Director Vidal Clarifies That the Compelling Merits Determination Is Not a Substitute for the Fintiv Analysis

March 6, 2023

On February 27, 2023, Director Vidal issued a precedential decision in CommScope v. Dali Wireless[1] vacating and remanding the Board’s institution decision based on a finding of compelling merits under Fintiv. The precedential decision was issued sua sponte by the Director a mere 20 days after the PTAB panel decided to institute trial in the case, and no order granting Director review had previously been entered in the matter. In her decision, Director Vidal acknowledges that her June 2022 Fintiv Guidance Memo “could be read to allow for a compelling merits determination as a substitute for a Fintiv analysis,” but, as she explains in this decision, “that was not [her] intent.”[2] The steps below outline the limited circumstances in which a PTAB panel is to engage in the compelling merits determination.

CommScope Steps for the Evaluation of the Compelling Merits Question

(1) Assess Fintiv factors 1-5 to determine if they favor a discretionary denial.

(2) Only when the Fintiv factors favor discretionary denial should the PTAB panel evaluate the compelling merits question.

(3) If the PTAB panel finds compelling merits exist, the decision must “provide reasoning sufficient to allow the parties to challenge that finding and sufficient to allow for review of that decision.”[3]

In view of stepwise approach outlined above, the Director further explained that when the Board determines that “Fintiv factors 1–5 do not favor discretionary denial, the Board shall decline to discretionarily deny under Fintiv without reaching the compelling merits analysis.”[4]

Applying these standards to the issue at hand, the Director found that the Board improperly reached a compelling merits determination because it did not first assess whether Fintiv factors 1–5 favored discretionary denial .[5] The Director also found that the Board’s rationale for finding compelling merits was insufficient because it “[m]erely point[ed] to its analysis under the lower institution standard,” reasonable likelihood, “without reference to the higher standard required for compelling merits.”[6] Specifically, Director Vidal instructs that a panel finding in favor of the compelling merits question must “provide reasoning sufficient to allow the parties to challenge that finding and sufficient to allow for review of the Board’s decision”[7] as articulated in the precedential decision OpenSky.[8]

Takeaway:

The compelling merits determination may now be seen as less impactful than many previously perceived. Director Vidal clarifies that the compelling merits determination is not to serve as a substitute for the Fintiv analysis, but rather as a final consideration to be used after Fintiv factors 1-5 are determined to weigh in favor of a discretionary denial. Further, a PTAB panel that finds compelling merits exist must provide reasoning to support and explain this determination, a requirement which may further discourage such findings by PTAB panels in the future.