This week, the U.S. Patent and Trademark Office (USPTO) issued a memorandum introducing new processes related to discretionary denials of inter partes review (IPR) and post-grant review (PGR) submissions filed with the Patent Trial and Appeal Board (PTAB). This is the latest in a series of steps related to discretionary denials that will likely benefit patent owners by providing the PTAB with additional discretion to deny more patent challenges (more here: “USPTO Rescinds PTAB Denial Guidelines,” by Loeb partner Biil Kramer).

A discretionary denial of an IPR or a PGR occurs when the PTAB, based on certain factors, decides not to institute a review of a patent's validity regardless of whether the petition may otherwise warrant institution on the merits. Earlier this month, the USPTO rescinded a 2022 memo that had limited the use of discretionary denials. This change will likely result in more discretionary denials (i.e., petitions that will not be instituted). This week's memo introduces a larger role for the director in determining discretionary denials, and creates a new bifurcated decision-making process that distinguishes between (i) discretionary considerations and (ii) merits and other non-discretionary statutory considerations.

Traditionally, patent owners would argue for discretionary denial in the same briefings as their arguments on the merits, and PTAB judges (not the director) would assess those arguments all at once when determining whether to institute review. Under the new procedure, “the director, in consultation with at least three PTAB judges, will determine whether discretionary denial is appropriate.” This determination will be based on separate briefings filed early in the petition process, before the judges review the invalidity argument's statutory merits.

New Timeline

• Within two months of the Notice of Filing, patent owners may submit a separate briefing requesting discretionary denial and explaining all applicable bases for the request. 
• Within one month of the patent owner's request, the patent challenger may submit a brief opposing discretionary denial.
• The traditional “merits briefing schedule" is unchanged, and the discretionary briefing will occur in parallel. Accordingly:
  • The optional Patent Owner's Preliminary Response (POPR) must still be filed within three months of the petition's filing date.
  • The PTAB makes an institution decision within six months of the filing date.
  • The final determination on validity is made within 12 months of institution. 

Discretionary Considerations

The memo also includes a list of permissible considerations for discretionary denial, some of which are based on PTAB precedent, but others that were not traditionally considered when determining discretionary denial: 

• Whether the patent's validity has already been adjudicated;
• Whether changes in the law since issuance of the claims may affect patentability; 
• The strength of the unpatentability challenge; 
• The extent to which the petition relies on expert testimony;
• Settled expectations of the parties, such as how long the claims have been in force;
• Compelling economic, public health or national security interests; and 
• Any other considerations bearing on the director's discretion.

While the new bifurcated process may result in additional resources spent upfront by patent owners to separately brief a request for discretionary denial in addition to the standard merits-based briefing, patent owners will likely welcome the opportunity to end patent challenges early. On the other hand, patent challengers may be forced to commit additional resources pre-institution to oppose a patent owner's discretionary denial briefings just to have a chance at institution.  

Read the entire memo here.