Clause 8: Former USPTO General Counsel Nick Matich on Rulemaking and the PTAB

U.S. Patent and Trademark Office (USPTO) Director Kathi Vidal’s decision to issue the Advance Notice of Proposed Rulemaking (ANPRM) is the latest major controversy surrounding the Patent Trial and Appeal Board (PTAB). The America Invents Act (AIA) created the PTAB and new post-grant proceedings to supposedly provide a cheaper, faster alternative to district court patent litigation. However, the PTAB quickly became known as the patent “death squad” that allows defendants to repeatedly use the post-grant proceedings to challenge the same patents until those patents are invalidated.

During the last administration, former USPTO Director Andrei Iancu tried to correct that by limiting when patents could be challenged at the PTAB. He did that by having the PTAB issue a series of precedential decisions that identified Fintiv factors that “relate to whether efficiency, fairness, and the merits support the exercise of [the PTAB’s] authority to deny institution.” Because those changes never finished going through the federal government’s rulemaking process, the current administration was able to quickly roll them back. Discretionary denials based on Fintiv factors plummeted from 60 in Q3 of 2021 to 1 in Q3 of 2022.

When I interviewed Vidal on Clause 8 earlier this year, she vigorously defended rolling back Iancu’s changes and the PTAB’s handling of post-grant proceedings in general. However, she did hint at future efforts to help independent inventors dealing with the PTAB and address complaints about third parties challenging patents at the PTAB.

The ANPRM is a realization of those promised efforts along with a litany of other proposals to fix how the PTAB operates. The ANPRM has generated countless responses from all sides, including thousands of comments from independent inventors, a well-orchestrated House hearing by big tech allies, Senator Tillis, and even Iancu.

Nicholas Matich, who is now Principal at McKool Smith, joins the Clause 8 Podcast to share his unique perspective about the ANPRM. He not only was involved with previous efforts to fix the PTAB while serving as the USPTO’s general counsel under Iancu but – prior to that – worked as Special Assistant to the President at The White House and as Deputy General Counsel of the Office of Management and Budget (OMB). This provides him with an unmatched understanding of how the rulemaking process actually works for proposals emanating from the USPTO. Tune in to hear more on the following topics:

How to influence the rulemaking process outside of the agency issuing the rules:

“The executive order that governs the process has instructed OMB to take meetings with basically anyone who wants them on rules that OMB has under consideration, so you can actually get meetings with OMB staff. How effective are those going to be in steering the process? It probably depends a lot on what the rule is and what OMB’s views are and what the agency’s views are.”

What drove Iancu’s efforts to fix the PTAB:

“Director Iancu cared deeply what the general community thought, because what we want is ultimately a balanced IP system… There could be problems with a system that provided patent rights that were too strong. But there are also problems when you have a patent system that’s too weak.”

“The biggest concern with the PTAB that he had, and that I think I share, is situations where patent challengers get multiple bites at the apple. And that that can take a variety of forms.”

Opposition to Iancu’s efforts and why the efforts were correct:

“Some frequent defendants basically got used to having multiple opportunities to challenge a patent, and they got upset when that got curtailed even a little bit… That’s why it was controversial, but fundamentally, I think it was a sound policy. In every other area of law, [where there are] two litigants fighting about something, we’re only going to spend the judicial resources to resolve that dispute once. Except, the way the AIA has been implemented in the patent space, we will provide multiple opportunities to resolve the same issue. And that’s just a waste of society’s resources and unstable and destabilizing to the patent system.”

Vidal’s decision to issue the ANPRM:

“I think it was a mistake. And the USPTO has done this before, where they put out an ANPRM or a request for comments, rather than just going to a proposed rule when they already have in mind what they might want to do….I think the USPTO should have just [said], ‘okay, this is what we think the answer is,’ and you get comments, and you can change based on that.”

Also on this episode, Nick and Eli discuss:

• What Nick learned from working with Viet Dinh and Paul Clement at the well-known law firm, Bancroft PLLC
• How the OMB reviews and approves agency rules
• Serving as USPTO’s GC
• Advice for influencing USPTO’s rules
• Iancu’s Fintivfactors and how to explain swift reversal
• Whether there is statutory authority for the ANPRM
• Advice for future USPTO Directors