Pivot At The PTAB: The Acting Director Bifurcates Review

With two memoranda this week, the United States Patent and Trademark Office (“USPTO”) has made significant changes to trials at the Patent Trial and Appeal Board (“PTAB”). Those trials—introduced in 2012 by the Leahy-Smith America Invents Act (“AIA”)—allow a party to seek review of a U.S. patent by a three-judge panel of the PTAB. The panel considers the party’s petition under both discretionary considerations and merits in deciding whether to institute review. The two memoranda modify that initial assessment by bifurcating discretionary considerations from a merits analysis as well as allowing more discretion for denying review. The combination of these changes will likely result in more reviews being denied.

On March 26, 2025, Acting USPTO Director Coke Morgan Stewart issued a memorandum setting forth an interim procedure for decisions on instituting AIA trials, such as inter partes reviews (“IPRs”) or post-grant reviews (“PGRs”). Rather than consider both discretionary considerations and merits together in deciding whether to institute, as has been done since the inception of AIA, the PTAB will now follow a bifurcated approach. The Director, in consultation with at least three PTAB judges, will first determine whether to deny review under discretionary considerations, such as whether another forum will address the validity of the patent prior to the PTAB completing its review of the patent. The Director will issue a decision denying review, if appropriate. Otherwise, she will refer the matter to a three-judge panel to determine institution based on “the merits and other non-discretionary statutory considerations.”

To “facilitate the bifurcated approach,” the memorandum outlines a separate briefing on discretionary denial requests. Within two months of a filing date notice, a patent owner may file a 14,000-word brief requesting discretionary denial. The party petitioning for review (“petitioner”) may then file an opposition within one month. The parties, according to the memorandum, may address “all relevant considerations,” including “whether the PTAB or another forum has already adjudicated the validity or patentability of the challenged patent claims,” “the strength of the unpatentability challenge,” “settled expectations of the parties, such as the length of time the claims have been in force,” and “compelling economic, public health, or national security interests.” Such briefing would be separate from the petition by petitioner that initiates review and the patent owner’s preliminary response that had been, until now, the sole means for a patent owner to raise both discretionary and merit-based reasons for denying review.

The Acting Director’s memorandum comes on the heels of a memorandum from Chief Administrative Patent Judge Scott Boalick two days earlier. Chief Judge Boalick’s memorandum addressed the PTAB’s precedential decision in Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (“Fintiv”). Fintiv allows the PTAB to discretionarily deny review when another forum will address validity of a patent prior to the PTAB’s final written decision. Following that decision, the number of discretionary denials increased to the benefit of patent owners. In a 2022 memorandum, then Director Vidal sought to inject some balance for petitioners by providing safe harbors with respect to Fintiv. However, on February 28, 2025, Acting Director Stewart rescinded the 2022 Vidal memorandum. Chief Judge Boalick’s memorandum this week provides guidance on the recission. It makes clear that the PTAB will now apply the Fintiv factors when there is a parallel proceeding at the International Trade Commission (“ITC”). The 2022 Vidal memorandum had excluded ITC proceedings from Fintiv’s reach. Similarly, Chief Judge Boalick explained that the “Sotera” safe harbor also no longer applies. That safe harbor allowed a petitioner to avoid Fintiv altogether by stipulating that, if an IPR or PGR is instituted, the petitioner would not pursue in another forum any ground raised or that could have been reasonably raised in the IPR or PGR. The removal of these safe harbors means that Fintiv’s bite has returned.

The combination of a bifurcated discretionary review with the re-emergence of Fintiv will be impactful for any party considering AIA challenges going forward (as well as recently filed challenges). First, the upfront discretionary review will act as an initial filter on filed petitions. Although the procedure allows for more robust briefing on the discretionary denial issues, petitioners will now have to clear two temporally distinct hurdles—the initial discretionary review and the follow-on merits review—for a patent to be reviewed by the PTAB. Second, given the absence of Fintiv safe harbors, petitioners will now face a holistic analysis relating to the impact of parallel court or ITC proceedings that, in the past, has led to more petition denials. Third, Acting Director Stewart’s memorandum is replete with references to the PTAB’s workload, presumably due to the recent and potentially upcoming reductions in the number of PTAB judges. This arguably suggests that the initial discretionary review hurdle may be high for petitioners. While she indicates that the bifurcated procedure will be “temporary in nature,” Acting Director Stewart will likely utilize discretionary denial, where appropriate, with an eye toward workloads. Fourth, the discretionary review—whether relating to Fintiv or other discretionary issues, such as previously considered arguments in the original examination—will consider a broader range of factors, including “settled expectations of the parties, such as the length of time the claims have been in force,” and “compelling economic, public health, or national security interests.” These factors will provide both patent owners and petitioners with new framings to make their case at the expense of more costly proceedings. Only time will tell how parties will fare with this pivot at the PTAB.