IP Law Daily, TOP STORY: Challenge to the NHK-Fintiv doctrine won’t be heard at the Supreme Court, (Jan 18, 2022)

By Matthew Hersh, J.D.

The High Court declined to hear two petitions for certiorari that challenged the PTO’s inter partes review rules.

A controversial policy of the Patent and Trademark Office for reviewing the validity of existing patents will remain the law for now, given the Supreme Court decision not to enter the fray. The Court’s decision, declining to accept for review two petitions by companies that frequently challenge patents before the PTO, leaves in place an agency policy that, in the eyes of some critics, defers excessively to trial courts and encourages forum shopping by aggressive litigants.

The PTO policy at issue concerns the process for handling challenges to patent validity that arise simultaneously in the agency and in federal courts. Under the process established by the America Invents Act of 2011, parties have the right to ask the PTO to initiate an inter partes review, or IPR, to challenge the validity of an earlier granted patent. Because patents may be challenged in court as well as in administrative proceedings, the PTO is frequently asked to institute an IPR over a patent that is already the subject of litigation. In two precedential decisions, the Patent Trial and Appeal Board—the administrative entity delegated by the PTO to decide IPRs—has determined that in certain circumstances it will defer to the courts in lieu of initiating an IPR. In NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., No. IPR2018-00752, 2018 WL 4373643 (P.T.A.B. Sept. 12, 2018), the PTAB determined that it would defer to court proceedings that were in an “advanced state.” Two years later, in Apple Inc. v. Fintiv, Inc., No. IPR2020-00019, 2020 WL 2126495 (P.T.A.B Mar. 20, 2020), the PTAB clarified its earlier decision by setting out six factors it would consider in determining whether to defer to ongoing court proceedings, among them the investment of the parties in the parallel proceeding and the proximity of the trial date.

The so-called NHK-Fintiv doctrine has been the subject of considerable controversy within the patent community. The rule has been the subject of several petitions for certiorari at the Supreme Court and is opposed by many in the patent bar on the asserted grounds that, among others, PTAB review is more accurate and more reliable. In addition, some observers have expressed concern that the application of the doctrine encourages excessive deferral to district courts that intentionally position themselves, through the setting of speedy trial dates—or “rocket dockets”—as a favored forum to aggressive patent litigants. In a letter last November to then-acting Director Andrew Hirschfeld, Senator Thom Thillis (R-NC) singled out the impact of the doctrine within one such forum, the well-known Waco Division of the Western Division of Texas, expressing concern over the PTAB’s “historical practice of crediting unrealistic trial schedules.”

The certiorari petitions that the Supreme Court declined today arose out of two decisions of the United States Court of Appeals for the Federal Circuit, the appellate court that exclusively handles patent-related appeals. In one one petition, brought by Apple Inc., the technology giant sought review of an unpublished Federal Circuit decision (reproduced in Appendix A of Appel’s petition for certiorari) concerning the PTO’s refusal to initiate an IPR to review patents held by Optis Cellular Technology, Inc. In the second petition, brought by Mylan Laboratories Ltd., the pharmaceutical company sought review of a Federal Circuit opinion concerning the PTO’s refusal to initiate an IPR to review a patent held by Janssen Pharmaceutica, N.V. In each case, the Federal Circuit held that it had no jurisdiction to hear an appeal of the PTO’s decision.

Although the Supreme Court denied the two petitions, its action today does not put an end to challenges to the NHK-Fintiv rule. The High Court has frequently warned that its refusal to grant certiorari in any particular case should not be read as approving of the challenged decisions below.

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