WDTX Game Changes with New Director
As I predicted some months back, the new Director has now addressed the 314(a) policies of her predecessor. Under the previous Director, Fintiv and a filing in the WDTX, or ITC was a one-two punch for plaintiffs.
First, while Fintiv denials have fallen off a cliff since last summer, they are still a problem in WDTX. And, Congress has set the wheels in motion to outlaw the discretionary practice altogether.
Reading the room, today the Director clarified that the PTAB will not deny institution of an inter partes review (IPR) or post-grant review (PGR) petition under existing Fintiv policies if any of the following conditions apply (effective immediately):
- A request for denial under Fintiv is based on a parallel U.S. International Trade Commission (ITC) proceeding;
- A petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition (i.e., a petitioner agrees to a so-called “Sotera stipulation”).
- A petition presents “compelling evidence” of unpatentability.
Let’s take the revised ITC guidance, which has now come full circle to the original policy prior to its reversal under former Director. The rationale for today’s change, was also the rationale for the original policy. That is, the ITC’s invalidity rulings are not binding on the Office or on district courts. Why did it change? Because the previous Director wanted it that way, that’s why.
While I may agree with the original policy, the toggling of these positions across administrations is a bad look for the agency. If anything, this development will fuel the drive to commit this policy to statutory form via the pending legislation.
As to Sotera stipulations, the new guidance states that when a PTAB petitioner stipulates that it will not pursue invalidity in a parallel district court proceeding on the same grounds or any grounds that could have reasonably been raised in the PTAB petition (a so-called “Sotera stipulation”), “the PTAB will not discretionarily deny institution of an IPR or PGR in view of parallel district court litigation.
So, while a petitioner can now avoid discretionary denial, this stipulation practice was spawned from Fintiv practices that were arguably improper in the first instance. Once again, this only fuels the need for the PTAB Reform Act of 2022, which would simply outlaw Fintiv practices altogether.
As to the last bullet, the Director states that “compelling, meritorious challenges will be allowed to proceed at the PTAB even where district court litigation is proceeding in parallel.” Such challenges “are those in which the evidence, if unrebutted in trial, would plainly lead to a conclusion that one or more claims are unpatentable by a preponderance of the evidence.”
I don’t understand how this standard is any different from the standard for institution. In almost all cases the “reasonable likelihood of prevailing” is made in view of a Patent Owner’s rebuttal evidence/arguments in a preliminary response. In any event, it is bad policy for the PTAB to be getting into the business of grading petitions as “compelling” when they are under fire as biased for using the same judges at institution as the final decision.
Lastly, as was inevitable, the Director updated the PTAB’s approach to Fintiv factor two, under which the PTAB considers the proximity of a parallel district court’s trial date to the PTAB’s projected statutory deadline for a FWD. The Director recognized that “[a] court’s scheduled trial date . . . is not by itself a good indicator of whether the district court trial will occur before the statutory deadline for a final written decision,” and instructed the PTAB that “when other relevant factors weigh against exercising discretion to deny institution or are neutral, the proximity to trial should not alone outweigh all of those other factors.” Further, the Director stated that “[p]arties may 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.” (emphasis added)
Of course, it is far from prudent to present evidence and arguments on how slow your district court judge is in doing her job. Practically speaking, a Sotera stipulation becomes mandatory for WDTX petitioners wanting to avoid Fintiv. On the bright side, this lever will allow petitioners to file later, when they have more knowledge of the full scope of litigated issues, rather than (current practice) firing off a petition within 2-3 months in an attempt to avoid Fintiv.
While I am generally in favor of the changes as they will severely limit Fintiv from interfering with meritorious challenges, keeping the practices on life support just allows the next Director to come in and revive them. While notice and comment rulemaking is promised, and would make reversal by the next administration far more difficult, let’s just kill it via legislation and move on.