NHK-Fintiv rule makes the patent board ineffective. Can’t solve without repealing the rule

The first step Director Vidal must take is to fully repeal the NHK-Fintiv rule, which was unlawfully implemented by her predecessor. This rule makes it more difficult for innovators targeted by patent trolls to have expert judges at the USPTO determine whether the patent being asserted against them is valid. Those expert judges exist to give businesses and innovators targeted by patent trolls a cheaper, more reliable alternative to litigation; limiting their use is a step backwards. In 2011, Congress recognized that our patent system needed a significant overhaul and a large bipartisan majority in the House and Senate passed the Leahy-Smith America Invents Act (AIA). The AIA made a number of changes, shifting the U.S. from a first-to-invent to a first-to-file patent system and creating the review process at the Patent Trial and Appeal Board (PTAB), which allowed expert judges to review patents of questionable validity. The AIA had a large positive impact on U.S. economic growth and after 2011 patent troll litigation began to decline. But this progress was interrupted by the previous USPTO director, Andrei Iancu, who unilaterally made the Fintiv rule precedential in 2020. Under Fintiv, petitions for PTAB review are denied based on factors unrelated to a petition’s merits. Primary among them, PTAB review is denied if there is parallel litigation already in progress involving the patents in question. For example, a startup gets notified that an LLC that they have never heard of, and that they can’t find much information about, is suing them for patent infringement. If this litigation is expected to begin ahead of a potential PTAB review, then review is declined because litigation is already in process. This is especially troubling because PTAB incorrectly evaluates future trial dates in more than 90% of cases. When Congress passed the AIA, we intended for review to be in place as a protection for businesses and innovators who were in this exact position, actively facing infringement claims. For review to be denied due to parallel litigation, it is removed as an option in the instances where it is most valuable. Fintiv was supposedly instituted in the name of efficiency, with the PTAB not getting involved in disputes that the courts were already handling. But, particularly in highly technical matters, PTAB judges are far better equipped to handle disputes than the courts are and needing to proceed with litigation opens up defendants to a massive financial burden and increased risk. In essence, Fintiv has forced more companies, including everyone from small startups to large manufacturers, to spend more of their time and resources defending themselves in expensive litigation with the possibility of disastrous outcomes, despite having done nothing wrong. Repealing Fintiv would give innovators currently under siege a fairer, less expensive, more efficient option for resolving infringement disputes. It would allow them to spend less of their money hiring lawyers and invest more of it creating jobs, lifting wages, and developing more of the cutting-edge products that catalyze our economy and improve our quality of life.