Alert July 07, 2022

Fintiv 2.0: USPTO Director Issues Guidance Softening Risk of Discretionary Denial

Newly appointed USPTO Director Kathi Vidal issued a set of interim procedures clarifying how the Patent Trial and Appeal Board (PTAB or Board) should apply its Fintiv decision going forward. Vidal’s guidance, which will remain in place while it undergoes formal rulemaking, supports arguments that Fintiv unduly restricts access to the PTAB when a patent challenger is engaged in ongoing, fast paced litigation. Vidal’s guidance offers clarity on how parallel litigation will affect discretionary denials from now on.  

By way of background, in 2020, the PTAB designated as precedential its decision in Apple v. Fintiv, IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020). Fintiv established a six factor test for determining whether the PTAB would exercise its discretion to deny institution in the face of parallel litigation: 

    1.  whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted; 
    2. proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision; 
    3. investment in the parallel proceeding by the court and the parties; 
    4. overlap between 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; and 
    6. other circumstances that impact the Board’s exercise of discretion, including the merits.[1] 

Application of these Fintiv factors led to institution denials for numerous petitions where the scheduled litigation trial date was earlier than the statutory deadline for a PTAB final written decision. 

The Fintiv decision and its application have been the subject of controversy. Indeed, Fintiv critics have challenged the application of the Fintiv factors in essentially all available forums, including district courts, the Federal Circuit, and the U.S. Supreme Court.

Seemingly in response to this controversy, Vidal’s interim guidance provides four clarifications with respect to how Fintiv will now be applied: 

  1. No Fintiv denials if unpatentability is compelling: when a petition presents compelling evidence of unpatentability, that alone demonstrates that the PTAB should not discretionarily deny institution under Fintiv;
  2. No Fintiv denials if the parallel proceeding is before the ITC: when a request for denial under Fintiv is based on a parallel ITC proceeding, institution will not be denied, because the ITC lacks authority to invalidate patents and its invalidity rulings are not binding on the USPTO or a district court;
  3. No Fintiv denials if a Sotera stipulation is made: when a petitioner stipulates, in a parallel district court proceeding, not to pursue the same grounds as in the petition or any grounds that could have reasonably been raised in the petition; and
  4. No Fintiv denials solely based on a district court’s scheduled trial date, but the PTAB can consider median time-to-trial in the district: scheduled trial dates will not carry as much weight due to their unreliability. But, “[p]arties may [still] present evidence regarding the most recent statistics on median time-to-trial for civil actions in the district court in which the parallel litigation resides for the PTAB’s consideration.”  And, if time-to-trial statistics are considered, the PTAB will look at additional supporting factors like the number of cases before the judge and the speed and availability of other case dispositions. 

Impact on Future PTAB Proceedings

Vidal’s guidance provides clear limitations on the application of the Fintiv factors. Under Director Vidal’s guidance, the ongoing decline in discretionary denials is likely to not only continue but perhaps accelerate, especially for strong, well-supported petitions. Moving forward, it seems that the PTAB will place greater emphasis on the merits of petitions, with Fintiv issues limited to a more discrete set of circumstances. As a result, patent owners may shift their response strategy from being Fintiv focused to being merits focused. 

Sotera stipulations — those in which the petitioner agrees not to pursue overlapping issues in the district court — will also likely continue to play a greater role in PTAB proceedings, as this guidance makes clear that stipulations along these lines are sufficient to avoid denial under Fintiv

The guidance appears black and white for parallel ITC proceedings. Given the speed of ITC proceedings, the PTAB was consistently denying IPRs in deference to that speed. This new guidance seems to end that practice, making a parallel ITC action seemingly irrelevant to the Fintiv analysis. With that said, it is worth noting that while ITC validity rulings are not binding on the USPTO and district courts, ITC rulings and arguments raised in these cases are instructive and often relied upon in PTAB and district court proceedings. Thus, while procedurally ITC cases do not present conflicts with PTAB or district court proceedings, in practice, these conflicts will remain, especially given the speed at which the ITC proceeds. 

Director Vidal’s guidance is only interim at this point, but it appears poised to make a meaningful impact on how patent challengers view the IPR process. Additionally, there are other factors at play. Indeed, a bill was recently introduced in Congress that would abolish Fintiv denials, if enacted. In short, the rules regarding Fintiv discretionary denials are far from settled, but Director Vidal’s guidance provides some clarification on where the PTAB stands. 


[1] These factors built upon the PTAB’s prior decision in NHK Spring Co., v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential, designated May 7, 2019).