PTAB Institution Rate Climbed in Q3 As Courts Scrutinized USPTO’s Regulatory Authority

The Patent Trial and Appeal Board (PTAB) instituted trial for 72% of the America Invents Act (AIA) review petitions addressed in Q3, up from that same quarter last year (during which the institution rate was 68%) but down slightly from Q2 2024 (74%).

That increase in the institution rate comes as a fight continues over the PTAB’s practice of discretionarily denying institution based on the status of parallel litigation under NHK-Fintiv. In November 2021, Northern District of California District Judge Edward J. Davila dismissed all counts of a lawsuit filed by Alphabet (Google), Apple, Cisco, and Intel that sought to set the rule aside. However, in March 2023, the Federal Circuit revived one of the three alleged bases for such relief: that the rule is procedurally unsound because it should have been 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.

The Federal Circuit also addressed the extent of the USPTO’s regulatory authority in a different context in its July precedential decision in SoftView v. Apple, which the full court declined to revisit in early October. That case dealt with estoppel, the principle establishing that when a party’s validity challenge reaches a final decision, that party is then limited in its ability to subsequently take certain related actions, including relitigating certain validity arguments in another proceeding, as reflected in the AIA and various regulations issued by the USPTO under that law. In SoftView, the Federal Circuit upheld one such regulation, one that prevents patent owners from “obtaining” claims that are “not patentably distinct” from claims invalidated by the PTAB—a broader estoppel standard than the one that applies for validity challenges in district court litigation. The appellate court found that the USPTO was within its authority to issue that regulation in the first place, under a provision of the AIA (35 USC § 316(a)(4)) that empowers the agency to issue regulations governing the interplay of IPR and other USPTO proceedings. However, the court additionally determined that the PTAB had been wrong to find that the provision also bars “maintaining” existing claims that meet this same criterion.

That said, the Federal Circuit noted in a footnote that the USPTO’s “authority under Section 316(a)(4) is not unbounded”, merely empowering it to regulate IPR proceedings and not legislate new patent laws. The court explicitly stated that it was not here addressing the “exact limits” of Section 316(a)(4), and that it would need to do so in a case with dedicated briefing on that issue—importantly, briefing that addresses the impact of the Supreme Court’s June 28 opinion in Loper Bright Enterprises v. Raimondo. That landmark decision overturned a 40-year-old doctrine called Chevron deference that had previously 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 third-quarter review for more on the PTAB and other key developments impacting patent litigation.