider “the ability of the PTAB to comply with pendency goals for ex parte appeals, its statutory deadlines for AIA proceedings, and other workload needs.”
IV. Implications & Next Steps
It seems very likely that this memorandum will result in an increase in discretionary denials and fewer petitions being instituted. The memorandum introduces significant changes that will affect the strategy for patent owners and petitioners alike. We are available to consult about the critical decisions that will need to be made based on these changes.
