Discretionary Denials of Inter Partes Review and Post Grant Review of Patents by the Patent Trial and Appeal Board

Insights Discretionary Denials of Inter Partes Review and Post Grant Review of Patents by the Patent Trial and Appeal Board Eric C. Cohen · October 4, 2021

I.      Introduction

The 2011 America Invents Act (“AIA”) introduced two new proceedings to challenge patent claims in the U.S. Patent & Trademark Office (“USPTO”): “inter partes review” (“IPR”) and “post grant review” (“PGR”).[1]  To challenge one or more patent claims in an IPR or PGR proceeding, the challenger must file a petition, which is reviewed by a three-administrative patent judge panel of the Patent Trial and Appeal Board (“PTAB”) of the USPTO.[2]  If the  PTAB panel decides that the petition establishes the criteria for institution of a proceeding, it may institute a proceeding.[3] After institution, the proceeding must be completed within one year.[4]  IPR and PGR proceedings have become popular because patent challengers can participate in the entire proceeding, including the right to appeal.[5]

An interesting provision of the AIA provides the USPTO Director with discretion whether or not to institute IPR or PGR  proceeding.[6]  This discretion is almost always exercised by the PTAB, as is discussed below.  This means that even if the petition satisfies the statutory criteria for instituting a proceeding, PTAB, may exercise discretion to deny institution.  And, a decision denying institution is “final and non- appealable.”[7]

Over the last several years, the PTAB has issued several precedential decisions delineating circumstances under which the PTAB would exercise discretion not to institute proceedings based on otherwise meritorious petitions.  In fact, according to a Unified Patents study, discretionary denials have dramatically increased from just 5 petitions denied in 2016 to 167 in 2020.[8]

The growing number of IPR and PGR petitions in which the PTAB has exercised discretion to deny institution of otherwise meritorious IPR and PGR petitions has created a substantial amount of controversy, so much so, that on September 29, 2021, Senators Leahy and Cornyn introduced a bi-partisan bill entitled “Restoring the America Invents Act.”  This article summarizes how the PTAB has exercised discretion to deny institution of IPR and PRG petitions, and how the new Bill would change the PTAB’s current practice.

II.   Discretionary Denials of Follow-on Petitions

Sometimes, after the PTAB refuses to institute an IPR proceeding because the petition fails on its merits, the petitioner will file a follow-on petition with different prior art and arguments.  The PTAB views this as giving the unsuccessful petitioner a second bite at the apple, and has, in general denied such follow-on petitions.  In addition, follow-on petitions by different parties have been denied.  The PTAB issued a precedential decision explaining the factors it reviews to determine whether to exercise discretion to deny institution in General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha.[9] In exercising its discretion, the PTAB currently considers the following seven factors:

  1. whether the same petitioner previously filed a petition directed to the same claims of the same patent;
  2. whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it;
  3. whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition;
  4. the length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;
  5. whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent;
  6. the finite resources of the Board; and
  7. the requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review.[10]

The PTAB explained that although there is no per se rule precluding the filing of follow-on petitions after the Board’s denial of one or more first-filed petitions, “[o]ur intent in formulating the [seven] factors was to take undue inequities and prejudices to Patent Owner into account.”  Id. at 15-17. Since General Plastic, the Board has held that the application of the first General Plastic factor is not limited to instances where multiple petitions are filed by the same petitioner.[11]  When different petitioners challenge the same patent, the Board considers the relationship, if any, between those petitioners when weighing the General Plastic factors. Id.  According to the PTAB’s Trial Practice Guide, the General Plastic factors “are also not exclusive and are not intended to represent all situations where it may be appropriate to deny a petition.”[12] For example, the PTAB submits that “one petition should be sufficient to challenge the claims of a patent in most situations.”[13]

III.     Discretionary Denials Based on Parallel Petitions

Under current practice, the Consolidated Trial Practice Guide[14] states that a petitioner should, in its petitions or in a separate paper filed with the petitions, identify: (1) a ranking of the petitions in the order in which it wishes the PTAB to consider the merits, if the PTAB uses its discretion to institute any of the petitions, and (2) a succinct explanation of the differences between the petitions, why the issues addressed by the differences are material, and why the PTAB should exercise its discretion to institute additional petitions if it identifies one petition that satisfies petitioner’s burden under 35 U.S.C. § 314(a). The PTAB encourages the petitioner to use a table to aid in identifying the similarities and differences between petitions.  If the petitioner provides this information, the patent owner may, in its preliminary responses or in a separate paper filed with the preliminary responses, respond to the petitioner and explain why the PTAB should not exercise its discretion to institute more than one petition (if it institutes at all). Among other issues, the patent owner should explain whether the differences identified by the petitioner are directed to an issue that is not material or not in dispute. If stating that issues are not material or in dispute, the patent owner should clearly proffer any necessary stipulations. For example, the patent owner may seek to avoid additional petitions by proffering a stipulation that certain claim limitations are not disputed or that certain references qualify as prior art. The PTAB will consider the parties’ submissions in determining whether to exercise its discretion to institute inter partes review under 35 U.S.C. § 314(a).

IV. Discretionary Denials Based on the USPTO’s Previous Consideration of the Same Prior Art and Arguments Under § 325(d)

Becton, Dickinson & Co. v. B. Braun Melsungen AG,[15] the PTAB listed and applied the following “common non-exclusive factors” to determine whether to deny institution of a petition based on prior art previously before the USPTO

(a) the similarities and material differences between the asserted art and the prior art involved during examination;

(b) the cumulative nature of the asserted art and the prior art evaluated during examination;

(c) the extent to which the asserted art was evaluated during examination, including whether the prior art was the basis for rejection;

(d) the extent of the overlap between the arguments made during examination and the manner in which Petitioner relies on the prior art or Patent Owner distinguishes the prior art;

(e) whether Petitioner has pointed out sufficiently how the Examiner erred in its evaluation of the asserted prior art; and

(f) the extent to which additional evidence and facts presented in the Petition warrant reconsideration of the prior art or arguments.

Subsequently, the PTAB issued two additional precedential opinions, clarifying Becton Dickinson. In Oticon Medical AB v. Cochlear Ltd.,[16] the PTAB declined to exercise section discretion under 325(d) to deny institution where the petitioner cited the same prior art previously considered in prosecution but also cited new, noncumulative art.  In Advanced Bionics, LLC v. Med-El Elektromedizinische Gerate GMBH,[17] the PTAB explained that under §325(d), the art and arguments “must have been previously presented to the Office during proceedings pertaining to the challenged patent,” and includes “art made of record by the Examiner, and art provided to the Office by an applicant, such as on an Information Disclosure Statement (IDS), in the prosecution history of the challenged patent.”[18]  The proceedings on which section 325(d) may apply include “examination of the underlying patent application, reexamination of the challenged patent, a reissue application for the challenged patent, and AIA post-grant proceedings involving the challenged patent.”[19] The PTAB adopted a more streamlined version of the Becton Dickinson test:

[U]nder § 325(d), the Board uses the following two-part framework: (1) whether the same or substantially the same art previously was presented to the Office or whether the same or substantially the same arguments previously were presented to the Office; and (2) if either condition of first part of the framework is satisfied, whether the petitioner has demonstrated that the Office erred in a manner material to the patentability of challenged claims. * * * At bottom, this framework reflects a commitment to defer to previous Office evaluations of the evidence of record unless material error is shown.[20]

The PTAB did not abandon the Becton, Dickinson factors entirely, but explained that those factors “provide useful insight into how to apply the framework under 35 U.S.C. § 325(d).”[21]  Applying the newly articulated test, the PTAB in Advanced Bionics exercised its discretion to deny institution, even though new prior art was cited to the Office in the Petition, because “the ‘same or substantially the same art previously were presented to the Office’ and Petitioner has not demonstrated that the Examiner erred when considering the prior art or arguments.[22]

V.    PTAB Discretionary Denials based on Parallel Federal Court Litigation Involving the Same Patent

The most controversial type of discretionary denial occurs when the PTAB exercises discretion not to institute an IPR because of a parallel federal lawsuit involving the same patent.  The PTAB has issued two precedential decisions, exercising its discretion to deny institution of IPRs where a district court trial date would be earlier than the date of a final written decision for the IPR. Apple Inc. v. Fintiv, Inc.,[23]  and NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc.[24] The Fintiv/NHK factors are listed below:

  1. Whether a stay exists or is likely to be granted if a proceeding is instituted.
  2. Proximity of the court’s trial date to the Board’s projected statutory deadline.
  3. Investment in the parallel proceeding by the court and parties.
  4. Overlap between the issues raised in the petition and in the parallel proceeding.
  5. Whether the petitioner and the defendant in the parallel proceeding are the same party.
  6. Other circumstances that impact the Board’s exercise of discretion, including the merits.

There have been several court challenges to the Fintiv decision:  In re Cisco Systems, Inc.,[25] Cisco sought a writ of mandamus to review PTAB’s discretionary denials in IPRs applying Fintiv factors).  The Federal Circuit held that it did not have jurisdiction to entertain Cisco’s writ.  Several high-tech companies filed a lawsuit in the Northern District of California, challenging the authority of the USPTO director to deny institution under the Fintiv/NHK factors, arguing that it violates the Administrative Procedures Act.[26]  The trial court has not yet issued a ruling on the USPTO’s motion to dismiss for lack of standing or on the plaintiffs’ motion for summary judgment.

Statistics show that the PTAB has most often denied institution under the Fintiv/NHK factors to IPRs in which parallel litigation is pending in the Eastern District or Western District of Texas.  This is because both of those districts often issue case management orders relatively early in the case that include much earlier trial dates than in other districts.  From a petitioner perspective, one way to potentially avoid discretionary denials under Fintiv/NHK is to file a stipulation of the type that was approved in Sotera Wireless, Inc. v. Masimo Corp.,[27] in which the petitioner agreed not to assert the same grounds for invalidity in the district court as it had in the IPR petition.  The PTAB instituted the IPR proceeding in that case and denied the patent owners’ argument that the PTAB should exercise its discretion to deny institution.

VI.   The Leahy-Cornyn “Restoring the America Invents Act” Proposed Legislation

On September 29, 2021, Senators Leahy and Cornyn introduced a bi-partisan bill to intended to sharply reduce the PTAB’s discretion to deny institution of otherwise meritorious IPR or PGR petitions.  The bill would limit discretionary denial only where a petition presents the “same or substantially the same prior art or arguments previously presented to the Office.”  This means that the PTAB will not be able to deny institution of a meritorious IPR or PGR petition based on district court litigation involving the same patent, and will not be able to deny institution solely based on the fact that the petitioner had filed a previous petition that the PTAB had rejected on the merits.

It will take a while for the Leahy-Cornyn bill to wind its way through the legislative process.  In the meantime, it will be interesting to see whether the pending legislation influences the manner in which the PTAB exercises its discretion.

[1] P.L. 96-517, §1, 94 Stat. 3015 (Dec. 12, 1980); 35 U.S.C. §§ 311, 321.
[2] See 35 U.S.C. §§ 311 et seq. (IPR), 321 et seq. (PGR).
[3] Id.
[4] Id.
[5] Id.
[6] Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, ___ U.S. ___, 138 S.Ct. 1365 (2018).
[7] 35 U.S.C. §§ 314(d) (IPR), 324(e) (PGR); Oil States, 138 S.Ct. at 1378, n.5, citing Cuozzo Speed Techs., LLC v. Lee, ___ U.S.___, 136 S.Ct. 213, 2140 (2016).
[8] https://www.unifiedpatents.com/insights/2020-ptab-discretionary-denials-report?gclid=CjwKCAjwi9-HBhACEiwAPzUhHLcyxckMHSLrxibC4_ztieRFQibhgacd0vYyQs11tgj_M6kxYKRNwRoCMk4QAvD_BwE
[9] IPR2016-01357, Paper No 19 (PTAB, Sept. 6, 2017)(Precedential). In addition to the cited proceeding, this decision was issued in several IPRs that had not been combined. IPR2016-01358, IPR2016-01359, IPR2016-01360, and IPR 2016-1361.
[10] General Plastics, IPR2016-01357 at 9-10 (citations omitted).
[11] See Valve Corp. v. Elec. Scripting Prods., Inc., IPR2019-00062 (PTAB Apr. 2, 2019) (Paper 11) (precedential) (denying institution when a party filed follow-on petitions for inter partes review after the denial of an inter partes review request of the same claims filed by the party’s co-defendant).
[12] Patent Trial and Appeal Board Consolidated Trial Practice Guide (“TPG”), November 2019 at 58.
[13] TPG at 59.
[14] See, https://www.uspto.gov/sites/default/files/documents/tpgnov.pdf?MURL=.
[15] IPR2017-01586, Paper No. 8 (PTAB, Dec. 15. 2017) (precedential).
[16] IPR2017-000975, Paper 15 (PTAB, October 16, 2019)(precedential).
[17] IPR2019-01469, Paper 6 (PTAB, February 13, 2020 (precedential).
[18] Id. at 7-8.
[19] Id. at 8
[20] Id. at 8-9.
[21] Id. at 9.
[22] Id. at 22.
[23] IPR2020–00019, 2020 WL 2126495 (PTAB Mar. 20, 2020) precedential).
[24] IPR2018–00752, 2018 WL 4373643 (PTAB Sept. 12, 2018) (precedential).
[25] 20-148 Misc. (Fed. Cir., Oct. 30, 2020).
[26] Apple, Inc. v. Iancu, 5:20-cv-6128 (N.D. Cal., filed August 31, 2020).
[27] IPR2020-01019, Paper 12 (PTAB Dec. 1, 2020) (precedential).