Fintiv Refined: USPTO Provides Interim Procedure for Discretionary Denials

On June 22, 2022, the USPTO issued guidance on an Interim Procedure for Discretionary Denials (“Guidance”). In the Guidance, Director Vidal notes that the office is planning to explore rulemaking regarding discretionary denials, but, “in the meantime . . . several clarifications need to be made to the PTAB's current application of Fintiv to discretionary institution where there is parallel litigation.”  The memo provides that this guidance is binding on the PTAB, as it is issued under the Director’s authority to govern the PTAB’s implementation of various statutory provisions.  Guidance at 3.

In accordance with the Guidance, the “PTAB will not deny institution of an IPR or PGR under Fintiv” in the following scenarios:

1. Unpatentability is Compelling: “when a petition presents compelling evidence of unpatentability”
2. Parallel Case is Before the ITC: “when a request for denial under Fintiv is based on a parallel ITC proceeding”
3. Sotera Stipulation Made: “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”

Id. at 9.

Compelling Challenges Will Not Be Denied Institution Under Fintiv

The Guidance provides that if a compelling unpatentability challenge is presented in an IPR or PGR petition, “that determination alone demonstrates that the PTAB should not discretionarily deny institution under Fintiv.”  Id. at 5.  In support of this procedure, the memo states that Congress provided the Office with significant power to revisit and revise earlier patent grants as a mechanism to improve patent quality.  Id. at 4.  Thus, “compelling, meritorious challenges will be allowed to proceed at the PTAB even where district court litigation is proceeding in parallel.”  Id.

Fintiv Does Not Apply to ITC Cases

The Guidance notes that the PTAB’s NHK Spring precedential case considered a parallel district court proceeding and that the Fintiv factors “focus on the interplay between IPRs and district court litigation.”  Id. at 5-6. Furthermore, the memo identifies differences between ITC investigations and district court patent litigation, including the fact that the ITC lacks the authority to invalidate a patent and its invalidity rulings are not binding on the USPTO or a district court.  Id. at 6.  Accordingly, the Guidance states that denying institution in favor of a parallel ITC investigation will not necessarily minimize conflicts with a PTAB proceeding or a district court proceeding.  Id.  Thus, “the PTAB no longer discretionarily denies petitions based on applying Fintiv to a parallel ITC proceeding.”  Id. at 7. 

Sotera Stipulations

If both the PTAB and a district court are adjudicating the same validity issues, it is possible that conflicting decisions could be rendered.  Thus, factor 4 of Fintiv looks at the overlap between the issues raised in an IPR or PGR petition and a parallel district court proceeding.  The Guidance provides, however, that a stipulation by a petitioner that it will not pursue in district court litigation the same grounds as in the petition or that could have reasonably been raised in the petition can mitigate the concern of potentially conflicting decisions.  Id. at 7.  Thus, “the PTAB will not discretionarily deny institution of an IPR or PGR in view of parallel district court litigation where a petitioner stipulates not to pursue” grounds raised or that reasonably could have been raised in the petition.  Id.

Consideration of Median Time-To-Trial Statistics

The PTAB’s reliance on a district court’s scheduled trial date for Fintiv consideration has been an issue that has drawn significant comment.  The Guidance provides that “[s]takeholders correctly noted that scheduled trial dates are unreliable and often change.” Id. at 8.  Thus, a district court’s scheduled trial date, by itself, is not a good indicator of whether the PTAB’s final written decision will be released before the district court trial.  Id.  The Guidance provides that parties may present “median time-to-trial for civil actions in the district court.” Id. at 8-9.  Accordingly, the PTAB will consider the speed with which the district court case may come to trial and be resolved.  Id. at 9.