This morning, in a likely pro-patent holder approach, the U.S. Patent and Trademark Office (USPTO) rescinded a guidance memorandum from former USPTO Director Vidal (Vidal memo) describing when petitions to the Patent Trial and Appeal Board (PTAB) to find patents invalid could be discretionarily denied. The result of the recission of the Vidal memo will be more discretion for the PTAB to decline to review patent challenges based on parallel infringement litigation.

As background, the PTAB established procedures for determining the validity of patents in a faster and more efficient manner than proceeding through the courts. Issues arose when similar grounds for invalidity were put forth in the courts and the PTAB. Thus, the PTAB began to use its discretion to deny invalidity petitions. In Apple v. Fintiv, the PTAB listed out factors to determine if an invalidity petition should be denied:

• The proximity of the court's trial date to the PTAB's projected statutory deadline;
• The investment in the parallel proceeding by the court and parties;
• The overlap between issues raised in the inter partes review (IPR) and in the parallel proceeding;
• Whether the IPR petitioner is also the defendant in the parallel litigation;
• Whether the IPR petitioner waited too long to file the petition; and
• Other circumstances that impact the Board's exercise of discretion.

The Vidal memo, issued in June 2022, tightened the agency’s guidelines established in Apple v. Fintiv to allow the PTAB to use its discretion to deny reviews of patents already being asserted in district court. The Vidal memo explained that the PTAB will not deny institution of an invalidity challenge in the PTAB under Fintiv: (i) when a petition presents compelling evidence of unpatentability; (ii) when a request for denial under Fintiv is based on a parallel ITC proceeding; or (iii) where 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. The memo resulted in more restrictive application of the Apple Inc. v. Fintiv, Inc. decision. 

The likely result of rescinding the Vidal memo is that more petitions to find patents invalid in the PTAB will be discretionarily denied (will not proceed in the PTAB), which is a more pro-patent holder approach. By rescinding the Vidal memo, the PTAB has more discretion to deny invalidity petitions, which should result in more petition denials and may result in fewer hurdles for patent holders to overcome in asserting their patents.

From a patent challenger perspective, more discretionary denials are not a welcome development. The PTAB has been an efficient approach to establish invalidity of patents. In the future, the Fintiv factors will be even more important. Thus, patent challengers will want to have their PTAB petitions on file as soon as possible to be as far from a trial date as possible. Similarly, an early petition will limit the investment of the parties. And patent challengers certainly do not want to be viewed as waiting too long to file their PTAB actions.

A side consideration may be that by denying more petitions, less PTAB judges will be needed. With almost all PTAB judges working remote, mass resignations of PTAB judges are expected.