CommScope Techs. LLC. v. Dali Wireless, Inc.

When deciding whether to discretionarily deny institution under 35 U.S.C. § 314(a) in view of parallel district court litigation, the Board must first analyze Fintiv factors 1-5 and may reach the compelling merits question only if that analysis favors discretionary denial; if the factors do not favor denial, it must decline to deny under Fintiv without reaching compelling merits. When the Board does reach compelling merits and finds them, it must give reasoning, beyond pointing to its analysis under the lower institution standard, sufficient to let the parties challenge the finding and to allow review. The Director clarifies the June 21, 2022 Guidance Memo, whose statement that the PTAB will not deny institution based on Fintiv if there is compelling evidence of unpatentability could be read to let compelling merits substitute for a Fintiv analysis; the Director says that was not intended. It also applies the OpenSky instruction (IPR2021-01064, Paper 102, precedential) that the Board shall provide its reasoning on compelling merits. For petitioners, a compelling merits showing matters only after Fintiv factors 1-5 favor denial, and a bare reference to the institution analysis will not support a compelling merits finding, so the petition must make that case in terms of the higher standard. For patent owners, the decision gives a basis to argue that a compelling merits finding must be separately reasoned and can be challenged and reviewed, and that the Board should not reach merits when factors 1-5 do not favor denial. The decision cites no Federal Circuit or Supreme Court authority; it relies on 35 U.S.C. § 314(a), § 324(a), the Guidance Memo, and OpenSky. LEGAL TEST OR STANDARD: Step one: the Board assesses Fintiv factors 1-5. If they do not favor discretionary denial, the Board declines to deny under Fintiv without reaching compelling merits. If they favor denial, step two: the Board assesses compelling merits, meaning whether the petition presents challenges "in which the evidence, if unrebutted in trial, would plainly lead to a conclusion that one or more claims are unpatentable by a preponderance of the evidence." That is a higher standard than the statutory institution standard (highly likely that the petitioner would prevail on at least one challenged claim). The Board must give reasoning sufficient to allow the parties to challenge the finding and sufficient to allow review. TRIGGERING FACTS: The Board granted institution in a case with parallel district court litigation, declining discretionary denial under Fintiv and the Guidance Memo because the petitioner presented compelling unpatentability challenges. It did so without first determining that Fintiv factors 1-5 favored denial. Its compelling merits conclusion cited only its analysis under the lower 35 U.S.C. § 314 institution standard (level of skill, claim construction, and obviousness grounds) with no explanation of why or how the higher standard was met. The Director initiated sua sponte review. KEY QUOTE: "Merely pointing to its analysis under the lower institution standard is insufficient to demonstrate that the Petition presents a compelling unpatentability challenge." (Paper 23, p. 5) PRIOR PRECEDENT AFFECTED: Clarifies the Guidance Memo, Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation (June 21, 2022), at 5. Follows and applies OpenSky Indus., LLC v. VLSI Tech. LLC, IPR2021-01064, Paper 102 (PTAB Oct. 4, 2022) (precedential), which requires the Board to give its reasoning on compelling merits. Applies Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020) (precedential). Cites OpenSky, Paper 107, and Patent Quality Assurance, LLC v. VLSI Tech., IPR2021-01229, Paper 102 (Decision of Director) (Dec. 22, 2022), as examples of sufficient compelling merits reasoning. PRACTICE TIP: In a petition or preliminary response, address Fintiv factors 1-5 first and argue compelling merits only as a fallback if they favor denial. Where compelling merits is at issue, set out a separate analysis showing the challenge would plainly lead to unpatentability by a preponderance of the evidence if unrebutted, rather than relying on the reasonable-likelihood showing.