Patent Office ‘Fintiv’ Return Signals Patentee-Friendly Shift

The US Patent and Trademark Office’s move to make it easier for administrative judges to turn away validity challenges swings the pendulum back in favor of patent owners and away from the tech companies that are frequent targets of infringement lawsuits, attorneys said.

The change, announced in a Feb. 28 bulletin, scrapped a June 2022 guidance memo issued by former director Kathi Vidal that narrowed a controversial framework set up in the precedential Apple v. Fintiv decision, under which the agency’s Patent Trial and Appeal Board had discretion to turn away challenges to patents subject to parallel district court litigation. Administrative patent judges should look to the 2020 Fintiv decision for guidance, the bulletin said.

The change gives patent owners a “leg-up” and foreshadows “a more patent-owner friendly climate under this administration than under the previous administration,” said Kevin McNish, a litigator in Maine who frequently represents patent owners before the PTAB.

Scott McKeown, a PTAB litigator at Wolf, Greenfield & Sacks who often represents patent challengers, said he had expected the patent landscape to “swing back” to where it was under President Trump’s first-term PTO director, Andrei Iancu.

“I suspect that there will be a number of other changes which are more and more pro-patentee,” he said.

Vidal’s guidance had said the PTAB wouldn’t turn down patent challenges when a petition presents “compelling evidence of unpatentability;" is based on a parallel proceeding at the International Trade Commission; or where the petitioner promises not to raise the same arguments in the district court that it raises at the PTAB. It came after several companies like Intel Corp., Netflix Inc., and Roku Inc. complained the Fintiv rule was inconsistently applied, allowing litigation funder-backed plaintiffs to “obtain judgments for hundreds of millions and even billions of dollars based on patents that never should have issued.”

Before Vidal’s guidance, a 2022 PTO study showed discretionary denials under Fintiv were issued in about half of all cases in which a petitioning company was being sued by patent owners in district court.

Coke Morgan Stewart is currently acting director of the PTO, and Trump hasn’t announced a nominee for the full-time position.

The PTO declined a request for comment.

Litigation Impact

Removing restrictions on PTAB discretionary denials could close the door to certain defendants hoping to challenge patents outside of the courts where they’re accused of infringing. Among the factors administrative patent judges are to consider under Fintiv is the anticipated time to a trial date in district court.

While that may create headaches for big tech companies who are often targeted in patent lawsuits, it would be a boon for plaintiffs, McNish said.

“It definitely helps patent owners who are asserting their patents in fast-moving venues,” he said. “That includes places like Eastern District of Texas, Western District of Texas—district courts that are known to move quickly.”

In the long term, a return to the Fintiv era means courts where judges move cases quickly to trial are likely to see more patent litigation, McKeown said.

“Any time you have a recipe for litigants to essentially tax large American companies with patents—and the way that those lawsuits were short-circuited is now taken away—you’re going to have more lawsuits with weaker patents,” he said.

The ability for the PTO to issue or rescind guidance like Vidal’s memo—in an email bulletin not accompanied by further instruction—creates issues litigators aren’t used to seeing in district courts.

“Any sort of sudden news like this risks destabilizing the entire practice and the entire system” of patent validity challenges and makes it harder for lawyers to advise clients on the chances of a successful petition, said Kit Crumbley, partner at Bracewell LLP and former PTAB Judge.

“If you’re a patent litigator at district court, unless you had some big Supreme Court case that came down and sort of changed everything, when a new administration comes in, things don’t change on the ground in patent litigation,” he said. “But now we’re starting to see maybe that’s not the case when it comes to the PTAB.”