PTAB Institution Rate Inches Up as USPTO Mulls NHK-Fintiv Changes, Revamps Director Review

The institution rate for America Invents Act (AIA) review petitions was 69% in 2023, climbing slightly from 68% the year before. However, the institution rate was 66% in the fourth quarter, falling from 69% in Q4 2022.

That slight year-over-year uptick comes as the USPTO considers whether to codify and expand some of its existing practices related to the discretionary denial of institution based on the status of parallel proceedings, as governed by the NHK-Fintiv rule. In April 2023, the agency released a sweeping Advance Notice of Proposed Rulemaking (ANPRM) that, in addition to formalizing aspects of this rule, would add new exceptions allowing petitioners to sidestep discretionary denials for petitions showing “compelling merits” and those filed within six months of the service of an infringement complaint (as opposed to the one-year time bar currently required by statute). The proposal also includes a Patent Trial and Appeal Board (PTAB) standing requirement, here based on a broadened view of corporate relationships as well as certain exceptions concerning business models. Some of these potential changes mirror those included in a legislative reform package, Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act, introduced in Congress last July.

In the meantime, the USPTO has been making a series of other refinements in response to stakeholder feedback. One of the most significant has been a revamp of the interim director review process, which was created in June 2021 in response to the Supreme Court’s mandate in Arthrex that the USPTO director must have the authority to revisit PTAB validity decisions.

In its original form, the director review process existed alongside the PTAB’s Precedential Opinion Panel (POP), a body created under former USPTO Director Andrei Iancu in September 2018 that was tasked with deciding issues of “exceptional importance” to the PTAB. Yet as the director review program evolved alongside the POP, Vidal later remarked that the two processes had come to operate essentially “backwards”: The POP could set precedent for the PTAB but was not set up to correct errors by PTAB panels, a function that was handled far more, as a result, by the director—a task that Vidal suggested had been preventing her from spending enough time on more important policy issues. In July, the USPTO eliminated the POP as part of a broader revamp of the director review process—replacing it with the Delegated Review Panel, an “independent panel” to which the director may delegate the review of PTAB decisions for various reasons, including legal and factual errors. The revised process additionally gives parties the ability to request director review of institution decisions for the first time, though on a narrower basis than for final written decisions.

See RPX’s fourth-quarter review for more on the PTAB, including the ongoing debate over the PREVAIL Act.