Will Fewer PTAB Judges Increase the Rate of Discretionary Denials of IPRs and PGRs?

The Acting Director of the United States Patent and Trademark Office just issued a memorandum setting out new procedures for discretionary denials of Inter Partes Reviews (IPRs) and Post-Grant Reviews (PGRs). The Acting Director will determine whether to deny institution based not only upon the Fintiv factors, but also upon the workload of the Patent Trial and Appeal Board (PTAB). In short, given that the number of PTAB judges soon will be reduced, the Acting Director has announced that IPRs and PGRs may be denied institution based upon the overall workload of the PTAB judges.

The PTAB handles both ex parte appeals (appeals from rejections of patent applications) as well as IPRs and PGRs. Ex parte appeals do not have a statutorily-imposed deadline for decision.  On the other hand, governing statutes require the PTAB to make an institution decision in IPRs or PGRs within six months, and if instituted, to issue a final written decision one year later. The PTAB, however, has the power to discretionarily deny institution of an IPR and PGR, and that denial is not reviewable by the Federal Circuit.

Recent announcements indicate that the USPTO likely will reduce the number of PTAB judges. In early February, PTAB judges, many of whom worked remotely, all were required to return to the office. PTAB judges also were offered early retirement and separation packages. And, in March, PTAB judges were informed that a reduction in force was in the works for mid-April. There is no word regarding the total number of PTAB judges who will remain after the expected reduction in force.

The Acting Director’s memorandum, entitled “Interim Processes for PTAB Workload Management,” explains that the purpose is “[t]o ensure that the PTAB continues to meet its statutory obligations as to ex parte appeals.” In order to meet this goal, the memorandum sets out the ability to deny institution of IPRs and PGRs based simply upon PTAB workload: “[t]he Director will also consider the ability of the PTAB to comply with pendency goals for ex parte appeals, its statutory deadlines for AIA proceedings, and other workload needs.”  It appears that because the Acting Director has the discretion to deny institution of IPRs and PGRs but does not have that same power with respect to ex parte appeals, the Acting Director has chosen to have the remaining PTAB judges focus their efforts on ex parte appeals. As a result, fewer IPRs and PGRs will be instituted.

There are two other important aspects of the memorandum.  First, it will be the Acting Director, in conjunction with three PTAB judges, who will decide whether to discretionarily deny institution of IPRs and PGRs. The Acting Director will look to PTAB workload as well as the Fintiv factors, such as whether another forum has already adjudicated the challenged patent claims, the strength of the challenge, and length of time that the claims have been in force. If the Acting Director does not discretionarily deny institution, then the petition will be referred to a PTAB panel to handle the remainder of the case. 

Second, the parties now have an opportunity to separately brief the issue for the Acting Director. The patent owner has two months to file a brief explaining any applicable bases for discretionary denial of institution and the petitioner has one month to file an opposition. 

The expected reduction in force of PTAB judges may increase the rate of discretionary denials of IPRs and PGRs. The Congressionally mandated timetables for IPRs and PGRs, which do not exist for ex parte appeals, coupled with the Acting Director’s ability to discretionally deny institution without appellate review, likely influenced the Acting Director’s decision to prioritize ex parte appeals over IPRs and PGRs.