Discretion Retained: USPTO Dodges Attack from Big Tech to Rein in Discretionary IPR Denials
Monday, November 22, 2021

The U.S. Patent and Trademark Office (USPTO) recently thwarted an attempt by big tech companies such as Apple, Cisco, Google, and Intel, to rid themselves of discretionary denials under the Fintiv factors. While these companies will almost assuredly seek other avenues to dismantle such discretionary denials, last week’s developments are a win for patent owners in the short term.  On November 10, 2021, Northern District of California Judge Edward J. Davila dismissed a suit challenging the application of the NHK-Fintiv factors, finding that Supreme Court precedent prevents their challenge under 35 U.S.C. § 314(d), stating that decisions to institute inter partes reviews (IPRs) are “final and nonappealable.”

The IPR process allows parties to challenge the validity of patents at the USPTO’s Patent Trial and Appeal Board (PTAB).  IPRs are popular with companies accused of infringing patents and are used as tools to invalidate patents, often while fighting infringement claims.

However, these companies have been irked by rejections of IPRs due to the agency’s NHK-Fintiv rule.  This rule, created in two precedential decisions, identifies a six-factor “holistic” test used by the PTAB to decide when to deny petitions based on the advanced stage of parallel proceedings (among other things).  The USPTO states this policy is necessary to preserve their limited resources, especially when another forum may resolve validity first.  Precedential decisions are binding on PTAB judges.

In August 2020, Apple, Google, Cisco, Intel, and others sued, alleging the NHK-Fintiv rule’s “vague factors lead to speculative, unpredictable, and unfair outcomes.”  These critics claim the policy undermines the role of IPRs in protecting a strong patent system by drastically reducing the availability of IPRs.

The USPTO moved to dismiss.  Citing Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. 261 (2016) and Thryv, Inc. v. Click-To-Call Technologies, 140 S. Ct. 1367 (2020), Judge Davila found that under § 314(d) of the America Invents Act (AIA), only constitutional challenges and jurisdictional violations related to institution decisions may be appealed.  Plaintiffs’ suit did not fit those categories.  More to the point, Judge Davila found that an analysis into the lawfulness of the NHK-Fintiv rule would require one to address questions closely tied to IPR institution decisions—which Cuozzo forbids.  Judge Davila held that he could not “deduce a principled reason” why that precedent “would not extend to the Director’s determination that parallel litigation is a factor in denying IPR.”

While it is unclear if the tech companies involved will appeal this particular decision, their attacks on the NHK-Fintiv factors are likely far from over. Congress is also considering legislation that could eliminate most of the USPTO director’s discretion to deny IPRs.  Finally, where USPTO director nominee, Kathi Vidal, stands on discretionary denials may play an even more important role in this fight. In short, the fight over PTAB discretionary denials, and the PTAB generally, is far from over.


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