Federal Circuit Revives Lawsuit Challenging The USPTO Director’s Fintiv Instructions On A Limited Basis To Determine Whether They Were Improperly Issued Without A Notice-and-Comment Period
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  • Federal Circuit Revives Lawsuit Challenging The USPTO Director’s Fintiv Instructions On A Limited Basis To Determine Whether They Were Improperly Issued Without A Notice-and-Comment Period
     
    03/24/2023
    On March 13, 2023, the United States Court of Appeals for the Federal Circuit (“CAFC”) affirmed-in-part and reversed-in-part an order of the United States District Court for the Northern District of California (N.D. Cal.) dismissing as unreviewable a lawsuit challenging the instructions of the Director of the U.S. Patent and Trademark Office (“USPTO”) regarding the standard for discretionary denial of petitions for inter partes review (IPR) based on pending parallel litigation involving the same patents.  Apple Inc. v. Vidal, No. 2022-1249, —F.4th— (Fed. Cir. Mar. 13, 2023).  The CAFC affirmed the unreviewability dismissal of the challenge to the Fintiv instructions as contrary to statute and arbitrary and capricious but reversed and remanded the dismissal of the challenge to the instructions as improperly issued without a notice-and-comment period.

    In May 2020, the Director of the USPTO designated as precedential a Patent Trial and Appeal Board (“PTAB”) decision setting forth a set of six factors to consider when determining whether to institute IPR challenging a patent when there is a pending parallel district court litigation involving the same patent (the Fintiv instructions).

    On August 31, 2020, Apple, Inc.; Cisco Systems, Inc.; Google LLC; Intel Corp.; Edwards LifeSciences Corp.; and Edwards LifeSciences LLC (Appellants) filed suit in the N.D. Cal. challenging the Fintiv instructions as (1) contrary to statute and arbitrary and capricious, particularly with respect to the instructions’ consideration of the stage and time to trial of the parallel litigation, and (2) improperly issued without complying with the notice-and-comment rulemaking requirements for administrative agencies.  The government moved to dismiss, and on November 10, 2021, the N.D. Cal. dismissed, finding that the challenges were directed at the Director’s statutorily unreviewable decision to institute.

    Appellants appealed in December 2021.  While the appeal was pending, on June 21, 2022, the Director issued a memorandum clarifying the Fintiv instructions, after receiving hundreds of comments in response to a request for comments regarding the Fintiv instructions published in the Federal Register.  The memorandum was not itself published in the Federal Register before issuance.

    On appeal, the CAFC affirmed the N.D. Cal.’s dismissal of the challenges that the Fintiv instructions were contrary to statute and arbitrary and capricious but reversed dismissal of the notice-and-comment challenge.

    With respect to the contrary-to-statute and arbitrary-and-capricious challenges, the CAFC found that such challenges were not petition-specific like in Cuozzo and Thryv, but instead challenged the Director’s decision—through its delegate, the PTAB—whether to institute, which is unreviewable.
     
    Regarding the notice-and-comment challenge, the CAFC considered the Director’s updated instructions from June 2022, rather than the original instructions that were the subject of the N.D. Cal.’s original dismissal, noting that the updated instructions were subject to the same asserted deficiency as the original instructions.  The CAFC then reversed, finding that nothing in the patent statute supplied clear and convincing evidence that the Director’s procedure for announcing instructions for making the institution decision was unreviewable.  Further, the CAFC found no persuasive justification to conclude that the USPTO had discretion not to use the required notice-and comment procedure.
    CATEGORIES: IP Litigation Procedure, IPRs, PTAB

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