Director Vidal provides clarity to Patent Trial and Appeal Board practice on discretionary denials of patent challenges based on parallel litigation

Press Release

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WASHINGTON – The Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO), Kathi Vidal, released a memorandum on the “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation” (“guidance memo”) that clarifies the Patent Trial and Appeal Board (PTAB) practice.

As outlined in the guidance memo, to benefit the patent system and the public good, the PTAB will not deny institution of an IPR or PGR under Fintiv (i) when a petition presents compelling evidence of unpatentability; (ii) when a request for denial under Fintiv is based on a parallel ITC proceeding; or (iii) where a petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition. Additionally, when the PTAB is applying Fintiv factor two, the PTAB will consider the speed with which the district court case may come to trial and be resolved. The PTAB will weigh this factor against exercising discretion to deny institution under Fintiv if the median time-to-trial is around the same time or after the projected statutory deadline for the PTAB’s final written decision. That said, even if the PTAB does not deny institution under Fintiv, it retains the right to deny institution for other reasons under 35 U.S.C. §§ 314(a), 324(a), and 325(d). For example, the PTAB may deny institution if other pertinent circumstances are present, such as abuse of process by a petitioner.

“The Patent Trial and Appeal Board serves an important role in strengthening the patent system in America,” said USPTO Director Vidal. “The USPTO is committed to providing clarity and transparency around all our processes, especially in PTAB’s practice of discretionary denials. It is critical that we all play a role in ensuring that our patent system serves the public good the way it was intended. I look forward to hearing more from our stakeholders on these issues.”

The USPTO today also released a study (executive summary here and appendix here) on the impact of PTAB denials of AIA petitions when there is a parallel district court proceeding addressing the same patent. The PTAB Parallel Litigation Study, which explores “Fintiv denials” based on the Fintiv precedential decision, covers a time period from the second quarter of fiscal year 2019—when the first PTAB precedential decision (NHK) on this issue was designated—through the first quarter of fiscal year 2022. The study offers authoritative data that reveals a sharp overall decline in Fintiv denials. It also reveals only three instances of Fintiv denials in pharmaceutical patent challenges.

“Authoritative data helps inform and advance the conversation around the impact of PTAB discretionary denials by offering key insights and trends,” continued Director Vidal. “The work in this area is centered around our mission to issue and maintain robust and reliable patents, while advancing the goals of the America Invents Act.”

The study found that:

  • After Fintiv was designated precedential, parallel litigation was raised in about 40% of all cases.
  • Fintiv denials peaked in the second quarter of fiscal year 2021 and dropped significantly afterward.
  • The PTAB had issued no Fintiv denials based on parallel litigation in the Western District of Texas since August 2021.
  • The USPTO’s guidance on using stipulations appears to have led to an increase in stipulation filings and a significant decrease in Fintiv.
  • The PTAB has denied institution based on Fintiv of only three total AIA petitions challenging drug patents: two Orange Book-listed patents and one biologic drug patent.

The PTAB plans to discuss the results of the study in further detail at an upcoming Boardside Chat.

The Director’s guidance memo provides interim guidance while the USPTO prepares to engage in rulemaking on proposed approaches. The guidance memo is available on the PTAB’s resources and guidance page, and the results of the study, along with the executive summary and appendix, are available on the PTAB’s statistics page under “Special reports.”

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