IAM

Angela Morris and Nisha Shetty

28 February 2025

The United States Patent and Trademark Office has rescinded a 2022 memorandum that drastically limited the number of discretionary denials of inter partes review petitions.

The agency has thrown out former USPTO Director Kathi Vidal‘s policy memo, “Interim procedure for discretionary denials in AIA post-grant proceedings with district court litigation”, said a press release.

The patent office reinstated two discretionary denial precedential rulings issued in 2020 under then-USPTO Director Andrei Iancu. PTAB litigants should now consider Apple Inc v Fintiv and Sotera Wireless Inc v Masimo Crop for guidance about the agency’s discretionary denial policy.

“To the extent any other PTAB or Director Review decisions rely on the Memorandum, the portions of those decisions relying on the Memorandum shall not be binding or persuasive on the PTAB,” the notice said.

The Fintiv precedent — favoured by patent holders — led to the PTAB discretionarily denying petitions against patents that were subject to parallel US district court litigation. If the court trial was scheduled to occur prior to the patent office’s deadline to decide an IPR (18 months from filing to final written decision), then PTAB judges might deny institution. The Sotera precedent enabled a petitioner to sidestep a discretionary denial by stipulating they would not raise the IPR’s same invalidity grounds in underlying district court litigation.

Vidal’s memo prohibited discretionary denials for three categories:

1. Where petitions present compelling evidence of unpatentability;

2. On the grounds that there is a parallel case in the US International Trade Commission; and

3. Cases in which the petitioner undertakes not to pursue the same invalidity grounds – or those it could have reasonably raised – in parallel district court cases.

The memo also instructed the PTAB to consider whether a district court’s medium time-to-trial is about the same as the PTAB’s statutory deadline for a ruling — which should weigh against discretionary denial.

After issuing the memo, Vidal used PTAB director review rulings to further tweak agency policy on Fintiv discretionary denials. A rulemaking initiative proposed some permanent changes, but it didn’t make it over the finish line before Vidal resigned in December 2024 to return to her old firm, Winston & Strawn.

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Wendy Verlander, an attorney at Verlander, says she expects discretionary denials to increase without reliance on the memorandum.

“The USPTO action rescinding the June 2022 memorandum will return the PTO’s discretionary denial analysis to the Fintiv factors, under which many more IPR petitions were discretionarily denied,” says Verlander. “Although a Sotera stipulation was an important factor before the 2022 memorandum, afterwards it became the most important factor and was almost always provided by the petitioner to avoid a denial. Today’s change to the procedure will allow the PTAB to weigh the other factors as well.”

For the full article, continue reading at IAM.