Discretionary Denial Requires Compelling Analysis Only After Fintiv Factors Support Denial

Intellectual Property Law

In Commscope Techs. LLC v. Dali Wireless, Inc.1 the Director of the U.S. Patent Office issued a precedential decision that discretionary denial requires the Patent Trial and Appeal Board (PTAB) to perform the compelling merits analysis that at least one claim is unpatentable only after first determining that Fintiv factors 1–5 support denial of institution. If Fintiv factors 1–5 do not favor discretionary denial, the PTAB need not perform the compelling merits analysis. In addition, the Director reiterated that the PTAB must provide reasoning to explain and support for its determination on whether to deny institution sufficient to allow the parties to challenge that finding and allow review.

The PTAB issued a decision granting institution of inter partes review (IPR) of U.S. Patent 11,026,232. The PTAB decided not to exercise its discretion to deny IPR institution under 35 U.S.C. § 314(a), in view of Apple Inc. v. Fintiv, Inc. (Fintiv) and the U.S. Patent Office Memorandum “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings With Parallel District Court Litigation” (the Guidance Memo).2 The PTAB reasoned that it decided not to exercise its discretion because the petitioner submitted persuasive unpatentability challenges.

The Director granted review to evaluate the PTAB’s determination that the petition included a compelling, meritorious opposition. The Director explained that the Guidance Memo unmistakably indicates that where the PTAB “determines that the information presented at the institution stage presents a compelling unpatentability challenge, that determination alone demonstrates that the PTAB should not discretionarily deny institution under Fintiv.”3 To decide whether there is a convincing unpatentability ground, the PTAB assesses whether the petition asserts invalidity grounds “in which the evidence, if unrebutted in trial, would plainly lead to a conclusion that one or more claims are unpatentable by a preponderance of the evidence.”4

Thus, the Director explained that the compelling merits standard is a higher measure than what is used for institutions as provided by statute. The Director explained that a challenge is compelling if it is highly probable that at least one claim being challenged is unpatentable. The PTAB must describe its reasoning as to why the merits are convincing that at least one claim is highly likely to be unpatentable.

Here, the Director explained, the PTAB evaluated the compelling merits standard without first deciding whether the other Fintiv factors support discretionary denial. However, the Director clarified that the PTAB can “only consider compelling merits if they first determined that Fintiv factors 1–5 favored a discretionary denial.”5 According to the Director:

Thus, in circumstances where the Board determines that […] Fintiv factors 1–5 do not favor discretionary denial, the Board shall decline to discretionarily deny under Fintiv without reaching the compelling merits analysis. In circumstances where, however, the Board’s analysis of Fintiv factors 1–5 favors denial of institution, the Board shall then assess compelling merits. In doing so, the Board must provide reasoning sufficient to allow the parties to challenge that finding and sufficient to allow for review of the Board’s decision.6

In addition, the Director noted that the PTAB did not provide a sufficient explanation to justify its determination that the merits were compelling. The Director observed that even though the PTAB stated that the evidence showed it was highly probable that the petitioner would win a patentability challenge to at least one challenged claim, the PTAB did not include a detailed evaluation describing why or how it obtained this conclusion. According to the Director:

Merely pointing to its analysis under the lower institution standard is insufficient to demonstrate that the petitioner presents a compelling unpatentability challenge. As I note above, to find compelling merits, the Board must provide reasoning to explain and support its determination as to compelling merits sufficient to allow the parties to challenge that finding and sufficient to allow for review of that decision.7

Therefore, the Director vacated the PTAB’s decision and remanded the IPR to the PTAB to reevaluate its Fintiv analysis as a result of this decision:

The Board should first assess Fintiv factors 1–5; if that analysis supports discretionary denial, the Board should engage the compelling merits question. If the Board reaches the compelling merits analysis and finds compelling merits, it shall provide reasoning to explain its determination.8

Why it matters

This decision ensures that the five Fintiv factors are evaluated by the PTAB in depth and in writing before the PTAB can determine whether there is a compelling case of unpatentability for at least one claim. The PTAB has to provide detailed reasoning to support its finding regarding compelling merits sufficient to enable the parties to challenge and allow for review of that decision. This decision will require both patent owners and petitioners to thoroughly apply the Fintiv factors to achieve the appropriate analysis of whether to institute an IPR. Thus, the PTAB will not reach the merits of the petition, i.e., the compelling merits analysis, until the Fintiv factors have been weighed.

Patent owners will likely emphasize how much work the district court has put into the case and the overlapping invalidity issues in arguing that the PTAB should deny institution. On the other hand, petitioners may emphasize other factors, such as whether the court’s trial date is after the PTAB’s projected statutory deadline for a final written decision, while also providing justification for the PTAB to consider the case compelling.

The big question then is what constitutes a “compelling patentability challenge” even if the other Fintiv factors favor denial. The Director has only outlined the overall test, which is that the evidence, if unrebutted, shows that it is “highly likely” that the petitioner would succeed in demonstrating the unpatentability of at least one claim. No specifics have been provided on how to assess what is considered highly likely, which might only be clarified decision by decision.

Irah Donner is a partner in Manatt’s Intellectual Property practice and the author of Patent Prosecution: Law, Practice, and Procedure, 2023 Edition, and Constructing and Deconstructing Patents, Second Edition, both published by Bloomberg Law.

1 Commscope Techs. LLC v. Dali Wireless, Inc., No. IPR2022-01242, 2023 WL 2237986, 2023 USPQ2d 231 (PTAB Feb. 27, 2023) (precedential) (granting rehearing and vacating and remanding).

2 Id., slip op. at 2 (citing Apple Inc. v. Fintiv, Inc., IPR2020-00019, slip op. at 5–6, 2020 WL 2126495 (PTAB Mar. 20, 2020) (precedential) (Paper 11), and the Guidance Memo (June 21, 2022)).

3 Id., slip op. at 3 (quoting the Guidance Memo at 4–5).

4 Id., slip op. at 3 (quoting the Guidance Memo at 4).

5 Id., slip op. at 4.

6 Id., slip op. at 4–5.

7 Id., slip op. at 5–6.

8 Id., slip op. at 6.



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