Vidal Says PTAB Improperly Expanded Discretionary Denial Principles

United States Patent and Trademark Office (USPTO) Director Kathi Vidal on April 19 vacated a decision of the Patent Trial and Appeal Board (PTAB) that had denied institution of an inter partes review (IPR) for a lighting system patent owned by Rotolight Limited.

Videndum Production Solutions challenged claims 1–19 of U.S. Patent No. 10,845,044 B2 via IPR and Rotolight argued the petition should be discretionarily denied under the factors set forth in General Plastic Industries Co., Ltd. v. Canon Kabushiki Kaisha.

The PTAB on January 25, 2024, exercised its discretion to deny institution as a follow-on of a previous petition on the same patent filed by Arnold & Richter Cine Technik GmbH & Co. Betriebs KG (“ARRI”), which the Board had instituted. The ARRI petition was, however, dismissed following a joint motion by the parties due to settlement.

Although the majority of the Board in the Videndum decision to deny institution acknowledged that the first General Plastics factor weighed strongly against denial since there was no “significant relationship” established between ARRI and Videndum, it ultimately found that “the evidence and circumstances as whole weigh in favor of denying institution in this case.” One administrative patent judge (APJ) dissented, explaining that “the majority did not take into account certain facts that weighed against exercising discretion.”

Vidal granted Director Review and vacated the decision based on “existing USPTO policy and precedent,” which she said teaches that “where, as here, the first and second petitioners are neither the same party, nor possess a significant relationship under Valve [Corp. v. Elec. Scripting Prods., Inc., IPR2019-00062], General Plastic factor one necessarily outweighs the other General Plastic factors.”

The Director Review decision went on to say that the PTAB’s denial “improperly expanded the discretionary principles set forth in General Plastic and Valve to apply to petitioners that are not the same and do not have a “significant relationship.”

“Because I agree that the record here establishes that Videndum and ARRI do not have a significant relationship, exercising discretion to deny the Petition is not justified,” Vidal sais.

The decision was published one day after Vidal announced a Notice of Proposed Rulemaking (NPRM) that proposed codifying several changes around PTAB practices, including serial and parallel petitions practices, rules for briefing on discretionary denial requests, termination and settlement agreements, and the factors for consideration of discretionary denials. As part of that NPRM, the Office proposed to apply the common law concepts of “real party in interest” and “privity” to discretion in the serial petition context, arguing that this approach “carries out Congress’s desire that the Director balance concerns about harassment in exercising discretion.”