Rescission of the Fintiv Guidance Memorandum, and What Comes Next

The U.S. Patent and Trade Office (PTO) on February 28, 2025, rescinded former PTO Director Kathi Vidal's June 21, 2022, memorandum (Memorandum) addressing discretionary denial of inter partes review (IPR) of patents that are subject to parallel district court litigation. The Memorandum had added some certainty to the uncertain procedures under Apple Inc. v. Fintiv, Inc., and its rescission will likely renew old challenges for IPR petitioners.

This post will explore the evolution of discretionary denials under Fintiv, then look to the future now that the Memorandum is no longer controlling.

IPR Proceedings

The America Invents Act (AIA) created a new form of patent reexamination before the PTO, an IPR. 35 U.S.C. §§ 311-19. An IPR allows a petitioner to challenge the validity of a U.S. patent in view of printed prior art before the Patent and Trial Appeal Board (PTAB or Board). The patent owner has the right to participate in the proceedings. After a petition is filed and the patent owner submits its preliminary response, a Board consisting of three administrative judges decides whether to grant or deny the IPR's institution. An institution decision usually takes six months following a petition's filing. Eleven months following the institution decision, the Board will hold a hearing. The Board will issue a final written decision regarding the validity of the patent one month after the hearing.

The Early Fintiv Era

The AIA gives the Board discretion to deny institution, and this discretion resulted in the 2020 Fintiv ruling. See 35 U.S.C. § 314(a). In Fintiv, the Board evaluated "whether efficiency and integrity of the system are best served by denying or instituting review" when a parallel district court litigation was slated for trial six months later. IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020).

Petitioner Apple had filed on Oct. 28, 2019. In patent owner Fintiv's February 15, 2020 Preliminary Response, it argued that the approaching November 16, 2020 trial date compelled the Board to exercise its discretion to deny institution because the district court trial would conclude before the Board's final written decision was issued. In such a case, the district court and the Board could reach different conclusions, the Board would be engaging in duplicative efforts, and the petitioner could receive "two bites at the invalidation apple."

The Board requested further briefing on the issue and laid out six factors that it would consider when rendering its decision:

1. whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted
2. proximity of the court's trial date to the Board's projected statutory deadline for a final written decision
3. investment in the parallel proceeding by the court and the parties
4. overlap between issues raised in the petition and in the parallel proceeding
5. whether the petitioner and the defendant in the parallel proceeding are the same party
6. other circumstances that impact the Board's exercise of discretion, including the merits

Since its issuance, Fintiv has frustrated petitioners who face a quickly approaching trial date. Petitioners regularly traverse these six "Fintiv Factors" while arguing that institution should not be denied; and patent owners argue the opposite.

While the Fintiv Factors have existed for nearly five years, how petitioners and the Board evaluate these factors has shifted dramatically over that period. The PTAB initially used Fintiv to deny a large number of petitions. In 2020 and 2021, the PTAB denied 167 and 123 petitions using their Section 314(a) discretion, respectively, an increase of over 45 and 84 such denials in 2018 and 2019, respectively. To place themselves on better footing relating to Factor 4 (overlap with the district court proceedings), petitioners began stipulating to abandoning certain invalidity defenses in district court if institution occurred. In other words, if the Board did take up the invalidity issues raised in the petition, then the petitioners would not bring the corresponding invalidity defenses at trial. These stipulations had various scopes:

• Sand Revolution Stipulations – stated that petitioners would not bring any invalidity grounds at trial that were addressed in the petition. See Sand Revolution II, LLC v. Cont'l Intermodal Group-Trucking LLC, IPR2019-01393, Paper 24 (PTAB June 16, 2020). Here, the petitioner gave up only the exact arguments found in the petition.
• "Sand Revolution Plus" Stipulations – stated that petitioners would not bring any invalidity grounds at trial that were based on any of the prior art references included in the petition. If a prior art reference appeared in the petition, then that reference would not appear at trial.
• Sotera Stipulations – stated that petitioners would not bring any invalidity grounds at trial that were addressed, or could have been addressed, in their petition. See Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 at 13-20 (PTAB Dec. 1, 2020). This effectively amounted to a wholesale loss of any invalidity argument at trial based on printed material.

As the broadest type, a Sotera stipulation gave a petitioner the best chance at avoiding a Fintiv discretionary denial, but each petitioner needed to balance the factors. For example, a particularly strong petition might fare better under Factor 6 (the merits), which may caution for a narrower stipulation. Still, whether a petition would face Fintiv denial was largely difficult to predict and made the IPR process uncertain for petitioners.

The Memorandum Era

Vidal's Memorandum offered guidance regarding Fintiv denials, and provided some clarity to petitioners who were otherwise weighing six factors and hoping the Board would not exercise discretion to deny institution. First, the Memorandum stated that "the PTAB will not discretionarily deny institution in view of parallel district court litigation where a petitioner presents a [Sotera] stipulation not to pursue in a parallel proceeding the same grounds or any grounds that could have reasonably been raised before the PTAB." This guidance was clear: file a Sotera stipulation and the Board will not deny institution based on Fintiv. Second, the Memorandum also emphasized the importance of Factor 6 (the merits) in a Fintiv analysis: "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." This guidance required that the Board, even if it was inclined to deny institution under Fintiv, reach the merits of the petitioner's arguments.

In February 2023, Vidal provided more clarity regarding Fintiv in her CommScope Technologies LLC v. Dali Wireless, Inc. decision. IPR2022-01242, Paper 23 (PTAB Feb. 27, 2023). There, the Director clarified that "[t]he Board should first assess Fintiv factors 1–5; if that analysis supports discretionary denial, the Board should engage the compelling merits question [Factor 6]." In other words, a Fintiv denial required the Board to address the petition's merits, so invoking Fintiv alone would not provide an easy method to dispose of the petition.

In the time since the Memorandum was issued, Fintiv denials became much less prevalent, and petitioners became more emboldened to offer narrower stipulations than Sotera. Many petitions did not address Fintiv upfront, but instead argued that the petition's merits were strong so Fintiv was not in play. If a patent owner forcefully argued that Fintiv denial was still appropriate, the petitioner would request leave to file a reply that more fully addressed Fintiv.

The Post-Memorandum Era

This customary Fintiv practice before the PTAB was upended on February 28, 2025, when the PTO rescinded its Memorandum. The recission simply states,

Today, the USPTO rescinded the June 21, 2022, memorandum entitled "Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation" (Memorandum).

Parties to post-grant proceedings should refer to Patent Trial and Appeal Board (PTAB) precedent for guidance, including Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential) and Sotera Wireless, Inc. v. Masimo Corp., IPR2020-01019, Paper 12 (PTAB Dec. 1, 2020) (precedential as to § II.A).

To the extent any other PTAB or Director Review decisions rely on the Memorandum, the portions of those decisions relying on the Memorandum shall not be binding or persuasive on the PTAB.

Without the Memorandum's guidance – and with precedent stemming from the Memorandum no longer "binding or persuasive" – parties to an IPR are now effectively cast back to the Early Fintiv Era. Petitioners must return to the six-factor balancing test and argue that their facts weigh in favor of institution despite a parallel district court proceeding.

Some factors are outside of a petitioner's control (e.g., the trial date and identical parties to both proceedings), but petitioners should focus on the facts that they can control:

• Choosing to File a Petition Quickly After a Complaint Is Filed. Defendants have a year to file their IPR petition, but the new Fintiv target="_blank"landscape will require them to act fast. Petitioners will need to analyze and understand the challenged patent, search for quality printed prior art and likely retain an expert and draft a petition – all within a few months of being served a complaint. Moving fast will favor the petitioner under Factors 2 (proximity to court's trial date) and 3 (current investment in district court proceedings).
• Selecting the Correct Stipulation Language. Although a Sotera stipulation is no longer a "silver bullet" to defeat Fintiv denial, it will still strongly favor institution by removing issue overlap under Factor 4.
• Drafting a Quality Petition. Factor 6 focuses on the merits of the petition, so while there will be a race to file as quickly as possible, time should be taken to ensure that petition presents strong grounds.

As with any discretionary standard built on a multifactor test, it will take time to learn how the PTAB will apply Fintiv going forward. Practitioners before the PTAB will need to monitor and observe how the Board addresses Fintiv over the next several months to develop clear strategies now that uncertainty has returned to the proceedings.