Acting Director Reverses Previous Discretionary Denial

By Adam Cook and Sarah Geers –

For the first time under the bifurcated institution procedures, the Acting Director reversed her own prior discretionary denial, citing changed circumstances based on a settlement in the parallel district court litigation.  See Arm Ltd. v. Daedalus Prime LLC, No. IPR2025-00207, Paper 14 (P.T.A.B. Aug. 6, 2025).

In April 2024, Daedalus filed a complaint in the Eastern District of Texas against MediaTek, claiming that MediaTek had infringed eight chip technology patents.  Compl., Daedalus Prime LLC v. MediaTek, Inc., No. 2:24-CV-00235 (E.D. Tex. Apr. 8, 2024).  MediaTek challenged the validity of four of these patents in IPR petitions filed between October 2024 and January 2025.  See IPR2024-01488; IPR2025-00100; IPR2025-00207; IPR2025-00243.  In one of the four IPRs, a third party, Arm, joined MediaTek as a petitioner, challenging the validity of U.S. Patent No. 8,984,228 (the “’228 Patent”).  In accordance with the new bifurcated procedure,

The Acting Director found Daedalus’s Fintiv argument convincing, and on May 16, 2025, among the first round of decisions under the new bifurcated institution procedure, she discretionarily denied IPR, citing the parallel litigation between Daedalus and MediaTek.  See Arm, No. IPR2025-00207, Paper 10.  However, one day before, on May 15, Daedalus and MediaTek filed a notice of settlement in the district court docket, and a week later, the district court issued an order dismissing the infringement case.

According to the discretionary denial decision, for denying institution was duplicative efforts arising from the now-settled parallel district court litigation.  Arm, having not been a party in the parallel litigation and thus not being bound by the settlement terms, sought to reignite its challenge to the ’228 Patent.  In , 27 days after the settlement appeared on the district court docket, Arm filed a Request for Director Review, arguing that vacatur of the Acting Director’s prior discretionary denial was warranted in light of the now-settled parallel litigation.  See id., Paper 12.  Specifically, Arm stated that it “was not a party to the litigation and ha[d] separate interests that were not vindicated by the dismissed district court proceedings.”  Id. at 1.  Arm also argued, “the Petition demonstrates compelling merits for multiple reasons including that the Board has already held substantially identical claims in the child patent [invalid.]”  Id. at 2.

In a response, Daedalus urged that Arm failed to articulate what its “separate interests” were for continuing to challenge the ’228 Patent and that there “is perhaps nothing more unnecessary than a validity contest brough [sic] by a party with no verified interest in the validity of a subject patent.”  Id., Paper 13 at 3.

Citing changed circumstances caused by the settlement between Daedalus and MediaTek, the Acting Director reversed her prior discretionary denial.  See id., Paper 14.  This marks the first time the Acting Director has reversed a discretionary decision that resulted from the bifurcated institution procedures.  In her decision, the Acting Director stated, “[n]ow that the litigation has been dismissed, the balance of factors weighs in favor of referral.”  Id. at 2.  Because “the Board already has determined that ‘substantially identical claims’ in a related patent to the challenged patent are unpatentable . . . it is efficient for the Board to take up this case.”  Id. at 3.

Takeaway: This decision illustrates that it is possible to obtain reconsideration and vacatur of the Director’s discretionary denial of institution based on changed circumstances.  So far, settlement in a parallel proceeding when the denial was based on Fintiv considerations regarding that parallel proceeding is the only example of changed circumstances warranting reversal of the Acting Director’s own discretionary denial under the bifurcated procedures.  In future decisions, the Acting Director may continue to articulate what, beyond settlement in parallel litigation, may amount to changed circumstances.