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Leahy Plans Legislation to Limit PTAB’s Discretion Denials (1)

Sept. 22, 2021, 6:12 PMUpdated: Sept. 22, 2021, 9:04 PM

Sen. Patrick Leahy (D-Vt.) plans to introduce legislation to limit the Patent Trial and Appeal Board’s discretion to deny patent reviews.

Leahy announced his plan at an anniversary event for the America Invents Act, legislation that created the PTAB and the inter partes review program. No timetable was given.

Leahy, who played a major part in the AIA becoming law, said the bill would “restore the IPR process to what Congress intended” and limit discretionary denials, while bringing more transparency to the process.

“We did a good job 10 years ago,” Leahy said at the event hosted by manufacturing industry group US-Made. But as chairman of the Senate’s intellectual property subcommittee, “I want to build on it further.”

A spokesperson for Leahy didn’t immediately respond to a request for more information about the measure.

Discretionary Denials

Discretionary denials of patent reviews at the PTAB rose under Andrei Iancu, the patent office director under President Donald Trump. The NHK-Fintiv rule, a product of precedent established under Iancu, was a big part of that.

The rule allows the PTAB to decline to institute review based on the advanced stage of parallel litigation, including an infringement case in district court.

The rule has been polarizing. Inventors say it helps patent owners avoid fighting attacks on multiple fronts. But tech heavyweights like Apple Inc. and Google LLC say it’s unraveling Congress’ attempt to rein in abusive patent legislation.

Leahy said that actions taken during the previous administration undermine the IPR process and “hamstring the ability of the public to challenge poor-quality patents.”

“We have to ensure that future PTO directors are not able to unduly influence the process,” Leahy said.

Big Tech Support

Because the NHK-Fintiv framework emphasizes the speed of the parallel litigation, companies facing infringement allegations in the U.S. District Court for the Western District of Texas and the U.S. International Trade Commission have found it especially difficult to get review.

Both places move cases fast and are reluctant to pause disputes for PTAB review. Intel Corp. in March was hit with a $2.8 billion verdict in West Texas on patents the PTAB turned away, exercising its discretion.

Joshua Landau, patent counsel at the Computer and Communications Industry Association, said the group looks forward to the introduction of a bill “that will improve the IPR process, including the elimination of Fintiv denials which have significantly harmed the IPR process and the patent system as a whole.”

Recent attempts to make significant legislative changes to the patent system have stalled, including efforts to rewrite the rules on patent eligibility. Brand-name pharmaceutical companies typically have been on the pro-patentee side, pitted against big tech companies.

But pharmaceutical companies don’t typically sue in the Western District of Texas or take cases to the ITC, and don’t benefit much from discretionary denials, attorneys said. The most significant pushback on this legislation is expected to come from inventor groups and patent licensing businesses.

“The opposition that tends to stall these bills is the sort of tug-of-war between big tech and bio, and I just don’t think bio has enough interest in this particular issue to fight that hard,” said Scott McKeown, chair of the PTAB group at Ropes & Gray LLP.

(Updated with additional reporting.)

To contact the reporter on this story: Matthew Bultman in New York at mbultman@correspondent.bloomberglaw.com

To contact the editor responsible for this story: Renee Schoof at rschoof@bloombergindustry.com