Neg - USPTO and Solvency Answers - MSDI 2024

USPTO & IPR File
USPTO Fails
USPTO Bad – Patent Board/NHK-Fintiv
NHK-Fintiv rule makes the patent board ineffective. Can’t solve without repealing the rule
Max Baucus (He served as Chairman of the U.S. Senate Committee on Finance from 2001 until 2003, and again from 2007 until 2014) “It’s Time for the U.S. to Tackle Patent Trolls” September 16, 2022 https://hbr.org/2022/09/its-time-for-the-u-s-to-tackle-patent-trolls
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.
NHK – Fintiv causes many patents to be denied. Undermines the ability of the affirmative to solve through lack of certainty and patents banned
SHEILA MORTAZAVI “NHK-Fintiv Frustration: Status of the Current Challenges and the Uncertain Fate of the PTAB’s Discretionary Denial of IPRs” 2023 https://haugpartners.com/article/nhk-fintiv-frustration-status-of-the-current-challenges-and-the-uncertain-fate-of-the-ptabs-discretionary-denial-of-iprs/
Several challenges have been made recently to the Patent Trial and Appeal Board’s (“PTAB’s or Board’s”) controversial practice of denying inter partes review (IPR) petitions based on the status of parallel infringement litigation involving the same claim. The so-called NHK-Fintiv rule, resulting from Board-designated precedential cases in 2018 and 2020, allows the PTAB to decline review of a patent based on several discretionary factors, including whether the patent is being asserted in ongoing parallel district court litigation, presumably to prevent the inefficient use of the Board’s resources. The challenges to the NHK-Fintiv rule have been unsuccessful to date, with appellate courts holding that they lack jurisdiction to review institution decisions, and the Supreme Court in January 2022 denying certiorari with respect to two of those challenges. We examine below the current status of the various challenges, and the uncertain fate of the NHK-Fintiv rule. NHK-FINTIV FRAMEWORK: Established under former USPTO director Iancu, the NHK-Fintiv rule resulted from the Board’s precedential opinions in NHK Spring Co. v. Intri-Plex Techs.1 and Apple Inc. v. Fintiv,2 which set forth the circumstances under which the Board may exercise its discretion to deny institution of IPRs. The PTAB considers the following six factors for discretionary denials under 35 U.S.C. § 314(a): (1) whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted; (2) proximity of the court’s trial date to the Board’s projected statutory deadline for a final written decision; (3) investment in the parallel proceeding by the court and the parties; (4) overlap between issues raised in the petition and in the parallel proceeding; (5) whether the petitioner and the defendant in the parallel proceeding are the same party; and (6) other circumstances that impact the Board’s exercise of discretion, including the merits.3 NHK-FINTIV CHALLENGES: The NHK-Finitiv rule has been the subject of numerous challenges from technology and pharmaceutical companies. On August 31, 2020, Apple, Cisco, Google and Intel (“plaintiffs”) filed a lawsuit in the Northern District of California, arguing that the NHK-Fintiv rule violated the Leahy-Smith America Invents Act (“AIA”), which created the IPR regime, and the Administrative Procedure Act (“APA”), which governs the process by which federal agencies develop and issue regulations.4 Plaintiffs argued that by applying the NHK-Fintiv rule, the Director exceeded his statutory authority and thus violated the AIA, since nothing in the AIA authorizes the Director to deny IPR petitions based on perceived overlap with pending infringement litigation involving the same patent claims.5 According to the plaintiff, the fact that AIA requires IPR petitions to be filed within a year of a company being sued reflects that Congress carefully calibrated the one-year limit to ensure that IPR is not used for purposes of delay, while also giving infringement defendants an adequate opportunity to investigate the claims asserted against them in litigation.6 Plaintiff also argued that the NHK-Fintiv rule should be overruled because it is arbitrary, capricious, and violates the AIA with inconsistent outcomes in different cases that make it hard to know how the factors will be applied.7 Finally, Plaintiffs argued that the NHK-Fintiv rule should be held unlawful and set aside because it is a final, binding rule that substantially alters the rights and interests of IPR petitioners without any notice-and-comment rulemaking.8 USPTO (“defendant”) argued that the plaintiffs’ claims are not justiciable under the APA. The California Court granted defendant’s motion to dismiss, finding that the case is precluded by an AIA provision stating that decisions on whether to institute IPR are “final and nonappealable.” 9 The court reasoned that the Supreme Court in Cuozzo determined that issues closely related to the Director’s decision to institute an IPR petition are non-appealable under 35 U.S.C. § 314(d), and that a court will lack jurisdiction to review such cases.10 The court also relied on the Supreme Court’s decision in Thryv, which held that the USPTO’s decision to implement the time bar provision of the IPR regime under 35 U.S.C. § 315(b), so as to refuse institution of an IPR, was also not reviewable since the “time limitation is integral to, indeed a condition on, institution,” and a lawsuit challenging the time bar was merely “an ‘ordinary dispute about the application of’ an institution-related statute.”11 Relying on Cuozzo and Thryv, the court found that the NHK-Fintiv rule establishes factors that are “closely related to [the Director’s decision] whether to institute [IPR],”12 and that it “cannot deduce a principled reason why preclusion of judicial review under § 314(d) would not extend to the Director’s determination that parallel litigation is a factor in denying IPR” under § 314(a).13 The court did note that the Supreme Court in Cuozzo stated that § 314(d) may be reviewable if it implicated “constitutional questions . . . of interpretation that reach, in terms of scope and impact, well beyond [§ 314(d)],”14 and that institution decisions that implicate due process concerns or jurisdictional violations are not “categorically precluded” from judicial review under § 314(d).15 Nevertheless, the court found that plaintiffs’ challenges did not rise to the level of a constitutional violation warranting review. An appeal is currently pending before the Federal Circuit. While the case was still pending, the USPTO requested comments on discretion to institute trials in IPR and post grant review (PGR) proceedings, and specifically solicited comments on whether rulemaking was necessary and the type of rules it should adopt. The USPTO did not itself propose any rules.16 The USPTO received over 800 submissions, and published a summary in January 2021.17 On July 28, 2021, Apple Inc. petitioned the Supreme Court for relief after the Federal Circuit refused to review the Board’s discretionary denial of an IPR.18 Apple had argued that it should be able to appeal the denial of institution based on the Fintiv factors, and that, in the alternative, the Federal Circuit should grant mandamus to review the denials. Apple also contended that the language of § 314(d) is not an absolute bar that prevents arguments that the PTAB’s denial of an IPR petition rested on grounds that exceed the agency’s statutory authority, are arbitrary and capricious, or fail to comply with basic procedural requirements of the APA.19 The government had argued that Apple cannot establish the “clear and indisputable right” to a different outcome that the mandamus standard requires. The Federal Circuit held that it lacks jurisdiction to hear the case.20 On August 9, 2021, Mylan Laboratories urged the Supreme Court to strike down the NHK-Fintiv rule and argued, amongst other things, that the rule is unlawful and renders Congress’s one-year period for seeking IPR illusory.21 Mylan’s IPR had been denied by the USPTO based on the status of pending litigation against a different Hatch-Waxman litigant, not Mylan. In its petition, Mylan also took issue with Federal Circuit’s position that PTAB institution decisions are not subject to appellate review, which it said “effectively handed the director and the board carte blanche to deny IPR petitions for any random (and potentially unlawful) reason they can dream up.”22 Mylan also highlighted that the rule has encouraged patent owners to file suits in districts that promise a fast time to trial, such as Waco in the Western District of Texas, partly to avoid PTAB review of the patents.23 The Supreme Court denied both Mylan’s and Apple’s petitions on January 18, 2022. On, November 29, 2021, US Inventor Incorporated, a non-profit, filed an appeal with the Fifth Circuit arguing that the district court wrongly concluded that the group does not have standing to bring an action challenging the lack of agency rulemaking, seeking formalizing of NHK-Finitiv rule through notice and comment rulemaking.24 The district court had ruled that US Inventor did not face any injury and was generally complaining about the system which Congress had established.25 On December 15, 2021, Intel filed a petition at the Supreme Court arguing that the NHK-Fintiv rule is arbitrary and capricious and requires the Board to deny IPR petitions after speculating when the infringement trial will conclude, the calculation of which is mostly incorrect considering trials are often rescheduled.26 In its appeal, Intel states that “by treating such decisions as if they are immune from judicial review, the Federal Circuit’s position endangers a tool that Congress determined to be essential to the integrity of the patent system.”27 Unified Patents, the Alliance for Automotive Innovation and Cable Television Laboratories have filed an amicus brief supporting Intel’s petition. The petition is currently pending FATE OF NHK-FINTIV RULE: While the Supreme Court has thus far not taken up any of the challenges to the rule, there has been proposed legislation from senators that would nullify the NHK-Fintiv rule altogether. Last year, Senators Patrick Leahy and Republican Senator John Cornyn introduced a new bill, the Restoring the America Invents Act, arguing against the use of discretionary denials at the PTAB. The new nominee to lead the U.S. Patent and Trademark Office, Kathi Vidal, has promised to look into the PTAB’s practice of discretionary denials and engage with stakeholders. In her written response to Senate Judiciary Committee members, Ms. Vidal stated “PTAB decisions are not themselves rules within the meaning of the APA and the decision to deem a PTAB decision as precedential is not a rule within the meaning of the APA, so notice-and-comment rulemaking is not required to make the precedential designation.”28 Recently, a group of legal executives from companies like Intel, Fresenius Kabi, Hyundai Motors, Netflix and several others collectively wrote to the Secretary of Commerce, Ms. Raimondo, urging her to immediately repeal the NHK-Finitiv rule because it unfairly denies access to IPR proceedings and effectively wrote out vital protections out of the law without any public notice or comment.29
NHK – Fintiv kills patent applications
Janelle Barbier “THE NHK-FINTIV RULE: PATENT LAW’S WHACK-A-MOLE” 39 Santa Clara High Tech. L.J. 339 (2023) https://digitalcommons.law.scu.edu/chtlj/vol39/iss3/2/
Since their inception in 2013, inter partes review proceedings have steadily gained in popularity, killing patents at an astounding rate. It is no wonder that defendants flee to the PTAB when staring down costly patent infringement suits in federal court. But an IPR institution is not a right––it is at the sole discretion of the USPTO Director. And despite increased petitions for IPR over the past few years, institution rates have declined. The reason for fewer institutions seemingly lies with the PTAB’s decision to employ certain factors in determining whether public policy weighs against IPR institution. This precedential doctrine—known as the NHK-Fintiv Rule—was created by the PTAB without any formal procedure. Following the Federal Circuit’s rulings that decisions relating to IPR institution are not subject to judicial review, the Rule has resulted in a frenzy of litigation and related pleas to the Supreme Court. While IPR institution denials continue to accumulate, accused infringers are engaged in a game of Whack-a-Mole with the Rule. Instead of continuing to attack the Rule as arbitrary and capricious, litigants should explore other avenues offered by the Administrative Procedure Act and the Constitution—these attacks on procedure may be the key in whacking the Rule for good. Further, the ramifications of the Rule on patent-specific forum shopping and litigation by nonpracticing entities are profound. For these reasons, the Supreme Court should heed the call by technology companies to clarify when judicial review is permissible for acts associated with discretionary agency action.
USPTO Fails – Chevron Deference
The Supreme Court’s recent decision to overrule the Chevron doctrine undermines the ability of the affirmative to solve – every decision will get caught up in lawsuits and likely overturned
James Bertino , Benjamin C. Stasa, Ph.D. Candidate, Allowing Agencies, 3-18-2024, "From Patents to Policy: The Potential Ripple Effects of Revising the Chevron Doctrine", Brooks Kushman, https://www.brookskushman.com/insights/from-patents-to-policy-the-potential-ripple-effects-of-revising-the-chevron-doctrine/ (Accessed on July 6, 2024) CR
The impending decision on the Chevron doctrine not only raises questions about the direction of the United States Patent and Trademark Office (USPTO), but also signals potential shifts across a spectrum of regulatory environments intersecting with intellectual property (IP). The USPTO, which relies on Chevron deference for interpreting complex statutes in patent law, exemplifies the immediate challenges of a post-Chevron landscape. Should this deference be curtailed, the agency’s decisions and regulations might face heightened scrutiny and uncertainty, complicating the patent examination process and affecting applicants’ strategies. This scenario at the USPTO serves as a microcosm for the broader regulatory ecosystem. Similar challenges could ripple through antitrust enforcement, where the FTC and DOJ navigate IP rights within competitive markets; biotechnology, where the FDA’s expedited approval processes for new medical innovations could slow; environmental law, with the EPA’s facilitation of green technologies potentially facing roadblocks; and telecommunications, as the FCC’s management of spectrum rights and net neutrality principles might encounter increased litigation. Each of these domains relies on a nuanced interpretation of laws that govern the balance between innovation, public interest, and market competition. Accordingly, a shift in Chevron deference, therefore, could potentially introduce a layer of unpredictability and legal complexity, affecting not just the USPTO but also the broader landscape of regulatory action that is intertwined with intellectual property. This interconnectedness underscores the need for careful consideration of the potential consequences that such a legal shift might entail for innovation and regulatory clarity across industries.
Chevron guts the plan – turns innovation and drives out start ups
James Bertino , Benjamin C. Stasa, Ph.D. Candidate, Allowing Agencies, 3-18-2024, "From Patents to Policy: The Potential Ripple Effects of Revising the Chevron Doctrine", Brooks Kushman, https://www.brookskushman.com/insights/from-patents-to-policy-the-potential-ripple-effects-of-revising-the-chevron-doctrine/
The Law of Unintended Consequences In evaluating the potential dismantling of the Chevron doctrine, it’s instructive to consider the principle known as “the law of unintended consequences” and the metaphor of Chesterton’s Fence. The latter, from the writings of G.K. Chesterton, suggests that one should not remove a fence without first understanding why it was erected in the first place. This wisdom underscores the importance of considering the original purpose and the potential ramifications of altering long-standing legal and regulatory structures, such as Chevron deference. The principle of Chesterton’s Fence—urging caution before removing established structures without understanding their purpose—is illustrated in the passage of the America Invents Act (AIA) of 2011. Enacted with the intention of streamlining the patent process and reducing litigation, the AIA marked the most significant overhaul of the U.S. patent system in decades. Among its reforms, the shift from a “first-to-invent” to a “first-inventor-to-file” system was aimed 

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