IPR tricks of the trade: changes to expect at the USPTO in 2023

January 27, 2023 – On April 5, 2022, after more than one year without a Senate-confirmed Director, Kathi Vidal was confirmed as the new Director of the U.S. Patent and Trademark Office. She got to work right away.

Director Vidal first issued a binding Guidance memorandum that clarified the Patent Trial and Appeal Board’s application of the controversial Fintiv factors for discretionary institution to deny a petition for inter partes review or post-grant review of a patent involved in parallel litigation in federal district court or the International Trade Commission (Fintiv Guidance). In May 2020, the PTAB designated as precedential Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (“Fintiv”), which sets forth several factors PTAB judges consider when deciding to exercise discretion to deny institution of a petition if the challenged patent is involved in parallel litigation. The immediate impact of this Fintiv Guidance was a sharp drop in the number of Fintiv-based denials.

Director Vidal also granted director review in 11 cases, 10 of which were taken sua sponte, to address various issues including abuse of the IPR process. This review is in response to the Supreme Court’s decision in United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021). In Arthrex, the Court held that PTAB judges were unconstitutionally issuing final decisions on behalf of the USPTO without the ability for the Director to potentially alter or reverse the decisions before they became the final decisions of the agency. Vidal’s decisions have provided clarity and transparency in the PTAB’s post-grant review operations.

And, under Vidal’s oversight, the USPTO published a request for comments seeking public input on the interim director review process.

Simply put, 2022 was a big year for the USPTO. The authors believe, however, that there will be more significant changes in PTAB operations in 2023. Director Vidal’s efforts initiated in 2022 will come to fruition in 2023 and are expected to provide even more clarity and transparency in PTAB adjudications.

Codification of the Fintiv guidance

Director Vidal’s Fintiv Guidance stated that the PTAB may not discretionarily deny a petition under Fintiv when:

(1) the petition presents compelling evidence of unpatentability;

(2) the request for discretionary denial is based on a parallel ITC proceeding; or

(3) the petitioner stipulates not to pursue in a parallel district court proceeding invalidity grounds that the petitioner raised or reasonably could have raised in the petition (i.e., a Sotera-type stipulation).

The immediate result of the Fintiv Guidance is the drop-off of Fintiv denials. Indeed, some analysts note that the PTAB has relied on Fintiv only twice to deny institution since the director’s Fintiv Guidance was published. Needless to say, this change in landscape is a welcome respite for opponents of the Fintiv factors.

Proponents of the Fintiv factors are similarly surprised about the immediate impact of the Fintiv Guidance. Some stakeholders have asked for a solution that is more formal than a “binding” Guidance.

Luckily, the Fintiv Guidance concludes with the admonition that it is merely an interim guidance and that the USPTO “expects to replace [the guidance]…with rules after [the USPTO] has completed formal rulemaking.” (Fintiv Guidance at 9.) It is therefore reasonable to expect the USPTO to “explore potential rulemaking on proposed approaches through an Advanced Notice of Proposed Rulemaking” in 2023.

Formalization of the director review process

On July 20, 2022, the USPTO published a Request for Comments on the post-Arthrex director review process. The request seeks comments on the scope of director review, i.e., whether it should be limited to final written decisions of the PTAB or permit the director to sua sponte review any decision of the PTAB including institution decisions and decisions on rehearing. It also seeks comments on the current Precedential Opinion Panel (POP) process.

It is expected that in 2023 the USPTO will complete its review and analysis of the multitude of public comments and promulgate a rules package in a Notice of Proposed Rulemaking. Stakeholders have requested clarity in this area. At the moment, there appears to be three competing processes for requesting review of a PTAB final written decision. A party can, of course, request rehearing by the PTAB panel under 37 C.F.R. § 42.71. The party can also seek director review as an alternative to a request for rehearing. Alternatively, the party can request review by the Precedential Opinion Panel (POP) under the PTAB’s Standard Operating Procedure (SOP) 2.

When it comes to other PTAB decisions, such as decisions on whether to institute trial, all three mechanisms remain available in one form or another. A party can file a request for rehearing of any PTAB decision and similarly recommend POP review. The director, in turn, may sua sponte review any PTAB decision as part of the director review process or may convene the POP for the same purpose. However, at present, a party cannot request director review of a decision on institution.

If the number of available options wasn’t confusing, consider this: The director is a party to two of these procedural mechanisms. The director is clearly the one reviewing a PTAB decision as part of the director review process. The director is also a member of the POP. (SOP 2 at 4.) One obvious question is when one mechanism is more appropriate to use than another and, where the director is at least one of the members rendering a decision, which mechanism is more precedential or binding.

Stakeholders are therefore hoping for greater clarity on these procedures in 2023.

Court decisions

Last but not least, the Supreme Court and the Federal Circuit have not been shy to offer their own views on PTAB policies and procedures. There is at least one case that is up for review in 2023 that may have a significant impact on PTAB practice.

In Apple Inc. v. California Institute of Technology, Case No. 22-203, Apple is asking the U.S. Supreme Court to resolve what invalidity grounds may be properly asserted by an unsuccessful PTAB petitioner against the same patent in district court litigation.

USPTO goals

In early January 2023, the USPTO published a draft version of its 2022-2026 Strategic Plan. One of the USPTO’s goals is to continue to “promote inclusive innovation.” The USPTO plans to further this goal by improving access to counsel and offer assistance with procuring patent protection through partner pro bono services and law school clinic programs.

The USPTO has also seen success with its Legal Experience and Advancement Program (LEAP). The program aims to give less experienced attorneys extra oral argument time so that the attorney may be fully able to represent their clients’ needs. The authors expect that 2023 will see the publication of the USPTO’s final 2022-2026 Strategic Plan and possibly the introduction of additional programs that are intended to enhance diversity, equity, and inclusion in USPTO practice.

At bottom, 2023 is likely to be an exciting year for PTAB trial practice. Practitioners should keep their eyes open for new relevant developments.

This article reflects only the present personal considerations, opinions, and/or views of the authors, which should not be attributed to any of the authors’ current or prior law firm(s) or former or present clients.

The writers are regular, joint contributing columnists on patent law for Reuters Legal News and Westlaw Today.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.