By Matthew Johnson, Carl Kukkonen, Evan C. Jones, and Daniel Sloan

On April 19, 2024, the USPTO issued a Notice of Proposed Rulemaking (the “Notice”) regarding discretionary denial in post-grant proceedings and other issues.  The Notice addresses stakeholder feedback responsive to the USPTO’s October 2020 Request for Comments and its April 2023 Advance Notice of Proposed Rulemaking (covered here).  Topics include a new procedure for patent owners to request discretionary denial, institution of serial and parallel petitions, and pre-institution settlement agreements.

New Mechanisms for Dealing with Pre-Institution Procedural Challenges

The proposed rule changes provide patent owners an opportunity to submit a 10-page request for discretionary denial two months after the date of notice of an IPR’s filing.  If the patent owner files a request, it can only address discretionary denial factors and issues, which cannot appear in the patent owner’s preliminary response (unless authorized “when the circumstances warrant”).  The petitioner can then file a 10-page opposition no later than one month after the filing of the request.  Finally, patent owner can file a 5-page reply no later than two weeks after the filing of the opposition.  Alternatively, the PTAB may sua sponte raise discretionary denial, in which case the parties have the opportunity for briefing using the same procedure.  As explained in the Notice’s discussion, the rule change to add a separate request is largely driven by a need expressed by stakeholders to free up space in petitions and patent owner responses.

Multiple Petitions

The Notice defines the terms “parallel petition” and “serial petition” in 37 C.F.R. section 42.2, and the terms are used in sections 42.108 (Institution of IPR) and 42.208 (Institution of PGR).  The USPTO intends “parallel petitions” to apply when two or more petitions challenging the same patent are filed by a petitioner on or before the patent owner’s preliminary response filing, favoring the “same patent” approach over the “overlapping claims” approach.  Parallel petitions will now be denied absent a showing of good cause, harmonizing the regulation with the Board’s Consolidated Trial Practice Guide (Nov. 2019), which states that one petition should be sufficient in most situations.  The Trial Practice Guide also states that, under rare circumstances, two petitions may be needed.  But filing three or more is likely inappropriate.  The Notice’s eight enumerated points for evaluating good cause include the complexity of the technology in the case and whether there is a dispute about the priority date of the challenged patent.  The Notice also contains a ninth point for “any other information pertinent to the good cause determination.”  There is no proposal to formally cap the number of petitions that can be filed, but the number may affect the PTAB’s evaluation of point nine.

The “serial petition” definition incorporates General Plastic’s first factor, i.e. whether a petitioner previously filed a petition directed to the same claims of the same patent.  “Serial petitions,” challenging a patent are filings made after the patent owner’s preliminary response  to the first petition or the due date for the same.  Comments to the 2023 Advanced Notice were mixed on whether “serial petition” should include petitioners filed by other petitioners.  To address concerns about harassment in exercising discretion, “serial petitions” will use a privity analysis, replacing the “significant relationship” analysis from Valve Corp. v. Electronic Scripting Products, Inc., IPR2019-00062, Paper 11 (PTAB Apr. 2, 2019) (covered here).  General Plastic factors two through five are also included in the proposed rules as a compromise between denying all and instituting all serial petitions that meet the statutory threshold for institution.

Filing of Settlement Agreements

In addition, changes to sections 42.72 and 42.74 will allow the PTAB to terminate IPRs and PGRs before or after institution.  In the case of a joint motion to terminate a proceeding, the motion must be filed with any written settlement agreement, even before institution.  The Notice explains that this practice is already required for post-institution settlement agreements, so the rule change will make pre- and post-institution settlement procedure uniform.  In the discussion section, the USPTO states that 30% of AIA proceedings settle each year, with half settling before institution.  The Notice also cites various PTAB decisions that held the proceeding could terminate before institution, without needing parties to file their agreement.  The proposed changes abrogate those decisions.

We continue to monitor the proposed rule changes and will provide more information as it becomes available.  Comments are due June 18, 2024.

Takeaways:  The recent Notice of Proposed Rulemaking is an effort to address stakeholder feedback and engage with practitioners to improve PTAB practices and procedures.  Practitioners should be aware of the logistical changes.  Patent owners and challengers will benefit from monitoring the situation.

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Matt Johnson is one of the Firm's primary contacts on practice before the PTAB. Currently co-chairing the Firm's PTAB subpractice and involved in proceedings at the Board since the first day of their availability in September 2012, Matt regularly represents clients as both petitioners and patent owners at the Board. He further works as an advocate for clients in appeals from Board proceedings at the Federal Circuit.