PTAB Institution Rate Increases as USPTO Seeks to Further Limit Discretionary Denials

The Patent Trial and Appeal Board instituted trial in 66% of the America Invents Act (AIA) review petitions addressed in the first half of 2022, up from 59.8% in the same period last year and 59% for all of 2021. The institution rate in the second quarter of 2022 alone was 71%.

Among the factors contributing to this uptick in the institution rate is a decrease in discretionary denials under the NHK-Fintiv rule, which allows the Board to consider the status of parallel district court litigation in deciding whether to institute. According to a USPTO parallel litigation study released in June 2022, NHK–Fintiv denials peaked in the first quarter of 2021 and “dropped significantly” afterwards, with just six such denials issued in Q4 (compared to 85 decisions granting institution after analyzing NHK-Fintiv).

Despite that dip in discretionary denials, NHK-Fintiv has remained a point of contention among frequent defendants, in part because it allows the Board to decide institution based on some aspects of district court litigation over which a petitioner inherently has no control. Chief among those is time to trial: under NHK-Fintiv two, the PTAB may reject a petition if the district court’s scheduled trial date falls too close to the deadline for the Board’s final validity decision, which can further compress the one-year filing window within which a defendant may file an IPR. Critics have faulted the Board for relying on the date when trials are scheduled as opposed to when they ultimately take place, since scheduled dates can often get pushed back.

However, in June, USPTO Director Kathi Vidal issued a guidance alongside its parallel litigation study that limits the application of NHK-Fintiv. Among other changes, the guidance seeks to mitigate the impact of factor two, clarifying that trial time alone cannot tip the scales toward denial under NHK-Fintiv. Rather, the guidance establishes that the PTAB should instead consider a district’s actual, median time to trial, alongside other factors including the caseload of the judge in the parallel litigation as well as the “speed and availability of other case dispositions”.

See RPX’s second-quarter review for more on NHK-Fintiv, the USPTO’s guidance, the PTAB, and a variety of other key patent litigation trends.