Vidal Exercises Director Review Discretion to Vacate PTAB Institution Denials, Clarify Application of General Plastic

“Vidal said that ‘the Board’s mission ‘to improve patent quality and restore confidence in the presumption of validity that comes with issued patents’ outweighs the impact on Board resources needed to evaluate the merits of a petition.”

Yesterday, U.S. Patent and Trademark Office (USPTO) Director Kathi Vidal issued a precedential sua sponte Director Review Decision in Code200, UAB v. Bright Data, Ltd., IPR2022-00861 and IPR2022-00862 Paper 18 (Aug. 23, 2022), clarifying the application of Gen. Plastic Indus. Co. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 (PTAB Sept. 6, 2017) in denying decisions to institute inter partes review (IPR) proceedings.

The Patent Trial and Appeal Board (PTAB) denied institution of the two IPRs on July 25, 2022, explaining that the General Plastic factors weighed in favor of denial. Specifically, addressing Factor 1, which asks “whether the same petitioner previously filed a petition directed to the same claims of the same patent,” the PTAB said that the fact the Board had not evaluated the similar patentability challenges brought by the petitioner on the merits did not outweigh the petitioner’s failure to offer a stipulation agreeing not to raise the grounds asserted in the present IPRs in related district court litigation as per Sand Revolution II IPR2019-01393.

Vidal, in her Director Review decision, “respectfully disagree[d]” with the Board’s analysis, explaining that the PTAB’s reasoning in its recent decision in Intel Corp. v. VLSI Tech. LLC, IPR2022-00366, Paper 14 (June 8, 2022), 9–10 should govern instead:

As the Board recently held, “allowing [a petitioner] the opportunity to pursue a decision on the merits” in a second-filed petition, when the first-filed petition was not evaluated on the merits, “best balances the desires to improve patent quality and patent-system efficiency against the potential for abuse of the review process by repeated attacks on patents.”

General Plastic’s first factor must be read in conjunction with factors 2 and 3, said Vidal. If a first-filed petition is discretionarily denied, factors 1-3 of General Plastic should only weigh in favor of denial if there are “road-mapping” concerns under factor 3 or other concerns under factor 2, she continued. “Road-mapping” suggests “multiple, staggered petitions challenging the same patent and same claims,” which Vidal said there was no evidence of here.

Furthermore, she added, “’road-mapping’ concerns are minimized when, as in this case, a petitioner files a later petition that raises unpatentability challenges substantially overlapping with those in the previously-filed petition and the later petition is not refined based on lessons learned from later developments.”

The PTAB in its decision to deny institution found that General Plastic factors 2, 4 and 5 had “limited relevance” in this case, but that factor 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,” weighed strongly in favor of denial because the petitioner’s request to be joined to IPR2021-01492 and IPR2021-01493 upon institution would have a “negative impact on the schedule in the 1492 IPR that would affect whether the one year deadline could be met.” Vidal disagreed, noting that the Board has acknowledged “the one year statutory time period may be adjusted for a joined case under 35 U.S.C. § 316(a)(11).”

The Board also said it would be inefficient to expend its resources on the proceeding under General Plastic factor 6, but, citing Cuozzo Speed Techs., Vidal said that “the Board’s mission ‘to improve patent quality and restore confidence in the presumption of validity that comes with issued patents’ outweighs the impact on Board resources needed to evaluate the merits of a petition.”

Vidal did not authorize additional briefing from the parties and remanded the cases to the Board to consider the patent owner’s remaining arguments, including those for discretionary denial under Fintiv.



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Join the Discussion

3 comments so far.

  • [Avatar for For Reals]
    For Reals
    August 25, 2022 11:18 am

    Lets see how long we wait for a sua sponte Director Review Decision that reversed an institution …

  • [Avatar for Pro Say]
    Pro Say
    August 24, 2022 05:25 pm

    Yaz jus’ gotsta luv all dem thar folks throughout the patent realm who insist on using “clarification” … when what they really mean … what they really want … what they really argue for … what they really do … constitutes … changes.


    You know. Like the proverbial wolf in sheep’s clothing.

  • [Avatar for Anon]
    August 24, 2022 01:39 pm

    Night Writer – your thoughts?