USPTO Rescinds Vidal Memo: A Return to Broad PTAB Discretion in Discretionary Denials

Introduction: A Significant Shift in PTAB Discretionary Denials

The United States Patent and Trademark Office (USPTO) has rescinded the June 21, 2022, memorandum issued by then-Director Kathi Vidal, which had provided interim guidance on the Patent Trial and Appeal Board’s (PTAB) discretionary denial of post-grant proceedings in cases of parallel district court litigation. This decision marks a return to a more flexible—and arguably unpredictable—discretionary denial framework that predated the memo, particularly as outlined in Apple Inc. v. Fintiv, Inc., IPR2020-00019 (March 20, 2020).

The Vidal memorandum was designed to bring clarity to the PTAB’s approach, ensuring that strong invalidity challenges could proceed while balancing judicial efficiency concerns. By removing this guidance, the USPTO is signaling a shift that could increase the frequency of discretionary denials and alter the calculus for both petitioners and patent owners engaged in parallel litigation.

This article examines the rescission’s implications, the likely effects on PTAB practice, and the broader consequences for patent litigation strategy.

Background: The Role of the Vidal Memorandum in PTAB Discretionary Denials

Understanding the Fintiv Framework

The Fintiv decision established a six-factor test for determining whether the PTAB should deny institution of an inter partes review (IPR) or post-grant review (PGR) petition when a parallel district court case is pending:

1. Stay of Litigation – Whether the district court has granted or is likely to grant a stay if the PTAB institutes review.

2. Proximity of Trial Date – How soon the district court trial is set to occur relative to the PTAB’s final written decision deadline.

3. Investment in Parallel Proceedings – The amount of resources already spent in the district court case, including whether substantive issues have been addressed.

4. Overlap of Issues – The extent to which the PTAB petition raises the same issues as the district court case.

5. Parties Involved – Whether the petitioner in the PTAB proceeding is the same party litigating in district court.

6. Other Circumstances – Any additional factors that could affect the PTAB’s discretionary decision.

The Fintiv framework provided the PTAB with broad discretion, often leading to denials based on projected trial dates and procedural posture—sometimes to the frustration of petitioners who had strong invalidity arguments.

The Vidal Memo’s Key Modifications

Director Vidal’s 2022 memorandum sought to address concerns that the PTAB was overusing its discretion to deny institution. The memo clarified that the PTAB should not deny review when:

• The petition presents compelling evidence of unpatentability.

• The parallel proceeding is before the International Trade Commission (ITC), as ITC determinations are not binding on validity.

• The petitioner submits a Sotera stipulation, agreeing not to pursue the same invalidity arguments in district court that could be raised before the PTAB.

• The district court’s scheduled trial date is unreliable, advising PTAB panels to consider actual median time-to-trial data rather than merely relying on a court’s trial schedule.

By setting these bright-line rules, the Vidal memo provided predictability, allowing petitioners to better anticipate whether their post-grant challenges would proceed.

Rescission of the Vidal Memo: What It Means for PTAB Practice

1. Increased Likelihood of Discretionary Denials

Without the Vidal memo’s constraints, the PTAB regains broader discretion to deny institution based on procedural factors alone, even when the merits of the petition are strong. This means that:

• Petitions with strong unpatentability arguments could be denied simply because a district court case is progressing.

• The PTAB may revert to placing significant weight on trial dates, even though courts frequently reschedule trials.

• Petitioners may face greater uncertainty about whether their challenges will be heard, particularly in fast-moving jurisdictions like the Western and Eastern Districts of Texas.

2. Impact on Parallel ITC Proceedings 

The Vidal memo explicitly stated that the PTAB should not deny institution based on Fintiv considerations if the parallel litigation was an ITC investigation. With this guidance rescinded, the PTAB may once again consider ITC proceedings as a factor in denying institution, even though ITC decisions do not determine patent validity.

• This could discourage accused infringers from filing PTAB petitions if they are simultaneously defending against an ITC complaint.

• It may also encourage patent owners to file ITC complaints strategically to increase the likelihood of discretionary denials at the PTAB.

3. Greater Weight on District Court Trial Schedules

The Vidal memo had instructed the PTAB to look beyond scheduled trial dates and consider actual median time-to-trial statistics. Now, the PTAB may place renewed emphasis on nominal trial dates, increasing the risk that a petitioner’s challenge will be denied if a district court trial is scheduled to occur before the PTAB’s statutory deadline for a final decision.

• Given that district court trial schedules frequently change, this could result in more arbitrary denials where the PTAB declines to institute a proceeding based on an optimistic trial setting that ultimately does not hold.

• It may also disincentivize petitioners from filing post-grant challenges, especially in jurisdictions with aggressive scheduling orders.

4. Uncertainty Regarding Sotera Stipulations

Under the Vidal memo, a Sotera stipulation—where a petitioner agrees not to pursue the same invalidity arguments in district court—was a strong mitigating factor against Fintiv denials. With the memo rescinded:

• It is unclear whether the PTAB will continue to view Sotera stipulations favorably, or if they will have less weight.

• Petitioners may need to rethink their strategy, potentially avoiding early stipulations until PTAB trends become clearer.

• Patent owners may exploit this uncertainty by forcing petitioners into a dilemma: risk a discretionary denial or forfeit certain invalidity defenses in district court.

Strategic Considerations Moving Forward

Given this shift, both petitioners and patent owners should adjust their strategies:

Petitioners should:

• File PTAB petitions as early as possible to reduce the risk of discretionary denial based on trial scheduling.

• Consider challenging patents in districts with historically slower trial schedules to avoid premature denials.

• Reassess whether to submit Sotera stipulations, waiting to see how the PTAB adapts to the rescission.

• Evaluate alternative venues, such as ex parte reexamination, where discretionary denials are not an issue.

Patent Owners should:

• Leverage procedural uncertainty to argue for more Fintiv discretionary denials.

• Consider forum shopping to districts with fast-moving trial schedules to increase the likelihood of PTAB denials.

• If possible, initiate parallel ITC proceedings to create additional barriers to institution.

• Highlight any significant investment in district court proceedings to strengthen Fintiv arguments.

Conclusion: A More Unpredictable PTAB Landscape

The USPTO’s decision to rescind the Vidal memorandum signals a return to a more unpredictable and discretionary approach to post-grant proceedings. While some patent owners will welcome the increased ability to block PTAB challenges, petitioners may find themselves at a disadvantage, particularly in cases where strong invalidity arguments are present but procedural factors weigh against institution.

This move restores the PTAB’s broad discretion under Fintiv, increasing the likelihood of denials and making the institution process less predictable. As stakeholders navigate this shifting landscape, strategic adjustments will be necessary to maximize the chances of success in both PTAB proceedings and parallel district court litigation.

For petitioners, this means an even greater emphasis on timing, venue selection, and procedural maneuvering. For patent owners, it presents new opportunities to strategically leverage trial schedules and procedural investment to fend off PTAB challenges.

With these changes, the coming months will be critical in assessing how the PTAB applies its renewed discretion—and how parties on both sides of the aisle adapt their strategies accordingly.