Background
Apple Inc., joined by Google, Cisco, Intel, and Edwards Lifesciences, challenged a controversial USPTO policy that allows the Patent Trial and Appeal Board (PTAB) to deny institution of inter partes review (IPR) petitions — even meritorious ones — when a parallel district court case involving the same patent is moving quickly toward trial. This policy traces to two PTAB decisions designated as “precedential” by the USPTO Director: NHK Spring Co. v. Intri-Plex Technologies (2018) and Apple Inc. v. Fintiv Inc. (2020). Together, these decisions established a six-factor “Fintiv” balancing framework that the PTAB uses to decide whether to deny IPR institution based on concerns about parallel district court efficiency.
The tech industry viewed Fintiv as a major blow to the IPR system: by denying IPR institution in cases with fast-moving parallel litigation, the policy forced challengers to defend against patent validity challenges in district court without the benefit of the more patent-challenger-friendly IPR proceeding. Apple and its co-plaintiffs sued the USPTO Director under the Administrative Procedure Act (APA), arguing that the Fintiv and NHK designations were substantive rules that could only be adopted through formal notice-and-comment rulemaking — a process that the USPTO had bypassed by simply designating the PTAB panel decisions as “precedential.” The district court dismissed the case for lack of subject matter jurisdiction, and Apple appealed.
The Court’s Holding
The Federal Circuit reversed the dismissal and remanded, holding that the district court had jurisdiction to entertain Apple’s APA challenge. The key question was whether the challenge was to the PTAB’s denial of specific IPR petitions — which would be unreviewable under the statute — or to the USPTO Director’s policy of issuing binding guidance through the mechanism of precedential designations rather than notice-and-comment rulemaking. The Federal Circuit concluded that Apple’s challenge was the latter: a challenge to the Director’s general rulemaking authority and process, not to any particular IPR institution decision. That type of challenge is cognizable in district court under the APA.
The ruling did not resolve whether Fintiv actually violates the APA — it only held that Apple could have its day in court on that question. The decision placed squarely at issue whether the USPTO’s practice of issuing substantive patent practice rules by designating PTAB panel decisions as precedential complies with the APA’s notice-and-comment requirements. If Apple prevails on the merits, the Fintiv framework could be vacated, requiring the USPTO to either formally promulgate it through rulemaking or abandon it entirely.
Key Takeaways
- APA challenges to USPTO Director policy — as opposed to challenges to specific PTAB institution decisions — are justiciable in federal district court and are not barred by the statute’s preclusion of judicial review of individual IPR institution decisions.
- The USPTO’s practice of issuing substantive guidance by designating PTAB panel decisions as “precedential” — without notice-and-comment rulemaking — is now squarely at issue in federal litigation.
- If the Fintiv framework is ultimately vacated, the PTAB would likely return to a more institution-friendly default, significantly expanding access to IPR for patent challengers in cases with parallel district court litigation.
- The case is part of a broader tech-industry effort to restore the IPR system as a robust validity challenge mechanism, pushing back against policies perceived as tilting patent law toward patent holders.
Why It Matters
The Fintiv policy has been one of the most contentious aspects of the modern patent system. District courts — particularly the Western District of Texas and the Eastern District of Texas — move quickly to trial on patent cases, and Fintiv has effectively insulated many patents from IPR challenge by allowing the PTAB to deny petitions when those courts have set aggressive schedules. For large technology companies that face frequent NPE (non-practicing entity) litigation in those venues, Fintiv dramatically increases the cost and difficulty of patent defense.
Apple’s successful jurisdictional challenge keeps alive the possibility of dismantling or formally constraining Fintiv through APA litigation. Even if the merits challenge ultimately fails, the case highlights the systemic tension between the USPTO’s flexibility in managing the PTAB and the APA’s procedural requirements for agency rulemaking. The decision is a significant win for patent challengers who argue that substantive PTAB policy cannot be made through administrative designation alone.