Stewart Rejects Motorola’s Argument that Director Reviews Applied New Fintiv Guidance Retroactively

Last Friday, U.S. Patent and Trademark Office (USPTO) Acting Director Coke Morgan Stewart issued a pair of orders on Director review of inter partes review (IPR) proceedings at the Patent Trial and Appeal Board (PTAB) petitioned by mobile network provider Motorola Solutions to challenge digital video recording patent claims owned by Stellar LLC. While Stewart’s rulings confirm there is no retroactive application of the USPTO’s recent rescission of previous guidance on PTAB discretionary denials, they also underscore that IPRs instituted prior to the guidance’s rescission this February will be subject to Acting Director Stewart’s discretionary denial framework if Director Review requests on those institution decisions are still pending.

The orders each resolve institution decisions for a series of four IPR petitions targeting Stellar’s patent claims. In one order, the Acting Director granted Director review, vacated the March 18 institutions of those IPR proceedings, and then denied institution to all four IPR petitions. In the other order, Acting Director Stewart denied Motorola Solutions’ request for rehearing of Director Review decisions to vacate four other IPR proceedings instituted on the same date and ultimately deny institution to those petitions.

PTAB Erred by Giving Too Much Weight to District Court Stay, Sotera Stipulation

In each institution decision on Motorola Solutions’ IPR petitions, including earlier decisions to institute in February two weeks prior to the USPTO’s rescission of the 2022 interim procedure memo promulgated under then-USPTO Director Kathi Vidal, the PTAB weighed the district court’s stay of parallel litigation and Sotera stipulations filed by Motorola as favoring institution under the Fintiv discretionary denial factors. However, in late March, Acting Director Stewart issued Director Review decisions determining that the PTAB erred in its Fintiv analysis by failing to give enough weight to the investment in the parallel district court proceedings, which were only stayed pending the outcome of the PTAB’s institution decisions, and by giving too much weight to Sotera stipulations filed by Motorola Solutions.

Both orders on Director Review in Motorola Solutions’ IPRs dismiss the petitioner’s argument that the USPTO is retroactively applying the rescission of the 2022 interim procedure memo. Not only was final resolution of the PTAB’s institution decisions on these IPR petitions pending upon the outcome of Stellar’s Director Review requests, but the Acting Director noted that Motorola had opportunity to present arguments related to the agency’s rescission, pointing out that Motorola had argued that the rescission of the 2022 interim procedure memo should apply to Stellar’s requests for Director Review.

Shortly after the USPTO under Acting Director Stewart rescinded the 2022 interim procedure memo on Fintiv, also known as the “compelling merits” memo, Stewart also established an interim procedure under which she would exercise Director’s discretion on Director Review requests regarding discretionary denial issues. In her first few discretionary denial decisions, issued on May 16, Acting Director Stewart was credited for her holistic, thorough approach by former administrative patent judge (APJ) James Carmichael of Carmichael IP, who noted the Acting Director’s focus on expected trial dates versus PTAB final written decision dates.

Although Stewart’s most recent orders denied institution under Fintiv, not every Director Review decision following the rescission of the compelling merits memo has led to denial of an IPR petition. A Director Review decision issued May 19 and marked precedential ordered additional briefing on Fintiv from both parties in the IPR. Although prior art raised in the IPR petition was entirely duplicative of art previously presented to the USPTO during prosecution in an information disclosure statement (IDS), Acting Director Stewart noted the fact that the patent owner did not respond to the examiner’s request to narrow down prior art references listed in the IDS could demonstrate that discretionary denial isn’t warranted in this particular case.