Vidal issues non-binding guidance on Fintiv denials
The director of the US Patent and Trademark Office, Kathi Vidal, has unveiled long-anticipated guidance for the procedures governing the discretionary denials that can be handed down by the US Patent Trial and Appeal Board (PTAB) when declining to review a patent’s validity.
The guidance, “ Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation,” was published on June 21.
Generic drug makers have openly opposed the controversial rule and its effect on inter partes reviews (IPRs), with companies such as Mylan and Edwards Lifesciences putting forward criticisms in amicus briefs before the US Supreme Court.
Time and speed
Commenting on the release of the memorandum in a statement, Vidal said:
“The Patent Trial and Appeal Board serves an important role in strengthening the patent system in America. The USPTO is committed to providing clarity and transparency around all our processes, especially in PTAB’s practice of discretionary denials. It is critical that we all play a role in ensuring that our patent system serves the public good the way it was intended.”
According to the guidance, the PTAB should not deny the institution of an IPR under Fintiv in the following scenarios: when a petition presents compelling evidence of unpatentability; when a request for denial under Fintiv is based on a parallel ITC proceeding; or where a petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition.
Additionally, when the PTAB is applying the Fintiv rule, the PTAB should consider the speed with which the district court case may come to trial and be resolved.
The PTAB, said the memorandum, will weigh this factor against exercising discretion to deny institution under Fintiv if the median time-to-trial is around the same time or after the projected statutory deadline for the PTAB’s final written decision.
Even if the PTAB does not deny institution under Fintiv, it does retain the right to deny institution for other reasons under 35 USC §§ 314(a), 324(a), and 325(d). For example, the PTAB may deny institution if other pertinent circumstances are present, such as abuse of process by a petitioner.
Not binding
Commenting on the guidance, Trenton Ward, partner at Finnegan noted that while the guidance represents an important clarification of the PTAB’s Finitiv procedure, it is not being “binding” on the PTAB.
“The guidance specifically addresses one of the more controversial topics regarding the PTAB’s reliance on a district court’s scheduled trial date for Fintiv consideration. A district court’s scheduled trial date, by itself, is not a good indicator of whether the PTAB’s final written decision will be released before the district court trial,” he said.
The guidance provides that parties may present “median time-to-trial for civil actions in the district court”. Accordingly, the PTAB will consider “the speed with which the district court case may come to trial and be resolved,” he explained.
This development also comes after several US lawmakers called upon the USPTO to curb the increase in IPR denials to combat the “soaring cost” of prescription drugs.
Eleven US senators and members of Congress, including Massachusetts Senator and former presidential campaigner Elizabeth Warren, co-signed the open letter.
“While the patent system plays a critical role in incentivising innovation in the prescription drug market, aspects of the system have also allowed drug companies to engage in anti-competitive practices that drive up the cost of drugs and keep competitors from entering the market,” said the senators.
Fintiv’s impact
At the time of the publication of the guidance, the USPTO also released findings on a related study on the impact of PTAB denials on petitions when there is a parallel district court proceeding addressing the same patent, revealing the ongoing impact of denials following the Fintiv precedential decision.
The study, “ Patent Trial and Appeal Board parallel litigation study”, found that after Fintiv was designated precedential in 2020, parallel litigation was raised in about 40% of all cases.
Fintiv denials peaked in the second quarter of fiscal year 2021 and dropped significantly afterwards, while the PTAB had issued no Fintiv denials based on parallel litigation in the Western District of Texas since August 2021, said the study.
The study also noted how the PTAB had denied the institution based on Fintiv of only three petitions challenging drug patents: two Orange Book-listed patents and one biologic drug patent.
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