NHK-Fintiv Rule Challenges Look Futile at Federal Circuit

April 6, 2021

The NHK-Fintiv rule allows the Patent Trial and Appeal Board (PTAB) to deny institution of an inter partes review petition based on the progress of a parallel U.S. district court proceeding of the same patent. The rule was established under former USPTO director Andrei Iancu in 2018, in NHK Spring v. Intri-Plex., No. IPR2018-00752, Paper 8 (PTAB Sept. 12, 2018) (precedential). As a result of the restrictions opposed by the NHK-Fintiv Rule, many petitioners have been facing increasing challenges in seeking review at the PTAB for patents where there is a parallel district court proceeding.

Last month, the Federal Circuit dismissed Mylan’s appeal of a PTAB decision that denied institution of an IPR for U.S. Patent No. 9,439,906, which claims a dosing regimen for administering paliperidone palmitate to a psychiatric patient in need of treatment for schizophrenia, schizoaffective disorder, or schizophreniform disorder.

The court indicated that there is no statute that confers jurisdiction over appeals from decisions denying institution. The Federal Circuit held that without such a statute, the court lacks jurisdiction over such appeals. Therefore, judicial review would only be available by petition for mandamus.

In this respect, the Federal Circuit held that although judicial review is available by petition for mandamus and the Federal Circuit may consider Mylan’s request for mandamus, the Federal Circuit further stated that “[t]he scope of our review of a mandamus petition over a denial of institution is very narrow.” Mylan Laboratories Ltd. v. Janssen Pharmaceutica. N.V., No. 2021-1071, slip op. at 12 (Fed. Cir. March 12, 2021) (precedential). Basically, the Federal Circuit concluded that “there is no reviewability of the Director’s exercise of his discretion to deny institution except for colorable constitutional claims.” Id. The Federal Circuit went as far as to stating that “it is difficult to imagine a mandamus petition that challenges a denial of institution and identifies a clear and indisputable right to relief.” Id. at 13.

Therefore, the Federal Circuit largely confirmed that if the PTAB denies institution of an IPR, the petitioner likely does not have an alternative remedy by appeal, unless a colorable constitutional violation can be demonstrated.

The combination of the NHK-Fintiv rule and this recent CAFC decision imposes significant restrictions on petitioners when there is a parallel U.S. district court proceeding. However, the PTAB issued a relatively uncommon decision by granting institution for inter partes review of U.S. Patent No. 10,217,523 in SK Hynix Inc. v. Netlist Inc., No. IPR2020-01421, Paper 10 (PTAB March 16, 2021). Although the parallel district court infringement suit was set for trial on July 6, the PTAB granted the institution of the IPR of the patent, indicating that SK Hynix was diligent in filing its petition, showing at least one claim in the patent is likely to be invalid, and minimizing the potential overlap between the issues raised in the IPR and the district court proceedings.

Of course, patent owners and petitioners have begun to adapt to the recent developments following the NHK-Fintiv Rule. Patent owners now consider the NHK-Fintiv Rule when selecting the desired forum — as a patent owner, it may be beneficial to file suit in a forum with a fast court docket, such that by the time a petition for IPR is filed, the infringement case has progressed weighing in favor of the PTAB denying institution of the IPR. Alternatively, the petitioner should also consider the forum in which the lawsuit is currently pending and understand the significant possibility that IPR review will be denied, particularly in a forum with a speedy docket.