Institution Rates Declined in 2024 and Q4 as NHK-Fintiv Reforms Face Unclear Path
February 19, 2025
The Patent Trial and Appeal Board (PTAB) instituted trial in 69% of the America Invents Act (AIA) review petitions addressed in 2024, a slight dip from the year prior (70%). The institution rate in Q4 alone was 61%, down from 69% in that same quarter last year.
That decrease came as the AIA review system faces significant uncertainty in the new year—in part due to the post-election resignation of former USPTO Director Kathi Vidal, who pursued a number of PTAB reforms during her tenure that face an unclear path forward under the new administration.
Perhaps the most controversial of those initiatives were her efforts to rethink the PTAB’s practice of discretionarily denying institution under NHK-Fintiv—a rule first adopted under Iancu that has garnered criticism from frequent defendants for tying the outcome of PTAB petitions to factors that are outside of their control, especially the date when a district court has scheduled a trial in parallel litigation. In April 2023, the USPTO released a sweeping rulemaking proposal that would have codified NHK-Fintiv as well as imposed a standing requirement for PTAB proceedings, among a variety of other proposals. Following extensive feedback, the agency then released a scaled-back proposal in April 2024 that lays out potential rules concerning “serial” and “parallel” petitions as well as validity arguments previously addressed by the USPTO, also creating a separate briefing process for discretionary denials and requiring the filing of pre-institution settlement agreements.
A final rule based on this latest proposal, for which public comments were accepted into June, has not yet been issued. Additionally, some of the more sweeping changes from the 2023 rules package have been included in a legislative proposal that gained traction in the fourth quarter.
In the meantime, the USPTO still faces an ongoing legal challenge against the NHK-Fintiv rule, which was filed by a series of tech companies in late 2021 and is currently on appeal before the Federal Circuit for the second time. The parties and various amici have sparred over the remaining question in that appeal: whether, as the defendants contend, NHK-Fintiv is invalid because it was not implemented via notice-and-comment rulemaking under the Administrative Procedure Act (APA). Judge Davila dismissed that claim on remand in April 2024, and now the plaintiff-appellants have pushed back in their opening brief on appeal—arguing that the lower court was wrong to conclude that NHK-Fintiv is not a “substantive” rule that is therefore not subject to the APA’s rulemaking requirement. Vidal responded in a brief filed by the USPTO on October 16, contending that NHK-Fintiv is instead a general statement of policy describing how the agency plans to utilize a discretionary power, and that it is not a legislative rule subject to APA rulemaking because the NHK-Fintiv factors “do not alter legal rights or obligations” or “bind private parties” and instead bind only agency employees.
Notably, one of the amicus briefs in support of the plaintiff-appellants—filed by Unified Patents and Zero Motorcycles—seeks to leverage the Supreme Court’s June 2024 ruling in Loper Bright Enterprises v. Raimondo, which ended the longstanding Chevron doctrine that previously required courts to defer to agencies’ interpretation of certain statutes. Here, the amici argue that the USPTO has misinterpreted the intent of Congress through NHK-Fintiv and that under Loper Bright, judicial scrutiny is therefore “not merely justified, it is required”.
See RPX’s fourth-quarter review for more on the PTAB and other trends that shaped patent litigation in Q4 and 2024.