Codifying Discretionary Denial of IPR Petitions

by Dennis Crouch

The USPTO recently released yet another Notice of Proposed Rulemaking (NPRM) — this one focusing on codification of IPR/PGR rules associated with non-merits based “discretionary denials” of institution as well as termination due to settlement.  This is a controversial area because of that word ‘discretion.’  Unrestricted discretion by government officials is concerning because of the potential for arbitrary or biased decisions, lacking transparency and accountability.  In that frame, these rules are beneficial because they structure and limit discretion – hopefully making the outcomes more predictable and justifiable.  A key note – the rules here focus primarily on procedure (separate briefing for discretionary denials) and substantive issues relating to parallel, serial, and cumulative petitions. Although this is an important step, they do not address discretionary denials associated with parallel litigation (or other outside factors) under Fintiv and subsequent director guidance. This is likely the most controversial area of discretionary denials that is being left out for now.

Congress clearly intended the USPTO to have substantial discretion in denying when to institute IPR proceedings.  Although the law sets a floor for institution (reasonable likelihood of success), the statute does not require institution in those cases.  Discretion is further indicated by providing the Director unreviewable authority at the institution stage, unlike the trial stage where the PTAB must issue a final written decision that is then appealable.  Although not in the statute, after losing in Arthrex, the USPTO was forced to create an additional  post-trial discretionary layer known as director review that was the subject of an earlier NPRM.  Although having this level of discretion seemingly powerful, it tends to make administrators uncomfortable because it opens themselves up to criticism and can become resource intensive to  repeatedly make up the playbook.

In 2023, the Office released an ANPRM (advanced NPRM) that included more aggressive rules that were perceived as more anti-patent-owner — especially compared to the approach taken under Dir. Iancu.  That notice received more than 14,000 comments, and the USPTO dropped a number of the more controversial proposals in these new proposed rules.

The USPTO is seeking comments on the proposed rules through June 18, 2024.

Separate Briefing Process for Discretionary Denial Issues

The most important aspect of the NPRM is the creation of a separate briefing process to address discretionary denial issues. Under the proposal, a patent owner may file a request for discretionary denial separate from its preliminary response. This request would be limited to addressing applicable discretionary denial factors, distinct from arguments on the merits of unpatentability. The petitioner would then have the opportunity to file an opposition, and the patent owner could file a reply.

Word counts are a big deal in IPR briefing, and this separate briefing process would not count against the word count limits for the main merits briefs.  One problem though is that this briefing process suggests that it be entirely separate from the merits considerations — while the PTAB regularly consider merits as part of the discretionary denial process.  Further, the discretionary denial briefing typically does not arise until the patent owner’s preliminary response (POPR) to the institution decision — and that is a document that often does have additional space available for briefing.  So, in the end, this process appears to favor petitioner by giving them automatic separate space to argue against discretionary denial.

The NPRM also proposes that the Board itself may raise discretionary denial sua sponte, in which case the parties will receive an opportunity to provide their own briefing.

Discretionary Denial Factors for Parallel and Serial Petitions

In addition to this procedural change, the NPRM proposes to codify discretionary denial factors for parallel petitions, serial petitions, and petitions raising art or arguments previously considered by the Office.

For parallel petitions – defined as petitions challenging the same patent filed on or before the deadline for a patent owner preliminary response – the USPTO proposes that the Board will not institute multiple petitions absent a showing of good cause as to why more than one petition is necessary. Petitioners would need to provide information relevant to the good cause determination as well as ranking the petitions in their preferred order of consideration, explaining material differences between petitions, and identifying which (if any) challenged claims have been asserted in litigation.

Serial petitions are similar but with a slightly different timing.  These are petitions challenging overlapping claims of a patent after filing of a patent owner preliminary response to an earlier petition – the USPTO proposes that the Board may deny institution upon considering factors such as the petitioner’s knowledge of the prior art at the time of filing the first petition, the timing of the petitioner’s receipt of a patent owner preliminary response or institution decision on the first petition, the time elapsed between the petitioner learning of the prior art and filing the second petition, and whether the petitioner adequately explained that elapsed time.[6]

For petitions previously considered arguments, implicating 35 U.S.C. § 325(d), the Board may deny institution if the same or substantially similar art or arguments were previously “meaningfully addressed” by the Office unless the petitioner demonstrates a “material error” in the Office’s prior consideration. The NPRM clarifies that “meaningfully addressed” requires more than mere appearance in the record, such as an initialed information disclosure statement.

Alignment of Termination Requirements for Settlement

Finally, the NPRM proposes changes to align the requirements for terminating proceedings in view of settlement, whether before or after institution. Specifically, the USPTO proposes amending the rules to clarify that settlement agreements supporting pre-institution termination must be filed with the Board, similar to the existing requirement for post-institution settlement agreements.  This proposal springs from an identified inconsistency in PTAB practice, where some pre-institution termination requests have been granted without submission of the underlying settlement agreement. The NPRM notes this change will also further the USPTO’s ability to coordinate with other agencies in support of the whole of government approach to promoting competition and policing anticompetitive conduct.  Thus, although the documents might be filed “under seal” – they may still be shared with the DOJ, FTC, or other US governmental branches.  Of all the proposals, this is the one most likely to receive legal challenge – with parties arguing that the USPTO lacks authority to require submission of settlement agreements reached prior to institution.

An additional point of clarity will need to focus on whether discretionary denial decisions will be subject to immediate Director Review in the same way that institution decisions will be reviewed. It seems that the answer should be yes, but that is not clear from the documents.

24 thoughts on “Codifying Discretionary Denial of IPR Petitions

  1. 8

    Credit where credit where a due – thank you Mister SS

  2. 7

    For a more sustantive review of these Proposed Rules themselves, see the latest “Patents Post-Grant” blog post just out entitled “Limited PTAB Rule Proposal Marred by Ill Conceived Briefing Changes” [unhelpful for patent owners.]

    1. 7.1

      Yikes. That’s a surprisingly pro-Petitioner proposal.

      Current practice is to address 325(d) issues in a Petition, and POPRs that focus on 325(d) spend far more than ten pages on the issue.

      1. 7.1.1

        > Yikes. That’s a surprisingly pro-Petitioner proposal.
        > Current practice is to address 325(d) issues in a Petition,
        > and POPRs that focus on 325(d) spend far more than ten
        > pages on the issue.

        The distribution of comments the USPTO received about the proposed rules suggest that the new procedures are a net benefit to petitioners. This might be correct, but time will tell. Sometimes when these types of procedural rules actually go into effect, initial assumptions about who wins and loses turn out to be incorrect.

        For example, on your point about 325(d), only in rare cases should anyone need more than 10 pages to address 325(d) issues. And before these rules, patent owners had to use their POPR for both discretionary denial and merits arguments, thus reducing the amount of space for merits arguments. Patent owners will now have an entirely separate 10-page brief to address arguments about discretionary denial, and the word limit of their POPRs is unaffected. This will give patent owners a lot more space in their POPRs for merits arguments against institution.

  3. 6

    As the Patents Post Grant blog has variously noted earlier, this is putting into formal PTO rules pretty much what has already been PTO practice under prior guidelines just for the very small number of IPRs that are denied institution on a discretionary basis even if otherwise meeting the normal threshold 102 or 103 patent or publication prior art showing required for institution.

    1. 6.1

      For background here, the exercise by the Board of its power to refuse insititution of a requested IPR on a discretionary basis re the pending District Court suit on the same patent was previously called denying institution under “Fintiv.”
      Also, such IPR institution refusals have become even less since common since it became common practice for patent suit defendants to file a “Sotera stipulation” that the prior art asserted in the IPR will not also be the same prior art asserted in the pending patent suit. Sotera stipulations mitigate concerns of potentially conflicting PTAB and district court decisions and duplicative efforts between the district court and PTAB. The Board will not discretionarily deny IPR institution when a petitioner submits a Sotera stipulation.

      1. 6.1.1

        What you’ve described above is a Sand Revolution stipulation.

        A Sotera stipulation is when a Petitioner states that, if the IPR is instituted, it’ll be bound by the same estoppel that would apply if there was a final written decision, i.e., that it won’t assert any grounds that could have been raised in the Petition.

        Sotera stips give me all kinds of heartburn.


          Thanks, but what is the practical difference between a “Sand Revolution stipulation” and a Sotera stipulation? Are not both effective to prevent that “prior art asserted [or could have been asserted] in the IPR will not also be the same prior art asserted in the pending patent suit” Or, does a Sand Revolution stipulation not include the “or could have been asserted”?


            The latter, though I’ve seen two kinds of Sand Revolution stips. The first is limited to the art in the Petition. The second is limited to the grounds in the Petition.


              If “Sand Revolution stipulations” do not even exclude litigation assertion of mere alternative-equivalent patents or publications of those in the IPR petition, even mere foreign equivalents. I would think the patent owner would object that it does not properly avoid Fintiv or PTO Fintiv guidelines and their discretionary IPR denial intended function?


                Institution Decision should normally issue well in advance of trial, so that should be a relatively straightforward summary judgment motion for the Plaintiff to win.

  4. 5

    Dennis, does this (c)(1) below address one of your concerns?
    Ҥ 42.108 Institution of inter partes review.
    * * * * *
    (c) Institution considerations. Inter partes review shall not be instituted unless the Board decides that the information presented in the petition demonstrates that there is a reasonable likelihood that at least one of the claims challenged in the petition is unpatentable. …
    (1) Consideration of discretionary
    denial…..To the extent the patent owner contends that there are substantive weaknesses in the petitioner’s grounds of unpatentability that are relevant to the exercise of discretion under 35 U.S.C. 314(a), the patent owner may indicate in their request that they will address those substantive weaknesses in the
    preliminary response permitted by § 42.107(a).”
    [I.e., rebut a petitioner argument that discretionary denial is inappropriate because the Petionioners unpatability argument is so strong?]

  5. 4

    The statute should be amended to impose a deadline by which IPRs must be filed. Perhaps make it two years. Then, challengers have to make a decision whether to peremptorily challenge or wait until getting sued for infringement (or threatened therewith) to challenge.

    1. 4.1

      More than 80% of IPRs are in response to being sued for infringement, and thus one year time limited by 35 USC 315 (b) “Patent Owner’s Action – An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).”
      By a proposed two year deadline did you mean an additional short time limitation running from the issue date of the patent? That is what PGRs have, and look how very rarely they are used because of it as compared to IPRs. Most patent suits are not on such newly issued patents. Also, normal companies do not go spending money and stirring up legal troubles attacking patents on which they have not yet even been threatened with infringement concerns. Not to mention defeating the Congressional intent of IPRs vis a vis PGRs.

      1. 4.1.1

        Yeah, Paul, I was confused by that comment also. It’s possible the original commenter simply didn’t know about the one year statute of limitations to file IPR under 315(b) when patent litigation is filed.

        To the extent the poster was proposing an absolute two-year deadline for filing any IPR petitions (similar to the nine-month window for filing PGR petitions), that’s not a workable or serious proposal. Reexamination has existed for more than 40 years and has never had any such limitation. A universal two-year limit on filing IPR petitions also creates some weird incentives that appear counterproductive; for example, encouraging patent owners to deliberately delay filing suit on newly-issued patents, seeking licenses from third parties or even informing third parties about their infringement of newly-issued patents.


          Not confused.

          Allowing patent challengers to challenge under a preponderance of the evidence burden well into the life of a patent is my problem.

          We have reexam, as you admitted, so use that.

          The patent holder gets to do whatever they want, because they are the patent holder. That is a patent challenger mindset.

    2. 4.2

      Short of shutting down the PTAB Death Squad failed experiment entirely, a two year limit is a great idea.

      Heck; many inventors and patent owners would be thrilled if patents could not be IPR’d in the last, say, 5 years of their life.

      Patents shouldn’t be IPR attackable forever.

      1. 4.2.1

        The one-year bar from a complaint being served is probably about right (though in slower moving forums, it’s annoying).

        Spending the $150-200k on an IPR Petition doesn’t happen absent litigation or the threat of litigation.


          It was meant to be INSTEAD OF litigation, not a second bite at the apple.

      2. 4.2.2

        Exactly. Note how the patent litigators on this thread think that they should have every option open to them up until expiration.

  6. 3

    It may be worse:

    (“This is a controversial area because of that word ‘discretion.’ Unrestricted discretion by government officials is concerning because of the potential for arbitrary or biased decisions, lacking transparency and accountability.”)

    This may invoke an improper transfer of power from one branch of the government to another.

    Those with Constitutional Law chops will recognize that proper transfer of authority must adhere to strict protocols.

  7. 2

    >USPTO proposes that the Board may deny institution

    It seems like the petition standards should be closer to “shall, absent showing of unavoidability.” Congress clearly ~intended~ to protect patentees from having to run the IPR gauntlet multiple times. E.g., § 325(c), § 325(e)(1), all of the “golden plated patent” rhetoric during debates.

    1. 2.1


      We both know that the drafting of the AIA involved some of the worst legal writing of all time.

      That can easily happen in a regulatory capture situation.

  8. 1

    With these further complications to the innovation-killing hydra which are IPRs and PGRs, what chance do America’s little guys and gals have to protect their inventions?

    In stark contrast to the intention of our country’s founders, patents truly are a game of, by, and for kings.

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