In late April, the USPTO released a long-awaited Notice of Proposed Rulemaking (NPRM) addressing discretionary denials before the Patent Trial and Appeal Board (PTAB) that included just a subset of the changes from a far more sweeping—and far more controversial—proposal released in April 2023. Public comments submitted in response to the newer, more limited package by the June 18 deadline reflected feedback from a broad set of stakeholders, including licensors, frequent defendants, industry groups, and even the US Federal Trade Commission (FTC).
Serial and Parallel Petitions
One focus of the 2024 NPRM and last year’s reform proposal (an Advance Notice of Proposed Rulemaking, or ANPRM), and one of the most heavily discussed in stakeholder feedback, was the issue of “repeated validity challenges to patent claims”. The proposals both distinguish between “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); and “parallel” petitions, which generally contemplate multiple petitions against the same patent that are filed closer in time to the first petition.
As noted in RPX’s prior coverage, 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 additionally placed limits on discretionary denials of follow-on petitions where the prior petition was also discretionarily denied.
The April 2023 ANPRM included an expansive definition of a “serial petition” that would have barred subsequent petitions against the same claim from petitioners that have a “significant relationship” with the prior petitioner (based on the first Valve factor), as well as those filed by the prior petitioner, its real party in interest, or privy. However, the April 2024 NPRM explicitly opted not to include the “significant relationship” test, instead defining a “serial petition” 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 the deadline for such a response, if not filed). Similarly, the 2024 NPRM would omit the “substantial relationship” test for parallel petitions, defined as those filed by the same petitioner as a prior petition, challenging the same patent as that prior petition, and filed within the time period for the patent owner’s preliminary response in that first proceeding.
A variety of commenters recommended changes to this provision from the 2024 NPRM. For instance, networking company Ciena argued that the USPTO should remove or “limit[] the reach” of the term “privy” as used in the definition of a serial petition, contending that this limitation would be impractical and unduly burdensome in the context of real-world customer-supplier relationships: Because of “incomplete and high-level accusations by patent owners, the defendant may not be able to identify, which, if any, of its suppliers or contractual rights are implicated”. This forces such a defendant to file its own PTAB petition to avoid the one-year time-bar “[r]ather than gather a patchwork of unidentified suppliers”, which are then “at the mercy of the quality of [the] earlier filing”.
The need to account for certain industry practices was also highlighted by Mercedes-Benz, which contended in its own submission that the USPTO should confirm that “being co-defendants in a joint defense group or being part of a trade association does not create a ‘real party in interest’ or ‘privy’ relationship”, consistent with its prior guidance released in 2019. Licensor Dolby Laboratories also expressed its overall support for the NPRM’s provisions on serial petitions, albeit with the proposed addition of a requirement that the USPTO determine the real parties in interest for each proceeding, therefore abrogating a 2023 precedential decision (Unified Patents v. MemoryWeb) that allows such a determination only if it would impact the current proceeding, rather than future ones.
Other commenters have asserted that certain aspects of the “serial petition” definition could encourage misconduct or otherwise bar necessary behavior. The American Bar Association Section of Intellectual Property Law, for example, opposes what it characterizes as the NPRM’s proposed expansion of General Plastic from encompassing “the same claims” to “the same or overlapping claims” (emphasis in original). This could encourage gamesmanship, it argues, because a patent owner may initially assert one set of claims and then later add a set of claims depending on the first, such that any petition challenging the dependent ones would be denied as overlapping. As a result, if this language were maintained, the Section recommends the addition of a new factor contemplating “whether the patent owner’s conduct impacted the timing of a later petition filed against the patent”.
The Computer and Communications Industry Association (CCIA) also raised concerns over this “overlapping claims” requirement, explaining that some limited overlap may be necessary in “a petition that meets the timing and party identity requirements of the NPRM” where a party needs to “challenge the same independent claim as the earlier petition in order to address a newly asserted set of dependent claims”. Separately, the CCIA argues that serial petitions should not be defined based on the “expiration of the time period for a patent owner response” because there is “no roadmapping concern for a petition filed before either the filing of a [patent owner preliminary response] or the issuance of a decision on institution, and thus no reason to penalize a petitioner if they file in that circumstance”. To fix both issues, the CCIA proposes defining serial petitions as those challenging “the same claims or more than one overlapping claim”, and as one filed either after the preliminary response or institution decision.
The issue of claim overlap was additionally discussed by the New York Intellectual Property Law Association (NYIPLA), which asserts that USPTO should clarify that “when two petitions are filed that have non-overlapping claims being challenged, such filings should be deemed appropriate in general”. NYIPLA argues that fairness would dictate such a principle for patents with many claims, for which it contends that multiple, non-overlapping petitions should be allowed; and for subsequent petitions against claims added to a district court case after the defendant files its initial petition.
Also weighing in on this issue was Unified Patents, which argued against “blanket rules for denying serial or parallel petitions” in light of the USPTO Director’s existing tools for dealing with “multiple challenges of the same patent” (including her ability to “proceed, stay, transfer, or terminate co-pending proceedings”, as well as consolidate them). Moreover, among other points, Unified asserts that the ability of defendants to file follow-on petitions once they learn of a patent owner’s preliminary arguments is “not a bug, but rather a feature of [America Invents Act (AIA)] trials, as panels have great flexibility to consolidate and stay related cases. Parties who wait until they understand a patent owner’s position are not gaming the system, but simply presenting a more complete analysis for the Office to consider”.
In contrast, US Inventor—an organization that has frequently been critical of the PTAB—has proposed a further expansion of “serial petitions” beyond the language in the 2024 NPRM, arguing that they should also be defined to bar petitions from companies that are “similarly situated” to another petitioner: one operating in the same broad market sector (as determined by their “North American Industry Classification System (NAICS) 2-digit sector code”) or one that a skilled artisan “would consider to be in a similar business or industry as any previous petitioner”.
Validity Arguments Previously Considered by the USPTO
Another topic addressed in stakeholder feedback 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). The PTAB currently makes those determinations based on a two-part framework established by its 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”.
Rather than adopting a broader approach that would encompass circumstances where art is merely cited on an Information Disclosure Statement (IDS) but not addressed by an examiner, the April 2024 NPRM provides that 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, as also proposed in the 2023 ANPRM.
Mercedes-Benz argues that the USPTO needs to further clarify what constitutes art or arguments that are “meaningfully” considered, including related standards referenced in the proposed rule (“substantially the same prior art” and “articulated in consideration”). Among the ambiguities flagged by Mercedes-Benz is that the rule does not establish whether art may only be “meaningfully addressed” in a final written decision or if would meet that threshold if addressed in an institution decision (which has a lower evidentiary threshold). Additionally, the company contends, the rule does not clarify whether art that was previously presented to the USPTO “but is now being presented in a different way in a new petition” is considered to be “meaningfully addressed”.
Relatedly, NYIPLA argues that “meaningfully addressed” should be clarified due to likely disagreements that will arise when the new standard is applied in practice: It predicts that patent owners will insist that “meaningfully addressed”, as opposed to just addressed, runs counter to the presumption of validity, whereas petitioners will argue in favor of the ability to assert invalidity claims over previously considered art and arguments.
Those opposing the NPRM’s proposed changes on this issue included Unified Patents, which recommends against codifying the Advanced Bionics test, arguing that doing so would turn “Congress’s permission to deny” on this basis to an inappropriate “mandate to deny absent proof of material error”. Advanced Bionics should remain as guidance, it contends, especially given the lack of “studies evaluating [its] impact”. Should it be codified, Unified argues, it agrees with the USPTO that references that are “meaningfully addressed” should apply, rather than those merely listed in an “Information Disclosure Statement”.
Also weighing in against these changes is the Council for Innovation Promotion (C4IP), an organization led in part by former USPTO Directors Andrei Iancu and David Kappos and former Federal Circuit Judges Paul Michel and Kathleen O’Malley, which asserts that the “original Becton/Advanced Bionics test strikes a better, more nuanced, balance with a sliding-scale analysis under which § 325(d) would be implicated any time a reference had been before the Office”. US Inventor, meanwhile, favors a broader approach, allowing denial for art made of record (including on an IDS) but “but not necessarily applied or substantively discussed by the examiner”.
Briefing Process for Discretionary Denials
The 2024 NPRM, similar to its predecessor, seeks 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. This provision would set various 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), as well as 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.
The length, form, and timing requirements for these various filings were raised by several commenters. For instance, the PTAB Bar Association recommended that rather than the specified page counts, the rule should instead require the equivalent word counts (a recommendation echoed by the CCIA), but regardless raised concerns that the “complex, multi-factor analyses” related to serial petitions, 325(d), and Fintiv may “unduly restrict” parties’ ability to present these issues under the proposed page limits. The organization also argued that the patent owner’s discretionary denial request should be due by the preliminary response date, rather than one month earlier—citing concerns by some patent owners that they may not be able to retain counsel soon enough after being served with a petition.
The Intellectual Property Owners Association (IPO), meanwhile, saw potential benefits and downsides for both parties: It observed that some patent owners might have otherwise used more than the allotted ten pages for briefing discretionary denial issues (a point also raised by the ABA’s IP Law Section), and that all patent owners would have to raise the issue earlier than they otherwise would have under the new rule. However, it remarked that both parties would benefit from getting a sur-reply because this would create a “consistent and predictable briefing process”. Additionally, IPO argued that because petitioners would no longer need to address discretionary denial issues in petitions, the PTAB would benefit because those petitions could thus focus to a greater extent on the merits.
Perhaps not surprisingly, US Inventor opposed the new briefing process, arguing that it unfairly favors petitioners by giving them more space to address the merits. By preventing patent owners from addressing discretionary denials in their preliminary response, and forcing them to assert separately, US Inventor insisted that the process unfairly gives petitioners an “additional brief”, thereby “eliminat[ing] the one small advantage patent owners have in IPR; namely, being able to submit two responses”.
Mandated Filing of Pre-Institution Settlement Agreements
Another change proposed by 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 has stated 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 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).
Notably, the FTC itself filed comments in support of this proposal, after not filing any comments on the April 2023 ANRPM. The FTC frames its interest in the issue as relating to monitoring compliance with antitrust law in the pharmaceutical industry—observing that “certain patent settlement agreements between pharmaceutical manufacturers can raise antitrust concerns where they include reverse payments that keep drug prices high by impeding competition from lower-cost generic drugs”. The FTC supports the USPTO’s proposed extension of the disclosure requirement to pre-institution settlements, the former explains, because “[t]his concern extends to patent disputes that are settled at any point in the PTAB review process”.
More broadly, the FTC argues that it shares two common goals with the USPTO: to promote innovation and fair competition, underscoring for the latter that “the misuse or abuse of patents” may constitute “anticompetitive conduct and unfair methods of competition” within the FTC’s enforcement mandate. Both goals, the FTC contends, require “cracking down on patent abuse”. As such, after observing that “access to timely review of patent validity is vital”, the FTC expressed its appreciation for the USPTO’s overall focus on improving patent quality and for its “ongoing vigilance” in deterring abuse of the PTAB, “including by the use of discretionary denials to impede meritorious challenges”.
Meanwhile, the PTAB Bar Association notes that its membership is split on the settlement disclosure rule: Some support it, asserting that if the filing of agreements is not required, certain for-profit petitioners might demand large cash settlements and that certain patent owners could make “large and unexplained reverse payments to the petitioner”. In contrast, it states that other members argue that the AIA only requires the filing of post-institution settlements, and that to extend this to those before institution would run counter to the intent of Congress. Those members additionally contend that there is no basis under President Biden’s competition order that empowers the USPTO to pursue this change.
Omitted Proposals from 2023 ANPRM
As indicated above, the 2024 NPRM is notable in part for what it does not include from last year’s more expansive proposal, including some of its most heavily debated changes.
For instance, the 2024 proposal leaves 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, during the ANPRM’s comment period, 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 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.
Yet the USPTO has indicated that some of the remaining reforms from the April 2023 ANPRM could still come to pass. The agency stated in the 2024 NPRM 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 are still being considered.
The above omissions from the 2023 ANRPM—and the open question of which, if any changes, may still be on the table—did not go unnoticed by some commenters. C4IP went as far as to declare that it would not support any of the changes in the 2024 NPRM due to the lack of clarity over whether further changes from ANPRM are being contemplated and “[a]s a result of not knowing the Office’s overall agenda for PTAB”: “To the extent additional proposals are forthcoming, their piecemeal presentation makes it difficult to meaningfully comment on any given one. It is critical to know if basic assumptions about how PTAB operates are settled or are still up for change”. According to C4IP, this silence is especially problematic given that there is ongoing litigation over the director’s ability to provide rules on discretionary denials without formal rulemaking.
Should there be further changes, C4IP argues that the “Office should discretionarily deny petitions where there is parallel district court or ITC litigation unless the petitioner files a Sotera stipulation”—i.e., a stipulation under which a petitioner agrees that it will not pursue “any ground raised or that could have been reasonably raised in an IPR” in the district court litigation, in order to avoid a discretionary denial on that basis—“for both PGR and IPR proceedings”. C4IP also notes that it would not support some of the other key aspects of the 2023 ANPRM, including the “compelling merits” standard, the proposed rule requiring disclosure of funding sources and interested parties, and the suggested codification of a standing requirement (which the organization supports, but only in the form of legislation).
Ciena also “commend[ed]“ the USPTO for excluding several provisions from the 2023 ANPRM, including the aforementioned standing requirement (as partly based, in that proposal, on the exclusion of certain “for-profit petitioners”) and “compelling merits” standards, among others—arguing that these changes “would have unfairly restricted operating companies like Ciena from using AIA proceedings, driving-up litigation costs, increasing PTAB uncertainty, increasing patent abuse, and diverting funds from innovation efforts that makes Ciena, and other domestic technology leaders, competitive globally”.
For more on the 2024 NPRM and its 2023 predecessor, see “USPTO Releases Narrower PTAB Rules Package, but Further Changes Could Still Be Coming” (April 2024).
