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PTO director issues critical IPR clarification
Cantor Colburn August / September 2023 IP Newsletter
The director of the U.S. Patent and Trademark Office recently addressed confusion over how the Patent Trial and Appeal Board (PTAB) should determine whether to institute an inter partes review (IPR) of a patent when parallel litigation is already proceeding in federal district court. The opinion makes clear that, while it’s possible to obtain an IPR in such circumstances, it won’t be easy.
Starting the IPR proceeding
The opinion arose in a case involving a patent for a reconfigurable distributed antenna system. The plaintiff had sued the defendant for patent infringement, and the defendant filed a petition to institute an IPR proceeding. Under IPR, the PTAB can reconsider and cancel an already-issued patent based on certain types of “prior art” that make the claimed invention unpatentable.
The PTAB instituted an IPR, finding CommScope had presented “compelling unpatentability challenges.” But it made this assessment without considering the so-called Fintiv factors that the PTAB generally applies to determine whether to institute an IPR proceeding when there’s parallel district court litigation.
The nonexclusive Fintiv factors include:
- Whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted,
- Proximity of the court’s trial date to the board’s projected statutory deadline for a final written decision,
- Investment in the parallel proceeding by the court and the parties,
- Overlap between issues raised in the petition and in the parallel proceeding,
- Whether the petitioner and the defendant in the parallel proceeding are the same party, and
- Other circumstances that affect the board’s exercise of discretion, including the merits.
The director initiated review of the board’s decision to skip analysis of these factors.
Clarifying the analysis
In June 2022, the director had published a “Guidance Memo” on the procedure by which the PTAB can deny an IPR request while district court litigation is ongoing. It states that, where the board determines that a compelling unpatentability challenge exists, that determination alone demonstrates that the PTAB shouldn’t discretionarily deny IPR institution under Fintiv.
The director subsequently explained that, when assessing compelling merits, the board should evaluate whether evidence, if unrebutted in trial, would plainly lead to a conclusion that one or more claims are unpatentable by a preponderance of the evidence. The PTAB must find it “highly likely” that the petitioner would prevail on at least one challenged claim to satisfy the compelling merits standard.
The director acknowledged that the memo could be read to allow for a compelling merits determination as a substitute for a Fintiv analysis — even though that wasn’t the intention. Rather, the guidance should be interpreted as meaning that PTAB panels should consider compelling merits only if they first determine that the first five Fintiv factors favor a discretionary denial of IPR.
In other words, if the Fintiv factors don’t favor discretionary denial, the PTAB must decline to discretionarily deny an IPR without performing a compelling merits analysis. If, on the other hand, the board’s analysis favors denial of IPR, the board also must assess compelling merits before denying the IPR. And, importantly, it must provide sufficient reasoning to permit the parties to challenge its finding and allow for review of its decision.
Determining the result
The director determined that, in the underlying case, the PTAB failed to provide sufficient reasoning to support its conclusion that the merits were compelling. Therefore, the decision was vacated and the proceeding was returned to the board to revisit its Fintiv analysis. If the analysis supports denial of the IPR, the director instructed the PTAB to address the compelling merits question. And, if it finds such merits, it must provide reasoning to explain its determination.
