In 2023, Fintiv1—the precedential Order issued in 2020 that established a six-factor framework that the Patent Trial and Appeal Board (PTAB) applies when evaluating whether to exercise its discretion to institute an America Invents Act (AIA) trial when there is co-pending litigation—continued to grab headlines and spark controversy. It has, thus far, survived myriad efforts to curtail the PTAB’s discretion at institution. At the time of our last report,2 there were efforts to modify, limit, or abolish the Fintiv framework—several of which continue to exist in some form today. First, some stakeholders argued that the PTAB’s application of Fintiv to deny institution improperly refuses to review meritorious petitions contrary to the intent of AIA trials as being low-cost alternatives to district court litigation.3 Second, members of Congress had proposed legislation aimed to rein in the PTAB’s discretion.4 Third, legal challenges to Fintiv were working their way through federal courts.5 Fourth, President Biden appointed a new Director of the U.S. Patent and Trademark Office (USPTO), Kathi Vidal, who acknowledged during her Senate committee hearing a desire to address Fintiv policy, leaving many open questions as to how she would shape that policy.6

So far, Director Vidal’s appointment has shaped Fintiv’s impact the most. In June 2022, she issued a Memorandum that provides guidance on how and when panels should apply the Fintiv framework (“Guidance Memo”).7 And in 2023, she issued the precedential Commscope8 decision, in which she clarified how the PTAB should apply Fintiv factors and evaluate a petition that presents a challenge having “compelling merits.”

Figure 1: Fintiv Reviews by Year

Keeping these developments in mind, we continue here our data-driven analysis of PTAB decisions applying the Fintiv framework. Figure 1 shows the number of institution decisions in which the PTAB evaluated the Fintiv factors, broken down by year. Out of those cases, Figure 1 delineates between decisions that denied review based on Fintiv (indicated by red) and decisions that instituted review (indicated by blue). Figure 1 does not track decisions that denied review for other reasons, such as the merits.

While Fintiv denials are nowhere near their peak rate from 2021, Fintiv is still a common issue in PTAB proceedings. As indicated above in Figure 1, the PTAB still considers the Fintiv factors in a significant number of cases. Given that Fintiv is a key issue for any party facing parallel patent litigation, we continued to monitor Fintiv denial rates and review recent institution decisions to shed light on how the PTAB applies Fintiv following the Director’s Guidance Memo and subsequent precedential PTAB case law. Practitioners should be mindful of the latest statistical trends to accurately gauge Fintiv’s influence on litigation strategy. Before analyzing the latest trends, we provide a brief background and recap of the recent developments that have directly shaped how the PTAB applies Fintiv.

Fintiv’s Rise

35 U.S.C. §§ 314(a) (IPR) and 324(a) (PGR) set forth the minimum threshold requirements to institute review of petition for IPR or PGR. But since institution is never required, they give broad discretion to the Director to deny review even if the minimum requirements are met. For example, as explained in the PTAB’s Trial Practice Guide, the PTAB interprets these statutes as permitting denial in light of “events in other proceedings related to the same patent, either at the Office, in district courts, or the ITC.”9 In Fintiv, the PTAB enumerated six non-exhaustive factors weighed by the PTAB when determining whether to exercise this discretion in view of parallel litigation: (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 PTAB’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; and (6) other circumstances that impact the PTAB’s exercise of discretion, including the merits.10

Following its precedential designation in May 2020, Fintiv required the PTAB to consider the proximity of the parallel proceeding’s trial date, in addition to other factors (including the merits), which led to a spike of discretionary denials. When the parallel proceeding involved an expedited International Trade Commission (ITC) investigation or a trial in district court that was scheduled to begin before the statutory deadline for the PTAB to issue a final written decision, the PTAB often exercised its discretion to deny institution in the interest of judicial efficiency. Indeed, more than one-third of the institution decisions in 2020 in which the PTAB considered Fintiv resulted in the PTAB exercising its discretion to deny institution under Fintiv, as shown in Figure 1 above.

In return, petitioners began advancing stipulations that forgo presenting certain invalidity challenges in parallel litigation in order to reduce overlap of issues under Fintiv –factor 4. These stipulations vary in scope. From narrowest to broadest, these stipulations concede not raising in the parallel litigation: (1) the same grounds raised in the petition,11 (2) the same prior art raised in the petition, or (3) the same grounds or any ground that reasonably could have been raised in the petition. The broadest stipulations, better known as Sotera stipulations,12 track the “raised or reasonably could have raised” language of the estoppel provisions in 35 U.S.C. §§ 315(e) and 325(e). Overall, petitioners’ stipulations helped curb Fintiv denial rates, which began declining in the second quarter of the 2021 fiscal year, as shown in Figure 2, which shows the number of cases in which the PTAB evaluated the Fintiv factors, broken down by quarter. Similar to Figure 1, Figure 2 delineates between decisions that denied review based on Fintiv (indicated in red) and decisions that instituted review (indicated in blue).

Figure 2: Fintiv Denials by Quarter

Even with the availability of stipulations, the PTAB’s use of Fintiv to deny petitions remained controversial. First, some stakeholders considered the scheduled trial date in parallel litigation to be an unreliable metric for determining the proximity of the trial relative to the PTAB’s statutory deadline. Second, deferring invalidity decisions to the ITC was inappropriate, some said, because the PTAB is not bound by the ITC’s findings and the ITC lacks authority to invalidate a patent. Third, discretionary denial practice under Fintiv raised significant uncertainty as to whether the PTAB would consider petitions on the merits. Again, some stakeholders viewed this uncertainty as contrary to the Congressional intent of the AIA’s post-grant proceedings.

Director’s Interim Guidance: Fintiv’s Decline

On June 21, 2022, Director Vidal issued the Guidance Memo clarifying how panels were to apply the Fintiv framework, and, importantly, identifying scenarios in which the PTAB would not exercise its discretion under Fintiv. Specifically, Director Vidal identified three scenarios in which the PTAB would no longer exercise its discretion to deny institution in view of parallel proceedings:

1.    when the petition presents compelling evidence of unpatentability,
2.     when the request for denial under Fintiv is based on a parallel ITC proceeding, and
3.     when the petitioner makes a Sotera stipulation.

The first scenario emphasizes Fintiv factor 6 over the remaining Fintiv factors—pushing the PTAB to consider the merits. Director Vidal defined “compelling evidence” as evidence that “would plainly lead to a conclusion that one or more claims are unpatentable,” which is a higher threshold than the threshold for institution (reasonable likelihood of success in inter partes review and more likely than not in post grant review).13 According to the Guidance Memo, the purpose of this clarification was to “strike[] a balance among the competing concerns” of stakeholders—avoiding conflicting tribunal outcomes while allowing the PTAB to review the merits of seemingly strong invalidity challenges.14 The second scenario in the Guidance Memo clarifies that Fintiv analysis is directed solely to district court litigation, not ITC proceedings. And the third scenario provides petitioners an opportunity to avoid Fintiv if they agree to allow estoppel akin to that under Section 315(e) to apply at institution (as opposed to final written decision).

Director Vidal further expanded the considerations of Fintiv factor 2 beyond the district court’s scheduled trial date. The Guidance Memo encouraged parties to “present evidence regarding the most recent statistics on median time-to-trial for civil actions” where the parallel litigation resides.15 Noting that the scheduled trial dates often change, Director Vidal clarified that the PTAB may “also consider additional supporting factors such as the number of cases before the judge in the parallel litigation and the speed and availability of other case dispositions.”16 The Guidance Memo clarifies that Fintiv factor 2 should not alone outweigh all other factors acting against the PTAB exercising its discretion, which was a criticism that some stakeholders lodged against the PTAB’s application of Fintiv (despite panels routinely emphasizing in decisions that factor 2 is not dispositive).

While committing to a Sotera stipulation avoids denial under Fintiv, Director Vidal also clarified in her sua sponte Director Review in NXP USA, Inc. v. Impinj, Inc.17 that the stipulation must be timely—it must be filed before the institution date. In NXP USA, Director Vidal affirmed the PTAB’s ruling “that a stipulation, offered by a petitioner for the first time after a decision denying institution, is not a proper basis for granting rehearing of the decision on institution.”18 Accordingly, the only appropriate time to offer a stipulation related to Fintiv factor 4 is prior to an institution date.

Against this backdrop, we tracked PTAB decisions in which Fintiv was addressed from March 2020 to November 2023. Particularly, we compared Fintiv denial rates over three time periods: (1) Fintiv’s rise from March 20, 2020, to June 22, 2022; (2) Fintiv’s decline following the release of the Guidance Memo on June 22, 2022; and (3) Fintiv’s modest revival following the issuance of the Director’s Review in Commscope on February 27, 2023.19 As for our methodology, the blue bar in Figure 3 (seen below) represents decisions in which Fintiv was addressed and review was instituted. The red bar in Figure 3 represents decisions in which Fintiv

Figure 3: Tracking Fintiv Denials in View of the Guidance Memo and Commscope 

was addressed and review was denied due to Fintiv. The dark blue bar in Figure 3 represents decisions in which Fintiv was addressed and review was denied for other reasons (e.g., the merits). Tables 1 and 2 (below) respectively show the number and percentage of decisions addressing Fintiv based on the timeframe and categories outlined above.

As shown in Figure 3 (on page 23) and Tables 1 and 2 (below), Fintiv denial rates declined significantly in the eight months following the Guidance Memo, while the overall PTAB institution rate climbed to over 80%. From June 22, 2022, to February 27, 2023, the PTAB reviewed 878 total petitions, denying only five petitions based on Fintiv.

Notably, four of the five Fintiv denials in the June 22, 2022 to February 27, 2023 time frame presented similar circumstances.20 The parallel trial date was scheduled to start less than one month from the PTAB’s institution date—well before the PTAB’s statutory deadline for issuing a final written decision. Petitioners raised narrow ground-based or prior art-based stipulations, not a broad Sotera stipulation. And the petitions were found to lack compelling merits. Ultimately, the PTAB found that balancing these factors weighed in favor of denying institution.

Figure 4 (seen on the right page) shows the effect of the Guidance Memo ending the practice of Fintiv denials in view of parallel ITC investigations. To compare denials stemming from parallel district court litigation with denials based on parallel ITC investigations, we determined for each Fintiv denial whether the subject patent was involved in an ITC proceeding. If so, the case was categorized as “ITC” (even though it may have also involved parallel district court litigation). The remaining cases—those with patents not involved in an ITC investigation—were categorized as having only parallel district court proceedings. Any case denied for reasons other than Fintiv (e.g., based on the merits) was omitted from our statistics.

As shown on page 25, between roughly 2020 and 2022, panels frequently issued Fintiv denials based on parallel ITC investigations, which are accelerated proceedings that advance quickly to trial. Although the rate of these denials was decreasing in the 2021-2022 timeframe, they were still more frequent than denials based on parallel district court litigation. Accordingly, ending the practice of Fintiv denials in view of parallel ITC investigations has played a significant role in decreasing the overall Fintiv denial rate.

Director’s Review: Fintiv Staying Alive
While the Guidance Memo clarified the application of Fintiv and reduced denials, Director Vidal later issued a precedential sua sponte Director Review decision21 clarifying that the PTAB should consider all the Fintiv factors for any proceedings involving parallel district court litigation. In Commscope Technologies LLC v. Dali Wireless, Inc., Director Vidal vacated a panel’s institution decision for failing to provide an adequate Fintiv analysis.22 In its institution decision, the panel assessed whether the petition presented compelling merits “without first determining that the other Fintiv factors favor discretionary denial.”23 Director Vidal clarified in Commscope that the Guidance Memo did not intend to make a compelling merits determination a substitute for a Fintiv analysis.24 That is, PTAB panels should only consider compelling merits if determining that Fintiv factors 1-5 favored discretionary denial.25 Conversely, when determining that Fintiv factors 1-5 do not favor discretionary denial, the PTAB does not need to assess

Table 1: Fintiv Denial in View of the Guidance Memo and Commscope