SCOTUS Denials of Apple and Mylan Petitions Unlikely to End Challenges to PTAB NHK/Fintiv Framework

“The NHK/Fintiv rule continues to rankle the top customers of the PTAB, and there has even been legislation proposed in the U.S. Senate to rein it in under the premise of making PTAB trials ‘fair and accessible.’” this week, the U.S. Supreme Court issued an order list indicating it had denied petitions for writs of certiorari in two cases challenging the NHK/Fintiv framework developed by the Patent Trial and Appeal Board (PTAB) for discretionary denials of validity trials under the America Invents Act (AIA). In denying petitions from consumer tech giant Apple and generic pharmaceutical firm Mylan Laboratories, SCOTUS has ended the latest challenge to the PTAB’s NHK/Fintiv rule, which has raised the ire of many entities who have found the PTAB to be a very valuable backdoor towards patent invalidation outside of U.S. district court. Both petitions essentially asked the Court whether the PTAB’s application of its NHK/Fintiv rule passes muster under precepts of U.S. administrative or due process law.

Mylan and Apple Arguments

Apple’s petition for a writ of certiorari was first filed with the Supreme Court last July, following an order entered in December 2020 by the U.S. Court of Appeals for the Federal Circuit (CAFC) denying the company’s appeals from the PTAB and request for mandamus relief. Apple was appealing the denial of two petitions for inter partes review (IPR) challenging patent claims owned by Optis Wireless and Unwired Planet covering technologies incorporated into mobile networking standards. The Federal Circuit’s December 2020 order struck down Apple’s appeals, referencing other recent Federal Circuit decisions holding that PTAB institution decisions are unappealable under the relevant statute (35 U.S.C. § 314(d)) and Supreme Court precedent in cases like Thryv v. Click-to-Call Technologies (2020).

The company’s SCOTUS petition had challenged the Federal Circuit’s determination that it lacked appellate jurisdiction to hear Apple’s appeals from the PTAB. While Section 314(d) bars an appeal of an institution decision on grounds tied to other statutes closely related to the USPTO’s decision to initiate IPR proceedings, Apple argued that Supreme Court precedent from cases like Cuozzo Speed Technologies v. Lee (2016) left open judicial review on administrative law grounds for being arbitrary or capricious under the APA. Further, Apple contended that the language of Section 314(d) is not an absolute bar that prevents arguments that the PTAB’s denial of an IPR petition rested on grounds that are within the scope of federal court review of agency decisions under the APA.

Apple had also challenged what it argued was the Federal Circuit’s inappropriate standard for granting mandamus relief. Apple said that language from Justice Alito’s concurrence in Cuozzo and Justice Gorsuch’s dissent in Thryv indicated the availability of mandamus relief for institution decisions, so the Federal Circuit was wrong to conclude that Section 314(d) barred mandamus relief. Apple contended that it had a clear and indisputable right to the USPTO’s compliance with the boundaries of both the AIA and the APA, which should have afforded mandamus relief.

Mylan’s petition for writ of certiorari was filed last August and followed a similar path to Apple’s denial. Last March, the Federal Circuit entered an order denying the generic’s IPR appeals and requests for mandamus relief against the PTAB’s application of the NHK/Fintiv discretionary denial framework to dismiss an IPR petition challenging Janssen Pharmaceutica patent claims that had been asserted against Mylan in U.S. district court. Again, the Federal Circuit found that Section 314(d), which states that Director decisions whether to institute IPR proceedings are nonappealable, and the Supreme Court’s application of that statute, eliminated jurisdiction for Mylan’s appeal, and that Mylan did not show that it was entitled to the extraordinary remedy of mandamus relief directing the PTAB to institute the Mylan IPR proceeding.

The petition traveled ground similar to Apple’s, challenging the NHK/Fintiv rule as an unlawful exercise of Director discretion that substituted the Director’s judgment for that of Congress when deciding whether to institute a timely filed IPR petition. Mylan noted that Congress already had parallel proceedings in mind when crafting the AIA, as made clear by provisions such as the one-year time bar under 35 U.S.C. § 315(b). Mylan had also challenged the USPTO’s development of NHK/Fintiv through precedential decision-making instead of notice-and-comment rulemaking, as required under the provisions of the AIA. The APA’s requirements for informal rulemaking are made even more relevant by provisions in the AIA, codified at 35 U.S.C. § 316(b), directing the USPTO to prescribe regulations for the conduct of IPR proceedings at the PTAB.

Cert Denials Unlikely to End Challenges to NHK/Fintiv Framework

NHK/Fintiv is a framework developed through PTAB precedential decision-making that guides panels of administrative patent judges (APJs) as they assess whether they should exercise discretion under 35 U.S.C. § 314(a) to deny institution to IPR proceedings based on parallel infringement proceedings in U.S. district court. The rule has been controversial among patent defendants and, in August 2020, a Big Tech coalition including some of the most active IPR petitioners (Apple, Google, Cisco and Intel) filed a lawsuit in Northern California district court challenging NHK/Fintiv as procedurally invalid under the Administrative Procedures Act (APA). The district court granted the USPTO’s motion to dismiss the case last November, in part because of Thryv’s precedent on the non-appealable nature of decisions whether to institute IPR proceedings. Still, the rule continues to rankle the top customers of the PTAB, and there has even been legislation proposed in the U.S. Senate to rein in NHK/Fintiv under the premise of making PTAB trials “fair and accessible.”

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Author: trekandshoot
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2 comments so far.

  • [Avatar for Alicia owens]
    Alicia owens
    February 3, 2022 11:16 pm

    This ruling made it more difficult to challenge patents before the US Patent and Trademark Office. The internal regulation, which was implemented in 2020 by former PTO Director Andrei Iancu, allows judges on the agency’s Patent Trial and Appeal Board more leeway in rejecting challenges to patent validity.
    Inter partes review (IPR) hearings are popular among technology corporations and others who are frequently sued for patent infringement, but less so among inventors and pharmaceutical companies who rely on patent protection to avoid generic competition.
    The rule permits PTAB judges to dismiss review requests for a variety of reasons, including the proximity of relevant court cases to trial.

  • [Avatar for Pro Say]
    Pro Say
    January 20, 2022 05:47 pm

    So Big Tech finally loses one.


    Thank you SCOTUS, CAFC, and Patent Office for doing the right thing.