Significant Procedural Change in PTAB Procedure for Inter Partes Review (IPR)
After recently rescinding former Director Kathi Vidal’s memorandum regarding discretionary denials of petitions for Inter Partes Review (IPR), the acting director of the U.S. Patent and Trademark Office (USPTO), Coke Morgan Stewart, provided additional guidance on discretionary denials moving forward. The new guidance involves Director involvement and oversight and will likely lead to an increase discretionary denials.
The rescinded Fintiv Memo established clear guidelines for discretionary denials of IPR petitions. These guidelines included bright line rules about Sotera stipulations and parallel International Trade Commission (ITC) proceedings and provided predictability for petitioners and patent owners alike. Under the new interim policy, the director will now make decisions on whether to deny petitions for discretionary reasons before the Patent Trial and Appeal Board (PTAB) even considers the merits of the case. If the petition is not denied during the initial review, then it will be referred to a three-member panel of the PTAB to consider the merits.
Director Stewart cited workload as a major reason for this change, likely pointing to the expected workforce reduction at the PTAB. The new policy aims to improve PTAB efficiency, maintain capacity for America Invents Act (AIA) proceedings, and reduce pendency in ex parte appeals.
Impacts of the Decision
- Less Clarity About Discretionary Denials: The new policy introduces uncertainty regarding the criteria for discretionary denials. The Fintiv Memo provided clear guidelines, particularly with regard to Sotera stipulations. A properly worded Sotera stipulation ended the discretionary review process and acted as a “get-out-of-jail-free card” for petitioners. Now, a Sotera stipulation is merely one of six factors to consider for discretionary denial. Nevertheless, the Sotera decision (a case in which Miller Johnson member, Nathan Sportel, was instrumental in representing Petitioner, Sotera Wireless) remains precedential, and the Board should still consider a Sotera stipulation as strong weight against discretionary denial.
- Early Filing of IPR Petitions: Given the increased potential for discretionary denials, it is again advisable for petitioners to file IPR petitions as early as possible in order to mitigate the risk of discretionary denial based on the timing of parallel litigation. Unfortunately, for petitioners, this likely means that the statutory 12-month deadline for filing an IPR is again rendered unimportant because a petition will need to be filed, in many courts, long before the 12-month from complaint service date to avoid discretionary denial.
- District Court Timing Considerations: The timing of district court proceedings may once again play a significant role in the PTAB’s discretionary denial decisions. Petitioners should be mindful of the status and schedule of related district court cases when planning their IPR strategy.
- Increased Word Count for Petitioners: One positive outcome of the new policy is that petitioners are now allowed more words, as a matter of right, to argue against discretionary denial if it is raised. This provides petitioners with an assured opportunity to present their arguments against discretionary denial.
- Director Involvement as an Additional Hurdle: The involvement of the Director in the discretionary denial process adds another layer of review. This additional hurdle may impact the overall efficiency and predictability of obtaining the benefits of inter partes review. Notably, Director involvement also results in a four-member panel, which could theoretically result in a 2-2 vote among the members of the panel.
While the new procedural change aims to address the PTAB’s workload needs and improve efficiency, it introduces new challenges and uncertainties for petitioners. It is important for both patent owners and potential petitioners to stay informed about these changes and adjust their strategies accordingly to navigate the evolving landscape of inter partes review.
Miller Johnson’s patent litigation team will be monitoring developments at the USPTO. If you have any questions or concerns about IPRs, we encourage you to consult with counsel.
