On February 28, 2025, the U.S. Patent and Trademark Office (“USPTO”) rescinded its June 21, 2022 Memorandum entitled “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation” (see prior Alert). The Memorandum had been issued by former USPTO Director Kathi Vidal in response to an increase in the Patent Trial and Appeal Board’s (“PTAB”) discretionary denials of institution of post-grant proceedings following the PTAB’s precedential Apple v. Fintiv decision. The Memorandum had the immediate effect of reducing discretionary denials. Rescinding the Memorandum is expected to have the opposite impact and thus reduce the institution rate for post-grant challenges before the USPTO.
Fintiv
The PTAB has discretion to deny institution of post-grant proceedings, such as inter partes review proceedings (“IPRs”), under 35 U.S.C. § 314(a). In Fintiv, the PTAB outlined six factors to assess whether a post-grant petition that challenges patent claims being litigated in a parallel proceeding in a U.S. District Court or before the U.S. International Trade Commission (“ITC”) should be denied institution in light of that proceeding.
One way for a patent challenger to reduce the risk of a discretionary denial under Fintiv is to stipulate that it will not pursue invalidity in the parallel proceeding on the same grounds or any grounds that could have reasonably been raised in the PTAB petition (a so-called “Sotera stipulation” named after the PTAB’s 2020 Sotera Wireless v. Masimo precedential decision). However, such a stipulation also thus limits defenses that the patent challenger can raise in the parallel proceeding.
The Rescinded Memorandum
The June 2022 Memorandum reduced the impact of Fintiv by clarifying that the PTAB will not deny institution of a post-grant proceeding under Fintiv if any of the following conditions apply:
- A petition presents “compelling evidence” of unpatentability.
- A request for denial under Fintiv is based on a parallel ITC proceeding.
- A patent challenger agrees to a Sotera stipulation.
The guidance also considered other factors such as the median time-to-trial statistics and the number of cases before the judge in the parallel proceeding.
The USPTO’s decision to rescind the Memorandum removes these safe harbors and returns the PTAB’s Fintiv analysis to weighing the six factors.
