As NHK-Fintiv Constrains IPR Availability, District Court Defendants File More Reexams
June 16, 2021
Over the past two years, the Patent Trial and Appeal Board (PTAB) has made a series of changes that have effectively limited the availability of inter partes review (IPR) for many district court defendants—and as confirmed by RPX data, this shift has led such companies to take a renewed look at IPR’s predecessor, ex parte reexamination.
The changes in question, known as the NHK-Fintiv rule, came about through a set of precedential decisions through which the PTAB has expanded the circumstances in which it will exercise its discretion to deny institution in IPRs. Most notably, NHK-Fintiv allows the Board to consider the status of a parallel district court case, letting it deny institution if the court has scheduled a trial too close to when the Board’s final decision would be due. This added wrinkle can be especially problematic if a defendant is sued in a venue that tends to schedule earlier trial dates, like the Western District of Texas, since a company hoping to defend itself by filing an IPR would have to bring its petition much earlier to avoid that trial date. Yet such quick action may not be feasible for some as a practical matter, since defendants often do not learn what claims of a patent are being asserted against them—and thus, what claims to challenge in an IPR—until later in the course of litigation.
As the uncertainty introduced by the NHK-Fintiv rule makes America Invents Act (AIA) reviews a less attractive option, it is not terribly surprising that some defendants seeking to challenge patent validity have increasingly turned to ex parte reexams, which are not subject to discretionary denials and have other advantages (including lower cost and lack of estoppel).
Indeed, RPX data reveal that 21.3% more ex parte reexam applications were filed in 2020 than the year before, as shown below. What’s more, the overlap between the patents challenged in those reexam applications and those previously challenged before the PTAB has grown: while 25% of the patents hit with ex parte reexam applications in 2019 had previously been subjected to a PTAB proceeding, that percentage rose to 33% in 2020. Additionally, the share of patents with reexam requests that have been litigated in district court is also on the rise, climbing from 52% in 2019 to 58% in 2020. Taken together, this trend suggests that the increase in applications for ex parte reexam is the result of NHK-Fintiv, and if current trends hold, 2021 could see an even greater upswing.
For more on the NHK-Fintiv rule and other PTAB trends, see RPX’s first-quarter review.
