Judge dismisses big tech’s NHK-Fintiv challenge
A California judge has terminated a lawsuit from Apple, Cisco, Google and Intel challenging the Patent Trial and Appeal Board’s (PTAB) practise of denying inter partes review (IPR) due to parallel litigation in district courts under the NHK-Fintiv rule.
The rule was first established under former US Patent and Trademark Office (USPTO) director Andrei Iancu, who held that the existence of parallel litigation in district courts should preclude IPR in PTAB proceedings.
In May 2020, Apple v Fintiv clarified parts of the rule, outlining six scenarios for the PTAB to consider before instituting an IPR, including notably the trial date in parallel district court litigation and any potential overlap.
The tech companies sued Iancu in August 2020, asking the US District Court for the District of Northern California to declare that the NHK-Fintiv rule is unlawful and to bar the PTAB from denying IPR on these grounds.
California judge Edward Davila dismissed the lawsuit in an order handed down Wednesday, November 10, agreeing with Iancu that the tech companies lacked subject-matter jurisdiction in the lawsuit.
Challenging the rule
Core to Davila’s analysis was whether the companies’ challenge to the NHK-Fintiv rule was barred by an America Invents Act (AIA) provision (35 USC 314(d)) that states that decisions on whether to institute IPR are “final and non-appealable”.
Davila considered a Supreme Court case, Cuozzo, in which the court analysed this provision in the context of a challenge to the director’s decision to institute IPR of two claims.
Cuozzo argued that the USPTO director acted “outside his legal authority” and violated the APA by instituting IPR of three claims in the dispute, despite the fact that only one of the claims was at issue in the suit. The Supreme Court found the director’s institution decision in this case unreviewable.
Davila also cited a similar case, Thryv v Click-to-Call Technologies, which held that the USPTO director’s application of another provision related to the “time bar” was “final and non-appealable”.
In light of these two cases, Davila said that he could not “deduce a principled reason” why these decisions on the finality of the director’s decisions would not extend to the director’s determination that parallel litigation is a factor in denying IPR.
NHK-Fintiv critics
Since its creation, the NHK-Fintiv rule has been criticised for inhibiting the IPR process.
In September, US Senator Patrick Leahy proposed a bill that he hoped would restore the IPR process and tackle efforts to “hamstring” challenges to poor-quality patents using the NHK-Fintiv rule.
According to Leahy, the new legislation would abolish PTAB’s ability to deny review petitions for reasons other than the merits of the case and would enable government agencies to file challenges.
Research from law firm Perkins Coie also challenged the PTAB’s application of the rule, claiming that the reasoning for many of the board’s discretionary denials was based on “inaccurate data” as trial dates are “almost always pushed back”.
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