Apple, Google revive USPTO challenge at Fed Circ
Tech giants overturn ruling on controversial Fintiv rule | USPTO director‘s updated guidelines influence court’s reasoning.
In a victory for Apple and Google, the US Court of Appeals for the Federal Circuit has ruled that the tech companies do have standing to challenge the US Patent and Trademark Office’s controversial Fintiv rule.
The court delivered a precedential decision on March 13, after the pair appealed an earlier decision that dismissed their bid to dismantle Fintiv.
In doing so, the appeals court found that a federal court in California should not have rejected Apple’s challenge based on the government’s arguments that the case was not reviewable.
The development comes after the USPTO director’s latest decision seemingly reinforced the viability of the rule, amid speculation about its future.
An ‘arbitrary and capricious’ rule
In August 2020, Apple and three other companies filed suit in the Northern District of California, seeking to challenge the rule, describing it as “arbitrary and capricious”.
Under the Fintiv rule, the Patent Trial and Appeal Board must consider six factors before deciding whether to institute an inter partes review of a patent in parallel with an overlapping court case.
These are: whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted; the proximity of the court’s trial date to the board’s projected statutory deadline for a final written decision; and the investment in the parallel proceeding by the court and the parties.
The final three factors examine any overlap between issues raised in the petition and in the parallel proceeding; whether the petitioner and the defendant in the parallel proceeding are the same party; and other circumstances that impact the board’s exercise of discretion, including the merits.
In its complaint, Apple and Google argued that the Fintiv instructions were issued by the USPTO without compliance with the notice-and-comment rulemaking requirements of 5 U.S.C. § 553.
The Federal Circuit noted how the present case does not involve a petition-specific challenge, ie, a challenge to a director's determination whether to institute a review requested in an individual petition.
Rather, it involves a challenge to the director’s instructions to the board, and the board’s position when trying “to exercise the director’s institution discretion”.
The court concluded that Apple did have standing to press the challenge to the director’s instructions as invalid for want of notice-and-comment rulemaking.
In doing so it pointed to the Fintiv guidelines released by the USPTO director in June 2022, which had “unveiled favourable clarifications to the rule”.
There was now, the court asserted, “a genuine possibility that the instructions would be changed in a way favourable to Apple in a notice-and-comment rulemaking”.
