United States: Director Vidal Further Clarifies When A Discretionary Denial Of An IPR Is Appropriate Under Fintiv

Director Vidal is reshaping the rules for discretionary denials of Inter Partes Review ("IPRs") at the Patent Trials and Appeals Board ("PTAB"). The Director's most recent decision inAviaGames v. Skillz Platform, Inc., IPR2022-00530, comes on the heels of her decision inCommScope Tech. v. Dali Wireless, Inc., IPR2022-01242. InAviaGames, the Director articulates a new discretionary denial standard for IPRs where the patent has been ruled invalid under 35 U.S.C. § 101 in the parallel District Court litigation. (For a detailed discussion ofCommScopesee our previous post:Discretionary Denials under Fintiv Rebooted by Vidal's Decision: | Volpe Koenig (vklaw.com).)

AviaGamesholds that, when there is a District Court decision invalidating a patent under §101, the PTAB should use its discretion to deny an IPR unless the Petition presents acompellingcase of unpatentability.AviaGamesoverrules earlier decisions, such asSnap, Inc. v. Sanderling Management Ltd., IPR2021-00781andWyze Labs, Inc. v. Sensormatic Elecs., LLC, IPR2020-01486, which found that discretionary denials were not appropriate where the patent had been ruled invalid by the District Court under § 101, because the PTAB's effort assessing validity under 35 U.S.C. §§ 102, 103 would not be duplicative of the District Court's assessment of validity under § 101.

InAviaGames, the Panel originally hearing the case issued aDecisiondenying institution of the IPR, reasoning that it would be inefficient to spend the PTAB's resources evaluating a patent that had been found invalid in the District Court. The Director did not disagree with this reasoning, but said that efficiency concerns are not enough to deny institution where the "compelling merits test" is met. So the Director remanded the case so that the Panel could determine whether the compelling merits test was satisfied. The Director based her ruling, at least in part, on the concern that, if the district court ruling invalidating the patent under §101 were reversed on appeal, the Petitioner would be barred by the passage of time under 35 U.S.C. § 315(b) from bringing a new IPR challenge at that time.

The Director's ruling inAviaGamesfurther reiterates her holding inCommScopethat the "compelling merits" test must specifically be addressed even when the other factors favor a discretionary denial. One consequence ofAviaGamesis that in instances where the "compelling merits test" is met and the district court ruling invalidating the patent under §101 is affirmed on appeal, both parties and the Board will spend considerable time and resources on an IPR proceeding that will ultimately be moot.

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