It has been a busy week of news out of the Patent Trial and Appeal Board.  Last week Law360 reported that after the current voluntary retirement and separation program expires on April 17, the PTAB “is expected to experience staff reductions.”  

Then on Monday, the Chief Administrative Patent Judge published an updated guidance memorandum on the USPTO's recission of “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation.”  That memorandum set forth additional guidance regarding how the Board would exercise discretion whether to deny institution of post-grant proceedings in view of parallel district court or ITC litigation.  

Two days later, the Acting Director issued a memorandum to all PTAB judges providing an interim process for PTAB workload management.  It explains: “To ensure that the PTAB continues to meet its statutory obligations as to ex parte appeals, while continuing to maintain its capacity to conduct AIA proceedings, the Director will exercise her discretion on institution of AIA proceedings.”  To do so, decisions on whether to institute will be bifurcated between (i) discretionary considerations to be determined by the Director, in consultation with PTAB judges, and (ii) merits and other considerations to be determined by the three-member panel.  The procedure will also permit separate briefing on requests for discretionary denial of institution. 

The memo explains that these processes aim to improve PTAB efficiency, maintain PTAB capacity to conduct AIA proceedings, and reduce pendency of ex parte appeals.  That aim, combined with the expected reductions in force of the PTAB in the near future, suggests that discretionary non-institutions may be on the rise – and that rise could be significant if the Board's capacity is reduced.  An increase in discretionary denials could trigger an uptick in patent assertions, especially of weak patents that would be at high risk before an expert tribunal but harder to invalidate before a jury.  And an uptick in patent assertions would further burden the Board, potentially leading to more discretionary non-institutions to manage the Board's workload.  It could be a vicious cycle. 

While the Director's discretion to deny institution is an important tool to prevent abuse of the system, if that discretion were to be used to deny broad swaths of patent challenges due to co-pending litigation that risks running counter to the aim of the America Invents Act: to "improve patent quality and limit unnecessary and counterproductive litigation costs." H.R. Rep. 112-98, pt. I, at 40 (2011).