PTO Files Reply in Support of Motion to Dismiss Apple, Cisco, Google, Intel’s IPR Rule Suit

On Thursday in the Northern District of California, Andrew Hirshfeld, “performing the duties of ” the United States Patent and Trademark Office (PTO) filed a reply in support of the motion to dismiss an amended complaint in a case concerning the NHK-Finitiv rule, arguing the plaintiffs do not have standing and the claims are non-justiciable under the Administrative Procedures Act.

The rule at issue is described by the plaintiffs as a decision allowing the PTO to deny a petition for inter partes review (IPR) based on “a balancing of discretionary factors relating to the pendency of parallel patent infringement litigation.” Apple, Cisco Systems, Google, and Intel Corporation filed their complaint for declaratory and injunctive relief challenging the rule, which they said hampers Congress’ intention for the IPR system to streamline patent litigation.

According to the filing, the plaintiffs’ claims lack standing because they “have not alleged either an injury in fact or that any such injury would be redressed by relief that the Court could provide.” Specifically, the defendant averred that the plaintiffs cannot establish an injury in fact because “there is no legal entitlement to inter partes review.” Meanwhile, the plaintiffs alleged that they have “suffered a concrete injury because the application of factors enumerated in (Apple’s IPR) creates an increased risk that their IPR petitions will be denied, thus depriving them of their preferred procedure for contesting patent validity.” In response, the PTO argued that the “concrete interests at stake in IPR proceedings are patent rights and their enforceability, and IPR institution or its denial does not alter those rights. Plaintiffs’ preference for one procedure over another to determine the validity of an existing patent is not the kind of right or benefit that can establish standing.”

The defendant also argued that the plaintiffs are not entitled to a permanent injunction, because, for example, “(t)he Director would literally be enjoined from complying with his statutory obligation to consider the merits of IPR petitions when deciding whether to institute IPR proceedings;” therefore, success on their claims would not redress their alleged injury.

Turning to the non-justiciability defense, Hirshfeld noted that the APA provides for judicial review when: “(A) Congress has not displaced the APA’s default cause of action, (B) the challenged agency action is not committed to agency discretion by law, and (C) the action is final for purposes of APA review,” adding that the plaintiff tech companies have not many of these criteria. Additionally, the director’s discretion over the institution decision “encompasses the factors he considers in reaching that decision,” and thus not fit for judicial review, according to Hirshfeld. The defendant also claimed that the “Director adopting the Finitiv factors was not a final agency action reviewable under the APA.”

The defendant has sought for the court to grant the motion to dismiss and to dismiss the plaintiffs’ amended complaint with prejudice.