# Apple Inc. v. Iancu

> District Court, N.D. California · March 31, 2024

URL: https://www.frixlaw.com/law-library/cases/10078592

## Case

- **Court:** District Court, N.D. California
- **Decided:** March 31, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10078592

## How later opinions describe it (automated extraction)

- noting that general statements of policy are “statements 15 issued by an agency to advise the public prospectively of the manner in which the agency proposes 16 to exercise a discretionary power”

## Opinion text

1
2
3
4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6 SAN JOSE DIVISION
7
8 APPLE INC., CISCO SYSTEMS, INC., Case No. 20-cv-06128-EJD
GOOGLE LLC, INTEL CORPORATION,
9 EDWARDS LIFESCIENCES ORDER DENYING PLAINTIFFS’
CORPORATION, and EDWARDS RENEWED MOTION FOR SUMMARY
10 LIFESCIENCES LLC, JUDGMENT; GRANTING
DEFENDANT'S MOTION FOR
11 Plaintiffs, SUMMARY JUDGMENT

v.
12
Re: ECF Nos. 153, 157
13 KATHERINE K. VIDAL, in her official
capacity as Under Secretary of Commerce
14 for Intellectual Property and Director,
United States Patent and Trademark Office,
15
Defendant.
16
17 Plaintiffs Apple Inc., Cisco Systems, Inc., Google LLC, Intel Corp., Edwards Lifesciences
18 Corp., and Edwards Lifesciences LLC (together “Plaintiffs”) brought this action against the
19 Director of the United States Patent and Trademark Office (“PTO”) alleging three violations of the
20 Administrative Procedure Act ( “APA”), 5 U.S.C. § 701 et seq., based on the Director’s adoption
21 of a rule (the “NHK-Fintiv rule” or “NHK-Fintiv standard”) concerning the PTO’s consideration of
22 petitions to institute inter partes review (“IPR”). See Am. Compl., ECF No. 54. Following the
23 Court’s dismissal of the Amended Complaint for lack of jurisdiction as to all three APA claims,
24 the Federal Circuit affirmed as to two claims and reversed and remanded as to the third. Now
25 pending before the Court are cross-motions for summary judgment on the remaining claim, which
26 challenges the NHK-Fintiv standard on the ground that it should have been—but was not—
27 implemented through notice-and-comment rulemaking. See Pls.’ Renewed Mot. Summ. J. (“Pls.’
1 MSJ”), ECF No. 153; Def.’s Mot. Summ. J. & Opp’n to Pl.’s MSJ (“Def.’s Opp’n/MSJ”), ECF
2 No. 157.
3 Based on the parties’ written and oral arguments, the Court finds that the NHK-Fintiv
4 standard was not a substantive rule requiring notice-and-comment rulemaking.
5 I. BACKGROUND
6 The Court has previously set forth the background for the IPR process, as well as the
7 decisions that gave rise to the NHK-Fintiv standard, in its order granting the Director’s motion to
8 dismiss the Amended Complaint. See Order Granting Mot. Dismiss (“MTD Order”), ECF No.
9 133. Accordingly, the Court here summarizes only the relevant facts for the remaining claim
10 regarding the NHK-Fintiv standard’s procedural soundness under the APA.
11 A. PTO Organization and Actions
12 The powers and duties of the PTO are vested in an individual given the title “Under
13 Secretary of Commerce for Intellectual Property and Director of the United States Patent and
14 Trademark Office” (the “Director”). See 35 U.S.C. § 3(a)(1). One of the PTO’s organizational
15 offices is the Patent Trial and Appeal Board (“PTAB” or the “Board”). See 35 U.S.C. § 6(a). The
16 Board’s membership consists of “[t]he Director, the Deputy Director, the Commissioner for
17 Patents, the Commissioner for Trademarks, and the administrative patent judges.” Id.
18 The Board’s duties include conducting IPRs, which are heard by at least three members of
19 the Board. See 35 U.S.C. § 6(c).
20 1. Standard Operating Procedure 2 (“SOP-2”)
21 By default, decisions issued by the Patent Trial and Appeal Board (“PTAB” or the
22 “Board”) in IPR proceedings are “routine” decisions that do not carry any binding authority.
23 Patent Trial and Appeal Board, Standard Operating Procedure 2 (Rev. 11) (“SOP-2”), at 2 (July
24 24, 2023), https://www.uspto.gov/sites/default/files/documents/20230724_ptab_sop2_rev11_.pdf.1
25

26 1 Although the Court here cites to SOP-2, Revision 11, it notes that Revision 10 was the operative
version of the document when the Director designated the NHK and Fintiv decisions as
27 precedential. See Def.’s Opp’n/MSJ 3–4 n.2. Revision 11 made no substantive change to the
aspects of the precedential designation process relevant to this case. See id.
1 However, the Director possesses the discretion to designate any decision or part of a decision as
2 “precedential” or “informative.” SOP-2, at 6 n.5; see also United States v. Arthrex, Inc., 141 S.
3 Ct. 1970, 1980 (2021) (“The Director also promulgates regulations governing inter partes review .
4 . . and designates past PTAB decisions as ‘precedential’ for future panels.”). “A precedential
5 decision is binding Board authority in subsequent matters involving similar facts or issues.” SOP-
6 2, at 7. By contrast, the Director may also designate certain decisions as “informative,” meaning
7 that they “set forth Board norms that should be followed in most cases, absent justification,
8 although an informative decision is not binding authority on the Board.” Id.
9 2. The NHK-Fintiv Standard
10 At issue in this case are two Board decisions that discretionarily denied instituting IPR
11 petitions: NHK Spring Co. v. Intri-Plex Technologies, Inc., IPR2018-00752, 2018 WL 4373643
12 (P.T.A.B. Sept. 12, 2018) (designated precedential on May 7, 2019), and Apple Inc. v. Fintiv, Inc.,
13 IPR2020-00019, 2020 WL 2126495 (P.T.A.B. Mar. 20, 2020) (designated precedential on May 5,
14 2020). In both cases, the Board evaluated the argument that it should discretionarily deny IPR
15 institution because a pending district court infringement action involving the same patents was set
16 for trial earlier than the anticipated conclusion of IPR proceedings. See NHK, 2018 WL 4373643,
17 at *7 (denying IPR institution due to agreement with patent owner’s argument that “the district
18 court proceeding will analyze the same issues and will be resolved before any trial on the Petition
19 concludes”) (citation omitted); Fintiv, 2020 WL 2126495, at *2 (“When the patent owner raises an
20 argument for discretionary denial under NHK due to an earlier trial date, the Board’s decisions
21 have balanced the following [six] factors.”) (footnote omitted).
22 The Fintiv decision, which expanded on NHK, noted that “an early trial date”—as with
23 “other non-dispositive factors considered for [IPR] institution under 35 U.S.C. § 314(a)”—should
24 be “weighed as part of a ‘balanced assessment of all relevant circumstances of the case, including
25 the merits.’” Fintiv, 2020 WL 2126475, at *2 (quoting Consolidated Trial Practice Guide
26 November 2019 (“TPG”), available at https://www.uspto.gov/TrialPracticeGuideConsolidated).
27 The Fintiv Board noted that prior Board decisions had evaluated patent owners’ arguments for
1 discretionary denials under NHK based on a “[p]arellel, co-pending proceeding” by evaluating (1)
2 whether the court granted a stay or evidence exists that one may be granted if a proceeding is
3 instituted; (2) proximity of the court’s trial date to the Board’s projected statutory deadline for a
4 final written decision; (3) investment in the parallel proceeding by the court and the parties; (4)
5 overlap between issues raised in the petition and in the parallel proceeding; (5) whether the
6 petitioner and the defendant in the parallel proceeding are the same party; and (6) other
7 circumstances that impact the Board’s exercise of discretion, including the merits. Id.
8 The Board then proceeded to discuss how prior opinions had treated each of these
9 factors—all of which related to the impact of a parallel proceeding, see id. at *2–6—before noting
10 that other facts and circumstances separate from the parallel proceedings could impact the Board’s
11 decision regarding institution. See id. at *7 (“For example, factors unrelated to parallel
12 proceedings that bear on discretion to deny institution include the filing of serial petitions, parallel
13 petitions challenging the same patent, and considerations implicated by 35 U.S.C. § 325(d).” [nn.
14 34–36]) (citing Valve Corp. v. Elec. Scripting Prods., Inc., IPR2019-00064, Paper 10 (PTAB May
15 1, 2019) (precedential); Valve Corp. v. Elec. Scripting Prods., Inc., IPR2018-00752, Paper 8
16 (PTAB Sept. 12, 2018); Gen. Plastic Indus. Co. v. Canon Kabushiki Kaisha, IPR2016-01357,
17 Paper 19 (PTAB Sept. 6, 2017) (precedential as to § II.B.4.i); TPG 59–61; Advanced Bionics, LLC
18 v. MED-EL Elektromedizinische Geräte GmbH, IPR2019-01469, Paper 6 (PTAB Feb. 13, 2020)
19 (discussing two-part framework for applying discretion to deny institution under 35 U.S.C. §
20 325(d))). The Fintiv Board accordingly concluded by requesting that the parties submit
21 supplemental briefing addressing the various factors discussed by the Board. See id. at *7.
22 The Director designated NHK a precedential decision on May 7, 2019, and likewise
23 designated Fintiv as precedential on May 5, 2020. As such, “[t]he decisions, designated as
24 precedential, constitute instructions from the Director regarding how the Board is to exercise the
25 Director’s institution discretion.” Apple Inc. v. Vidal, 63 F.4th 1, 8 (Fed. Cir. 2023).
26 3. June 2022 Interim Procedure for Discretionary Denials
27 On June 21, 2022, after requesting comments on IPR institution decisions and receiving
1 822 comments, the Director issued a memorandum (the “June 2022 Memo”) indicating that
2 “several clarifications need[ed] to be made to the PTAB’s current application of Fintiv.” Mem.,
3 Interim Proc. for Discretionary Denials in AIA Post-Grant Proceedings with Parallel Dist. Ct.
4 Litig. (“June 2022 Mem.”), at 2 (June 21, 2022). The June 2022 Memo was issued under the
5 Director’s “authority to issue binding agency guidance to govern the PTAB’s implementation of
6 various statutory provisions.” Id. at 3.
7 The June 2022 Memo clarified three circumstances where the PTAB will not deny
8 institution of an IPR under Fintiv: (1) when a petition presents “compelling evidence of
9 unpatentability”; (2) when a request for denial is based on a parallel ITC proceeding instead of a
10 district court proceeding; or (3) where a petitioner stipulates not to pursue in a parallel district
11 court proceeding “the same grounds as in the [IPR] petition or any grounds that could have
12 reasonably been raised in the petition.” June 2022 Mem. 9. Additionally, when the Board is
13 assessing the second Fintiv factor (i.e., comparing the district court’s trial date with the Board’s
14 projected deadline for a final written IPR decision), the PTAB will consider the district’s median
15 time-to-trial. Id. The June 2022 Memo lastly reiterated that “even if the PTAB does not deny
16 institution under Fintiv, it retains the right to deny institution for other reasons under 35 U.S.C. §§
17 314(a), 324(a), and 325(d).” Id.
18 4. Potential for Future Rulemaking
19 The June 2022 Memo noted that the PTO was “planning to soon explore potential
20 rulemaking on proposed approaches through an Advanced Notice of Proposed Rulemaking,” June
21 2022 Mem. 2, and stated that the office “expect[ed] to replace this interim guidance with rules
22 after it has completed formal rulemaking,” id. at 9. On April 21, 2023, the PTO published an
23 Advance Notice of Proposed Rulemaking in the Federal Register. See Changes Under
24 Consideration to Discretionary Institution Practices, Petition Word-Court Limits, and Settlement
25 Practices for America Invents Act Trial Proceedings Before the Patent Trial and Appeal Board
26 (“Apr. 2023 ANPRM”), 88 Fed. Reg. 24,503 (Apr. 21, 2023). Among various potential changes,
27 the PTO is “proposing rules to install Apple v. Fintiv and related guidance, with additional
1 proposed reforms,” where there is “a pending district court action in which a trial adjudicating the
2 patentability of challenged claims has not already concluded at the time of an IPR institution
3 decision.” 88 Fed. Reg. at 24,505. It is not clear whether the “additional proposed reforms”
4 would substantially reduce the Board’s discretion in applying the Fintiv factors. See id.
5 B. Procedural History
6 On August 31, 2020, Apple and three other companies filed this action, challenging the
7 NHK-Fintiv standard on three grounds under the APA. See Compl., ECF No. 1. Plaintiffs filed an
8 amended complaint on November 9, 2020. See FAC. On November 10, 2021, this Court granted
9 the government’s motion to dismiss, finding that Plaintiffs had standing to sue but that their
10 challenges were not reviewable under 35 U.S.C. § 314(d). See MTD Order. The Federal Circuit
11 affirmed in part, reversed in part with respect to the reviewability of one claim, and remanded the
12 matter to this Court “for consideration of this one challenge on the merits,” referring to Plaintiffs’
13 “challenge to the Director’s instructions as having improperly been issued without notice-and-
14 comment rulemaking.” Apple, 63 F.4th at 18. The circuit court emphasized the distinction
15 between holding a notice-and-comment rule making claim reviewable under the APA and making
16 a decision on the merits as to whether such rule making was required. See id. at 15 (discussing
17 Supreme Court decision, Lincoln v. Vigil, 508 U.S. 182 (1993), Court did not question APA
18 claim’s reviewability, but rather “decided, on the merits, that § 553 did not require notice-and-
19 comment rulemaking for the agency decision at issue”). Additionally, in affirming this Court’s
20 finding that Plaintiffs had plausibly alleged an injury-in-fact for the purposes of standing, the
21 Federal Circuit noted that Plaintiffs sufficiently alleged that the NHK-Fintiv standard would
22 continue causing harm “harm in the form of denial of the benefits of IPRs linked to the concrete
23 interest possessed by an infringement defendant.” Id. at 17.
24 Following remand, the parties proposed a briefing schedule for their anticipated cross-
25 motions for summary judgment. See ECF No 145. Pursuant to the Court’s scheduling order,
26 Plaintiffs filed their motion for summary judgment on August 17, 2023, see Pls.’ MSJ; the
27 Director filed her opposition and cross-motion for summary judgment on September 14, 2023, see
1 Def.’s Opp’n/MSJ; Plaintiffs filed their reply in support of their summary judgment motion and
2 opposition to the Director’s motion, see Pls.’ Reply/Opp’n, ECF No. 158; and the Director filed
3 her reply brief, see Def.’s Reply, ECF No. 159. The Court heard oral argument on the two
4 summary judgment motions on December 7, 2023. See ECF No. 160.
5 II. LEGAL STANDARDS
6 A. Governing Law
7 Federal Circuit law governs the analysis of any issue that is unique to patent law or that
8 presents a substantial question of patent law; any other issue is governed by Ninth Circuit law.
9 See Alarm.com Inc. v. Hirshfeld, 26 F.4th 1348, 1354 (Fed. Cir. 2022) (“[A]n issue that presents a
10 substantial question of patent law . . . is governed by our own law, rather than regional circuit
11 law.”) (citing Odyssey Logistics & Tech. Corp. v. Iancu, 959 F.3d 1104, 1108 (Fed. Cir. 2020));
12 Odyssey Logistics, 959 F.3d at 1108 (“We review procedural rules following ‘the rule of the
13 regional circuit, unless the issue is unique to patent law and therefore exclusively assigned to the
14 Federal Circuit.’”); see also, e.g., Injen Tech. Co., Ltd. v. Advanced Engine Mgmt., Inc., 270 F.
15 Supp. 2d 1189, 1192 (S.D. Cal. 2003) (In cases concerning the patent laws, the district court
16 applies the law of the Federal Circuit to patent issues and the law of the circuit in which it sits
17 (‘the regional circuit’) to nonpatent issues. . . . Thus, as a general rule, procedural issues are
18 governed by the law of the regional circuit.”) (internal citations omitted).
19 “APA claims against the PTO ‘raise a substantial question of patent law,’” and substantive
20 legal issues raised in such actions are therefore governed by Federal Circuit law. Odyssey
21 Logistics, 959 F.3d at 1108 (internal alternations omitted) (quoting Exela Pharma Scis., LLC v.
22 Lee, 781 F.3d 1349, 1352 (Fed. Cir. 2015)); see also, e.g., Helfgott & Karas, P.C. v. Dickinson,
23 209 F.3d 1328, 1334 (Fed. Cir. 2000) (noting that although “[t]he APA is clearly not a patent
24 law,” Federal Circuit law governed in APA action brought against PTO because plaintiff’s APA
25 claims involved alleged loss of patent-related rights).
26 B. Summary Judgment
27 In a district court action challenging an administrative agency’s decision under the APA,
1 “[s]ummary judgment . . . serves as the mechanism for deciding, as a matter of law, whether the
2 agency action is . . . consistent with the APA standard of review.” Gill v. Dep’t of Just., 246 F.
3 Supp. 3d 1264, 1268 (N.D. Cal. 2017) (citation omitted), aff’d, 913 F.3d 1179 (9th Cir. 2019).2
4 That is, although the parties and the Court characterize the pending motions as seeking summary
5 judgment, the motions are not brought pursuant to Federal Rule of Civil Procedure 56, and the
6 question before the Court is not whether the movant has shown that there is no genuine dispute as
7 to any material fact. See id. at 1267–68; see also, e.g., Klamuth Siskiyou Wildlands Ctr. v.
8 Gerritsma, 962 F. Supp. 2d 1230, 1233 (D. Or. 2013) (“‘Summary judgment’ is simply a
9 convenient label to trigger this court’s review of the agency action.”), aff’d, 638 F. App’x 648 (9th
10 Cir. 2016). “In other words, the district court acts like an appellate court, and the entire case is a
11 question of law.” Gill, 246 F. Supp. 3d at 1268 (internal quotation marks omitted).
12 C. APA Review
13 Under the APA, a “reviewing court shall … hold unlawful and set aside agency action”
14 taken “without observance of procedure required by law.” 5 U.S.C. § 706(2)(D). Agency actions
15 can be divided into two broad categories: rule making and adjudication. See, e.g., Yesler Terrace
16 Cmty. Council v. Cisneros, 37 F.3d 442, 448 (9th Cir. 1994) (citing 5 U.S.C. §§ 551(4)–(7)). The
17 parties agree that only rule making is relevant here. See Pls.’ MSJ 14 n.12 (stating NHK-Fintiv
18 standard is not adjudication under the APA); see generally Def.’s Opp’n/MSJ (no argument that
19 adjudication framework applies to NHK-Fintiv standard).
20 The APA defines “rule” as:

21 the whole or a part of an agency statement of general or particular
applicability and future effect designed to implement, interpret, or
22 prescribe law or policy or describing the organization, procedure, or
practice requirements of an agency and includes the approval or
23 prescription for the future of rates, wages, corporate or financial
structures or reorganizations thereof, prices, facilities, appliances,
24 services or allowances therefor or of valuations, costs, or accounting,
or practices bearing on any of the foregoing,
25

26
2 The procedural mechanism of summary judgment in challenging an agency action under the
27 APA does not raise a substantial question of patent law, and is accordingly discussed with
reference to Ninth Circuit law.
1 5 U.S.C. § 551(4), and “rule making” as the “agency process for formulating, amending, or
2 repealing a rule,” id. § 551(5). In general, when an agency engages in rule making, the APA
3 requires that the agency conduct a notice-and-comment process involving the agency’s publication
4 of notice of the proposed rulemaking, the opportunity for interested persons to comment on the
5 proposal, and the agency’s response to significant comments. See 5 U.S.C. §§ 553(b)–(d).
6 However, the APA expressly excludes three categories of rulemaking from the notice-and-
7 comment requirement: (1) interpretative rules; (2) general statements of policy; and (3) rules of
8 agency organization, procedure, or practice. Id. § 553(b)(4)(A).3 Courts have formulated this
9 distinction to hold that “[t]he notice-and-comment requirements apply . . . only to so-called
10 ‘legislative’ or ‘substantive’ rules.” Lincoln v. Vigil, 508 U.S. 182, 195 (1993) (citations omitted);
11 see also Chrysler Corp. v. Brown, 441 U.S. 281, 301 (1979) (“The central distinction among
12 agency regulations found in the APA is that between ‘substantive rules’ on the one hand and
13 ‘interpretative rules, general statements of policy, or rules of agency organization, procedure, or
14 practice’ on the other.”) (quoting 5 U.S.C. §§ 553(b), (d)).
15 A rule is “substantive,” and therefore subject to the APA’s notice-and-comment
16 requirements, if it “effect[s] a change in existing law or policy or . . . affect[s] individual rights and
17 obligations.” Paralyzed Veterans of Am. v. West, 138 F.3d 1434, 1436 (Fed. Cir. 1998) (citation
18 omitted); see also Yesler Terrace, 37 F.3d at 449 (“Substantive rules . . . create rights, impose
19 obligations, or effect a change in existing law pursuant to authority delegated by Congress.”)
20 (citation omitted). A “general statement of policy,” which is not subject to notice-and-comment
21 rule making, is a statement “issued by an agency to advise the public prospectively of the manner
22 in which the agency proposes to exercise a discretionary power.” Lincoln, 508 U.S. at 197
23 (quoting Chrysler, 441 U.S. at 302 n.31).
24 III. DISCUSSION
25 As noted above, the only remaining claim before the Court is Plaintiffs’ challenge to the
26

27 3 The only exception at issue here is for “general statements of policy.” See generally Def.’s
Opp’n/MSJ.
1 NHK-Fintiv standard as having improperly been issued in violation of the APA due to the lack of
2 notice-and-comment rule making. It is undisputed that the NHK-Fintiv standard did not undergo
3 the regular notice-and-comment rule making. The contested issue is thus whether the Director
4 was in fact required to invoke the rule making process to implement the NHK-Fintiv standard.
5 Plaintiffs argue that notice-and-comment rule making was required because the adoption of the
6 NHK-Fintiv standard was a substantive rule that the Board is bound to follow and that affects
7 private interests. See Pls.’ MSJ 14–20. The Director argues that notice-and-comment was not
8 required because the NHK-Fintiv standard is a general statement of policy that does not affect the
9 rights of private interests and does not replace the Board’s discretion. See Def.’s Opp’n/MSJ 9–
10 18.
11 In considering these arguments, the Court first distills the specific agency action at issue
12 before turning to the question of whether that action was the implementation of a substantive rule
13 or the issuance of a general statement of policy.
14 A. The Nature of the Challenged Action
15 Plaintiffs’ challenge to the NHK-Fintiv standard is based on the Director’s designation of
16 the NHK and Fintiv decisions as “precedential” under SOP-2. See Pls.’ MSJ 7–8; Am. Compl. ¶¶
17 49–53, 92–95. Plaintiffs have not challenged SOP-2 itself, or more generally the Director’s
18 authority to designate a decision as precedential. See generally Am. Compl.; see also Dec. 7,
19 2023 Hr’g Tr. (“Tr.”) 40:11–13.4 Rather, Plaintiffs argue that the specific designations of NHK
20 and Fintiv have had the effect of creating a substantive rule, which should have been—but was
21

22
4 The Court notes that the Director’s authority to designate a decision as precedential is well
23 established. See, e.g., Facebook, Inc. v. Windy City Innovations, LLC, 973 F.3d 1321, 1353 (Fed.
Cir. 2020) (discussing process under SOP 2 for designating PTAB decision as precedential and
24 noting that Chevron deference is not afforded to such decisions). It is also worth noting that other
agencies have similar mechanisms through which they may designate a decision as precedential.
25 See, e.g., ITServe Alliance, Inc. v. U.S. Dep’t of Homeland Sec., 71 F.4th 1028, 1032 (D.C. Cir.
2023) (Department of Homeland Security designated precedential decision by United States
26 Citizenship and Immigration Services regarding visa eligibility); Splane v. West, 216 F.3d 1058,
1065 (Fed. Cir. 2000) (“Written legal opinions [of the General Counsel] designated as precedent
27 opinions [] shall be considered by Department of Veterans Affairs to be subject to the provisions
of 5 U.S.C. 552(a)(1).”) (quoting 38 C.F.R. § 14.507(b)).
1 not—subject to notice-and-comment rule making. Accordingly, it is necessary to understand what
2 is required by NHK and Fintiv before evaluating whether that requirement is properly categorized
3 as a substantive rule or a general statement of policy.
4 1. When Does the NHK-Fintiv Standard Apply?
5 As a threshold matter, the NHK-Fintiv standard applies to the circumstance where the
6 Board is considering a petition to institute IPR, and the patent owner, in opposing the petition,
7 argues that the Board should apply its discretion under 35 U.S.C. § 314(a) to deny institution due
8 to the advanced state of a parallel district court litigation. See NHK, 2018 WL 4373643, at *7
9 (finding, after patent owner argued that IPR would be inefficient where parallel district court
10 proceeding addressing same issues was set for trial five months before IPR would conclude, that
11 “advanced state of the district court proceeding is an additional factor that weighs in favor of
12 denying” IPR); Fintiv, 2020 WL 2126495, at *1–2 (aggregating factors that Boards considered
13 where patent owners argued for denial of IPR due to earlier trial date in parallel district court
14 proceeding); see also Apple Inc. v. Fintiv, Inc.(“Fintiv II”), IPR2020-00019, 2020 WL 2486683, at
15 *3 (P.T.A.B. May 13, 2020) (not precedential) (“The recent Precedential Order in this case sets
16 forth factors that balance considerations of system efficiency, fairness, and patent quality when a
17 patent owner raises an argument for discretionary denial due to the advanced state of a parallel
18 proceeding.”) (citing Fintiv, 2020 WL 2126495, at *2).
19 2. What Must a Board Do When the NHK-Fintiv Standard Applies?
20 To answer this question, the Court reviews the actual language of Fintiv, which expounded
21 on the holding in NHK that an early trial date in a parallel proceeding could be a basis for denial of
22 IPR institution. Broadly, the existence of an early trial date in a parallel district court proceeding
23 is a “non-dispositive factor[] considered for institution under 35 U.S.C. § 314(a)” that “should be
24 weighed as part of a ‘balanced assessment of all relevant circumstances of the case, including the
25 merits.’” Fintiv, 2020 WL 2126495, at *2 (quoting TPG 58). Fintiv identified six “factors related
26 to a parallel, co-pending proceeding,” id., that Board decisions had balanced following NHK, and
27 noted that the “factors relate to whether efficiency, fairness, and the merits support the exercise of
1 authority to deny institution in view of an earlier trial date in the parallel proceeding,” id. at *3. In
2 discussing the six identified factors, Fintiv noted potential facts that prior Boards had found to
3 weigh for or against—and weakly or strongly—the Board’s “exercising the authority to deny
4 institution under NHK.” Id. For example, as to the first factor (“whether a stay exists or is likely
5 to be granted if [an IPR] proceeding is instituted”), a litigation stay “has strongly weighed against
6 exercising authority to deny institution,” but a district’s court’s prior denial of a motion for a stay,
7 and lack of indication that the court would reconsider such a motion, “has sometimes weighed in
8 favor of exercising authority to deny institution under NHK.” Id.
9 In addition to the six identified factors “related to a parallel, co-pending proceeding”—
10 including the sixth factor of “other circumstances that impact the Board’s exercise of discretion,
11 including the merits”—Fintiv noted that there may exist facts and circumstances “unrelated to
12 parallel proceedings that bear on discretion to deny institution,” including factors such as “the
13 filing of serial petitions, parallel petitions challenging the same patent, and considerations
14 implicated by 35 U.S.C. § 325(d).” Id. at *6–7 (footnotes and citations omitted). The precedential
15 Fintiv decision ends with a request for supplemental briefing from the parties related to the various
16 enumerated factors and about “whether these or other facts and circumstances exist in their
17 proceeding and the impact of those facts and circumstances on efficiency and integrity of the
18 patent system.” Id. at *7.
19 Accordingly, Fintiv “articulates [a] set of nonexclusive factors that the PTAB considers . . .
20 in determining whether to institute an [IPR] proceeding where there is parallel district court
21 litigation.” June 2022 Mem. 1–2. That is, Fintiv summarized various factors that the PTAB had
22 considered in evaluating patent owners’ arguments that institution should be denied due to the
23 status of a parallel district court proceeding, and the Director, by designating the decision
24 precedential, required that future Board decisions also consider those identified factors when faced
25 with similar arguments.
26 B. Classification of the NHK-Fintiv Standard
27 The dispositive question, then, is whether the Director’s requirement that Boards consider
1 the factors enumerated in Fintiv constitutes a “substantive rule” that is invalid absent notice-and-
2 comment rule making, or a “general statement of policy” for which the APA does not require such
3 rule making processes. Whether a particular agency action is a “substantive rule” or a “general
4 statement of policy” is a significant question in administrative law. See, e.g., Nat’l Min. Ass’n v.
5 McCarthy, 758 F.3d 243, 251 (D.C. Cir. 2014) (describing framework for classification of agency
6 action as “quite difficult and confused,” and noting that “among the many complexities that
7 trouble administrative law, few rank with that of sorting valid from invalid uses of so-called
8 ‘nonlegislative rules’”) (quoting John F. Manning, Nonlegislative Rules, 72 GEO. WASH. L. REV.
9 893, 893 (2004)). The Court will look primarily to Federal Circuit law in evaluating the
10 classification of the NHK-Fintiv standard, as the inquiry here involves the Director’s authority and
11 duties under 35 U.S.C. §§ 314 and 316 and thus “can be said to raise a substantial question under
12 the patent laws.” Helfgott, 209 F.3d at 1333–34; see also Odyssey Logistics, 959 F.3d at 1108.
13 However, as indicated below, there is a large degree of overlap between the circuits—including
14 the Federal Circuit and the Ninth Circuit—regarding the classification of agency actions as
15 substantive versus non-substantive rules.
16 1. Analytical Framework
17 At base, the Federal Circuit and Ninth Circuit agree that substantive rules “alter the
18 landscape of individual rights and obligations.” Stupp Corp. v. United States, 5 F.4th 1341, 1352
19 (Fed. Cir. 2021); see also Paralyzed Veterans of Am., 138 F.3d at 1436 (“[C]ase law has defined
20 ‘substantive rules’ as those that effect a change in existing law or policy or which affect individual
21 rights and obligations.”) (citation omitted); Yesler Terrace, 37 F.3d at 449 (Ninth Circuit decision
22 stating that substantive rules “create rights, impose obligations, or effect a change in existing law
23 pursuant to authority delegated by Congress”) (citation omitted). By contrast, a “general
24 statement of policy” is a statement “issued by an agency to advise the public prospectively of the
25 manner in which the agency proposes to exercise a discretionary power.” Lincoln, 508 U.S. at 197
26 (citation omitted); see also Stupp, 5 F.4th at 1351 (same under Federal Circuit law); Serrato v.
27 Clark, 486 F.3d 560, 569 (9th Cir. 2007) (same).
1 The Federal Circuit frequently cites to D.C. Circuit cases when discussing the distinction
2 between substantive and non-substantive rules. See, e.g., Disabled Am. Veterans v. Sec’y of
3 Veterans Affairs, 859 F.3d 1072, 1077 (Fed. Cir. 2017) (“The most important factor [in
4 distinguishing substantive rules from general statements of policy] concerns the actual legal effect
5 (or lack thereof) of the agency action in question on regulated entities.”) (quoting Nat’l Min.
6 Ass’n, 758 F.3d at 252); id. (generally describing substantive rulemaking under the APA) (citing
7 Molycorp, Inc. v. EPA, 197 F.3d 543, 545 (D.C. Cir. 1999)); Splane v. West, 216 F.3d 1058, 1063
8 (Fed. Cir. 2000) (“The D.C. Circuit has recognized that ‘an agency's characterization of its own
9 action, while not decisive, is a factor [to] consider’ [in deciding whether a rule is substantive].”)
10 (quoting Am. Hosp. Ass’n v. Bowen, 834 F.2d 1037, 1047 (D.C. Cir. 1987)). As the D.C. Circuit
11 has noted, its case law “guide[s] the determination of whether an action constitutes a [substantive]
12 rule or a general statement of policy” through two lines of inquiry: the first “considers the effects
13 of an agency’s action, inquiring whether the agency has ‘(1) imposed any rights and obligations,
14 or (2) genuinely left the agency and its decisionmakers free to exercise discretion’”; and the
15 second “looks to the agency’s expressed intentions,” and particularly as to “whether the action has
16 binding effects on private parties or on the agency.” Clarian Health W., LLC v. Hargan, 878 F.3d
17 346, 357 (D.C. Cir. 2017) (citations omitted).
18 Similarly, under Ninth Circuit law, a general statement of policy (1) must “operate only
19 prospectively,” and (2) “must not establish a binding norm or be finally determinative of the issues
20 or rights . . . but must instead leave [agency] officials free to consider the individual facts in the
21 various cases that arise.” Mada-Luna v. Fitzpatrick, 813 F.2d 1006, 1014 (9th Cir. 1987) (internal
22 quotation marks and citations omitted); see also Gill v. U.S. Dep’t of Just., 913 F.3d 1179, 1186
23 (9th Cir. 2019) (“The critical factor to determine whether a directive announcing a new policy
24 constitutes a legislative rule or a general statement of policy is ‘the extent to which the challenged
25 directive leaves the agency, or its implementing official, free to exercise discretion to follow, or
26 not to follow, the announced policy in an individual case.’”) (alterations omitted) (quoting Colwell
27 v. Dep’t of Health & Human Servs., 558 F.3d 1112, 1124 (9th Cir. 2009)).
1 2. Application of Analytical Framework
2 In light of the Court’s above discussion of the relevant framework, the Court will evaluate
3 whether the NHK-Fintiv standard (1) affects individual rights and obligations; (2) operates
4 prospectively; (3) leaves the PTAB free to exercise discretion and consider the individual facts
5 before it in a given case; and (4) has binding effects, establishes a binding norm, or is otherwise
6 determinative of any issues or rights.
7 a. Affects Individual Rights and Obligations
8 Plaintiffs argue that the NHK-Fintiv standard affects private interests by increasing the risk
9 of IPR denial and thereby “restricting the ability of infringement defendants to access IPR and its
10 benefits.” Pls.’ MSJ 18–19. Plaintiffs urge that the Court look to W.C. v. Bowen, 807 F.2d 1502
11 (9th Cir. 1987), amended on denial of reh’g, 819 F.2d 137 (9th Cir. 1987), where the circuit held
12 that a Social Security Administration program requiring mandatory screening and review of
13 decisions allowing disability benefits, if those decisions were made by specified administrative
14 law, constituted a substantive rule. See Pls.’ MSJ 19–20. Plaintiffs argue that the NHK-Fintiv
15 standard likewise changes existing policy because it established non-statutory factors that a
16 petitioner “must satisfy to access the benefits of IPR,” and was designed to alter the Board’s
17 decisionmaking and thereby displaced Board discretion. See id. The Director counters that the
18 Fintiv factors do not affect any legally protected individual rights or obligations, as IPR petitioners
19 have no right to IPR review, and the institution decision makes no determination regarding the
20 validity of the underlying patent at issue. See Def.’s Opp’n/MSJ 10. The Director additionally
21 notes that the Federal Circuit’s finding in its remand decision in this case—that Plaintiffs alleged
22 sufficient harm to establish standing—“does not automatically convert to a holding that Plaintiffs’
23 rights are altered by the Fintiv factors.” Id. at 12.
24 The Court agrees with the Director that the NHK-Fintiv standard—i.e., the application of
25 the Fintiv factors—does not “alter the landscape of individual rights and obligations,” Stupp, 5
26 F.4th at 1352, or “create rights, impose obligations, or effect a change in existing law pursuant to
27 authority delegated by Congress,” Yesler Terrace, 37 F.3d at 449. Congress has provided that the
1 Director “may not authorize an [IPR] to be instituted unless . . . there is a reasonable likelihood” of
2 success with respect to at least one challenged claim. 35 U.S.C. § 314(a) (“Threshold.”)
3 (emphasis added). However, there is no set of circumstances under which the Director is required
4 to authorize IPR institution. See generally 35 U.S.C. §§ 311, et seq.; see also, e.g., SAS Inst., Inc.
5 v. Iancu, 138 S. Ct. 1348, 1355 (2018) (“The Director, we see, is given . . . the choice ‘whether’ to
6 institute an inter partes review.”). The NHK-Fintiv standard, which requires that the Board
7 consider certain non-exclusive factors in determining whether to institute IPR is therefore
8 distinguishable from the program reviewed in W.C. v. Bowen, which affected individuals’
9 “existing rights” to social security benefits by altering decisions toward benefit denials. See 807
10 F.2d at 1505. Where there is no existing right to the action sought by a petitioner, i.e., where a
11 grant of the requested relief is entirely discretionary, the fact that an agency action “diminishes the
12 likelihood,” that the agency will grant relief does not require a finding that preclude the action
13 from “constitut[ing] a general statement of policy,” even if the agency action “will cause a
14 ‘substantial impact’ to the rights of a specific class.” Mada-Luna, 813 F.2d at 1016.5
15 To the extent Plaintiffs argue that the NHK-Fintiv standard imposes on the right to bring a
16 petition for IPR within one year of being served with an infringement complaint, see Pls.’ MSJ
17 21–22, the Federal Circuit has affirmed this Court’s dismissal of Plaintiffs’ claim that the NHK-
18 Fintiv standard is contrary to the one-year window set by statute. See Apple, 63 F.4th at *11–13.
19 Further, there is no statutory language suggesting that Plaintiffs should expect the same likelihood
20 of institution regardless of the time of filing within the one-year window; rather the window
21

22
5 The Federal Circuit, in holding that Plaintiffs had alleged facts sufficient to confer standing,
23 noted that Plaintiffs plausibly alleged that the NHK-Fintiv standard caused harm by denying IPR
benefits linked to an infringement defendant’s legally protected interests in the infringement suit.
24 See Apple, 63 F.4th at 17. Plaintiffs argue that this finding should lead to the conclusion that the
NHK-Fintiv standard is a substantive rule because it alters legal rights, see Pls.’ MSJ 18, but that
25 argument would collapse the threshold analysis of standing with that of the merits of the APA
claim, which is the very distinction between threshold and merits analysis that the Federal Circuit
26 concluded applied to this case. See Apple, 63 F.4th at 15 (“The government in Lincoln explained
this distinction . . . [and] [w]e conclude that the distinction applies here.”). The Court is not here
27 required to take Plaintiffs’ allegations as true, and makes its finding regarding the merits question
based on the analogous case law discussed in this section.
1 functions to create a time bar in the event the petitioner has been served with a complaint alleging
2 infringement of the patent. See 35 U.S.C. § 315(b). Lastly, nothing in the NHK-Fintiv standard
3 requires any action on the part of a petitioner or patent owner; rather, the Director’s designation of
4 the NHK and Fintiv decisions as precedential has required action only of the PTAB, as discussed
5 in greater detail below. See infra, at Part III(B)(2)(c). Accordingly, the Court finds that the NHK-
6 Fintiv factors do not alter, create, or impose any individual rights or obligations.
7 b. Operates Prospectively
8 As Plaintiffs note, the general definition of a “rule” is an “agency statement of general or
9 particular applicability and future effect designed to implement, interpret, or prescribe law or
10 policy.” Pls.’ MSJ 16 (quoting 5 U.S.C. § 551(4)). Such rules must be adopted through notice-
11 and-comment rule making, except for enumerated exceptions including “general statements of
12 policy.” Id. (quoting 5 U.S.C. § 553(b)). For an agency action to be a general statement of policy,
13 one requirement is that the action must operate “only prospectively.” Mada-Luna, 813 F.2d at
14 1014; see also Lincoln, 508 U.S. at 197 (noting that general statements of policy are “statements
15 issued by an agency to advise the public prospectively of the manner in which the agency proposes
16 to exercise a discretionary power”) (quoting Chrysler, 441 U.S. at 302 n.31).
17 Here, the parties do not dispute that the Director’s designation of the NHK and Fintiv
18 decisions as precedential had only a prospective effect. See generally Pls.’ MSJ; Def.’s
19 Opp’n/MSJ; see also SOP-2, at 7 (stating that precedential decisions constitute authority for
20 “subsequent matters involving similar facts or issues”) (emphasis added). Accordingly, the NHK-
21 Fintiv standard meets this necessary, though not sufficient, criterion for a general statement of
22 policy.
23 c. Exercise of Discretion
24 This next avenue of analysis—whether the NHK-Fintiv standard leaves agency officials
25 “free to exercise discretion”—is perhaps the thorniest one presented by this case. Clarian Health
26 W., 878 F.3d at 357; see also Mada-Luna, 813 F.2d at 1014 (noting that general statement of
27 policy must “leave [agency] officials free to consider the individual facts in the various cases that
1 arise”). Plaintiffs argue that the NHK-Fintiv standard leaves the Board with no discretion with
2 respect to both (1) considering the Fintiv factors and (2) denying institution “where those factors
3 on balance weigh against institution,” regardless of any case specific facts. See Pls.’ MSJ 17–18.
4 The Director agrees that the NHK-Fintiv standard requires the Board to consider the enumerated
5 factors, and argues that (1) the Director’s complete statutory discretion to deny institution of IPR
6 means that she may instruct the Board on her policy priorities, and (2) the Fintiv factors do not
7 require any particular outcome in a given case, but merely guide the Board’s attention to certain
8 facts to consider in conducting a holistic analysis. See Def.’s Opp’n/MSJ 13–18. The parties’
9 arguments as to whether the NHK-Fintiv standard replaces the Board’s discretion with respect to
10 the outcome of a petition to institute IPR overlap with the analysis of whether the standard is
11 binding or determinative, and the Court will therefore address those arguments in the following
12 section. See infra, at Part III(B)(2)(d). Here, the Court examines whether the NHK-Fintiv
13 standard’s undisputed requirement that the Board to consider the Fintiv factors (when presented
14 with arguments about a parallel district court proceeding) is a substantive rule.
15 At the outset, to the extent the Director argues that her own complete discretion to deny
16 institution of IPR means that she may set forth instructions that would require the Board to make
17 specific institution decisions in specific circumstances as a general statement of policy, the Court
18 rejects the argument as contrary to the requirement that agency decisionmakers remain free to
19 exercise their discretion. See Lincoln, 508 U.S. at 197 (general statements of policy concern “the
20 manner in which the agency proposes to exercise a discretionary power”); Clarian Health W., 878
21 F.3d at 357 (general statement of policy “genuinely left the agency and its decisionmakers free to
22 exercise discretion”) (emphasis added) (citation omitted).
23 The Court finds instructive the Ninth Circuit’s reasoning in Mada-Luna. There, the Court
24 considered whether two versions of operating instructions issued by the Immigration and
25 Naturalization Service (“INS”) were substantive rules or general statements of policy regarding
26 the grant of deferred action status. See 813 F.2d at 1017. Both versions of the operating
27 instructions required the agency decisionmakers to consider several enumerated, non-exclusive
1 factors when determining whether to recommend a case for deferred action, such as the age of the
2 applicant. See id. at 1008–09 nn. 1–2. The Ninth Circuit found each version of the operating
3 instruction to be a general statement of policy even though the instructions required the district
4 director to consider the specified factors, reasoning that the instructions “expressly authorize[d]”
5 and left the director free to consider any other individual facts in each case. See id. at 1017.
6 Similarly, here, the NHK-Fintiv standard enumerates a set of non-exclusive factors for
7 agency decisionmakers to consider when determining whether to institute an IPR. See Fintiv,
8 2020 WL 2126495, at *2 (noting that Fintiv factors relating to early trial date arguments are
9 similar to “other non-dispositive factors considered for institution,” all of which “should be
10 weighed as part of a ‘balanced assessment of all relevant circumstances of the case’”) (quoting
11 TPG 58); see also June 2022 Mem. 1–2 (“[Fintiv] articulates the following . . . nonexclusive
12 factors.”). Further, Fintiv not only includes a factor for “other circumstances”—a broad category
13 that makes explicit that the Board should consider “all the relevant circumstances in the case,” the
14 decision also expressly notes that “factors unrelated to parallel proceedings [may] bear on
15 discretion to deny institution,” such as “the filing of serial petitions, parallel petitions challenging
16 the same patent, and considerations implicated by 35 U.S.C. § 325(d).” Fintiv, 2020 WL
17 2126495, at *6–7 (footnotes and citations omitted). Accordingly, the “language and structure of
18 the directive” not only permit but in fact require that the Board exercise its discretion in
19 consideration of the particular facts presented in each case. See Mada-Luna, 813 F.2d at 1015
20 (citation omitted).
21 d. Binding or Determinative Effect
22 The Court lastly considers whether the NHK-Fintiv standard establishes a binding norm or
23 has a determinative effect. Plaintiffs argue that the standard is binding because the Board “must
24 grant or deny IPR petitions in accordance with the rule.” Pls.’ MSJ 10; see id. at 18 (“The Board
25 must apply the rule’s factors and deny institution in accordance with the NHK-Fintiv rule where
26 those factors on balance weigh against institution; the Board has no freedom to consider the
27 individual facts in the various cases that arise and grant an IPR petition where the balancing of the
1 rule’s factors dictates otherwise.”) (internal quotation marks omitted) (citing Mada-Luna, 813
2 F.2d at 1014). Plaintiffs additionally argue that the NHK-Fintiv rule “overall has proven
3 dispositive, as evidenced by its repeated use to deny IPR petitions.” Id. at 18 (citing Am. Compl.
4 ¶¶ 54–61); see id. at 9 (“[F]ollowing adoption of the rule, the percentage of cases raising parallel
5 litigation as a ground for denying institution nearly doubled. . . [and in] the first half of [2021,] the
6 Board denied institution in 38% of cases in which NHK-Fintiv was considered.”) (citations
7 omitted). The Director first counters a rule that is binding only within the agency is not a
8 substantive rule. See Def.’s Opp’n/MSJ 13–14 (citing Splane, 216 F.3d at 1064). The Director
9 further argues that the Fintiv factors in any event “do not compel a specific outcome on
10 institution,” id. at 12, and therefore do not establish a ‘binding norm’ because “merely guide the
11 Board’s decision-making process . . . without dictating any particular outcome,” id. at 14.
12 With respect to the Director’s first argument—that a rule that is binding within an agency
13 may not be substantive rule—the Court finds the Director’s reliance on Splane to be misplaced. In
14 Splane, the Federal Circuit rejected the argument that a rule’s binding effect within the agency
15 meant that the rule “necessarily ha[d] the ‘force and effect of law,’” such that it could not be
16 anything but a substantive rule. See 216 F.3d at 1064 (emphasis added); see id. (“Petitioners
17 assert that any agency rule that is binding on an agency tribunal has the ‘force and effect of law,’
18 and must therefore be deemed legislative in nature. We disagree.”). Any rule—substantive or
19 not—may be “binding on agency officials insofar as any directive by an agency head must be
20 followed by agency employees.” Id. (citation omitted). However, the Federal Circuit did not
21 hold, as the Director appears to argue, that a rule that binds only the agency may never be a
22 substantive rule. See id. Further, the Federal Circuit has since noted that one of the factors
23 relevant to whether an agency action constitutes substantive rule making is “whether the action has
24 binding effect on private parties or on the agency.” Disabled Veterans of Am., 859 F.3d at 1077
25 (emphasis added) (quoting Molycorp, 197 F.3d at 545).
26 The Director’s next argument—that the Fintiv factors are not outcome-determinative—is
27 more persuasive. The language of Fintiv repeatedly notes that various facts may weigh in favor of
1 or against instituting IPR. For example, in considering the first Fintiv factor of whether a stay
2 exists or is likely to be granted if an IPR proceeding is instituted, the Board noted that a district
3 court’s stay of litigation “has strongly weighed against exercising the authority to deny
4 institution,” while a court’s lack of indication that it would consider a motion to stay if a PTAB
5 proceeding were instituted “has sometimes weighed in favor of exercising authority to deny
6 institution.” Fintiv, 2020 WL 2126495, at *3. Fintiv itself does not reach a decision on instituting
7 an IPR, but rather only requests briefing consistent with the decision, see id. at *7; and the actual
8 decision based on the supplemental briefing has not been designated precedential, see Fintiv II,
9 2020 WL 2486683. Nothing in Fintiv would prevent a Board from considering all of the
10 enumerated factors and any others the Board deemed appropriate, finding that the factors related
11 to a parallel proceeding all weighed in favor of denial, but that the merits of the petition were so
12 strong that institution was the preferred disposition. See Fintiv, 2020 WL 2126495, at *6–7; see
13 also June 2022 Mem. 9 (“[T]he PTAB will not deny institution of an IPR . . . when a petition
14 presents compelling evidence of unpatentability.”) (emphasis added). For example, in
15 Commscope Techs. LLC v. Dali Wireless, Inc., the Director vacated and remanded the Board’s
16 decision instituting IPR without assessing the Fintiv factors, holding that on remand:

17 The Board should first assess Fintiv factors 1–5; if that analysis
supports discretionary denial, the Board should engage the
18 compelling merits question. If the Board reaches the compelling
merits analysis and finds compelling merits, it shall provide reasoning
19 to explain its determination. By issuing this Order, I express no
opinion on whether the Board need reach the compelling merits
20 analysis, nor whether the record as it existed before institution meets
the compelling merits standard; I leave these case-specific issues to
21 the sound discretion of the Board.
22 IPR2022-01242, 2023 WL 2237986, at *3 (P.T.A.B. Feb. 27, 2023) (precedential). Accordingly,
23 the Court finds that the NHK-Fintiv standard does not “so fill[] out the statutory scheme that upon
24 application one need only determine whether a given case is within the rule’s criterion.” Sacora v.
25 Thomas, 628 F.3d 1059, 1069 (9th Cir. 2010) (citation omitted).
26 Plaintiffs’ main argument to the contrary relies on what the perceived effects of the NHK-
27 Fintiv standard, i.e., an increase in denials of institution where there lies a parallel district court
1 proceeding. See Pls.’ MSJ 9, 17–18. Plaintiffs cite to non-precedential decisions in which the
2 Board determined that it could not refuse to consider the Fintiv factors for policy reasons. See id.
3 (citing, e.g., Apple Inc. v. Maxell, Ltd., No. IPR2020-00203, 2020 WL 3662522, at *7 (P.T.A.B.
4 July 6, 2020); Supercell Oy v. GREE, Inc., No. IPR2020-00513, 2020 WL 3455515, at *7
5 (P.T.A.B. June 24, 2020)). However, as discussed above, see supra, at Part III(B)(2)(c), a
6 requirement to consider a certain subset of factors as part of a holistic analysis is not a substantive
7 rule, and the decisions cited by Plaintiffs do not suggest that there existed other facts or
8 circumstances that would weigh in favor of instituting IPR that the Board was somehow prevented
9 from evaluating. See generally Apple, 2020 WL 3662522; Supercell Oy, 2020 WL 3455515.
10 The Court is sympathetic to Plaintiffs’ frustration that the Board has placed a greater
11 emphasis on efficiency between the combined PTAB and district court systems. However,
12 although Plaintiffs are doubtless unhappy with the outcomes of their petitions for IPR when those
13 petitions are denied, including where the Board considered the Fintiv factors, Plaintiffs’ claims
14 based on the allegedly unfair or absurd results have been dismissed, see Apple, 63 F.4th at *11–13,
15 and the outcome-based argument does not persuade the Court because the express language of
16 Fintiv, as well as the June 2022 Memo and other guidance from the Director, make clear that the
17 Board undertakes a holistic analysis when determining whether to exercise its discretion in
18 denying or instituting IPR. The Director’s guidance to the Board regarding her policy priorities of
19 “system efficiency, fairness, and patent quality,” Fintiv, 2020 WL 2126495, at *2, does not mean
20 that the NHK-Fintiv standard creates a “binding norm” or is otherwise outcome determinative.6
21 The Court also notes that these policies are entirely consistent with the rationale behind the
22 creation of the IPR process, which, along with other processes, was a corrective measure that
23 relieved the pressure on district courts from an increasing volume of infringement litigation based
24 on “bad patents.” See SAS Inst., 138 S. Ct. at 1353; 35 U.S.C. § 282(b)(2)–(3).
25 Accordingly, based on the Court’s foregoing evaluation of the NHK-Fintiv standard, it
26

27 6 In fact, counsel for the Director indicated at the hearing on these motions that Fintiv denials have
dropped significantly. See Tr. 37:7–12.
1 finds the NHK-Fintiv standard is a general statement of policy that guides the Board to consider
2 || certain enumerated factors related to parallel district court litigation with an eye toward overall
3 system efficiency, but expressly leaves the Board with genuine discretion to evaluate all facts and
4 || circumstances relevant to the institution or denial of IPR. Because the NHK-Fintiv standard is a
5 general statement of policy, rather than a substantive or legislative rule, the Director was not
6 || required to conduct notice-and-comment rule making prior to designating the NHK and Fintiv
7 decisions as precedential, and the lack of such rule making does not render the NHK-Fintiv
8 standard unlawful under the APA, 5 U.S.C. § 706(2)(D).
9 || IV. CONCLUSION
10 For the foregoing reasons, the Court hereby ORDERS that Plaintiffs’ motion for summary
11 || judgment is DENIED, and the Director’s motion for summary judgment is GRANTED. This
12 || order disposes of Plaintiffs’ sole remaining claim in this action, and the Court will enter judgment
5 13 against Plaintiffs and in favor of the Director.

IT IS SO ORDERED.
a 16 Dated: March 31, 2024

EDWARD J. DAVILA
Z 18 United States District Judge
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28 || Case No.: 20-cv-06128-EJD
ORDER RE PARTIES’ CROSS-MOTS. FOR SUMM. J.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10078592. Public record. Not legal advice.