Key Takeaway: The USPTO has reinstated earlier discretionary denial standards (including Fintiv) and introduced a new two-phase review process, which is expected to lead to more frequent denials of IPR petitions. Both patent challengers and owners should prepare for increased procedural complexity, tighter briefing deadlines, and heightened scrutiny in post-grant proceedings.
Over the past few months, the United States Patent and Trademark Office (USPTO) has issued several memoranda significantly altering the Patent Trial and Appeal Board's (PTAB) procedures for determining discretionary denial of post-grant America Invents Act (AIA) trial proceedings, such as inter partes review (IPR) and post-grant review (PGR). At the heart of these changes is the UPTOS's decision to rescind the June 21, 2022 memorandum entitled "Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation" (Interim Procedure) and restore the guidance set forth in the PTAB's precedential decisions in Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) ("Fintiv") and Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (PTAB Dec. 1, 2020) ("Sotera"). These policy changes are likely to increase the frequency of discretionary denials of AIA proceedings and raise the bar for patent challengers pursuing the IPR process as an alternative to district court litigation.
Background: Fintiv and Discretionary Denial
Under the Interim Procedure
In May 2020, the USPTO increased the burden on IPR and PGR
petitioners by designating the PTAB's decision in
Fintiv as precedential. Fintiv outlined six
factors that the PTAB should consider in determining whether to
institute an AIA-post grant proceeding where there is parallel
district court litigation:
- whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
- proximity of the court's trial date to the Board's projected statutory deadline for a final written decision;
- investment in the parallel proceeding by the court and the parties;
- overlap between issues raised in the petition and in the parallel proceeding;
- whether the petitioner and the defendant in the parallel proceeding are the same party; and
- other circumstances that impact the Board's exercise of discretion, including the merits.1
On June 21, 2022, former Director of the USPTO, Katherine Vidal, issued the Interim Procedure memorandum clarifying the PTAB's application of the Fintiv factors to discretionary institution when there is parallel litigation.2 First, where a petition presented compelling evidence of unpatentability, the PTAB would not discretionarily deny institution under the Fintiv factors.3 Second, the USPTO recognized that Fintiv's application was limited to district court litigation and did not apply to parallel U.S. International Trade Commission (ITC) proceedings.4 Third, the PTAB would not discretionarily deny institution where a petitioner presents a stipulation not to pursue in a parallel proceeding the same grounds or any grounds that could have been reasonably raised before the PTAB, consistent with its holding in Sotera.5 Finally, the PTAB would consider the median time from filing to disposition of parallel litigation when comparing the district court's trial date to the anticipated date of a final written decision from the PTAB under the second Fintiv factor.6
Rescission: Concerns with Workload Management and
Efficiency
In March of 2025, the USPTO issued two memoranda
rescinding the Interim Procedures, introducing new hurdles for
patent challengers to overcome in seeking institution of AIA
proceedings. The first, issued March 24, 2025, provides guidance on
the PTAB's exercise of discretionary institution of AIA
proceedings in light of the USPTO's decision to rescind the
Interim Procedures on February 28, 2025.7 The guidance
effectively reverses each point raised in the Interim Procedure.
Specifically, the guidance states that (1) the board will still
consider discretionary denial even when a petition presents
compelling evidence of unpatentability, (2) parallel ITC
proceedings are relevant to the Fintiv factors (3) a
Sotera stipulation is highly relevant, but will not be
dispositive in itself, and (4) the Board may consider any evidence
that bears on the proximity of a parallel district court or ITC
final determination target date, including median time-to-trial
statistics.8
The second memorandum, issued March 26, 2025, introduces a new step in the institution process by bifurcating the decision between discretionary considerations and the merits of the challenge.9 For review of discretionary considerations, the Director will now consult with at least three PTAB judges to determine whether discretionary denial of institution is appropriate.10 If discretionary denial is deemed inappropriate, the Director will refer the petition to a three-member panel of the PTAB to handle the case in the normal course by issuing a decision on institution addressing the merits and other non-statutory considerations.11 The new bifurcated process also allows the parties to file separate briefing for each step of the institution process. The patent owner may file its briefing on discretionary factors within two months of receiving a Notice of Filing Date, and the Petitioner can then file an opposition within one month.12 If no discretionary briefing is filed, the case will move forward to be decided on the merits without consideration of discretionary factors.13 Both the patent owner's opening brief on discretionary denial, and the petitioners opposition are limited to 14,000 words, and any reply brief (if allowed on a case-by-case basis) is limited to 5,600 words.14 The discretionary denial briefing may address all relevant considerations, including the following:
- 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 discretion15
Impact on IPRs and Strategies Moving
Forward
The bifurcated institution system and return to a broad application
of the Fintiv factors may increase the frequency of
discretionary denials in IPR proceedings. When former Director
Vidal first issued the Interim Procedures, procedural denials at
the PTAB decreased by over 61%, year-over-year due to the
limitations it imposed on the application of
Fintiv.16 Now, that number is likely to rise
again as patent owners have more leeway in discretionary arguments
and second briefing opportunity to prevent institution of
proceedings. Moreover, the March 26 Memorandum states that these
changes are geared toward managing the PTAB's capacity to
conduct AIA proceedings.17 With an additional briefing
stage to work through, the PTAB will likely be inclined to deny
more petitions at the discretion stage to achieve its stated goal
of increased efficiency.
Both patent owners and challengers should be prepared to adjust their IPR strategies as these new procedures are put into practice. For patent owners, the ITC may become a more popular venue due to its accelerated schedule, as the average time to completion of a section 337 ITC investigation is nearly half the national average time to trial in a district court litigation.18 The PTAB may also consider a district court's scheduled trial date or an ITC final determination target date as more relevant than median time-to-trial statistics, raising the likelihood of discretionary denial under the second Fintiv factor.
The fast-paced schedule of the discretionary briefing phase substantially limit the time that patent owners will have to collect evidence, work with experts, and address any new facts that may arise after the PTAB enters a Notice of Filing Date Accorded. Parties should also keep in mind that the Director will only consider discretionary factors that are raised in the briefing, so it is important to investigate and raise any factor that is relevant to their case, regardless of whether the other side has addressed it.
Additionally, including "the strength of the unpatentability challenge" as a consideration in the new discretionary denial briefing stage allows both parties to address the merits of their case before reaching the true merits stage. While petitioners will generally be constrained to the evidence and arguments submitted in their original petition, patent owners now have the opportunity to address a petitioner's merits arguments in both phases of the institution process. The Director is not expecting either party to make fully developed merits arguments at the discretionary phase, which may allow both sides to gain insight on the strength of the invalidity challenge based on the initial discretionary decision and, if the petition proceeds to the merits stage, allow patent owners to refine their arguments in the preliminary response.
While the Office has noted that these changes are only temporary in nature and dependent, in part, on the current workload needs of the PTAB, this marks a significant change for IPR practice moving forward. The USPTO has also indicated that these new procedures are likely to be submitted for notice and comment as part of its rulemaking process, which may mean these changes are here to stay. With rising uncertainty, patent owners, challengers, and practitioners should pay close attention to how these changes play out in the coming months and adapt their approach to IPRs accordingly.
Footnotes
1. Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020).
2. U.S. Patent and Trademark Office, Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings With Parallel District Court Litigation (June 21, 2022).
3. Id. at 2, 3-4.
4. Id. at 2-3, 5-7.
5. Id. at 3, 7-8.
6. Id. at 3, 8-9.
7. United States Patent and Trademark Office, Guidance on USPTO's recission of "Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation" (Mar. 24, 2025).
8. Id. at 2-3.
9. United States Patent and Trademark Office, Interim Processes for PTAB Workload Management (Mar. 26, 2025).
10. Id. at 1.
11. Id.
12. Id. at 2.
13. Id. at 1.
14. Id.
15. Id. at 2-3.
17. USPTO, supra note 9 at 1.
18. Q3 PTAB Discretionary Denial Report: Use of Fintiv Drops to Near-Zero, Unified Patents (Apr. 20, 2025, 6:00 PM), https://www.usitc.gov/intellectual_property/337_statistics_average_length_investigations.htm (showing the average time to completion of a section 337 investigation to be 18 months in 2024) ; Patent Research Tools – Time to Trial Statistics, Docket Navigator, https://search.docketnavigator.com/patent/binder/0/0?profileType=time_to_trial&profileId=0 (showing the national average time to trial in district courts to be 37 months in 2024).
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