NHK-Fintiv Rule Pushes District Court Defendants to File More Ex Parte Reexaminations

Over the past two years, the Patent Trial and Appeal Board (PTAB) has steadily expanded the circumstances in which it will use its discretion to deny institution in America Invents Act (AIA) reviews. Perhaps the most controversial of these new criteria were set forth in a pair of decisions, together known as the NHK-Fintiv rule, that allow the Board to reject a petition based on the status of parallel district court litigation.

Among the factors the PTAB may consider under NHK-Fintiv is whether the district court has scheduled a trial that is too close to the date when the Board’s final written decision would be due. This creates significant time pressure, since defendants already have a limited window within which to file an IPR—and must do so even earlier if they get sued in a district that schedules early trial dates, like the Western District of Texas.

As the uncertainty introduced by the NHK-Fintiv rule makes AIA reviews a less attractive option, some defendants seeking to challenge patent validity have increasingly turned to ex parte reexams, which are not subject to discretionary denials and have other advantages (including lower cost and lack of estoppel) despite affording the validity challenger little to no opportunity to participate in the proceeding after the request is filed.

Indeed, as shown below, RPX data reveal that 21.3% more ex parte reexam applications were filed in 2020 than the year before. Moreover, the overlap between the patents challenged in those reexam applications and those previously challenged before the PTAB in an AIA proceeding has increased: while 25% of the patents hit with ex parte reexam applications in 2019 had previously been subjected to a PTAB proceeding, that percentage rose to 33% in 2020. In addition, the share of patents with reexam requests that have also been asserted in district court is also on the upswing, rising from 52% in 2019 to 58% in 2020. Taken together, these developments suggest that the spike in applications for ex parte reexam is the result of NHK-Fintiv, and if current trends hold, 2021 could see an even greater increase.

See RPX’s second-quarter review for more on the PTAB and other notable patent trends. Further coverage of NHK-Fintiv can also be found on RPX Insight—including recent coverage of a new development in the ongoing, multivenue district court battle challenging that rule.