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23 September 2021PatentsMuireann Bolger

New bill planned to tackle PTAB’s reliance on NHK-Fintiv denials

Plans are unfolding for new legislation to erode the power of the US Patent Trial and Appeal Board (PTAB) to reject inter partes reviews (IPRs) under the controversial NHK-Fintiv rule, Senator Patrick Leahy has announced.

The senator confirmed the proposed bill at an event to mark the ten year anniversary of the America Invents Act yesterday, in a development first reported by Reuters.

During his speech, the senator envisioned that the legislation would restore the IPR process to what Congress intended and that it would tackle efforts to "hamstring" challenges to poor-quality patents. As yet, no timetable has been revealed for the planned bill.

Falling IPRs

The move comes as the number of patents that have been subject to IPRs at the PTAB has fallen dramatically, falling from 87% in 2013 to just 56% in 2020. The slump in reviews over the past couple of years has been particularly marked—falling by 63% in 2020 compared to the previous year.

Critics of this trend have blamed the PTAB’s increased adoption of the NHK-Fintiv rule.

Established under former US Patent and Trademark Office (USPTO) director Andrei Iancu, the rule emerged from NHK Spring v Intri-Plex (2018) in which the PTAB held that the existence of a parallel district court lawsuit should preclude an inter partes review.

In May 2020, Apple v Fintiv outlined six scenarios for PTAB to consider before instituting a review, including the trial date in the parallel case, whether the court has stalled its case for the PTAB review, and any overlap between the issues in both proceedings.

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.

Last week, several US lawmakers called upon the USPTO to curb the increase in IPR  denials to combat the “soaring cost” of prescription drugs.

Eleven US senators and members of Congress, including Massachusetts Senator and former presidential campaigner Elizabeth Warren, co-signed the open letter addressed to the temporary USPTO leader Drew Hirshfeld on September 16.

Mounting controversy

According to Brent Babcok, chair of Loeb & Loeb’s PTAB Trials Practice Group in Los Angeles, the widespread use of the rule means that petitioners frequently see their considerable time and legal expenses in preparing a detailed petition go to waste. But, conversely, the USPTO retains as much as 46% of the $41,500-plus IPR filing fees (42% of the $47,500-plus PGR filing fees).

In an article for WIPR, he wrote: “Like nearly all judicial decisions, the NHK and Fintiv cases were decided on the particular facts of those cases, and likely were never originally intended by the APJ panels deciding those cases to provide comprehensive guidance for evaluating the impact of parallel litigation on institution decisions for all future petitions.

“Moreover, the PTAB’s subsequent adoption of the NHK-Fintiv analysis as ‘precedential’ undoubtedly created far more controversy than the PTAB expected.”

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