USPTO Releases Notice of Proposed Rule Making Codifying Several Precedential Case Factors

On April 19, the USPTO released a Notice of Proposed Rulemaking (“NPR”) that proposes modifications to the IPR and PGR rules for (i) briefing discretionary denial issues, (ii) 325(d) Considerations, (iii) instituting parallel and serial petitions, and (iv) terminating these proceedings after a settlement agreement. While the NPR codifies most of the precedential Board decisions relating to discretionary denials, it does not codify or mention the Fintiv factors relating to co-pending litigation.

Separate Briefing for Discretionary Denial Issues:

Acknowledging that “most commenters” responding to the USPTO’s Advanced Notice of Proposed Rulemaking “favored separate briefing to discuss discretionary denial issues,” the NPR provides a “separate briefing process for discretionary institution arguments.”

The proposal authorizes patent owners to submit a separate 10-page paper requesting a discretionary denial due one month prior to filing their preliminary response. But a patent owner may not brief discretionary denial in the POPR without prior authorization from the Board. Patent owner’s request may cover all discretionary denial issues.

If a patent owner files a request, the proposed rule gives the petitioner one month to submit a responsive 10 page brief addressing the relevant factors and gives the patent owner two weeks to file a 5 page reply.

The Board also retains the right to raise discretionary denial issues sua sponte, after which the parties will be given an opportunity to respond.

Revised Framework for § 325(d) Considerations

The NPR shifts away from the Advanced Bionics framework currently used at the Board for determining whether to deny institution under 35 U.S.C. § 325(d) in view of other proceedings before the Office, and allows the Board to deny institution when “the same or substantially the same prior art or arguments were previously presented and were meaningfully addressed by the Office with respect to the challenged patent or a related patent or application” unless the petitioner establishes material error. The arguments and art are “meaningfully addressed where the Office has evaluated the art or arguments and articulated its consideration of the art or arguments.”

If adopted, this rule should prevent discretionary denials (1) where the prior art was merely cited on an IDS and (2) where the art was before the Board, but the Board did not reach the merits of the grounds.

Factors for Instituting Parallel and Serial Petitions

The NPR defines “parallel petitions” as petitions filed by the same petitioner and directed to the same patent—the challenged claims do not need to overlap. It also defines “serial petition” as a petition that challenges “overlapping claims of the same patent” that were already challenged by the same petitioner, petitioner’s RPI, or a privy of the petitioner.

The NPR states that parallel petitions will be denied unless a petitioner can show good cause, and identifies nine non-exhaustive factors the Board will consider in determining whether good cause exists. These factors echo some of the considerations highlighted in the Trial Practice Guide and affirmatively consider whether “there are alternative claim constructions requiring different prior art on mutually exclusive grounds” (Factor 6), “whether the petitioner lacked information, such as the identity of asserted claims” when filing the petitions (Factor 7), and “the complexity of the technology in the case” (Factor 8).These factors do not limit the Board’s discretion to deny institution or dismiss a proceeding as a sanction or in response to evidence of improper conduct or gamesmanship.

The NPR notes that the good cause requirement aligns with comments received in response to the Advanced Notice of  Proposed Rulemaking, including comments indicating that a “showing of good cause” was consistent with congress’s intent “to allow discretionary denials based on the volume of AIA petitions.” 

Aiming to strike a balance between the “sharply divided” interests of stakeholders on the issue of multiple petitions, the NPR “implements the current practice of applying substantially the same factors as those stated in General Plastic” when assessing whether to deny serial petitions, to balance concerns over “undue” patent owner “harassment” and “reasonable opportunities” for petitioners to seek review. The proposal states that serial petitions may be denied, and identifies four non-exhaustive factors for determining whether to institute serial petitions—effectively codifying General Plastic factors 2-5. The NPR does not codify General Plastic Factors 6 and 7 (concerns relating to the Board’s resources or the requirement to issue a FWD within one year of institution), though the Board reserves the right to evaluate these issues as part of its analysis.

Settlement Agreement Required for Pre-Institution Termination

The proposed rulemaking would require the parties to timely file any pre-institution settlement agreements to support termination of a proceeding pre-institution. This aligns with the current requirement for filing such agreements with any post-institution settlement request.

The period for submitting comments is scheduled to close on June 18, 2024. The full text of the NPR can be found here.