USPTO Rescinds Vidal Memo on Interim Discretionary Denial Procedure

Today the U.S. Patent and Trademark Office (USPTO), which is now being led by Acting Director Coke Morgan Stewart, rescinded former USPTO Director Kathi Vidal’s 2022 memo, titled “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation.” That memo explained that the Patent Trial and Appeal Board (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.”

The memo thus downplayed broad application of Apple Inc. v. Fintiv, Inc. and the six factors outlined in that precedential decision, which the PTAB considers in determining whether to institute a post-grant proceeding where there is parallel district court litigation. “[T]o benefit the patent system and the public good, the PTAB will not rely on the Fintiv factors to discretionarily deny institution in view of parallel district court litigation where a petition presents compelling evidence of unpatentability,” the memo said.

But today’s USPTO announcement said the Office has rescinded the memo and that parties to post-grant proceedings “should refer to [PTAB] precedent for guidance, including Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential) and Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (PTAB Dec. 1, 2020) (precedential as to § II.A).” It added: “To the extent any other PTAB or Director Review decisions rely on the Memorandum, the portions of those decisions relying on the Memorandum shall not be binding or persuasive on the PTAB.”

Shortly after the memo was issued in 2022, IPWatchdog Founder and CEO Gene Quinn spoke with James Carmichael of Carmichael IP, a former Administrative Patent Judge, who said the guidance “makes it virtually impossible to raise a successful Fintiv argument.”

Vidal’s “compelling, meritorious challenges” standard was particularly criticized by the patent owner community. Quinn wrote:

“The guidance purports to distinguish ‘compelling, meritorious challenges’ from those that are ‘merely sufficient to meet the statutory institution threshold,’ a difference characterized as ‘razor thin’ by Carmichael. The reason: The USPTO memo defines ‘compelling, meritorious challenges’ as ‘those in which the evidence, if unrebutted in trial, would plainly lead to a conclusion that one or more claims are unpatentable by a preponderance of the evidence.’ This is the same as the statutory institution threshold, with the addition of just one word: ‘plainly.’”

“Because the difference is so slight, the PTAB could easily find petitions that meet the statutory threshold raise ‘compelling, meritorious challenges’,” Carmichael explained to Quinn. “After committing to such a finding, a panel may be less open to confirming patentability of independent claims after trial. Therefore, it might be counterproductive for a patent owner to raise Fintiv at all.”

Discretionary denials did drop off sharply following Vidal’s memo, and institutions increased, but following the 2023 precedential Director Review decision in Commscope Technologies v. Dali Wireless IPR2022-01242, they rose again. In Commscope, Vidal clarified that the June 2022 “compelling merits” memo was not meant to replace the PTAB’s analysis under Apple Inc. v. Fintiv, Inc.