Ex Parte Reexam Filings Level Off as NHK-Fintiv Reforms Lessen Impact of Discretionary Denials

USPTO Director Kathi Vidal implemented a series of notable reforms in her first few months in office last year—most notably, a series of changes related to the Patent Trial and Appeal Board’s (PTAB’s) practice of discretionarily denying institution in America Invents Act (AIA) reviews\ based on the status of parallel litigation. In June, Vidal issued a new guidance targeting the most controversial elements of that practice, known as the NHK-Fintiv rule.

Among other refinements, the guidance limited the NHK-Fintiv factor allowing the PTAB to deny institution when its final decision falls too close to a scheduled district court trial date. By establishing that the Board may now consider data on actual time to trial, the guidance sought to blunt objections that the scheduled dates are too speculative of a metric. It also endorsed a series of existing practices allowing parties to stipulate around certain NHK-Fintiv factors by agreeing to be estopped by their petitions. One result of this set of reforms has been a decline in discretionary denials, as reported in a USPTO study, as well as an increase in the overall institution rate last year.

Another trend that has shifted in the wake of this guidance has been defendants’ use of ex parte reexaminations, which are not subject to discretionary denials to the same extent and offer other advantages as well (including lower cost and the lack of estoppel). The number of reexam requests went up by 21% in 2020 (following the 2019 designation of the PTAB’s NHK Spring decision as precedential) and then by 53% in 2021 (after the Fintiv decision received that same designation in 2020), with an increasing share of those patents having previously been litigated in district court and subjected to PTAB challenges. Together, those datapoints indicated that this prior uptick was the result of NHK-Fintiv.

However, with the recent decline in NHK-Fintiv denials, the data show that reexam requests have now leveled off. While quarterly reexam filings peaked in Q2 2022 at 101 requests total, they dropped to 75 in each of Q3 and Q4; as a result, the 2022 total came in just below last year’s (322 reexam filings vs. 331). Data also reveal that a decreasing share of patents subjected to reexam requests have previously been asserted in district court litigation (from 64% in 2021 to 59% in 2022), while the share of those patents also challenged in AIA reviews has gone down slightly as well (from 36% to 33%).

Yet Vidal suggested in a December 22 interview with Stanford University that the impact of her office’s recent guidance is more than just what is reflected in the numbers, explaining that “at a high level” the guidance has “created more certainty and clarity”. Vidal stated that apart from the guidance’s “compelling merits” test, the guidance is largely “just making it clear what the PTAB was already doing”—referring, for example, to the aforementioned practice of letting parties stipulate to certain estoppel that the guidance endorsed. Additionally, she underscored the value of applying the same practices consistently among PTAB panels to promote greater consistency in outcomes.

Vidal also reiterated that further changes are coming, confirming that the USPTO was working on an advance notice of proposed rulemaking to let stakeholders weigh in on her office’s next batch of discretionary denial reforms—and expressing the hope that this proposal would be released in Q1 2023.

For more on the PTAB and other patent litigation and marketplace trends last year, see RPX’s report on 2022 and the fourth quarter.