Apple Inc. v. Iancu
| Decision Date | 10 November 2021 |
| Docket Number | 5:20-cv-06128-EJD |
| Court | U.S. District Court — Northern District of California |
| Parties | APPLE INC., et al., Plaintiffs, v. ANDREI IANCU, Defendant. |
ORDER GRANTING MOTION TO DISMISS; TERMINATING MOTION FOR SUMMARY JUDGMENT Re: Dkt. Nos. 64, 65
Under the Leahy-Smith America Invents Act (“AIA”), 35 U.S.C. § 100 et seq., a party may ask the U.S Patent and Trademark Office (“the PTO”) to review and potentially cancel claims in an already-issued patent that the PTO finds to be unpatentable in light of prior art. See 35 U.S.C. §§ 102, 103. This process called “inter partes review” (“IPR”) is widely used to determine the patentability of patent claims that are the subject of pending patent infringement litigation. Plaintiffs challenge two PTO decisions that establish non-exclusive factors to aid in the PTO's determination of whether to institute IPR and argue that these decisions violate the Administrative Procedure Act (“APA”) because they are arbitrary, capricious and unlawful under the AIA. Defendant contends that the Court cannot reach Plaintiffs' challenge, both because Plaintiffs lack standing and because the issue is not justiciable. The Court must agree with Defendant-while Plaintiffs have standing to pursue their claims, the Court is bound by Cuozzo Speed Technlogies, LLC v. Lee, 579 U.S. 261 (2016) and Thryv, Inc. v. Click-To-Call Tehcnologies, 140 S.Ct. 1367 (2020), which require the Court to dismiss this action for lack of jurisdiction.
The Constitution grants Congress the power “[t]o promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” U.S. Const. art. I, § 8, cl. 8. Pursuant to this power, Congress created a patent system that grants inventors rights over the manufacture, sale, and use of their inventions. See 35 U.S.C. § 100 et seq. Inventors can secure a patent by filing an application with the PTO that includes “claims” that describe the invention. A patent examiner then reviews the patent claims, considers the prior art, and determines whether each claim meets the applicable patent law requirements. See id. §§ 101, 102, 103, 112. The examiner then accepts the claim or rejects it and explains why. See id. § 132(a).
“Sometimes, though, bad patents slip through.” SAS Inst., Inc. v. Iancu, 138 S.Ct. 1348, 1353 (2018). To remedy this problem, Congress allows parties to challenge the validity of patent claims in federal court. See 35 U.S.C. § 282(b)(2)-(3). Congress also has created an administrative process that allows a patent challenger to ask the PTO to reconsider the validity of an earlier granted patent claim. Specifically, in 2011, Congress enacted the AIA, which modified the “inter partes reexamination” system in favor of “inter partes review.” See H.R. Rep. No. 11298, pt. 1, pp. 46-47 (2011) (H.R. Rep.), codified at 35 U.S.C. §§ 311-19.
The IPR regime functions like civil litigation. A party must first file “a petition to institute an inter partes review of [a] patent. 35 U.S.C. § 311(a). The petition “may request to cancel as unpatentable 1 or more claims of [the] patent” on the ground that the claims are obvious or not novel. Id. § 311(b). The petition must identify “each claim challenged, ” the grounds for the challenge, and the evidence supporting the challenge. Id. § 312(a)(3). After a petition is filed, the patent owner may respond with “a preliminary response to the petition” to explain “why no inter partes review should be instituted.” Id. § 313. With the parties' submissions, the Director of the PTO (“the Director”) then decides “whether to institute an inter partes review . . . pursuant to [the] petition.” Id. § 314(b). Before instituting review, the Director must determine “that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” 35 U.S.C. § 314(a).
The Director has delegated this authority to the Patent Trial and Appeal Board (“the PTAB”) to exercise on his behalf. 37 C.F.R. § 42.4(a) (2017). The PTAB-patent judges are appointed by the Secretary of Commerce and must be “persons of competent legal knowledge and scientific ability.” 35 U.S.C. § 6(a), (c). Once the Director institutes IPR, the case proceeds before the PTAB “with many of the usual trappings of litigation.” SAS Inst., 138 S.Ct. at 1354. For example, the parties conduct discovery, issue briefing, and appear before the PTAB for an oral hearing. 35 U.S.C. § 316(a)(5), (6), (8), (10), (13). The parties also may settle the action and end IPR. Id. § 317. If, however, IPR is instituted and the action is not settled, the PTAB must “issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” Id. § 318(a).
35 U.S.C. §§ 315 and 316(a)(11) establish time limits for the institution and completion of IPR. For instance, IPR may not be instituted if the “petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” 35 U.S.C. § 315(b). As a result, the “life-span” of an IPR from the filing of a petition to a final written decision is typically only 18 months. See 35 U.S.C. § 316(a)(11); C.F.R. § 42.107(b); Amended Complaint for Declaratory and Injunctive Relief (“Compl.”), Dkt. No. 54.
Finally, while the AIA authorizes judicial review of a “final written decision” canceling a patent claim, it does not allow for review of the Director's initial decision whether to institute IPR. Compare 35 U.S.C. § 319 (), with id. § 314(d) ().
By default, the PTAB's decisions in IPR proceedings have no precedential force in future cases. Patent Trial and Appeal Board, Standard Operating Procedure 2 (Rev. 10) (“SOP-2”), at 3, 8-9 (Sept. 20, 2018). However, the PTO has established a procedure for designating select PTAB decisions as “precedential.” SOP-2 at 1-2, 8-12. Specifically, the Director decides whether to designate a Board decision as precedential. SOP-2 at 11. This procedure does not allow for public notice of or public comment on the PTAB's decision to designate an IPR decision as precedential. SOP-2 at 8-11. Decisions designated as precedential are “binding” on the PTAB “in subsequent matters involving similar factors or issues.” SOP-2 at 11.
Two recent, precedential PTAB decisions are at issue: NHK Spring Co., Ltd. v. Intri-Plex Techs., Inc., No. IPR2018-00752, 2018 WL 4373643 (P.T.A.B. Sept. 12, 2018) (“NHK”) and Apple Inc. v. Fintiv, Inc., No. IPR2020-00019, 2020 WL 2126495 (P.T.A.B Mar. 20, 2020) (“Fintiv”).
In NHK, the PTAB exercised its discretion under both 35 U.S.C. §§ 314(a) and 325(d)(6) to deny institution of IPR, in part due to a parallel district court trial that was scheduled six months away. After Intri-Plex Technologies, Inc. sued NHK International and its parent company, NHK Spring, for infringement of U.S. Patent No. 6, 183, 841 in the Northern District of California, NHK Spring petitioned for IPR. Intri-Plex Techs., Inc. v. NHK Int'l Corp., No. 3-17-cv-1097 (N.D. Cal. 2017). The PTAB denied institution because of the parallel district court proceedings. . The PTAB found that “the advance state of the district court proceeding[s] . . . weigh[ed] in favor of denying [IPR] under § 314(a)” because the petitioner asserted the arguments in both its petition for IPR and before the district court proceeding. Id.
In Fintiv, the PTAB clarified how it would consider parallel litigation when deciding whether to institute IPR. 2020 WL 2126495. There, Apple sought IPR of patent claims that had been asserted against the company in an infringement suit in federal court. Apple filed the petition less than ten months after the parallel infringement suit began. Building on NHK, the PTAB stated that in the interests of “system efficiency, fairness, and patent quality, ” it would “weigh” six factors under 35 U.S.C. § 314(a) when deciding whether to institute IPR. Id. at *3 (hereinafter “the NHK-Fintiv rule”). Those factors are:
Plaintiffs allege that the PTAB has applied NHK-Fintiv rule to unlawfully deny numerous IPR petitions, including petitions filed by Plaintiffs. Compl. ¶ 54. Plaintiffs filed this action to challenge the Director's authority to reject petitions for IPR using the NHK-Fintiv rule. Compl. ¶¶ 65-71. Plaintiffs assert three claims, each arising under the Administrative Procedure Act (“APA”). First Plaintiffs argue that pursuant to 5 U.S.C. § 706(2)(C), this Court must “hold unlawful and set aside” the Director's use of the NHK-Fintiv rule because the Director exceeded his statutory authority in adopting it. Compl. ¶¶ 82-86 (Count I). Se...
To continue reading
Request your trial