USPTO Rulemaking on PTAB Precedential Opinions Deserves Public Support

“Companies that frequently defend patent infringement claims oppose Fintiv in part due to its strategic implications. Fintiv can, of course, deny defendants a second bite at the apple from which they might otherwise have benefited. But defendants were never intended to have two shots to prove a patent invalid.”

The U.S. Patent and Trademark Office (USPTO) has submitted proposed rulemaking for review by the White House’s Office of Management and Budget (OMB). Although the details are not public, the proposed rule is anticipated to formalize prudential doctrines on trial institution that the Patent Trial and Appeal Board (PTAB) currently applies through precedential opinions such as Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB March 20, 2020); General Plastic Industries Co. Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 (PTAB Sept. 6, 2017); and Becton, Dickinson & Co. v. B. Braun Melsungen AG, Case IPR2017-01586, Paper 8 (PTAB Dec. 15, 2017).

These doctrines provide legal frameworks under which the PTAB may deny institution of an inter partes review (IPR) based on fairness—rather than on merits alone. Because the doctrines reduce the odds that certain categories of IPRs will be instituted, they are subjects of fierce dispute among patent lobbyists and, most recently, a lawsuit filed under the Administrative Procedure Act (APA) in the Northern District of California. Apple Inc. v. Iancu, No. 5:20-cv-06128 (N.D. Cal.).

As the two sides fight for their respective interests, the public—and policymakers—should not lose sight of the big picture: these doctrines protect basic tenets of fairness and they are, on balance, good policy. Stakeholders and OMB should therefore support the USPTO in its rulemaking effort.

The Fintiv Rule

Fintiv is by far the most controversial of the three prudential doctrines. Fintiv provides a six-factor test that asks whether an IPR trial, if instituted, would duplicate a parallel district court case. Specifically, the factors the PTAB considers are:

(1) whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;

(2) the proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision;

(3) investment in the parallel proceeding by the court and the parties;

(4) the overlap between issues raised in the petition and in the parallel proceeding;

(5) whether the petitioner and the defendant in the parallel proceeding are the same party; and

(6) other circumstances that impact the Board’s exercise of discretion, including the merits.

Where the district court will decide a patent’s validity before or near the time that the PTAB would reach the same decision, Fintiv gives the PTAB discretion to defer to the district court proceedings. Fintiv thus advances one of the core objectives of the America Invents Act (AIA) by ensuring that PTAB trials are an alternative—not an addition—to district court litigation.

Fintiv does not merely conserve judicial and party resources. It also spares the patent system from the credibility-diminishing spectacle of contradictory outcomes. Although thankfully rare, it is possible for a jury and a PTAB panel to reach opposite conclusions as to the validity of the same patent as litigated by the same parties. These cases raise constitutional questions under the 7th Amendment, and they are counterproductive to the health of the patent system as a whole.

Critics argue that Fintiv is unlawful because the AIA provides that a defendant may not file an IPR petition more than one year after it was sued in a parallel district court proceeding. Thus, the argument goes, the PTAB may not consider the relative timing between an IPR proceeding and a district court proceeding, provided that this one-year threshold is met. But this argument conflates a necessary condition for one that is sufficient. There is no statutory provision that prevents the USPTO from considering the advanced stage of a parallel district court proceeding in deciding whether to institute IPR. Indeed, the AIA’s preference for avoiding duplicate proceedings—and its commitment of the institution decision to USPTO discretion—confirms that the USPTO can exercise its discretion to avoid counterproductive duplication and contradictory outcomes.

Companies that frequently defend patent infringement claims oppose Fintiv in part due to its strategic implications. Fintiv can, of course, deny defendants a second bite at the apple from which they might otherwise have benefited. But defendants were never intended to have two shots to prove a patent invalid. Fintiv can also force defendants to file IPR petitions early in a case—sometimes, well before the one-year statutory deadline expires. The timing and cost of an IPR petition are real challenges to defendants who, for many reasons, may prefer to delay committing resources to an IPR. There are reforms that could be taken to provide relief to these defendants—such as by shifting IPR filing fees to the post-institution phase, or by passing legislation to deter the assertion of facially invalid patents. But allowing defendants to bide their time and then duplicate proceedings ultimately exacerbates—and does not alleviate—the issue of cost.

As USPTO Director Andrei Iancu recently explained in an interview with the Hudson Institute, IPRs were intended by Congress to be a faster, cheaper alternative to district court litigation. In cases where the district court is far ahead of the PTAB, “we’re not going to be faster because we’re going to finish afterwards, we’re not going to be cheaper because the expenses are done … , and we’re certainly not an alternative.” In these circumstances, “the complete purpose of the IPR system is defeated, and the only thing that is left is a second bite at the apple” for the accused infringer. Director Iancu’s analysis is precisely correct, and Fintiv deserves stakeholder support.

The General Plastic and Becton Dickinson Rules

General Plastic and Becton Dickinson apply to IPR proceedings basic principles of fairness that have long applied in district court litigation.

General Plastic stands for the proposition that a litigant must present its best case, the first time. Prior to the 2017 decision, it was possible for a patent challenger to file a first IPR petition, wait to review the patent owner’s arguments opposing the petition, and then file a new petition fixing any errors that the patent owner identified. General Plastic holds that, in these circumstances, the follow-on petition should generally be denied.

Although gray area exists around its application to petitions filed by new parties, in general, General Plastic provides necessary balance to PTAB proceedings. In a district court trial, a plaintiff cannot present its case-in-chief and then, upon hearing the defendant’s response, request a new trial so that it can present better arguments. Such a rule would be manifestly unfair to defendants. Similarly, there is no reason that an IPR petitioner should be entitled to a do-over should it learn after filing that its arguments require improvement.

Becton Dickinson, meanwhile, holds that a patent challenger generally cannot obtain institution merely by presenting the same arguments that were considered and rejected by the USPTO during examination. And, if the challenger’s arguments are similar to but not identical to those that were considered by the patent examiner, the challenger must explain why the new arguments are sufficient to justify a different result.

The same principle has been applied for decades without serious opposition in district court litigation. Juries are routinely instructed that patents enjoy a presumption of validity and that references considered by the examiner prior to the patent’s issuance may be weighted less heavily in the validity analysis.

Further, petitioners can often work around Becton Dickinson without major disruption to their case strategy. Petitioners who are alert to the issue can generally either find better prior art than was considered during examination or persuasively explain why the examiner’s analysis was wrong. Where neither is possible, one might reasonably question whether the IPR deserves to be instituted.

The rules set forth in General Plastic and Becton Dickinson are good policy. Indeed, the fact that these pro-patentee rules have not garnered significant opposition suggests that even companies that do not benefit from the rules recognize their fundamental fairness.

What Comes Next?

OMB is now reviewing the USPTO’s proposed rule and will decide whether it may proceed to the public notice-and-comment phase.

Central to OMB’s analysis will be: (1) whether the USPTO has authority to promulgate the proposed rule; and (2) whether the proposed rule is “significant,” as defined under Executive Order 12866. If the proposed rule is deemed significant, its publication and adoption may be substantially delayed.

The Supreme Court held in Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016) that the decision to deny an IPR petition “is a matter committed to the Patent Office’s discretion,” and Congress granted the USPTO broad statutory authority to prescribe regulations based on its consideration of factors such as “the integrity of the patent system,” “the efficient administration of the Office,” and “the ability of the Office to timely complete proceedings.” Although companies challenging Fintiv are surely arguing to OMB that the USPTO lacks authority to enact its proposed rule, it seems unlikely that the USPTO would lack power to promulgate rules explaining how it exercises its own discretion.

And, provided that the USPTO’s proposed rule merely consolidates doctrines that the PTAB already applies, OMB should have a straightforward basis to conclude that the proposed rule is not significant.

OMB should approve the USPTO’s proposed rule, and the public should be provided an opportunity to weigh in.


Warning & Disclaimer: The pages, articles and comments on do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of

Join the Discussion

11 comments so far.

  • [Avatar for a person]
    a person
    October 14, 2020 10:24 pm

    This advocacy piece is based on an incorrect characterization of Fintiv. It says “These doctrines provide legal frameworks under which the PTAB may deny institution of an inter partes review (IPR) based on fairness—rather than on merits alone.”

    You use the word “alone” to signify that the PTAB is still required to consider the merits, but that’s now how the PTAB sees it. The PTAB interprets Fintiv as permitting institution denial without consideration on the merits. That is, to deny institution without any consideration of the merits of the invalidity grounds raised in the petition. Check recent Fintiv-based denials if you don’t believe me.

    The statement that “There is no statutory provision that prevents the USPTO from considering the advanced stage of a parallel district court proceeding in deciding whether to institute IPR” is a strawman.

    There’s also no statutory provision in the AIA that prevents the USPTO from considering whether the name of the petitioner starts with “A” or “G”, or from denying petitions that were filed on a Tuesday. Just because there isn’t a statutory provision prohibiting a practice doesn’t necessarily mean a practice should be allowed.

  • [Avatar for Anon]
    September 25, 2020 04:25 pm

    Mr Chatman,

    The assertion you lead with is entirely disconnected (logically) from the remainder of your rant.

    I suppose that your intent may have been to amuse, but if it was to persuade to support an unseen condition, your rant simply points in the opposite direction.

  • [Avatar for Reginald D Chatman]
    Reginald D Chatman
    September 24, 2020 10:16 pm

    I support the ruling of the USPTO Rulemaking decision because some original inventors never got a fair shake they just was tooken the advantage of$$ This is why they have Agents and true rightful Officials to inforce the law when they break the law around the world $$ This is the Aftermath what happens when ruin people’s lives on TV and the Internet in a unprofessional products that’s wasn’t even your original invention $$ we may not have a college degree but we got common sense$$ And I watched them from 2015 makes all the wrong decision of a invalid patent $$ it’s Knowbody fault but your own $$ Knowone is above the law and knowone should steal anyone original creation for Their own benefits it doesn’t matter what group you belong to $$you still are human and you are not above the love neither am I but I stand for True Justice united we stand$$

  • [Avatar for Pro Say]
    Pro Say
    September 24, 2020 05:50 pm

    Once cannot (and indeed must not) support that which is unknown.

  • [Avatar for Josh Malone]
    Josh Malone
    September 24, 2020 04:43 pm

    Jonathan, please ask your friends at HTIA and CCIA what is in the rule and let us know what they say. Apparently it was leaked to them.

  • [Avatar for ipguy]
    September 24, 2020 04:12 pm

    The actions of USPTO Management remind me more and more of how the Directors of my Homeowners Association run our community. If you live in an HOA, you know exactly what I mean.

  • [Avatar for Jonathan Stroud]
    Jonathan Stroud
    September 24, 2020 02:04 pm

    To be clear, I don’t believe they now have the ability to openly publish the draft rules (i.e., once they are sent to OIRA), but they could have had stakeholder meetings prior to sending the draft—negotiated rulemaking, or the type that the Kappos administration engaged in during the AIA process, for instance. I would assume that some meetings have been held. But we’re still in the dark as to the substance.

  • [Avatar for ipguy]
    September 24, 2020 01:11 pm

    In view of the recent rule changes by the USPTO involving First Action Rejection, I have a dim view as to anything the USPTO is currently doing in regards to rulemaking.

  • [Avatar for Jonathan Stroud]
    Jonathan Stroud
    September 24, 2020 11:00 am

    To Anon—that is sort of the core of the problem. The agency refuses to release the proposed text or have any stakeholder meetings on the contents, whether with US Inventor or Senators or industry, despite 24 meetings being scheduled over the rumored contents. So everyone is kind of guessing at this point. Which is contrary to standard rulemaking practice and OIRA/White House guidance. Hard to know whether to support or oppose it without, you know, seeing it, wherever you stand.

  • [Avatar for AAA JJ]
    AAA JJ
    September 24, 2020 08:41 am

    Whenever a court, or other body that adjudicates anything, determines that they are going to do whatever they want to do, what do they do? They claim their decision is the result of a “six part test” (or some other other).

    Insert infinite eyeroll emojis here.

  • [Avatar for Anon]
    September 23, 2020 10:02 pm

    Without the details, it is beyond foolhardy to request for support.

    Why then ask for what a sane person would refuse to give?