On Feb. 28, the U.S. Patent and Trademark Office rescinded former Director Kathi Vidal's June 2022 memorandum outlining an interim procedure for discretionary denials.
In the notice rescinding the Vidal memorandum, the USPTO advised that portions of decisions relying on the Vidal memo will no longer be considered binding, or even persuasive.
Further, it instructed parties to post-grant proceedings to rely on prior PTAB precedential decisions for guidance, including the March 2020 decision in Apple Inc. v. Fintiv Inc. and the December 2020 decision Sotera Wireless Inc. v. Masimo Corp.
On March 24, the USPTO issued a memorandum providing new guidance consistent with the state of the board before the Vidal memorandum, and reintroducing challenges that petitioners previously faced before the Vidal memorandum.
Background
The America Invents Act granted the PTAB discretion to deny institution of post-grant proceedings but provided no formal procedure for exercising its discretion. To address this, in 2020, the PTAB designated its Fintiv decision precedential, outlining six Fintiv factors to analyze in considering discretionary denial in view of a parallel district court litigation.
Practically, the PTAB's application of the Fintiv factors increased discretionary denials based on parallel proceedings — and each panel at the board seemed to address and weigh the factors slightly differently.
To homogenize the board's application of the Fintiv factors, the Vidal memorandum specified instances where discretionary denial would not be applied by the board and allowed the board to consider the average time to trial when assessing the likely parallel trial date.
This favored petitioners and increased predictability by reducing the number of discretionary denials in proceedings with parallel district court cases.
The Vidal memorandum, however, was never adopted by the board as official rulemaking. Thus, the USPTO's rescission of the Vidal memorandum raised questions of how the PTAB will exercise its discretion going forward.
On March 24, the USPTO issued new guidance to clarify how discretionary denials should be handled following the rescission of the Vidal memorandum, and in turn, reinstated some of the inherent uncertainty petitioners would face when filing inter partes review petitions with parallel proceedings prior to the Vidal memorandum. The 2025 memorandum provides:
- The board will apply the Fintiv factors when there is a parallel proceeding at the ITC;
- Sotera stipulations will be considered highly relevant, but not dispositive on their own and the board will conduct a holistic Fintiv analysis;
- The PTAB may consider any evidence made of record relating to proximity to the district court's trial date or the ITC's final determination target date; and
- Compelling merits will not be dispositive on their own as a reason to institute IPR, and the board will conduct a holistic Fintiv analysis.1
Following rescission of the Vidal memorandum, like before June 2022, the PTAB faces few strict limitations on its application of discretionary denials of institution for petitions with parallel district court proceedings.
Under the 2025 memorandum, petitioners can likely expect a return of PTAB panel variability when analyzing the Fintiv factors — for example, when considering Sotera stipulations, when analyzing the likely trial date for a parallel proceeding, when assessing a parallel ITC proceeding and when considering whether the petition presents compelling merits.
Sotera Stipulations
Even before the Vidal memorandum, it had been common practice for petitioners to enter a Sotera stipulation, or a promise that they would not raise in a parallel district court proceeding the same grounds or any grounds that could reasonably be raised in a petition, to eliminate overlapping issues between an IPR petition and any parallel district court proceedings.
While the PTAB was increasingly accepting of these Sotera stipulations to grant institution, there was no forma rule requiring institution in view of a stipulation. The Vidal memorandum stated plainly that the PTAB would not exercise discretionary denial when a petitioner entered a Sotera stipulation, alleviating any uncertainty that petitioners may have had.2
With the Vidal memorandum rescinded, and the 2025 memorandum stating that while a Sotera stipulation will be highly relevant, it "will not be dispositive by itself," the uncertainty is reintroduced.3 Petitioners should still consider Sotera stipulations a strong tool in avoiding a discretionary denial but should address all Fintiv factors and analyze them holistically, as the 2025 memorandum instructs the board.4
District Court Trial Dates
Before the Vidal memorandum, the proximity of the court's scheduled trial date to the PTAB's projected statutory deadline for a final written decision was a primary focus when determining whether to exercise discretionary denial. If a trial date was scheduled before the date that the PTAB would statutorily render its final written decision, discretionary denial was likely, absent other mitigating factors.
The Vidal memorandum, however, recognized that trial dates often change and are unreliable on their own, and if other factors weigh against exercising discretion or are even neutral, then this factor should not outweigh the others.5
The Vidal memorandum also allowed the parties to present supporting evidence, like recent median time-to-trial statistics, the number of cases before the judge in the parallel litigation, and the speed and availability of other case dispositions in the district court where the parallel litigation is set to take place.6
The 2025 memorandum, following the rescission of the Vidal memorandum, permits the board to consider evidence relating to parallel proceeding trials dates, but does not require such consideration and provides no further guidance on how evidence of this nature will be weighed.7 Petitioners should be aware that PTAB panels may revert to analyzing scheduled trial dates at face value and potentially deny institution despite other factors weighing against discretionary denial.
Compelling Merits
Before the Vidal memorandum, the PTAB routinely discretionarily denied institution of meritorious petitions under Fintiv.
The Vidal memorandum recognized that Congress established post-grant proceedings to serve as efficient and cost-effective alternatives to litigation for challenging issued patents.8 It instructed that compelling, meritorious challenges — those with evidence that, if unrefuted at trial, would lead to one or more claims being determined as unpatentable by a preponderance of the evidence — should proceed at the PTAB regardless of other factors favoring discretionary denial.9
The 2025 memorandum minimizes the weight given to compelling merits in the petition, instead stating that the Fintiv factors must be assessed as a part of a "balanced assessment" and that "compelling merits alone is not dispositive."10 Thus, petitioners can no longer rely on having a compelling, meritorious challenge as solely sufficient to avoid discretionary denial, and it is yet to be seen how much weight will be given to compelling merits arguments going forward.
Parallel ITC Proceedings
Before the Vidal memorandum, some panels at the PTAB would apply the Fintiv factors to parallel ITC proceedings — although the ITC cannot truly invalidate patents. In practice, because of the fast-paced ITC schedules, the PTAB would frequently discretionarily deny IPR petitions with parallel ITC proceedings.
The Vidal memorandum, however, acknowledged a lack of efficiency because the ITC lacks authority to invalidate a patent, and its invalidity rulings are not binding on other tribunals.11 The Vidal memorandum, therefore, precluded the PTAB from discretionarily denying petitions based on parallel ITC proceedings.12
The 2025 memorandum now reinstates application of the Fintiv factors when there is a parallel ITC proceeding, highlighting that despite an ITC invalidity determination not being binding, there are challenges in asserting patent claims found invalid by the ITC.13
Accordingly, petitioners should understand the impact parallel ITC proceeding can have on institution of IPR petitions, and exercise diligence in filing PTAB challenges against patents asserted in the ITC as quickly as possible, in addition to analyzing the other Fintiv factors.
Key Takeaways
Following rescission of the Vidal memorandum and entry of the 2025 memorandum, there is a large reversion back to an early Fintiv world.
From the standpoint of textualists and patent owners, this may be viewed favorably, increasing discretionary denials and reducing challenges to issued patents presumed valid.
From petitioners' standpoint, however, this reversion creates uncertainty and potential for inconsistency. Petitioners, therefore, should resort to holistic review and analysis of all six Fintiv factors, instead of relying on certain fail-safe provisions that had become customary following the 2022 Vidal memorandum.
Footnotes
1 Memorandum from Chief Admin. Pat. Judge Scott R. Boalick to Members of the Patent Trial and Appeal Bd. (Mar. 24, 2025).
2 Memorandum from Under Secretary of Commerce for Intell. Prop. and Dir. of the U.S. Pat. and Trademark Office Kathy Vidal to Members of the Pat. Trial and Appeal Bd. (June 21, 2022) at 7.
3 Memorandum from Scott R. Boalick to Members of the Pat. Trial and Appeal Bd. at 2-3.
4 Id.
5 Memorandum from Kathy Vidal to Members of the Pat. Trial and Appeal Bd. at 8.
6 Id. at 8-9.
7 Memorandum from Scott R. Boalick to Members of the Pat. Trial and Appeal Bd. at 3.
8 Memorandum from Kathy Vidal to Members of the Pat. Trial and Appeal Bd. at 3.
9 Id. at 4-5.
10 Memorandum from Scott R. Boalick to Members of the Pat. Trial and Appeal Bd. at 3.
11 Memorandum from Kathy Vidal to Members of the Pat. Trial and Appeal Bd. at 6.
12 Id. at 7.
13 Memorandum from Scott R. Boalick to Members of the Pat. Trial and Appeal Bd. at 2.
Originally published by Law360
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