Mandamus Petitions Seeking Reversal of USPTO Policy on IPR Institution Denied by CAFC

Mandamus Petitions Seeking Reversal of USPTO Policy on IPR Institution Denied by CAFC

Stewart issued two orders in May, each resolving institution decisions for a series of four IPR petitions targeting patent claims of Stellar.

Three mandamus petitions have been denied by the US Court of Appeals for the Federal Circuit (CAFC) asking the court to step in and curb the recently-implemented practice whereby the USPTO Director decides whether to institute inter partes review (IPR) proceedings.

In Re Motorola Solutions, Inc., Judge Linn of the CAFC rejected Motorola’s arguments that the then-Acting USPTO Director Coke Morgan Stewart violated the Administrative Procedure Act (APA) and the Due Process clause of the Fifth Amendment to the Constitution by de-instituting eight IPR petitions it filed against Stellar LLC’s patents’ claims.

Stewart issued two orders in May, each resolving institution decisions for a series of four IPR petitions targeting patent claims of Stellar. She granted Director Review, vacated the March 18 institutions of those IPR proceedings, and then denied institution to all four petitions in one order. Stewart refused Motorola Solutions’ request for rehearing of Director Review decisions to vacate four other IPR proceedings instituted on the same date and ultimately refused institution to those petitions in the other order.

Appealing to the CAFC, Motorola challenged the rescission of the interim procedure memo on the Fintiv discretionary denial factors, also known as the ‘compelling merits’ memo of former USPTO Director Kathi Vidal and application of that rescission under the APA. The application of rescission violated its due process rights, Motorola said and reportedly asked the CAFC to “direct the PTO to vacate the Acting Director’s rescission of the Vidal Memorandum and to reinstate the Board’s institution of its petitions in accordance with that guidance.”

Mandamus relief is not ordinarily available for decisions on institution because “Congress committed institution decisions to the Director’s discretion, SAS Inst., Inc. v. Iancu, 584 U.S. 357, 366 (2018), and protected that exercise of discretion from judicial review by making such determinations ‘final and non-appealable,’” the opinion began noting. Exceptions have been carved out for ‘colorable constitutional claims’ by the CAFC, no such claims were presented by Motorola here, said the court.

The request for mandamus relief by Motorola was based on its argument that “the Vidal Memorandum imposed ‘substantive limits’ on the PTO’s ‘official discretion’ to deny an IPR petition based on the existence of parallel litigation so long as a petitioner provides a Sotera stipulation…,” the decision said. However, CAFC precedent distinguishes between “applications for discretionary benefits and those for non-discretionary benefits in which a particular outcome is mandated ‘upon a showing that [the applicant] meets the eligibility requirements set forth in the governing statutes and regulations,’” the court wrote.

The Vidal Memo did not meet the criteria for a property interest protected by the Due Process clause as it did not mandate an outcome on petitions and instead, merely directed the Board to rely on certain criteria in its decision-making.

The opinion said that secondly, Motorola failed to show that it even has a property right that is protected under the due process Clause. Mylan Lab’ Ltd. v. Janssen Pharmaceutica, N.V., 989 F.3d 1375, 1382 (Fed. Cir. 2021), where it rejected a similar argument, and added that “[w]e similarly see no ‘history or tradition’ that supports recognizing for these purposes a constitutionally protected right to have the Board consider Motorola’s petitions without regard to the Fintiv factors, even if it stipulates to not raising the challenges in parallel district court proceedings,” the court pointed.

The court was not convinced that there was any Due Process violation as outlined in Landgraf v. USI Film Prods., 511 U.S. 244, 265 (1994) with respect to Stewart’s application of the rescission of the Vidal Memo to the petitions.

The court wrote, “[E]ven if those principles are applicable to this context, Motorola did not experience anything close to the kind of unfair surprise that might raise a due process violation”. Motorola was aware of the Board precedent on discretionary denial when it filed its petitions and on notice that the interim guidance about how to apply that precedent in cases where a party provides a Sotera stipulation could be modified at any time. Even if Motorola relied on the Vidal Memorandum when it undertook the expense of filing the petitions…that ‘reliance alone is insufficient to establish a constitutional violation,’” the decision explained.

With respect to Motorola’s APA challenge, the court rejected the argument that Stewart’s rescission of the Vidal Memo required notice-and-comment rulemaking, noting that Motorola can raise that challenge in federal district court, and said the argument is also foreclosed by Mylan. Lastly, the court rejected Motorola’s contention that the Acting Director’s actions were arbitrary and capricious in that she failed to “offer any reasons for the change” or give sufficient consideration to the reasons the Vidal Memo was issued in the first place. “[T]hese arguments are the kinds of arguments that we have said are not reviewable in light of § 314(d) because, at bottom, they challenge ‘the Director’s exercise of [] discretion to deny institution’ (the weighing of the relevant factors)…and thus do not fall within the limited category of non-constitutional challenges to the applicable factors appropriate to review on limited mandamus relief,” the court said.

In re Google LLC and In Re SAP America, Inc. two other mandamus petitions were also denied for similar reasons.

This is the first round of mandamus decisions regarding the Squires’ USPTO’s policies on America Invents Act trial institutions but these are not the petitions the patent community has been most anxiously awaiting, said Scott McKeown of Wolf Greenfield:

“This first wave of mandamus denials was not unexpected given the court’s previous reviews of Fintiv-related discretionary issues. The court isn’t blessing the PTAB’s new practices, it just explains that APA suits are the proper way to raise such challenges. The PTAB’s so-called settled expectation reasoning was always the more interesting mandamus issue; those petitions remain pending,” Greenfield reportedly said.

The former USPTO Director Kathi Vidal in one of those pending petitions, filed an amicus brief on behalf of the Public Interest Patent Law Institute (PIPLI), urging the court to set aside the “settled expectations” rule.