Overview
In instances where a patent challenger submits a petition to the United States Patent and Trademark Office (USPTO) for inter partes review (IPR) or post-grant review (PGR) of a patent and there is parallel litigation involving the same patent, the Director of the USPTO, and, by delegation, the Patent Trial and Appeal Board (PTAB) administrative patent judges (“Judges”) have discretionary authority to deny institution of the petition.
Until recently, this discretionary denial authority was exercised according to the USPTO’s June 22, 2022 Interim Procedure for Discretionary Denials (the “2022 Guidance”). On February 28, 2025, however, the USPTO rescinded the 2022 Guidance. Since then, the USPTO has issued multiple memoranda aimed at clarifying the USPTO policies and procedures for discretionary denials going forward, including a March 24, 2025 memo on the impact of the recission (the “2025 Guidance”), a March 26, 2025 Interim Processes for PTAB Workload Management (the “2025 Interim Processes”), and answers to Frequently Asked Questions released April 25, 2025 (the “FAQ”). Nevertheless, discretionary denial practice at the PTAB remains unsettled.
By way of background, the 2022 Guidance, colloquially known as the Fintiv memo or Fintiv guidance, heavily referenced a 2020 PTAB ruling that detailed a non-limiting 6-factor test for its APJs to apply when deciding whether to discretionarily deny institution of an IPR or PGR proceeding based on the existence of parallel litigation, see Apple, Inc. v. Fintiv, Inc., IPR2020-00019, Paper No. 11, *5–16 (PTAB, March 20, 2020). The factors to consider in this test were the following:
- Whether a stay of the litigation exists or is likely to be granted if a PTAB proceeding is instituted;
- Proximity of the district court’s trial date to the PTAB’s projected statutory deadline;
- Investment in the parallel proceeding by the district court and the parties to the litigation;
- Overlap between issues raised in the IPR petition and in the parallel proceeding;
- Whether the petitioner and the defendant in the parallel proceeding are the same party; and
- Other circumstances that impact the PTAB’s exercise of discretion, including the merits.
The 2020 Fintiv decision led to a significant increase in discretionary denials by the PTAB in 2020 and 2021, which was controversial. For example, companies accused of patent infringement or otherwise wishing to challenge patents at the PTAB were critical of discretionary denials for cutting off access to the PTAB when infringement suits were filed in venues that scheduled trials quickly, such as the United States International Trade Commission (the “ITC”) and the Eastern and Western Districts of Texas.
The USPTO released the 2022 Guidance after receiving over 800 public comments on discretionary denials after Fintiv and the proposal of a bill in Congress seeking to ban them outright. The 2022 Guidance detailed circumstances in which the USPTO opined that it would be improper to deny institution of IPRs, for example, when the parallel litigation was an ITC proceeding, or when a party had stipulated to not pursue similar arguments to those made in the IPR petition in another forum. Notably the 2022 Guidance explained that the PTAB would not deny institution of an IPR or PGR in the following circumstances:
- When the parallel proceeding is before the ITC.
- When the petitioner presented “compelling evidence of unpatentability.”
- When the petitioner filed a “Sotera stipulation” in the parallel District Court proceeding stipulating that petitioner would not, in that proceeding, pursue the invalidity grounds that are raised in, or could reasonably have been raised, in an instituted IPR or PGR petition.
Overall, the 2022 Guidance was viewed by PTAB practitioners as curtailing the number of discretionary denials issued by the PTAB.
The 2025 Guidance confirms a return of the pre-2022 Guidance discretionary denial framework, and it means that discretionary denials of IPR proceedings will become more common. The 2025 Guidance also expressly identifies notable departures from the 2022 Guidance including that:
- The Fintiv discretionary denial framework applies to PTAB petitions with parallel ITC proceedings;
- Compelling merits are not dispositive, and the Fintiv factors are considered as part of a balanced assessment of all relevant circumstances of record, including the strength on the merits;
- A petitioner’s Sotera stipulation would not be dispositive, but instead would be considered highly relevant and analyzed under the Fintiv factors; and
- The PTAB will consider any evidence of record bearing on whether the parallel District Court’s trial date or ITC’s final determination date precedes or follows the PTAB’s deadline to render a final written decision, and that the PTAB will be less likely to deny institution where the PTAB’s final written decision would come first.
The 2025 Interim Processes for PTAB Workload Management establish a bifurcated procedure in which (i) the USPTO Director in consultation with three PTAB judges will determine first whether to discretionarily deny institution of an IPR or PGR petition, and (ii) if the petition for institution is not discretionarily denied, a three PTAB judge panel will decide whether to institute proceedings on the merits and non-discretionary statutory considerations according to established USPTO procedure. Additionally, parties are now permitted to file separate briefings for or against discretionary denial that may address all relevant considerations, such as the factors set forth in Fintiv and other PTAB precedents, and non-exclusive topics further enumerated in the 2025 Interim Processes:
- Whether the PTAB or another forum has already adjudicated the validity or patentability of the challenged patent claims;
- Whether there have been changes in the law or new judicial precedents issued since issuance of the claims that may affect patentability;
- The strength of the unpatentability challenge;
- The extent of the petition’s reliance on expert testimony;
- Settled expectations of the parties, such as the length of time the claims have been in force;
- Compelling economic, public health, or national security interests; and
- Any other considerations bearing on the Director’s discretion.
Notably, the 2025 Interim Processes also provides that the Director will consider factors such as statutory deadlines for resolving proceedings and PTAB workloads when making a decision on whether to deny institution.
The FAQ fills out some procedural details for the bifurcated review process, including the timing for parties to submit discretionary denial briefing and related stipulations, the allocation of responsibilities among the Director and PTAB Judge panels, briefing requirements, and processes for requesting rehearing of discretionary and merits-based denials.
Going forward, the expectation among many PTAB practitioners is that discretionary denials will increase. A further consequence of the 2025 Guidance is that patent infringement suits might become more common in venues known to schedule trial dates quickly, such as the ITC, as patent owners seek to limit the risk of a patent challenge at the PTAB being instituted. Patent challengers, on the other hand, are more likely to file IPR or PGR petitions well before the statutory one-year deadline imposed by the America Invents Act and are incentivized to consider “Sotera” stipulations as part of a strategy to limit discretionary denials. Another possible consequence of the current discretionary denial framework could be a decrease in stays of those parallel litigations, as district court judges might expect their cases to take priority. Ultimately, the 2025 Guidance signals a return to the pre-2022 framework in which the USPTO Director has broad discretionary denial authority and, concomitantly, increased uncertainty as to how those discretionary denials will be decided.
Apple, Inc. v. Fintiv, Inc., IPR2020-00019, Paper No. 11, *5–16 (PTAB, March 20, 2020).
