The USPTO triggered a heated debate through a set of decisions giving the Patent Trial and Appeal Board (PTAB) the discretion to deny institution for an America Invents Act (AIA) review trial based on the status of parallel district court litigation. In August, Apple, Cisco, Google, and Intel filed a lawsuit challenged those holdings, collectively known as the NHK-Fintiv rule, in a case filed in the Northern District of California—an action that has since grown beyond that initial cadre of tech companies to span a wider set of interests and industries. A medical technology firm joined as a coplaintiff in early November, and last week, a group of businesses and advocacy organizations from sectors including telecommunications and automotive filed a motion for leave to file an amicus brief in support of the plaintiffs. Meanwhile, a pair of dueling dispositive motions remain before the court, which has just rejected the USPTO's attempt to stay consideration of the plaintiffs' motion.
In their original complaint, filed on August 31 against USPTO Director Andrei Iancu, Apple, Cisco, Google, and Intel cited the practical impact of the NHK-Fintiv rule, asserting that the rule "has dramatically reduced the availability of [inter partes review (IPR)], regardless of the weakness of the patent claims being challenged, thereby undermining IPR's central role in protecting a strong patent system". The plaintiffs further asserted that the rule conflicts with the AIA and is arbitrary and capricious. Additionally, they argue that it is procedurally unsound—also raising their own concerns over the rule not having been "adopted through notice-and-comment rulemaking" under the Administrative Procedure Act (APA), on which grounds they seek to set the rule aside. The companies then added coplaintiff Edwards Lifesciences, a company specializing in cardiovascular treatment and monitoring technology, through an amended complaint filed on November 9. That new complaint raises the same substantive issues but adds examples of multiple IPR petitions filed by Edwards that were denied institution based on the status of parallel district court litigation, alongside similar examples already included for the other coplaintiffs.
On December 3, the court then received a motion for leave to file an amicus brief in support of the plaintiffs from three entities: Monolithic Power Systems, a provider of power management technology for automotive, telecommunications, and cloud computing companies and for other consumer and industrial applications; Engine Advocacy, a nonprofit focused on tech startups; an ACT | The App Association, a group representing app developers and Internet of Things businesses. In their request to file such a brief, the companies highlighted the potentially sweeping impact of the NHK-Fintiv rule, arguing that it runs counter to what they characterize as the core purpose of IPR. Should it remain in place, they assert, it would be "harder for amici curiae to invalidate bad patents covering prior-art designs through the IPR process". The result, the motion continues, would be to allow "nuisance patent holders to slow amici curiae's innovative progress by causing unnecessary litigations over patents that never should have issued in the first place—which is what the IPR statute was intended to protect against". Similar to the plaintiffs' complaint, the proposed amicus brief argues that the NHK-Fintiv rule undermines the AIA's one-year "grace period" (the IPR time bar), that the USPTO Director is required to implement such a regulation through notice-and-comment rulemaking under the APA, and that it undermines the efficiency of the IPR regime. The brief further asserts that because the USPTO "Director does not get Chevron deference for rules made through precedential opinions that contradict statutory provisions", the court "should give no deference to the precedential PTAB decisions that created the NHK-Fintiv Rule".
That filing comes as another group continues in its attempt to weigh in on the opposite side of the NHK-Fintiv issue. In September, inventors' industry association US Inventor and several other entities moved to intervene in the suit against Director Iancu, and then weeks later moved to enjoin the PTAB from instituting trial in any AIA reviews until the USPTO puts forth rules in compliance with the notice-and-comment provisions of the APA. Both the USPTO and the plaintiffs have filed briefs in opposition: the Patent Office has argued that US Inventor's injunction request "lacks merit at every level", while the plaintiffs—beyond their immediate substantive objections—assert that US Inventor "seek[s] to transform this case into an entirely different lawsuit".
The parties have also responded to the preceding request to intervene, with the plaintiffs opposing. For its part, the USPTO has filed a motion stating that it is not opposed to US Inventor's claim seeking to set aside the NHK-Fintiv factors, but opposes allowing it to intervene as to its claim to compel rulemaking.
For details on those briefs and the underlying litigation, see "USPTO and Tech Companies Push Back Against Inventor Association's Bid to Pause PTAB Trials" (October 2020).
Meanwhile, both the plaintiffs in the district court suit and the USPTO each recently filed dispositive motions that remain pending. On November 23, the plaintiffs moved for summary judgment on the issues raised in their complaint, the same day that the Patent Office brought a motion to dismiss the case. In that motion, the USPTO asserts that the plaintiffs lack standing, arguing "the Director's unreviewable discretion over IPR institution decisions means that Plaintiffs can establish neither an injury in fact nor redressability". The USPTO further asserts that the plaintiffs' claims are not justiciable under the APA for three reasons: first, the APA provides no cause of action where Congress has clearly prohibited appellate review, as it has done for AIA review institution decisions per the Supreme Court's Cuozzo decision; second, because the APA bars courts from reviewing decisions committed to an agency's discretion and those that require a "balancing of priorities" within the agency's expertise; and third, because the NHK-Fintiv factors govern institution decisions, which are non-dispositive, they are not final agency actions—the only type of actions subject to review under the APA.
Four days later, on November 27, the USPTO then moved to stay the consideration of the plaintiff's summary judgment motion until after the court decided its motion to dismiss—arguing that the court should decide whether it had jurisdiction over the plaintiffs' claims before ruling on their substance. However, District Judge Edward J. Davila declined to stay the case on December 2, finding "that the jurisdictional and substantive issues presented respectively in Defendant's Motion to Dismiss and Plaintiffs' Motion for Summary Judgment are intertwined", thereby allowing the court to consider those "jurisdictional and substantive issues concurrently".
As the district court proceedings continue, the USPTO has also launched a formal rulemaking process for the Board's discretionary institution practices. On October 19, the USPTO published a request for notice and comment in the Federal Register, stating that it was "considering the codification of its current policies and practices, or the modification thereof, through rulemaking". The proposal seeks to codify the NHK-Fintiv rules concerning parallel infringement litigation as well as other rulings from the PTAB's Precedential Opinion Panel allowing the Board to deny institution based on so-called "follow-on" or parallel petitions (General Plastic and its progeny). More than 800 comments were submitted by the December 3 deadline.
For more on the NHK-Fintiv rule, including its impact on frequent petitioner-defendants, see here.
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