Fintiv: More Work, Less Quality

When the Patent Trial and Appeal Board (PTAB or “Board”) first decided the IPR that led to the Fintiv rule, it justified its decision on the basis of “balanc[ing] considerations such as system efficiency, fairness, and patent quality.” But that rationale doesn’t hold up to the facts.

Previously, I explained how data suggests that the PTAB’s use of Fintiv denials is leaving in force patents that the PTAB thinks are likely to be proven invalid.  But beyond that major failing, the evidence shows that the original rationales don’t hold up.  Unified Patents studied 918 institution decisions issued in 2021; of those, around 45% (420) included some discussion of Fintiv.

Comparing the number of pages in Fintiv and non-Fintiv decisions is instructive.

Decisions Discussing The Fintiv Factors

StatusPage CountFintiv Analysis Pages
Instituted428
Not Instituted – Merits251
Not Instituted – Procedural2011

Decisions That Do Not Reference Fintiv

StatusPage CountFintiv Analysis Pages
Instituted34N/A
Not Instituted – Merits25N/A
Not Instituted – Procedural21N/A

Fintiv denials aren’t saving the agency any time when it is doing denials—whether Fintiv is analyzed or not, procedural denials run about 20 pages and merits denials run about 25 pages.

And when the USPTO institutes a petition while conducting a Fintiv analysis?  Fintiv is actually increasing workload on the Board by around 25%.  So it’s not making the Board operate more efficiently—in fact, it’s less efficient!

And because we know these patents probably aren’t actually valid—otherwise, the PTAB could just deny institution on the merits—there’s some amount of litigation that goes on that wouldn’t have in the event of institution.  So it’s not increasing efficiency in the overall patent litigation system either; the minor duplication of effort that might occur in instances where the district court doesn’t stay its case while the PTAB reviews the patent is outweighed by the increased cost of litigation, as litigation is far more expensive than PTAB review.

As to patent quality—well, as I said in my previous post, “[w]hen the Board denies institution based on Fintiv, they likely do so only when the merits are strong enough to render the patent likely invalid.”  Fintiv isn’t improving patent quality.  It’s actually doing the opposite—casting doubt on the validity of litigated patents and the patent system overall.

That leaves us with fairness as a rationale for the Fintiv inquiry.  The basic argument seems to be that it’s unfair for a patent owner to have to litigate their patent in district court and defend it at the PTAB at the same time.  Of course, it’s also unfair for a defendant to have to defend itself against a patent that’s likely invalid, spending millions of dollars on discovery and lawyers and wasting the time of their engineers on depositions instead of research.  Especially when the defendant has no idea whether their challenge—as meritorious as it might be—will actually be heard, or if the PTAB will reject it on a non-merits basis.  So fairness doesn’t seem to justify the Fintiv rule either.

There’s a simple solution to this problem:  Director Vidal has been confirmed.  She could de-designate Fintiv at the stroke of a pen.  Doing so would eliminate a rule that burdens the PTAB and leaves invalid patents in force.  It would improve patent system efficiency and patent quality.  And it wouldn’t perpetuate unfairness.

How long will it take?

Joshua Landau

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

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