Appeal Bar Deemed to Bar APA Suit

Back in September of 2020, a number of large tech companies sued the USPTO for violating the APA by denying IPR petitions on the basis of a competing trial date. More specifically, the suit argued that the so-called NHK-Fintiv practice — implemented without notice and comment rulemaking — was in violation of established APA practices.  Since filing, the Court seemed quite interested in that argument at an earlier oral hearing on summary judgment.  Oddly, the case was dismissed yesterday based upon the 314(d) appeal bar.

What is strange about this dismissal is that there was no specific IPR denial that was appealed.  Instead, it was a challenge, based upon the APA, to a systemic (and arguably ultra vires) agency practice.

The Court provided a short analysis, (here) simply explaining that it was bound by Cuozzo in the matter, explaining:

[I]n view of Cuozzo and Thryv, this Court cannot deduce a principled reason why preclusion of judicial review under § 314(d) would not extend to the Director’s determination that parallel litigation is a factor in denying IPR.  If the Director decides not to institute IPR, for whatever reason, there is no review.  To inquire into the lawfulness of the NHK-Fintiv rule, the Court would have to analyze questions that are closely tied to the application and interpretation of statutes related to the Director’s decision to initiate inter partes review.  Cuozzo forbids this and so the Court must conclude that Plaintiffs’ challenge to the NHK-Fintiv rule is barred by § 314(d).

(internal citations and quotes omitted, emphasis added)

The first point of note is there is no “NHK-Fintiv rule,” which was one of the main points of the lawsuit.  Likewise, 314(d) applies to appeals of actual decisions, not the lawfulness of system wide practices under the APA.  As to the argument that the Court would need to analyze issues “tied to the application and interpretation of statutes related to the Director’s decision to initiate,” if that is the standard, the USPTO can simply adopt any ultra vires institution practice it wants and evade review.  Such a broad rationale for upholding an appeal bar cannot be correct.  As pointed out in Cuozzo ulta vires practices would certainly fall into the “shenanigans” bucket.

Nevertheless the issue has been punted to the Federal Circuit, which may provide a more nuanced view.  Unless, of course, the practice is outlawed by intervening legislation.

Stay tuned.