A rule that lets the U.S. Patent and Trademark Office refuse to consider a patent challenge—to avoid duplicating proceedings—has sparked lawsuits, complaints, and even a request for Congress to investigate.
Inventors say the NHK-Fintiv rule helps patent owners avoid fighting attacks on multiple fronts.
But tech heavyweights such as
(1) What is the NHK-Fintiv rule?
The rule—a product of precedent established under former PTO director Andrei Iancu—lets the Patent Trial and Appeal Board decline to review a patent based on the progress of a parallel infringement case in a federal court or other agency.
The rule grew out of NHK Spring v. Intri-Plex, a 2018 PTAB decision that found the advanced state of a parallel district court lawsuit weighed in favor of denying review.
In May 2020, the board designated precedential Apple v. Fintiv, which laid out factors for judges to consider when deciding whether to institute review, including the trial date in the parallel case, whether the other tribunal has paused its case for PTAB review, and the extent of the overlapping issues. Decisions designated precedential are binding on PTAB judges.
(2) What’s the problem?
Many companies are finding it more difficult to challenge a patent because of the rule, which the PTO says offers flexibility to help ensure the PTAB is an alternative to district courts, not just instituting redundant proceedings.
One active challenger at the PTAB, Unified Patents LLC, found the board exercised its discretion to deny review in 228 cases in 2020—up 60% from the previous year. Most of the denials came under the NHK-Fintiv or another rule that discourages parallel petitions, Unified said.
Because the NHK-Fintiv framework emphasizes the speed of parallel litigation, companies suing in Waco, Texas, are finding it especially difficult to get review. The judge there, Alan Albright, has a fast court docket and is reluctant to pause his cases while the PTAB reviews a patent.
Because jurisdictions vary in speed, critics say the rule encourages plaintiffs to forum shop. Apple, in PTAB documents, said denying review based on trial dates limits “PTAB access to only defendants sued in slower jurisdictions,” effectively insulating other patents from review.
(3) What do others say?
The PTO has gotten more than 800 comments since it announced last fall that it was considering codifying its discretionary denial practices, including the NHK-Fintiv rule, through rulemaking.
The PTAB Bar Association said there was “nearly uniform dissatisfaction with the Fintiv analysis” among its members. The American Bar Association’s IP Law Section said the factors appear based on “incorrect assumptions” about the realities of litigation.
The New York City Bar Association noted Hatch-Waxman lawsuits, which involve disputes between brand-name and generic drug makers, and ITC cases are likely to be “disproportionately affected” under the current approach.
By contrast, a group called the Coalition for 21st Century Patent Reform that counts
And Sen. Thom Tillis (R-N.C.), the former chairman of the Senate Judiciary IP subcommittee, told Iancu in a letter that codifying the rule would help provide “long-term certainty.”
(4) What’s next?
Judge Edward Davila of the U.S. District Court for the Northern District of California is scheduled to hear arguments next month in the lawsuit Apple and other tech companies filed against the PTO, which argues the rule violates the Administrative Procedure Act.
An inventor group, US Inventor, sued in the U.S. District Court for the Eastern District of Texas to enhance the rule by forcing the PTO to put it through a formal rulemaking. It also wants the PTAB blocked from starting new patent reviews until the rulemaking is complete.
On Capitol Hill, the Electronic Frontier Foundation and Computer & Communications Industry Association asked the last Congress to investigate the issue of PTAB discretion. It’s too early to say if the new Congress will take up such a query.
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—From Bloomberg Law