Director Vidal Clarifies June 2022 Guidance Memo on the Fintiv Analysis for Discretionary Denials of IPR Under 35 U.S.C. § 314(a) and “Compelling Merits”

April 4, 2023

In CommScope Technologies LLC v. Dali Wireless, Inc., IPR2022-01242, the PTAB declined to exercise discretionary denial under 35 U.S.C. § 314(a) seemingly in view of an instruction in the June 2022 “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation” (“Guidance Memo”) that “the PTAB will not deny institution based on Fintiv if there is compelling evidence of unpatentability.” IPR2022-01242, Paper 21 at 49.  The PTAB’s decision suggests that it did not consider Fintiv factors 1-5 and, instead, skipped directly to Fintiv factor 6 and determined that the petition presented a compelling unpatentability challenge (i.e., the PTAB concluded that the evidence, if presented at trial, would plainly lead to a conclusion that one or more claims are unpatentable by a preponderance of the evidence). Id.


Director Vidal sua sponte reviewed the determination and issued a precedential decision on February 27, 2023, to clarify language in the Guidance Memo and Fintiv factor 6 regarding “compelling merits.” IPR2022-01242, Paper 23.  Director Vidal acknowledged that the above instruction could erroneously be read to allow for a compelling merits determination as a substitute for a Fintiv analysis. Paper 23 at 4-6.  She explained that the compelling merits test carries a higher standard than the statutory “reasonable likelihood” test for institution and that the instruction was intended to convey that PTAB panels should only consider compelling merits if they first determine that Fintiv factors 1-5 favor discretionary denial. Id.  She also explained that when the PTAB considers compelling merits, it must provide reasoning sufficient to permit the parties to challenge that finding and to allow for review of the decision. Id.


Director Vidal went on to find that in the decision under review the PTAB failed to provide sufficient reasoning to support its conclusion that the merits are compelling. Paper 23 at 5-6.  She particularly noted that “[m]erely pointing to its analysis under the lower institution standard [as the PTAB did in its decision] is insufficient to demonstrate that the Petition presents a compelling unpatentability challenge.” Id.  Consequently, Director Vidal vacated the decision and remanded with instructions for the PTAB to revisit its Fintiv analysis in view of her decision. Id. at 6.  She specifically directed the PTAB to “first assess Fintiv factors 1-5; if that analysis supports discretionary denial, the Board should engage the compelling merits question. If the Board reaches the compelling merits analysis and finds compelling merits, it shall provide reasoning to explain its determination.” Id. 


The PTAB recently issued its decision following remand and instituted IPR after determining that while Fintiv factors 1-5 favor denying institution, the petition presents a compelling, meritorious challenge that “plainly leads to a conclusion that at least one challenged claim is unpatentable.” IPR2022-01242, Paper 24, at 75.