USPTO Proposed Rulemaking Could Reshape Post-Grant Practice Under the AIA

On April 21, the U.S. Patent and Trademark Office (USPTO) published an Advanced Notice of Proposed Rulemaking (ANPRM), based on a Request for Comments (RFC) published in 2020. The ANPRM sets forth a series of proposed rule changes that, if adopted, would reshape inter partes review (IPR) and post-grant review (PGR) practice under the America Invents Act (AIA). The proposed changes would affect discretionary institution practices under 35 U.S.C. §§ 314(a), 324(a), and 325(d); petition word limits; and petition strategy for AIA proceedings before the Patent Trial and Appeal Board (PTAB).

The proposed rulemaking can be found here. A selection of the proposed rules is discussed below:

• Concurrent court proceedings. Following the USPTO’s June 2022 memorandum clarifying the application of the Fintiv factors, the ANPRM includes a variety of discretionary denial proposals designed to minimize any overlap between AIA proceedings and concurrent district court litigation. These proposals generally prefer bright line rules, for example: exercising discretion to deny institution if a trial is likely to occur before the statutory Final Written Decision deadline; and declining to exercise discretion to deny institution if: (1) the petition is filed within six months of an infringement complaint; (2) concurrent litigation has been stayed; or (3) the petition presents compelling merits. The ANPRM further proposes simplifying or omitting some Fintiv factors. Another proposal would further clarify that proceedings in the International Trade Commission (which lacks the authority to issue binding rulings on patent invalidity) cannot be grounds for discretionary denial. In the ANPRM, the USPTO continues to cautiously endorse a safe harbor for petitioners willing to make broad Sotera-type stipulations, which extend to invalidity grounds that reasonably could have been raised in an AIA proceeding. (One proposal would go so far as to replace Fintiv entirely with a test that simply asks whether a Sotera stipulation has been made.) But the USPTO invites comment as to whether narrower stipulations (such as Sand Revolution-type stipulations) are more fair and better advance broader policy goals.
• Serial petitions. The USPTO generally disfavors serial challenges to the same patent. Currently, the PTAB considers the seven non-exclusive General Plastic factors in deciding whether to exercise its discretion to deny a follow-on petition. The ANPRM proposes replacing the General Plastic factors with a bright line rule: with two exceptions, the PTAB would exercise its discretion to deny any serial IPR or PGR petition (having at least one overlapping challenged claim) filed by the prior petitioner, a real party in interest or privy to that petitioner, a party with a significant relationship to that petitioner, or a party that previously joined that petitioner in an instituted IPR or PGR. The two exceptions are where (1) the prior petition was not evaluated on the merits, or (2) exceptional circumstances are shown. In a stricter proposal, the PTAB would exercise its discretion to deny any serial petition, regardless of its petitioner’s relationship to the prior petitioner, unless compelling merits are shown. In another proposal, as a condition for the PTAB to not exercise its discretion to deny institution under § 314(a), the USPTO would require IPR petitioners to stipulate that they (1) have not filed prior post-grant proceedings challenging any of the same claims; and (2) will refrain from filing any such challenges in the future. These proposals would bring clarity to the current factor test, while raising the stakes for first-filed petitions, underscoring the need for petitioners to anticipate and proactively address future issues.

• Parallel petitions. In general, parallel IPR or PGR petitions are frowned upon by the USPTO as an inefficient use of limited agency resources. However, the USPTO recognizes some circumstances where a single petition may be insufficient: for example, where the claims are numerous or complex; where the priority date is in dispute; or where mutually incompatible theories are raised. One proposal in the ANPRM could curtail parallel petitions by requiring a showing of good cause as to necessity, with a separately filed paper ranking the petitions and explaining their differences. A proposal would also consider the relationship between the parallel petitioners (if they are different), and whether any of the petitions were filed after a patent owner’s preliminary response.

• Changes to petition word limits. The USPTO hopes fewer parallel petitions would be necessary in view of relaxed word count limits (currently 14,000 words for an IPR petition and 18,700 words for a PGR petition). The ANPRM proposes that additional word limits be purchased by the petitioner, perhaps on a proportional basis, such as a 50% increase in fees for a 50% increase in the word limit. Additionally, the ANPRM proposes allowing separate briefing on discretionary denial issues that would not count against the word limit. These changes would permit a more thorough discussion of the petition’s merits and could in some cases allow a single petition to challenge more claims, and on more grounds, than was previously possible. However, because the PTAB cannot selectively institute a petition’s challenged claims under SAS Institute, careful petition strategy would still be required to present arguments or claim constructions that may be mutually incompatible.
• Previously addressed prior art or arguments. The PTAB can exercise its discretion under § 325(d) to deny a petition for raising the same prior art or arguments previously presented to the USPTO. The PTAB is currently guided by the two-part Advanced Bionics framework (whether the art or arguments were previously presented and, if so, whether the USPTO erred in a manner material to patentability) and various factors set forth in Becton, Dickinson. In the ANPRM, the USPTO proposes limiting § 325(d) to art or arguments that were actually addressed in a prior proceeding—for example, distinguished in a rejection or a notice of allowance, or discussed during an examiner interview—for the challenged patent or a related application with the same claim limitations. (This would exclude, for example, prior art that was merely cited in an Information Disclosure Statement, but not addressed by the USPTO.) The petitioner would then have to establish material error by the USPTO to avoid discretionary denial.
• Prior final adjudications. In addition to its proposed revisions to the Fintiv test, proposed changes to the § 325(d) analysis, and proposed limits on serial and parallel petitions, the ANPRM proposes a separate, independent basis for exercising discretionary denial of post-grant petitions. Under one proposal, the PTAB would disfavor certain IPR and PGR petitions challenging claims that have been upheld in prior final adjudications. Such petitions would be denied unless three conditions are met: (1) the petitioner has standing to challenge the validity in district court (or intends to commercialize the challenged claim); (2) the petitioner was not a real party in interest or privy to the prior challenger; and (3) the petition meets a heightened “compelling merits” standard. Notably, the scope of “prior final adjudications” may include not only district court or AIA proceedings, but also (third party) ex parte reexaminations, introducing a formal estoppel risk to such reexaminations.
• Safe harbor for under-resourced patent owners. Acknowledging concerns about the costs and perceived fairness of defending against post-grant proceedings, the ANPRM proposes a safe harbor under which the PTAB would deny institution of certain petitions brought against patents belonging to under-resourced patent owners. Under one proposal, an IPR or PGR petition would be denied, absent compelling merits, under the following conditions: (1) the patent owner claimed small or micro entity status when the challenged patent was issued; (2) the patent owner’s gross income did not exceed eight times the micro entity threshold during the previous calendar year; and (3) the patent owner (or a licensee) was commercializing the claimed invention at the time of the petition. The patent owner’s government funding and litigation support, as well as certain non-income-based criteria, may also be considered. While the specific income threshold proposed by the ANPRM would exclude many patent owners, the safe harbor could embolden startups and other emerging companies in licensing and commercialization efforts.
• Abusive filings by for-profit entities. With the USPTO’s Director Review of OpenSky v. VLSI, and Director Kathi Vidal’s order sanctioning for-profit IPR petitioner OpenSky in that matter, the USPTO has expressed its distaste for some for-profit entities viewed as abusing the IPR process. In a proposal described in the ANPRM, the PTAB would exercise its discretion to deny IPR or PGR petitions by certain for-profit entities that have not been sued on, or threatened with, the challenged patent and that do not have a current or upcoming product or service in the field of the challenged patent. Included in this group of petitioners could be real parties in interest or privies of the for-profit entity, or parties having a substantial relationship with the for-profit entity. In a proposal, the PTAB would consider whether a for-profit petitioner satisfies a heightened “compelling merits” standard. An open question is how the proposed rules would apply to organizations that pool resources to challenge patents.

The USPTO is seeking public input on the proposed changes, with a public comment period to close on June 20. An Information Session with Director Vidal will be held on May 9 to discuss the proposed changes.