On April 19, 2024, the United States Patent and Trademark Office (USPTO) issued a notice of proposed rulemaking (NPRM) that proposes rules regarding the exercise of discretion to determine whether to institute an Inter Partes Review (IPR) or Post-Grant Review (PGR) proceeding with regard to serial petitions, parallel petitions, joinder petitions, and petitions implicating the same or substantially the same art or arguments previously presented to the Office. The Proposed Rules also provide a separate briefing process for discretionary institution arguments and align the procedures for termination of proceedings pre- and post-institution.¹ The deadline to submit comments addressing this NPRM is June 18, 2024.

Key Points

Discretionary denial occurs when the Patent Trial and Appeal Board (Board) uses its discretion to decline to institute an otherwise potentially meritorious petition.

This NPRM proposes rules relating to certain aspects of discretionary denial issues. Highlights from the NPRM include the following:

1. The NPRM does not expressly address discretionary denial in view of parallel district court litigation.

2. The NPRM contains multiple proposals pertaining to discretionary denials

A. Proposes that discretionary denial issues are briefed separately from the Patent Owner Preliminary Response (POPR).

B. Proposes definitions for serial and parallel petitions, and factors for evaluating when discretionary denial may be appropriate for them.

C. Proposes a framework for evaluating discretionary denial based on previously presented art or arguments (i.e., discretionary denial under 35 U.S.C. § 325(d)).

D. Proposes that discretionary denial arguments regarding parallel petitions or Section 325(d) will not be considered for joinder petitions if such issues were already addressed in the context of the instituted petition.

3. The NPRM proposes that pre-institution and post-institution settlement agreements must be filed with the USPTO.

Background

Under the America Invents Act, the decision “to deny a petition is a matter committed to the [USPTO’s] discretion.” Cuozzo Speed Techs., LLC v. Lee, 579 U.S. 261, 273 (2016). Discretionary denial disputes have arisen in various situations, including parallel district court and Board proceedings on the same patent,² serial and parallel Board petitions,³ and petitions including arguments that were previously considered by the USPTO.⁴

In April 2023, the USPTO published an Advance Notice of Proposed Rulemaking (ANPRM) that presented various proposals surrounding when the USPTO should exercise discretion to institute or not institute a petition for IPR or PGR.⁵ This included proposals related to parallel district court litigation, serial and parallel petitions, and Section 325(d). The ANPRM also included proposals regarding discretionary denial briefing, settlement agreements, and word limits. The USPTO reports that the ANPRM received 14,500 written comments. The present NPRM proposes rules that address a subset of proposals from the ANPRM.

Overview of Proposed Rules

The NPRM proposes two categories of rules: (1) rules related to discretionary denial and (2) rules related to settlement agreements and termination.

Discretionary Denial

Parallel District Court Litigation (Fintiv): Although the NPRM addresses aspects of discretionary denial, the NPRM does not explicitly address discretionary denial in view of parallel district court litigation. This omission is notable because the USPTO has received extensive feedback on this aspect of discretionary denial, including in connection with the ANPRM.

Briefing on Motions for Discretionary Denial: The Proposed Rules would provide separate briefing for discretionary denial. This would be a new procedure, which could affect the outcome of discretionary denial in a given case if, for instance, parties are able to leverage the new procedure to more persuasively explain their position.

Specifically, the POPR must not address discretionary denial unless authorized by the Board. Instead, a patent owner may raise and address discretionary denial issues in a separate brief. Petitioner opposition and patent owner reply briefing is permitted. The Board may also sua sponte raise any applicable discretionary denial issue, in which case the Board will provide an opportunity for briefing by the parties. The NPRM does not expressly address whether a petition may include discretionary denial briefing.

Serial Petitions: The NPRM proposes a definition for a “serial petition.” A serial petition is a petition that (1) challenges overlapping claims of the same patent that have already been challenged by the petitioner, the petitioner’s real party in interest, or a privy of the petitioner, and (2) is filed after (a) the filing of a POPR to the first petition or (b) the expiration of the period for filing the POPR, or as otherwise ordered, if no POPR to the first petition is filed.

The NPRM also proposes four factors for evaluating whether a serial petition should be discretionarily denied. The Board has evaluated serial petitions under the General Plastic factors,⁶ and the NPRM states that General Plastic factor one is included in the definition of serial petition and General Plastic factors two through five are included in the Proposed Rules. General Plastic factors six and seven—finite resources of the Board and the requirement to issue a final decision within one year of institution—were not included in light of stakeholder feedback. The Board may still weigh the considerations reflected by those factors in rendering its decision on serial petition issues. Thus, these rules would formalize the treatment of serial petitions.

Parallel Petitions: The NPRM proposes a definition for “parallel petitions.” Parallel petitions are defined as two or more petitions that (1) challenge the same patent and (2) are filed by the same petitioner on or before: (a) the filing of a POPR to any of the petitions, or (b) the due date for filing a POPR to the first petition (if no POPR is filed).

Under the Proposed Rules, the Board will not institute parallel petitions absent a threshold showing of good cause, explained in the petition or a separate filing, as to why more than one petition is necessary. The Proposed Rules provide multiple factors relevant to a good cause showing. For instance, the Board may consider the differences between the parallel petitions, whether the parties dispute the priority date of the challenged patent, whether there are alternative claim constructions requiring different prior art, and the complexity of the technology.

As with serial petitions, practices regarding parallel petitions were previously established by Board decisions. Thus, these rules would likewise formalize the treatment of parallel petitions.

Discretion Based on Previously Presented Art or Arguments (35 U.S.C. § 325(d)): The NPRM proposes that Section 325(d) is “limited to situations in which the prior art or arguments were meaningfully addressed by the [USPTO],” which occurs when “the [USPTO] has evaluated the art or arguments and articulated its consideration of the art or arguments in the record of the application from which the patent issued or the record of a related application or patent with claims that are substantially the same.” “An initialed Information Disclosure Statement, without more, does not satisfy this standard.” The NPRM also proposes that even if the prior art or arguments were meaningfully addressed, discretionary denial under Section 325(d) would be inappropriate if the petitioner establishes that the USPTO made a material error. If some, but not all, of the grounds of unpatentability presented in a petition implicate considerations under Section 325(d), the Board may nonetheless deny the petition.

Discretionary Denial Considerations for Joinder Petitions: The NPRM proposes that, consistent with its current practice, the Board will not consider discretionary denial arguments regarding parallel petitions or Section 325(d) for joinder petitions if such issues were already addressed in the context of the instituted petition. The Board may, however, deny motions for joinder where the later-filed petition implicates other bases for discretionary denial.

Evidence of Improper Conduct or Gamesmanship: The NPRM states that the Proposed Rules should “not be construed to limit the Board’s discretion to deny institution or dismiss a proceeding as a sanction or in response to evidence of improper conduct or gamesmanship.”

Settlement Agreements and Termination

Settlement Agreements: Under the Proposed Rules, parties must file a written settlement agreement with a joint motion for termination of a proceeding, regardless of its status (i.e., pre-institution or post-institution). The NPRM states that the approach provides the USPTO a greater ability to monitor and curb potential abusive filings and allows the USPTO to cooperate with other government agencies to police potential anticompetitive practices.

Termination: The NPRM proposes that the Board may terminate a proceeding on its own initiative before or after institution. The parties may jointly move for termination of a proceeding, before or after institution.

Conclusion

The NPRM proposes multiple rules relating to discretionary denials, settlement agreements, and termination. Industry participants should consider providing comments to the NPRM, which are due by June 18, 2024, and continue to monitor developments in this space.

Footnotes

1. Available at https://www.federalregister.gov/public-inspection/2024-08362/patent-trial-and-appeal-board-rules-of-practice-for-briefing-discretionary-denial-issues-and-rules.

2. See Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 15 (PTAB May 13, 2020) (describing factors to consider when there is a parallel district court litigation).

3. See Gen. Plastic Indus. Co., Ltd. v. Kaisha, No. IPR2016-01357, 2017 WL 3917706, at *7 (PTAB Sept. 6, 2017) (“Multiple, staggered petitions challenging the same patent and same claims raise the potential for abuse.”).

4. See 35 U.S.C. § 325 (“[T]he Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.”).

5. Available at https://www.uspto.gov/about-us/news-updates/uspto-announces-advance-notice-proposed-rulemaking-potential-ptab-reforms.

6. Gen. Plastic, 2017 WL 3917706, at *4 (“1. whether the same petitioner previously filed a petition directed to the same claims of the same patent; 2. whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it; 3. whether at the time of filing of the second petition the petitioner already received the [POPR] to the first petition or received the Board’s decision on whether to institute review in the first petition; 4. the length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition; 5. whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent; 6. the finite resources of the Board; and 7. the requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review.”).