Last week, four major technology companies – Apple, Cisco, Google, and Intel – brought suit against the United States Patent and Trademark Office (“USPTO”), challenging its authority to reject petitions for inter partes review (“IPR”) based on two precedential decisions by its Patent Trial and Appeal Board (“PTAB”).  The decisions, Apple Inc. v. Fintiv, Inc.,[1] and NHK Spring v. Intri-Plex Techs.,[2] allow the PTAB to deny institution of IPRs based on a number of factors related to the existence of a parallel United States district court proceeding on the same challenged patents.  The tech companies have sued in the District Court for the Northern District of California, arguing that the rule violates both the Leahy-Smith America Invents Act (“AIA”), which created the IPR procedure, and the Administrative Procedure Act (“APA”), which created the system of organization and procedures that all administrative agencies of the federal government must follow.

The three arguments of the complaint are that (1) the NHK-Fintiv rule is contrary to the policy and text of the AIA; (2) the rule is arbitrary and capricious as the factors are vague and have already led to unjustifiable and unpredictable disparities among similarly-situated IPR petitioners; and (3) the rule is otherwise procedurally invalid because it was not adopted through notice-and-comment rulemaking required by both the AIA and the APA.  The tech companies are seeking to have the rule set aside and have the USPTO enjoined from relying on the rule to deny institution of IPRs.

While the arguments certainly have merit, Federal Circuit and Supreme Court precedent supports the USPTO’s discretion both to deny petitions and to formulate policy.  The Supreme Court recently stated in Cuozzo Speed Tech., LLLC v. Lee that an “agency’s decision to deny a petition is a matter committed to the Patent Office’s discretion.”[3]  The Court has also long acknowledged that notice-and-comment is not the only method of lawmaking available to agencies.[4]  Thus, while the challenges may make sense from a policy standpoint, it may not be enough to prove the USPTO has acted unlawfully.

[1] No. IPR2020-00019, Paper 11 (Mar. 20, 2020).

[2] No. IPR2018-00752, Paper 8 (Sept. 12, 2018).

[3] 136 S. Ct. 2131, 2140 (2016).

[4] N.L.R.B. v. Bell Aerospace Co., Div. of Textron, Inc., 416 U.S. 267, 293 (1974) (“‘the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.’”) (quoting SEC v. Chenery Corp., 332 U.S. 194, 203 (1947)).