THE NHK-FINTIV RULE: PATENT LAW’S WHACK-A-MOLE

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.