Institution Rates Increased in Q2 as USPTO’s Discretionary Denial Proposal Faced Potential Setbacks

The Patent Trial and Appeal Board (PTAB) instituted trial for 74% of the America Invents Act (AIA) review petitions addressed in Q2 2024, up from that same quarter last year (during which the institution rate was 70%) and from Q1 2024 (68%). The institution rate for the first half of the year was 70%, versus 71% in 1H 2023.

The standards governing institution—in particular, the rules allowing the PTAB to discretionarily deny AIA review petitions—were among the areas of greatest focus in Q2 for the USPTO, which has steadily pushed to reform a variety of internal procedures using notice-and-comment rulemaking over the past year.

In late April, the USPTO released a long-awaited Notice of Proposed Rulemaking (NPRM) addressing discretionary denials before the PTAB that included just a subset of the changes from a far more sweeping—and far more controversial—rules package released in April 2023. While that earlier proposal (styled as an Advance Notice of Proposed Rulemaking, or ANPRM) floated the codification and expansion of the Board’s discretionary denial practices under NHK-Fintiv as well as the creation of a standing requirement, the newer NPRM is limited to 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. Public comments submitted in response to the newer, more limited package by the June 18 deadline reflected feedback from a broad set of stakeholders, including licensors, frequent defendants, industry groups, and even the US Federal Trade Commission (FTC).

However, those efforts saw a potentially significant setback as Q2 came to a close, when the US Supreme Court overturned a 40-year-old doctrine called Chevron deference that has, until now, given many agencies wide latitude to set certain regulations. While Chevron required courts to defer to federal agencies’ interpretation of the laws governing them when those statutes were ambiguous, Loper Bright now provides that no such deference is required. Stakeholders have observed that Loper Bright could, at the very least, expose the USPTO’s regulatory efforts to setbacks in the form of litigation, even if the remaining, lesser standard of deference still standing (Skidmore) could give the USPTO a tool to defend regulations challenged under the Supreme Court’s new holding.

See RPX’s second-quarter review for more on the PTAB and other key developments impacting patent litigation in Q2. A deeper dive on Loper Bright and its potential impact on the USPTO can also be found here.