NHK-Fintiv Rule Pushes Defendants Toward Reexams: More Already Requested This Year Than in All of 2020

RPX’s third-quarter review recently detailed how access to America Invents Act (AIA) reviews has been constrained by the NHK-Fintiv rule, which allows the Patent Trial and Appeal Board (PTAB) to discretionarily deny institution based on the status of parallel district court litigation. Data indicate that one likely result has been a shift toward ex parte reexaminations, as defendants seek an avenue for challenging patents asserted against them that is not subject to the PTAB’s discretionary denials.

As shown below, the filing of requests for reexam has been on the rise since the two decisions underpinning NHK-Fintiv came down in 2019 and 2020: 21.3% more reexams were brought in 2020 than the year before, and this trend appears set to continue in 2021 based on projected filings for the rest of the year. In fact, more reexam requests have already been filed in 2021 so far than were brought in all of last year. Additionally, the share of those patents that have been previously litigated in district court is also increasing, accounting for 61% of the patents with reexam requests filed so far this year (up from 58% in 2020 and 52% in 2019). Moreover, a significant portion of patents with reexam requests were also previously challenged via AIA review—going up from 25% in 2019 to 33% both in 2020 and in 2021 to date. These datapoints collectively suggest that defendants are filing more ex parte reexams as a result of NHK-Fintiv.

Additionally, defendants shifting from IPRs to reexams received some potentially unfavorable news as the third quarter came to a close. In its September 29 precedential decision in In re: Vivint, the Federal Circuit held that the same authority giving the Patent Office the discretion to undo institution decisions in AIA reviews also applies to reexams. The court also ruled that the USPTO “abused its discretion” by moving forward with the reexam at issue after having previously denied institution in a related IPR due to what it called the petitioner’s “improper” filing strategies—including the filing of multiple, overlapping petitions and the use of invalidity arguments designed to overcome prior PTAB decisions. By giving the USPTO discretion over reexam denials, and by indicating that certain PTAB filing behavior may effectively require the Patent Office to reject a reexam request, the result could be greater uncertainty for reexams in a manner akin to what litigants have experienced before the PTAB due to NHK-Fintiv.

On the other hand, better news for frequent defendants came in the form of the Restoring the America Invents Act, a PTAB reform bill that seeks to roll back many of the changes made to the PTAB in the past few years. Perhaps the most significant change is the proposed legislation’s explicit reversal of the NHK-Fintiv rule, by limiting discretionary denials to circumstances involving multiple invalidity actions—among a variety of provisions favoring defendants.

For more details on this legislation, the NHK-Fintiv rule, and other trends impacting the PTAB and patent litigation, see RPX’s full report on the third quarter.