PTAB Institution Rates Held Steady in Q1 as Vidal’s NHK-Fintiv Reform Push Continued

Institution rates in America Invents Act (AIA) review trials were relatively stable in the first quarter of 2023, which came in at 65%—slightly higher than Q1 2022 (when the rate was 62%) but lower than Q4 2022 (68%).

In the first quarter, the Patent Trial and Appeal Board’s (PTAB’s) practice of discretionarily denying institution in AIA reviews based on the status of parallel district court litigation—known as the NHK-Fintiv rule—remained a focus of USPTO Director Kathi Vidal. Q1 saw Vidal use her post-Arthrex director review power to further refine the metes and bounds of NHK-Fintiv through a series of such reviews initiated sua sponte (i.e., at the director’s own initiative, rather than at the request of a party). Most notably, Vidal set certain limits for the “compelling merits” standard, a limit imposed in a June 2022 guidance that exempts petitions that are especially likely to succeed on the merits from discretionary denial. In February, Vidal clarified that the “compelling merits” test is not a substitute for NHK-Fintiv and should only be applied when the rule’s other factors favor discretionary denial. Vidal then held in March that when a district court invalidates a patent under Alice, an inter partes review petition challenging the same patent should not be discretionarily denied if it presents compelling merits.

The most significant development related to NHK-Fintiv and the PTAB more broadly came this past month, however. On April 21, the USPTO published a long-promised rulemaking proposal that would formalize and build on some of the PTAB’s most closely scrutinized discretionary denial practices. That proposal would codify certain aspects of NHK-Fintiv and the “compelling merits” exception, would impose new corporate disclosure requirements on parties, and would revisit the Board’s approach to “repeated validity challenges to patent claims”. Among other changes, the USPTO is also considering whether to require that settlements and related documents be filed with the Board upon dismissal of an AIA review proceeding, and to allow institution to be denied for petitions from certain “for-profit entities” with business models that run counter to the intent behind the AIA.

See RPX Insight for further details on that proposal. More on the PTAB can also be found in RPX’s report on the first quarter.