NetList Inc (NLST)

[100lbStriper]

Amici Have Their Say in SAP’s Challenge to USPTO Recission of Vidal Discretionary Denial Guidance
“In many instances… discretionary power is the only legal mechanism that can prevent the abusive use of IPRs by large infringers to suppress inventors and small companies and to discourage the enforcement of their patents.” – USIJ amicus brief

Several amici have weighed in this week on a petition challenging the U.S. Patent and Trademark Office’s (USPTO’s) recission of former USPTO Director Kathi Vidal’s guidance on discretionary denial—and retroactive application of the new, interim guidance—which SAP America, Inc. argues violated its right to due process.

SAP filed a petition for a writ of mandamus with the U.S. Court of Appeals for the Federal Circuit (CAFC) in June seeking to compel the USPTO “to apply its June 21, 2022, ‘binding agency guidance’ to SAP’s petitions, and all still-active petitions filed before February 28, 2025, and to not pressure SAP or any IPR petitioner into forfeiting in parallel district court litigation an invalidity ground it could not have reasonably asserted in their IPR petition.”

SAP brought several inter partes review (IPR) petitions against claims of Cyandia, Inc.’s patents in October 2024 and filed a so-called Sotera Stipulation in February 2025 “agreeing (contingent on institution) not to pursue any ground of unpatentability in district court that was raised or reasonably could have been raised in any instituted IPR…” Under the Vidal memo on discretionary denial, the PTAB would not “deny institution of an IPR or PGR under Fintiv (i) when a petition presents compelling evidence of unpatentability; (ii) when a request for denial under Fintiv is based on a parallel ITC proceeding; or (iii) where a petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition.”

But on February 28, 2025, USPTO Acting Director Coke Morgan Stewart rescinded that memo and explained that “[t]o the extent any other PTAB or Director Review decisions rely on the Memorandum, the portions of those decisions relying on the Memorandum shall not be binding or persuasive on the PTAB.” Then, on March 24, the Office issued a memo “announcing that the February 28 rescission would apply not only prospectively to petitions filed after that date, but also retroactively to ‘any case in which the Board has not issued an institution decision, or where a request for rehearing or Director Review of an institution decision was filed and remains pending,” according to SAP’s petition.

On April 27, 2025, the PTAB denied institution of SAP’s IPRs, finding in part that “SAP’s Sotera stipulation had ‘limited practical effect’ because it did not cover the prior art system described in part by the printed publications cited in the IPR.” SAP’s request for Director Review of the denial was summarily denied in a one-sentence order. SAP is now arguing that mandamus relief is its only recourse and appropriate. “Due process and separation of powers are clear and indisputable legal rights applicable to SAP, and SAP’s rights were violated,” the petition argues.

Specifically, since SAP filed its IPR in October 2024 and the memo was not rescinded by Stewart until February and retroactive application was not announced until March, SAP argues that the legal landscape was greatly changed “leading to severe consequences for past actions SAP had taken in reliance on the Vidal Memo’s binding agency guidance.” The petition also argues that the Board’s assertion that “to clear the discretionary denial hurdle, SAP needed to also agree, upon institution, to forgo unpatentability challenges based on system art that it could not have raised in IPR” violates the separation of powers because it at odds with Congress’ intent in the statute. “This new policy is an unconstitutional agency end run around the statute,” says the petition.

Amici this week included Patent and Trademark Attorneys, Agents, and Applicants for Restoration and Maintenance of Integrity in Government (PTAAARMIGAN LLC); the Public Interest Patent Law Institute (PIPLI); and the Alliance of U.S. Startups and Inventors for Jobs (USIJ). While PIPLI urged the CAFC to grant mandamus relief, echoing SAP’s arguments that retroactive application of the Stewart guidance “violates the principle of the rule of law,” PTAAARMIGAN and USIJ support denial of the mandamus petition.

USIJ said that the USPTO Director should have broad discretion to deny institution of IPR because “in many instances that discretionary power is the only legal mechanism that can prevent the abusive use of IPRs by large infringers to suppress inventors and small companies and to discourage the enforcement of their patents.” USIJ’s brief further noted that Vidal’s memo was only interim guidance until a formal rule was promulgated, which the Office “never succeeded in doing.” Once a new Secretary of Commerce was appointed in February 2025 with the stated goal of reducing the USPTO’s backlog as quickly as possible, that interim guidance became moot, said the brief. Due process could not have been denied because petitioners do not have a right to institution of IPRs.

PTAAARMIGAN argued in its brief that “SAP’s petition is oddly and ambiguously framed” in that it never actually challenges the IPR at issue but instead “appears to be a challenge to a rule.” The CAFC thus has no mandamus jurisdiction, said the brief. SAP has other options for challenging the denial of institution in district court and therefore the extraordinary relief of mandamus review is not available.

Cyandia filed its response to SAP’s mandamus petition on July 14, arguing that “SAP has not even attempted to show a clear and compelling duty to institute inter partes review—because there isn’t one.” While a petitioner might be able to seek mandamus relief in a case where it alleged the institution decision itself was unconstitutional due to, for example, “an unconstitutional delegation of legislative powers,” here, SAP’s challenge is a procedural one, said Cyandia.

The CAFC on July 14 also granted the USPTO’s motion for an extension of time to file a response to SAP’s petition until July 21.

https://ipwatchdog.com/2025/07/16/amici-say-saps-challenge-uspto-recission-vidal-discretionary-denial/id=190428/