One case being argued at the Federal Circuit in January attracted amicus briefs. That case is Apple Inc. v. Squires. In it, Apple Inc., Cisco Systems, Inc., Google LLC, and Intel Corp. appeal a district court’s determination that the adoption of a precedential framework by the Patent and Trademark Office to govern whether the Patent Trial and Appeal Board will institute inter partes review when parallel district court litigation exists did not require notice-and-comment rulemaking under the Administrative Procedure Act. This is our argument preview.
In their opening brief, the appellants argue what they call the “NHK-Fintiv Rule” is “a substantive rule” under the Administrative Procedure Act. Therefore, they say, it should have been “promulgated through notice-and-comment rulemaking.” The appellants explain the Rule directs the Patent Trial and Appeal Board to deny instituting inter parties review “when certain factors relating to parallel litigation are present” based on the “Director’s view” that inter parties review would “be inefficient.” According to the appellants, the Rule “has both of the key attributes” courts use to determine if a rule is substantive and trigger notice and comment. First, they say, “the Rule affects private interest.” Second, they continue, the Rule “is binding on the Board.” Furthermore, they argue the Rule “deprives infringement defendants of opportunities to seek cancellation of questionable patents” through inter parties review, thereby affecting private interests. The appellants argue, moreover, that the Rule is binding on the Board because the Board “must treat the factors as weighing for or against institution” of inter parties review, and the Board must “deny institution when the factors on balance point against it.” The appellants contend the PTO Director “imposed a binding rule on the Board without warning,” and, they say, “obtaining judicial review of the Rule has seemingly been foreclosed.” Thus, they maintain, the “Director should not be permitted to evade statutory notice-and-comment requirements” and “the district court’s judgment should be reversed.”
In the brief for appellee, the government argues the Director was “not obligated to issue her guidance . . . through notice-and-comment rulemaking.” In the government’s view, the “guidance is a general statement of policy” and is therefore “exempt from the APA’s notice-and-comment requirements.” The Director suggests the guidance “describes how the USPTO intends to exercise a discretionary power,” does not “alter legal rights or obligations,” nor does it “bind private parties with the force and effect of law.” The Director explains though it “may have some effect on an agency’s discretionary decisions,” that effect alone does not render the guidance a “legislative rule” that requires it be “promulgated through notice-and-comment rulemaking.”
In their reply brief, the appellants argue the “Director’s desire for flexibility, however well-intentioned,” does not exempt the Director from following APA “procedures before taking actions that bind the agency in ways that affect parties’ legally protected interest.” Appellants argue the importance of notice-and-comment is highlighted here, moreover, because the “NHK-Fintiv is deeply flawed.” Appellants contend “feedback could have dramatically improved the Rule.” They say improvement through feedback “is one of the main purposes of notice and comment.”
Four amicus briefs were filed in this case.
The National Retail Federation and several technology and manufacturing trade associations filed an amicus brief in support of appellants and reversal. The amici argue the Rule “continues to operate as an outcome-determinative rule.” Moreover, the amici contend, the lower court’s conclusion that the “Board undertakes a holistic analysis” before applying the Rule is “at odds with how Fintiv has been applied.” Therefore, they say, the rule should be vacated.
Askeladden filed an amicus brief in support of appellants and reversal. The brief argues “[n]otice-and-comment rulemaking is fundamental to all federal agency” rules, and, it says, the procedure “serves unique values in patent law.” The brief argues the patent system depends on “stable legal rules.” Indeed, it continues, because the lower court allowed the Director to “sidestep[] notice-and-comment procedures,” the decision will pose “serious violence to the APA’s careful balance.”
Unified Patents and Zero Motorcycles also filed an amicus brief in support of appellants and reversal. They argue that, if the lower court’s decision is upheld, it will “derail Congress’ intended use of [inter parties review] to curtail the assertion of bad patents.” Furthermore, they argue, the decision “improperly deprive[s] the public and interested stakeholders of their ability to comment” on substantive rules.
PTAAARMIGAN, by contrast, filed an amicus brief in support of the government and affirmance. Its brief argues that, though the PTO has a “pattern of evading rulemaking procedure,” the “narrow circumstances” in the present case do not call for the reversal of the lower court’s decision. Rather, the brief argues, reversing the lower court’s decision would “reduce predictability” in the patent law system. Furthermore, it says, the PTO “has adjudicatory discretion,” and administrative law “urges agencies to issue non-binding” guidance to provide stakeholders with “insight into agency thinking.”
Oral argument in this case is scheduled to be heard on Monday, January 5 at 10:00 am in Courtroom 402.