In April 2023, the USPTO issued a rulemaking proposal that detailed a potentially sweeping revamp of Patent Trial and Appeal Board (PTAB) proceedings, with possible changes including the codification and expansion of the Board's discretionary denial practices under NHK-Fintiv as well as the creation of a standing requirement. USPTO Director Kathi Vidal later clarified that this Advance Notice of Proposed Rulemaking (ANPRM) was overbroad by design to gather as much feedback as possible and indicated that the final rules package would likely be narrower. Earlier this month, the agency released that promised Notice of Proposed Rulemaking—a more targeted package that indeed covers just a "subset of topics from the ANPRM". The final proposal includes rules concerning "serial" and "parallel" petitions as well as validity arguments previously addressed by the USPTO, also creating a separate briefing process for discretionary denials and requiring the filing of pre-institution settlement agreements. However, the USPTO has also indicated that further changes based on last year's ANPRM are still being considered.
Serial and Parallel Petitions
Among the areas addressed in both the April 2023 and 2024 proposals is the issue of "repeated validity challenges to patent claims". This practice, per the USPTO in both instances, includes "serial" petitions, which target one or more of the same claims as a first petition in another petition filed against that patent after the preliminary response has been filed (or the deadline for that response has passed). The proposals also contemplate "parallel" petitions, which are defined more differently between the two but generally contemplate multiple petitions against the same patent that are filed closer in time to the first petition. This practice is currently governed by the PTAB's precedential General Plastic decision, which lays out factors under which multiple petitions from the same petitioner can be discretionarily denied, including overlap in the challenged claims, whether the petitioner should have known of the prior art in the later petition, whether the petitioner had received the patent owner's preliminary response, and petition timing. The PTAB has since extended General Plastic to encompass follow-on petitions from a first petitioner's district court codefendant, wherein the two are deemed to have a "significant relationship" (in Valve I); and from a previously joined PTAB copetitioner (Valve II); the Board has also placed limits on discretionary denials of follow-on petitions where the prior petition was also discretionarily denied.
For serial petitions, the April 2023 ANPRM proposed replacing General Plastic and its progeny with an expanded version of the first factor, wherein any petitions challenging the same claim as a prior petition would be discretionarily denied if filed by the petitioner, its real party in interest or privy, those with a "significant relationship" to the petitioner under Valve I, or a previously joined PTAB petitioner under Valve II, except where the prior petition was also discretionarily denied.
However, the April 2024 NPRM provides a narrower definition of a serial petition than the one from last year's ANPRM. Here, a "serial petition" would be defined as one challenging "overlapping claims of the same patent that have already been challenged by the petitioner, the petitioner's real party in interest, or a privy of the petitioner", and filed after the patent owner's preliminary response has been filed (or, again, the deadline for such a response, if not filed). Notably, the USPTO explicitly opted not to codify the "significant relationship" test from Valve I. Rather, the agency "determined that applying the real party in interest and privity concepts in exercising discretion in the serial petition context carries out Congress's desire that the Director balance concerns about harassment in exercising discretion", directing stakeholders to the body of common-law caselaw on real parties in interest and privies for further guidance. The USPTO also asserted that this approach is consistent with Valve I: "The Office notes that though Valve used the term 'significant relationship' to examine the relationship between the petitioners, the analysis was consistent with privity concepts".
The NPRM also seeks to codify most of the factors from General Plastic—specifically, factors 2-5, contemplating whether the petitioner "knew . . . or should have known" of the prior art asserted in the second petition, whether the petitioner had received the patent owner's preliminary response or the Board's institution decision in the first proceeding, the time elapsed between when the petitioner learned of the newly asserted prior art and when it filed the second petition, and whether it adequately explained that elapsed time. Factor 1, defining a serial petition, is incorporated into the aforementioned definition, while the USPTO explicitly excluded factors 6 and 7 (respectively contemplating the PTAB's "finite resources" and the need for the Board to issue a final written decision not later than one year after institution).
Noting that comments addressing serial petitions were "sharply divided", the USPTO framed the adoption of the General Plastic approach as one that "strik[es] a balance between denying all serial petitions versus removing all restrictions on serial petitions", as respectively proposed by some commenters. Moreover, the agency explained that this solution "supports the Office's goal of reducing duplicative challenges to a patent and balances the interests of parties by preventing undue harassment of patent owners through serial challenges while allowing petitioners reasonable opportunities to seek review".
Meanwhile, the April 2023 ANPRM defined a parallel petition as one "filed against the same patent by the same petitioner or by a petitioner who has a substantial relationship with another petitioner challenging the same patent", establishing that such petitions would be discretionarily denied absent a showing by the petitioner that they are necessary. While some stakeholders subsequently criticized the more expansive definition encompassing petitions against the same patent, as opposed to the same claims, the USPTO carried forward this same focus on the overall patent in the April 2024 NPRM. The agency explained that this would give the PTAB "a mechanism . . . to review filing behaviors to assess whether there are any abuses or misuses of the post-grant procedures, including ones that may place unwarranted and unnecessary burdens on the patent owner (e.g., filing, without explanation, multiple petitions challenging a single patent where each petition challenges a single claim of the patent)".
The NPRM also considers parallel petitions to be those filed by the same petitioner, as opposed to the ANPRM's bar of parallel petitions from those with a "substantial relationship" with the first petitioner (a broader test that would have encompassed the General Plastic and Valve I/II factors along with other considerations, including whether petitioners are members of certain defensive organizations). With respect to timing, parallel petitions are also defined as those "filed during the time period for filing a patent owner preliminary response in the first proceeding".
In addition, the NPRM carries over the ANPRM's proposed requirement that petitioners must establish good cause for why a parallel petition is necessary, the USPTO explaining that it is already the Board's practice to "requir[e] that petitioners demonstrate why parallel petitions should be allowed to proceed". The NPRM further lays out the factors that may be considered for this determination—including an explanation of any differences between the petitions, "the number of claims challenged by the petitioner and asserted by the patent owner", whether the challenged patent's priority date is in dispute, "whether there are alternative claim constructions requiring different prior art", "whether the petitioner lacked information at the time of filing the petition", and "the complexity of the technology in the case", as well as a preferred ranking of the petitioner's parallel petitions.
Separate Briefing for Discretionary Denials
A less controversial proposal from the 2023 ANPRM was to establish a separate briefing process in which patent owners may request discretionary denials, allowing both parties to brief the issue without encroaching on word limits for briefing on the merits. The 2024 NPRM would do the same, including the ANPRM's proposed page limits (ten pages for the patent owner's discretionary denial request, ten for the petitioner's opposition, and five for the patent owner's surreply), further setting relevant deadlines (beginning with a two-month window in which the patent owner can file their brief). Additionally, the NPRM would allow the PTAB to raise discretionary denial sua sponte (i.e., on its own initiative, without the request of the patent owner), in which case the parties would be allowed to brief the issue.
To address concerns from stakeholders that allowing separate briefing "would only favor petitioners because it would give a petitioner an automatic right to respond to a patent owner preliminary response", the NPRM establishes that the petitioner's opposition may only raise issues first addressed in the patent owner's discretionary denial request. However, one potential provision not carried over from the ANPRM was a requirement that patent owners disclose information regarding any entities with whom they have a "substantial relationship", including the identification of entities holding an ownership interest in the patent owner, the existence of any government funding or third-party litigation funding, and any other stake that a party has in the outcome of the proceeding.
Mandated Filing of Pre-Institution Settlement Agreements
Additionally, the NPRM would establish that pre-institution settlement agreements must be filed with the PTAB when the parties seek to terminate the proceeding before institution as a result of those agreements (a change also contemplated by the ANPRM). This would carry over the same requirement that already applies to post-institution settlements, and the USPTO states that it is already the general practice of the PTAB to require the filing of such agreements in the pre-institution context (though under current rules there have been exceptions). As explained by the USPTO, this would also help the Federal Trade Commission (FTC) and Department of Justice (DOJ) ensure "compliance with antitrust laws" in light of President Joseph R. Biden, Jr.'s July 2021 executive order on competition, which in relevant part "encourages government agencies to cooperate on policing unfair, anticompetitive practices" (as summarized by the PTO).
Validity Arguments Previously Considered by the USPTO
Also addressed in the NPRM was the PTAB's authority, as delegated by the USPTO Director, to discretionarily deny institution where the USPTO has previously considered the asserted prior art or arguments, as provided under 35 USC § 325(d). Currently, those determinations are made based on a two-part framework established by the PTAB's precedential Advanced Bionics v. Med-El Elektromedizinische Geräte decision, using a set of non-exclusive factors interpreting that ruling from its Becton, Dickinson v. B. Braun Melsungen decision. Those factors allow for such denials where the asserted art or arguments "are the same or substantially the same as those previously presented to the Office" unless the petitioner has shown "a material error by the Office' in its prior consideration of that art or arguments".
The April 2023 ANPRM contemplated rules that would codify much of the Advanced Bionics framework, but proposed limiting its application to situations where art or arguments had been not just "previously presented," but "previously addressed"—meaning, for example, where the USPTO affirmatively "distinguished" the art rather than the art merely being cited on an Information Disclosure Statement (IDS) but not addressed by an examiner. While commenters debated the merits of this approach versus a broader one that would encompass IDS citations, the April 2024 NPRM adopts a similar approach where 325(d) is limited to consideration of art or arguments that were "meaningfully addressed" by the USPTO—under which the Office must have "evaluated the art or arguments and articulated its consideration of the art or arguments in the record of the application from which the patent issued", or in the record of a "related application or patent" with "substantially the same" claims. The NPRM would also preserve the Advanced Bionics limitation requiring the petitioner to show a "material error" by the USPTO if the "substantially the same" prong has been met, again as proposed in the ANPRM.
Codification of Current Joinder Practices
Finally, the NPRM would codify the PTAB's existing approach to joinder, wherein panels will not consider 325(d) and parallel petition issues when evaluating joinder petitions, as both types of issues are "already implicated by the previously instituted petition". In particular, the USPTO explains that 325(d) arguments were already available to the patent owner in responding to the "already instituted petition". Similarly, where a petitioner seeks joinder to "multiple instituted IPRs" (i.e., where the Board has already instituted trial for a set of parallel petitions), the petitioner has already had to show good cause why parallel petitions are justified, based on the "particular considerations" detailed above. However, the USPTO confirmed that the PTAB may continue to consider other bases for discretionary denial of the joined petition.
More Changes Are Under Consideration
As noted above, the April 2024 NPRM covers just a "subset" of the changes contemplated in the April 2023 ANPRM. The newer proposal omits some of the most heavily debated changes from the broader one from last year, leaving out most of those related to discretionary denials based on the status of parallel district court litigation under the NHK-Fintiv rule. In addition to codifying most of the factors from that test, the ANPRM—but not the NPRM—included potential new exceptions that would allow petitioners to sidestep discretionary denials altogether: One of those exceptions would apply for petitions filed within six months, in order to incentivize earlier IPR filings (questioned by some stakeholders as contradicting or undermining the one-year time window already provided by statute); and the other, perhaps more controversial one would apply to petitions found to demonstrate "compelling merits", or an especially high likelihood of prevailing on the merits (criticized as effectively overriding the statutory "reasonable likelihood" standard). Another polarizing proposal, as mentioned earlier, would essentially create a standing requirement—i.e., limiting what types of entities may and may not file PTAB petitions—based on an expanded view of corporate relationships as well as certain exceptions concerning business models. Some of the public comments submitted in response to those suggested changes opposed them not just on policy grounds, but also statutory ones—arguing that they undercut, or even contradict, certain provisions of the AIA.
While those provisions—and other more heavily debated changes—were not included in the April 2024 proposal, the USPTO has indicated that some of the remaining reforms from the April 2023 ANPRM could still come to pass. The agency stated in its newer proposal that it "continues to consider issuing proposed rules, with associated opportunities to comment, on other topics raised in the ANPRM". That said, it is not yet clear based on public statements which of those proposals could make the cut. In July 2023, Vidal floated the possibility that the USPTO would release two final rulemaking proposals, "one more procedurally focused and one more substantively focused", to vet the final rules with the public—but this latest proposal was not framed as falling into either bucket, and could be interpreted as covering both procedural and substantive issues, so it is possible that the agency has moved on from this potential approach.
For more on the contents of the April 2023 ANPRM, see "USPTO Proposes Formal Revamp of PTAB's Discretionary Denial Practices" (April 2023). Further coverage of stakeholder feedback published in response to that proposal can also be found at "Public Comments Reveal Fault Lines over USPTO's NHK-Fintiv Rulemaking Proposal" (June 2023), with details on a recently denied procedural challenge against the NHK-Fintiv rule available at "Formal Rulemaking Not Required for NHK-Fintiv, Holds California Court" (April 2024). Meanwhile, for more on recent legislative proposals impacting the PTAB, as well as other internal USPTO reforms, see "As Senate Committee Weighs Legislative PTAB Reforms, USPTO Changes Address Other Stakeholder Criticisms" (November 2023).
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