Alert September 27, 2021

Introduction of the Restoring the America Invents Act and Its Impact on the PTAB

At an event held by the U.S. Manufacturers Association for Development and Enterprise and the Alliance for Automotive Innovation on Wednesday September 22, 2021, Senator Leahy (D- Vt.) announced the introduction of the Restoring the America Invents Act bill (S.2774, 117th Congress, “RAIA”). Among its provisions, the RAIA is reported to include language that would effectively override the Patent Trial and Appeals Board’s (“PTAB”) ability to discretionarily deny petitions for inter partes review under the Fintiv factors on grounds unrelated to the substantive strength of petitions.

The Fintiv factors were first set forth in the board’s decision in Apple Inc. v. Fintiv, Inc., IPR2020- 00019, Paper 11 (PTAB Mar. 20, 2020). In Fintiv, thePTAB listed six factors for boards to assess in determining whether to discretionarily deny institution. The Fintiv factors include:

  1. Whether the court granted or may grant a stay if the IPR 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.

The discretionary denial framework set forth in Fintiv contributed to a sea change in the IPR landscape with ramifications for parallel district court litigations and strategy.

Prior to Fintiv, and the PTAB’s precursor decision in NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., IPR2018-00752, Paper 8 (Sept. 12, 2018), discretionary denials of IPRs were rare. On average, from the years 2013 through 2017, discretionary denials occurred in only 7.5% of filed IPRs.[1] Although the NHK decision did not issue until September of 2018, 9.2% of IPRs were discretionarily denied in 2018. In 2019, the first full year since the NHK decision, discretionary denials rose to 12.7% ultimately reaching a high of 17.7% in 2020. The current discretionary denial rate for 2021 is 16.2%. Almost more importantly, overall institution rates have dipped significantly over this period from a high of 82.7% in 2013 to an all-time low of 57.3% so far in 2021. Given these statistics, it is no surprise that the Fintiv test has the attention of the industry and legislature.

Although the RAIA was referred to the Senate Committee on the Judiciary’s Subcommittee on Intellectual Property on September 21, 2021, as of this writing, the text of the legislation is not yet available from Congress. For the legislation to become law, it would need to proceed through a number of steps in the Senate and the House of Representatives. Although legislation may become law in numerous ways, typically legislation like the RAIA would first need to be scheduled for review by the Subcommittee on IP. The subcommittee review could lead to markups of the RAIA which would then be referred to consideration by the full Judiciary Committee. The full committee could conduct studies, additional hearings, or propose additional amendments to the bill. If the legislation were to proceed through the full committee, the committee staff would draft a report on the legislation which would then be scheduled for action by the Senate including debate and a vote. If the legislation were to pass in the Senate, it would then be referred to the House where it would typically follow the same path through committee and floor action. Although it is impossible to predict the path forward for any piece of legislation, as a reference point, the America Invents Act took approximately six months to be enacted as law from the time it was first introduced in the Senate. The progression of the RAIA will undoubtedly depend on the level of support that is has in both chambers of Congress.

Given the prevalence of parallel proceedings in the PTAB and other forums, any changes to the application of the Fintiv factors in IPR practice could have broad implications. Issues such as, the venue in which patent cases are filed, the timing of IPR petitions, the coordination of prior art strategies between district court litigations and IPRs, and other issues like the parties involved in the parallel proceedings must all be considered as part of any comprehensive patent litigation strategy. But it remains unclear whether other aspects of the PTAB’s authority to discretionarily deny petitions under § 325(d) or the prior General Plastic analysis will be impacted. Given the potential significance of the RAIA to the patent bar, we will continue to monitor this piece of legislation.


[1] All of the statistics discussed herein are derived from data available at: https://portal.unifiedpatents.com/ptab/annual-report?year=2021.