Petition for Writ of Certiorari — Mylan Laboratories Ltd., Petitioner v. Janssen Pharmaceutica, N.V., et al.

Supreme Court briefAug 9, 2021

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No. 21-___

IN THE

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MYLAN LABORATORIES LTD.,

Petitioner,

JANSSEN PHARMACEUTICA, N.V.,

and

ANDREW HIRSHFELD, Performing the Functions and

Duties of the Under Secretary of Commerce for Intellectual Property and Director of the United States

Patent and Trademark Office,

Respondents.

________________

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

________________

PETITION FOR A WRIT OF CERTIORARI

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DEEPRO R. MUKERJEE

LANCE A. SODERSTROM

KATTEN MUCHIN

ROSENMAN LLP

575 Madison Avenue

New York, NY 10022

ROBERT T. SMITH

Counsel of Record

ERIC T. WERLINGER

KATTEN MUCHIN

ROSENMAN LLP

2900 K Street, NW

Washington, DC 20007

robert.smith1@katten.com

202-625-3500

Counsel for Petitioner

QUESTIONS PRESENTED

The Director of the U.S. Patent and Trademark

Office (acting through the Patent Trial and Appeals

Board) has created a six-factor test known as the

NHK-Fintiv Rule to determine whether to institute

inter partes review in light of parallel infringement

litigation pending in district court. Under NHKFintiv, the Board may deny a petition if it believes

that the parallel litigation has may proceed too far

for IPR to be of any efficient use. That is true even if

the IPR petition is timely filed within one year of the

petitioner being served with a patent-infringement

complaint, 35 U.S.C. § 315(b), and otherwise complies with Congress’s express limitations related to

co-pending litigation in other fora.

The practical import of the NHK-Fintiv Rule is

that it allows the Director to truncate the explicit

time limit created by Congress. Indeed, the Board

has wielded the NHK-Fintiv Rule to terminate scores

of timely filed petitions since March 2020. Worse,

this “rule” is not the product of a formal rulemaking,

despite Congress’s command that the Director “prescribe regulations” setting forth the standards and

rules governing the institution of IPR. 35 U.S.C.

§ 316(a). NHK-Fintiv is instead a creature of two

precedential Board decisions from which it takes its

name. It has never faced public comment, let alone

judicial review.

In this case, Petitioner appealed non-institution

of its IPR petition under NHK-Fintiv because the

rule exceeds the substantive and procedural limitations placed on the Director’s authority by Congress.

Notwithstanding the general prohibition on appellate

review of IPR institution decisions, 35 U.S.C.

§ 314(d), review is available to rein in the Director’s

overreach, SAS Inst. Inc. v. Iancu, 138 S. Ct. 1348,

1359 (2018).

The Federal Circuit refused to hear the appeal.

But instead of deciding whether this case fell within

the scope of SAS’s exception to the appellate bar, it

construed § 314(d) as establishing a categorical rule

that all non-institution decisions are nonappealable—in direct conflict with SAS. In light of this, the

panel below said it had no jurisdiction under 28

U.S.C. § 1295(a)(4)(A), which otherwise provides the

Federal Circuit authority to review an “appeal” from

a “decision” of the Board “with respect to … inter

partes review.”

The questions presented are:

1. Does 35 U.S.C. § 314(d) categorically preclude

appeal of all decisions not to institute inter partes review?

2. Is the NHK-Fintiv Rule substantively and procedurally unlawful?

iii

PARTIES TO THE PROCEEDING BELOW

AND RULE 29.6 STATEMENT

Petitioner Mylan Laboratories Ltd., the Appellant

below, is a subsidiary of Mylan, Inc., which in turn is

a wholly owned subsidiary of Viatris Inc. Viatris has

no parent company, and no publicly held company

owns 10% or more of its stock.

Respondents are: Janssen Pharmaceutica, N.V.,

the Appellee below; and Andrew Hirshfeld, in his capacity performing the functions and duties of the

Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and

Trademark Office, the Intervenor below.

TABLE OF CONTENTS

Questions Presented ....................................................i

Parties to the Proceeding Below

and Rule 29.6 Statement .................................... iii

Table of Authorities.................................................... vi

Introduction ................................................................. 1

Opinions Below ............................................................ 4

Jurisdiction .................................................................. 4

Statutory Provisions Involved .................................... 5

Statement .................................................................... 5

Reasons for Granting the Writ ................................. 13

The Decision Below Is Erroneous and

Conflicts With This Court’s Precedent .............. 14

A. The Federal Circuit Had Jurisdiction to

Hear This Case............................................. 14

B. The NHK-Fintiv Rule Exceeds the

Authority that Congress Delegated to the

Director......................................................... 21

II. The Questions Presented Are Exceptionally

Important ............................................................ 29

A. The Federal Circuit’s Misapplication of

§ 314(d) Severely Limits the Ability to

Challenge Misconduct by the Director and

Has Created Confusion Regarding

Appellate Jurisdiction over IPRs ................ 29

B. The NHK-Fintiv Rule Has Evaded

Judicial Review and Continues to Disrupt

the IPR System ............................................ 32

Conclusion ................................................................. 35

Appendix A: Order of the U.S. Court of Appeals for

the Federal Circuit (Mar. 12, 2021) ................... 1a

Appendix B: Decision of the U.S. Patent and Trade

Mark Office, Patent Trial and Appeal Board

(Sept. 16, 2020) ................................................. 17a

Appendix C: Statutory Provisions Involved

28 U.S.C. § 1295(a)(4)(A) .................................. 45a

35 U.S.C. § 314(a), (d) ....................................... 46a

35 U.S.C. § 315(b) ............................................. 46a

35 U.S.C. § 316(a)(2), (4) .................................. 47a

TABLE OF AUTHORITIES

CASES:

Aqua Prods., Inc. v. Matal,

872 F.3d 1290 (Fed. Cir. 2017) ........................... 27

Arthrex, Inc. v. Smith & Nephew, Inc.,

880 F.3d 1345 (Fed. Cir. 2018) ............................ 31

Cisco Sys. Inc. v. Ramot at Tel Aviv

Univ. Ltd., 834 F. App’x 571

(Fed. Cir. 2020) .................................................... 32

City of Arlington v. FCC,

569 U.S. 290 (2013) ........................................ 22, 24

Click-To-Call Techs., LP v. Ingenio, Inc.,

899 F.3d 1321 (Fed. Cir. 2018) ............................ 20

Cuozzo Speed Techs., LLC v. Lee,

136 S. Ct. 2131 (2016) .................................. passim

Dep’t of Comm. v. New York,

139 S. Ct. 2551 (2019) .......................................... 22

Holmberg v. Armbrecht,

327 U.S. 392 (1946) .............................................. 23

In re Cuozzo Speed Techs., LLC,

793 F.3d 1268 (Fed. Cir. 2015) ............................ 20

In re Dominion Dealer Sols., LLC,

749 F.3d 1379 (Fed. Cir. 2014) ............................ 30

In re Power Integrations, Inc.,

899 F.3d 1316 (Fed. Cir. 2018) ............................ 30

Intelligent Bio-Sys., Inc. v. Illumina

Cambridge Ltd.,

821 F.3d 1359 (Fed. Cir. 2016) .............................. 6

vii

Kisor v. Wilkie,

139 S. Ct. 2400 (2019) .......................................... 26

La. Pub. Serv. Comm’n v. FCC,

476 U.S. 355 (1986) .............................................. 21

Leedom v. Kyne,

358 U.S. 184 (1958) .............................................. 17

Lincoln v. Vigil,

508 U.S. 182 (1993) .............................................. 20

Microsoft Corp. v. i4i Ltd. P’ship,

564 U.S. 91 (2011) .................................................. 6

Perez v. Mortg. Bankers Ass’n,

575 U.S. 92 (2015) ................................................ 27

Petrella v. Metro-Goldwyn-Mayer, Inc.,

572 U.S. 663 (2014) ........................................ 23, 24

SAS Inst., Inc. v. ComplementSoft, LLC,

825 F.3d 1341 (Fed. Cir. 2016) ............................ 20

SAS Institute Inc. v. Iancu,

138 S. Ct. 1348 (2018) .................................. passim

SCA Hygiene Prods. Aktiebolag v. First

Quality Baby Prods., LLC,

137 S. Ct. 954 (2017) ............................................ 23

SEC v. Chenery Corp.,

332 U.S. 194 (1947) .............................................. 28

St. Jude Med., Cardiology Div., Inc. v.

Volcano Corp.,

749 F.3d 1373 (Fed. Cir. 2014) ............................ 31

Thryv, Inc. v. Click-To-Call Techs., LP,

140 S. Ct. 1367 (2020) ........................ 17, 18, 19, 20

United States v. Arthrex, Inc.,

141 S. Ct. 1970 (2021) ............................ 6, 7, 31, 32

viii

US Inventor Inc. v. Hirshfeld,

No. 21-CV-00047, 2021 WL 2936385

(E.D. Tex. July 13, 2021) ..................................... 33

Weyerhaeuser Co. v. U.S. Fish &

Wildlife Serv.,

139 S. Ct. 361 (2018) ............................................ 20

STATUTES AND LEGISLATIVE MATERIALS:

5 U.S.C. § 551(4) .................................................. 10, 27

5 U.S.C. § 553 ............................................................ 26

5 U.S.C. § 553(b) ........................................................ 26

5 U.S.C. § 553(c) .................................................. 26, 28

5 U.S.C. § 701(a)(2) ................................................... 20

28 U.S.C. § 1254(1) ...................................................... 5

28 U.S.C. § 1295(a)(4)(A)................................... passim

35 U.S.C. § 2(b)(2)(B) .......................................... 26, 27

35 U.S.C. § 141(c) ...................................................... 31

35 U.S.C. § 311(a) ........................................................ 6

35 U.S.C. § 311(b) .................................................... 5, 6

35 U.S.C. § 311(c) ...................................................... 22

35 U.S.C. § 312(a) ...................................................... 23

35 U.S.C. § 312(a)(3) ................................................... 6

35 U.S.C. § 313 ............................................................ 7

35 U.S.C. § 314(a) .............................................. passim

35 U.S.C. § 314(b) ........................................................ 5

35 U.S.C. § 314(d) .............................................. passim

35 U.S.C. § 315(a)(1) ........................................... 22, 25

35 U.S.C. § 315(a)(2) ................................................. 25

35 U.S.C. § 315(b) ........................................ 1, 7, 22, 25

35 U.S.C. § 315(d) ...................................................... 25

35 U.S.C. § 316(a) ........................................ 1, 8, 27, 28

35 U.S.C. § 316(a)(2) ............................................. 8, 26

35 U.S.C. § 316(a)(4) ............................................. 8, 26

35 U.S.C. § 316(a)(11) ................................................. 5

35 U.S.C. § 316(e) ........................................................ 6

35 U.S.C. § 318(a) ................................................ 22, 31

35 U.S.C. § 319 .................................................... 19, 20

35 U.S.C. § 325(d) ...................................................... 25

Leahy-Smith America Invents Act, Pub.

L. No. 112-29, 125 Stat. 284 (2011) ....................... 5

America Invents Act, H.R. 1249, 112th

Cong. (introduced Mar. 30, 2011) ........................ 23

Patent Reform Act of 2011, S. 23, 112th

Cong. (introduced Jan. 25, 2011) ......................... 23

Patent Reform Act of 2011, S. 23, 112th

Cong. (reported Feb. 3, 2011) .............................. 23

H.R. Rep. No. 112-98 (2011)........................................ 5

REGULATIONS AND AGENCY MATERIALS:

37 C.F.R. § 42.4(a) ................................................... 6, 7

77 Fed. Reg. 48612 (Aug. 14, 2012) ............................ 8

77 Fed. Reg. 48680 (Aug. 14, 2012) ............................ 8

83 Fed. Reg. 51340 (Oct. 11 2018) .............................. 8

PTAB DECISIONS:

Apple Inc. v. Fintiv, Inc.,

IPR2020-00019, 2020 WL 2126495

(PTAB Mar. 20, 2020) ............................ 1, 9, 10, 24

Mylan Labs. v. Janssen Pharmaceutica

NV, IPR2020-00440

(PTAB Feb, 07, 2020) ............................... 10, 11, 12

NHK Spring Co. v. Intri-Plex Techs.,

Inc., IPR2018-00752, 2018 WL

4373643 (PTAB Sept. 12, 2018) ....................... 2, 10

Philip Morris Prod., S.A. v. Rai

Strategic Holdings, Inc.,

No. IPR2020-00921, 2020 WL

6750120 (PTAB Nov. 16, 2020)............................ 24

OTHER AUTHORITIES:

J. Jonas Anderson & Paul Gugliuzza,

Federal Judge Seeks Patent Cases,

71 DUKE L.J. (forthcoming 2021) ........................ 34

Judge Albright Now Oversees 20% of

New US Patent Cases (Mar. 10,

2021), https://www.law360.com/

articles/1361071/judge-albright-nowoversees-20-of-new-us-patent-case ...................... 35

Mapping the Contours of PTAB

Discretionary Denials In 2020 (Dec. 15,

2020), https://www.law360.com/

articles/1335699/mapping-the-contoursof-ptab-discretionary-denials-in-202 ................... 34

Patent Trial and Appeal Board,

Standard Operating Procedure 2

(Rev. 10) (Sept. 20, 2018) ......................... 10, 27, 28

Unified Patents, Portal, https://bit.ly/3fCDI5b

(last visited Aug. 5, 2021) .................................... 33

Unified Patents, PTAB Discretionary

Denials Up 60%+ in 2020: Fueled

Entirely by 314(a) Denials (Jan. 5,

2021), https://www.unifiedpatents.

com/insights/2020-ptabdiscretionary-denials-report ................................ 33

DOCKETED CASES:

Apple Inc. v. Iancu,

No. 20-cv-6128 (N.D. Cal.) ................................... 33

Apple Inc. v. Maxell, Ltd.,

Nos. 20-2132, -2211-2213, 21-1033

(Fed. Cir.) ....................................................... 31, 32

Apple Inc. v. Optis Cellular Tech., LLC,

Nos. 21-1043, -1044, -1046 (Fed. Cir.) ........... 31, 32

Apple v. Optis Cellular Tech., LLC,

No. 21-118 (U.S.) .............................................. 4, 32

Google LLC v. Uniloc 2017 LLC,

No. 20-2040 (Fed. Cir.)......................................... 32

Intel Corp. v. VLSI Tech. LLC,

Nos. 21-1614, -1616-1617, -16731677, -1738-1741 (Fed. Cir.) .......................... 31, 32

Janssen Pharm., Inc. v. Mylan Labs.

Ltd., No. 19-cv-16484 (D.N.J.) ....................... 10, 11

Janssen Pharm., Inc. v. Teva Pharm.

USA, Inc., No. 18-cv-00734 (D.N.J.) .............. 10, 12

INTRODUCTION

This petition presents important questions about

the judiciary’s ability to oversee the administrative

state and the limits of agency discretion. Back in

May 2020, the PTO designated two Board decisions

as “precedential.” Through this internal administrative maneuvering, the NHK-Fintiv Rule was born—a

multi-factor test that asks whether, separate and

apart from the merits, institution of inter partes review should be denied because it would be “an inefficient use of Board resources in light of the ‘advance

state’ of parallel district court litigation” involving

the same patent claims. Apple Inc. v. Fintiv, Inc.,

IPR2020-00019, 2020 WL 2126495, at *1 (PTAB

Mar. 20, 2020) (quoting NHK Spring Co. v. Intri-Plex

Techs., Inc., IPR2018-00752, 2018 WL 4373643, at *7

(PTAB Sept. 12, 2018)). The rule did not face public

comment. Nor has it been reviewed on the merits by

a federal court. And if the Director has his way, it

never will.

The NHK-Fintiv Rule is unlawful. Substantively,

the rule renders Congress’s one-year period for seeking IPR illusory. 35 U.S.C. § 315(b). It allows the

Board to reject a timely filed IPR petition as “too

late” to be of any utility, based upon the Board’s assessment of the then-existing trial schedule in copending litigation—schedules that oftentimes are extended. Procedurally, the Director violated Congress’s command to promulgate substantive rules establishing standards for instituting inter partes review. 35 U.S.C. § 316(a). He instead created the rule

by fiat, slapping labels of precedential on Board decisions months (in the case of Fintiv) and years (in the

case of NHK) after they were issued.

Despite its short life, NHK-Fintiv has resulted in

chaos. Numerous timely filed IPR petitions have

been denied due to little more than an aggressive

(and oftentimes unrealistic) district-court scheduling

order. Worse, the rule has encouraged plaintiffs to

seek out courts that boast break-neck trial schedules

in patent cases, hoping that filing in these jurisdictions will minimize the chance of facing IPR. Particularly in light of the lack of public input, the patent

community is understandably upset about the NHKFintiv Rule and has raised a slew of challenges

against it. This is one such case.

Mylan sought review by the Federal Circuit after

the Board denied its IPR petition against Janssen

using the NHK-Fintiv Rule. Mylan invoked 28 U.S.C.

§ 1295(a)(4)(A), which vests the Federal Circuit with

jurisdiction to review an “appeal” from a “decision” of

the Board “with respect to … inter partes review.”

The Federal Circuit held that 35 U.S.C. § 314(d)

withdrew its jurisdiction, but that holding conflicted

with decisions of this Court. In SAS Institute Inc. v.

Iancu, for example, this Court held that § 314(d) is

no impediment where the Board “exceed[s] its statutory bounds,” and “judicial review remains available

consistent with the Administrative Procedure Act,

which directs courts to set aside agency action ‘not in

accordance with law’ or ‘in excess of statutory jurisdiction, authority, or limitations.’” 138 S. Ct. 1348,

1359 (2018) (quoting Cuozzo Speed Techs., LLC v.

Lee, 136 S. Ct. 2131, 2141 (2016)). Such is the case

here. No amount of discretion allows an agency to

ignore congressional limits on its power, enact rules

in a congressionally forbidden manner, or violate the

Constitution. That is exactly what the Director did

with NHK-Fintiv Rule.

The Federal Circuit distinguished Cuozzo and

SAS because both involved “an appeal from a final

written decision—not an institution decision.”

Pet.App.7a. But that distinction has no support in

the text of § 314(d) and clashes with this Court’s

precedent. In SAS, this Court reviewed the Board’s

decision not to institute review on all claims in an

IPR petition. 138 S. Ct. at 1359. The Court held that

“the statute forbids [t]his partial institution practice,” and it rejected the Director’s contention that

§ 314(d) precluded “judicial review of any legal question bearing on the institution of inter partes review.”

Id. Instead, relying on Cuozzo, the Court held that

§ 314(d) does not bar judicial review of a noninstitution decision when the Director has “exceed[ed] [his] statutory bounds.” Id.

Had the Federal Circuit engaged the substance of

those decisions, it would have readily concluded that

this case presents an instance of “shenanigans” that

falls outside the scope of § 314(d). Id. But it did not.

Unfortunately, the Federal Circuit has repeated this

error in multiple NHK-Fintiv appeals, dooming a

number of litigants to the same fate as Mylan.

All that is bad enough. But what makes this case

particularly disturbing is how it fits within the Director’s broader approach to defending NHK-Fintiv.

In the raft of litigation filed in the wake of NHKFintiv, the Director has maintained that no federal

court has jurisdiction to touch the rule. As he sees

things, the NHK-Fintiv Rule is an exercise of his absolute discretion to deny institution of inter partes

review for any reason the Board can think up. So in

direct challenges from non-institution, the Director

asserts the Federal Circuit lacks subject-matter jurisdiction under 28 U.S.C. § 1295(a)(4)(A), in light of

§ 314(d). And in district-court suits brought under

the Administrative Procedure Act, the Director

claims the plaintiffs lack standing to challenge the

rule. In essence, the Director has said to patent

community and the courts: “Heads, I win; tails, you

lose.”

Review by this Court is critical. Indeed, another

litigant in Mylan’s position recently petitioned this

Court for review, Apple, Inc. v. Optis Cellular Tech.,

LLC, No. 21-118 (filed July 26, 2021)—underscoring

the urgent need for this Court’s intervention. The Director has used the unlawful NHK-Fintiv Rule to cull

scores of IPR petitions in its short life. And given the

Federal Circuit’s failure to apply this Court’s precedent properly, the practice will continue unabated

and without recourse for aggrieved parties unless

this Court steps in.

OPINIONS BELOW

The opinion of the court of appeals (Pet.App.1a16a) is reported at 989 F.3d 1375 (Fed. Cir. 2021).

The Board’s decision denying institution of inter

partes review (Pet.App.17a-44a) is not reported but

available at 2020 WL 5580472 (PTAB Sept. 16,

2020).

JURISDICTION

The judgment of the court of appeals was entered

on March 12, 2021. Pet.App.16a. By a general order

of this Court dated March 19, 2020, which was modified by an order dated July 19, 2021, the time for fil-

ing this petition was extended to 150 days from the

date of the lower-court judgment. The jurisdiction of

this Court is invoked under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

The relevant statutory provisions are reprinted in

the appendix to this petition. Pet.App.45a-47a.

STATEMENT

Background

1. Congress introduced IPR as part of the LeahySmith America Invents Act (“AIA”), Pub. L. No. 11229, 125 Stat. 284 (2011). It intended IPR to provide a

“quick and cost effective alternative[ ] to litigation”

and to “improve patent quality and restore confidence in the presumption of validity that comes with

issued patents in court.” H.R. Rep. No. 112-98, pt. 1,

at 45, 48 (2011). IPR replaced the former system of

inter partes reexamination. See Cuozzo, 136 S. Ct. at

2137. IPR is “a second look at an earlier administrative grant of a patent.” Id. at 2144. The AIA also created the Patent Trial and Appeal Board within the

Patent and Trademark Office. Id. at 2137.

IPR has a number of benefits for patent challengers over district-court litigation. It is limited in scope

and follows a statutorily prescribed schedule, which

means it is usually quicker and cheaper than district-court litigation. 35 U.S.C. §§ 311(b) (limiting

IPR to novelty and obviousness challenges); 314(b)

(time limit for deciding to institute IPR); 316(a)(11)

(time limit for issuing a final written decision). It requires a lower burden of proof for invalidity—a preponderance of the evidence, as opposed to clear and

convincing evidence. Compare 35 U.S.C. § 316(e),

with Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91,

95 (2011). And the case is heard by a panel of administrative patent judges, all of whom have a technical

background. See United States v. Arthrex, Inc., 141 S.

Ct. 1970, 1977 (2021).

IPR is a two-step process consisting of institution

and trial. This case involves the first step of the process. Any person other than the patent owner can file

a petition for IPR. 35 U.S.C. § 311(a). Preparing an

IPR petition is no small undertaking. The would-be

patent challenger must identify, “in writing and with

particularity, each claim challenged, the grounds on

which the challenge to each claim is based, and the

evidence that supports the grounds for the challenge

to each claim.” Id. § 312(a)(3). The petition must include “copies of patents and printed publications that

the petitioner relies upon in support of the petition,

id. § 312(a)(3)(A), as well as “affidavits or declarations of supporting evidence and opinions, if the petitioner relies on expert opinions,” id. § 312(a)(3)(B).

PTO regulations echo this requirement: a petition

must contain “[a] full statement of the reasons for

the relief requested, including a detailed explanation

of the significance of the evidence including material

facts, and the governing law, rules, and precedent.”

37 C.F.R. § 42.22(a)(2).

Arguments and evidence not presented in the petition are deemed waived. Intelligent Bio-Sys., Inc. v.

Illumina Cambridge Ltd., 821 F.3d 1359, 1369 (Fed.

Cir. 2016). That means a petitioner must make its

full case-in-chief in its IPR petition. It must formulate its invalidity arguments, marshal the prior art

supporting its position, retain experts, and help pre-

pare often-times lengthy declarations. A litigant thus

cannot put together a filing overnight. And the patent owner has “the right to file a preliminary response to the petition” containing “reasons why no

inter partes review should be instituted based upon

the failure of the petition to meet any requirement of

this chapter.” 35 U.S.C. § 313.

The Director may institute review if he concludes

that “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the

claims challenged in the petition.” Id. § 314(a). The

Director has delegated his statutory discretion to the

Board, which considers IPR petitions in threemember panels typically comprised of three administrative patent judges. 37 C.F.R. § 42.4(a); Arthrex,

Inc., 141 S. Ct. at 1977.

Congress gave the Director discretion to determine whether to institute IPR under § 314(a). But it

also placed a number of statutory limitations on that

discretion. Two are important here:

First, Congress instructed that 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). This provision reflects Congress’s attempt to balance two competing needs. On one hand, many petitioners will not

seek IPR until after they have been sued for infringement, so it is necessary to give them a reasonable amount of time after they have been served with

a complaint to put together an IPR petition. On the

other hand, parallel litigation can be a source of inefficiency, disruption, and potentially abuse, so would-

be petitioners need to act expeditiously if they wish

to seek inter partes review. Congress settled on one

year as an appropriate period in light of these concerns.

Second, Congress commanded the Director to

“prescribe regulations” governing various aspects of

the IPR process. 35 U.S.C. § 316(a). This includes

regulations “setting forth the standards for the showing of sufficient grounds to institute a review under

section 314(a),” as well as “establishing and governing inter partes review under this chapter and the

relationship of such review to other proceedings under this title.” Id. § 316(a)(2), (4). This reflects Congress’s typical approach to administrative law: it lays

out key boundaries on the agency’s power in the

statute, while leaving other details to be formed by

the agency itself through the rulemaking process.

The Director has previously established a number of

rules related to IPR through notice-and-comment

rulemaking. E.g., 77 Fed. Reg. 48,612 (Aug. 14,

2012); 77 Fed. Reg. 48,680 (Aug. 14, 2012); 83 Fed.

Reg. 51,340 (Oct. 11, 2018).

2. The Director’s discretion to institute (or not

institute) IPR is typically unreviewable. In a provision entitled “No Appeal,” Congress provided that

the “determination by the Director whether to institute an inter partes review under this section shall

be final and nonappealable.” 35 U.S.C. § 314(d). But

as this Court has previously held, the AIA’s appellate

bar does not amount to an unchecked grant of power

to the Director over institution decisions. To the contrary, § 314(d) does not preclude review where the

Director has acted “‘outside [his] statutory limits.’”

SAS, 138 S. Ct. at 1359 (quoting Cuozzo, 136 S. Ct.

at 2141).

3. Under the NHK-Fintiv Rule, the Board will

consider the “advanced state of the district court proceeding” when deciding whether to deny instituting

IPR. Fintiv, Inc., 2020 WL 2126495, at *2. To determine the “state” of the district-court litigation, the

PTAB applies a six-factor analysis that looks at:

(1) “whether the court granted a stay or evidence

exists that one may be granted if a proceeding

is instituted”;

(2) “proximity of the court’s trial date to the

Board’s projected statutory deadline for a final written decision”;

(3) “investment in the parallel proceeding by the

court and the parties”;

(4) “overlap between issues raised in the petition

and in the parallel proceeding”;

(5) “whether the petitioner and the defendant in

the parallel proceeding are the same party”;

and

(6) “other circumstances that impact the Board’s

exercise of discretion, including the merits.”

Id.

If the Board decides that the first five factors

weigh in favor of denial, it will reject the petition

without addressing the merits—the lone factor that

Congress articulated under 35 U.S.C. § 314(a) for

granting a petition. All the more troubling, the Board

will deny a petition under NHK-Fintiv even if it is

filed within the one-year window for seeking IPR.

In May 2020—nearly two months after Fintiv was

issued and almost two years after NHK was rendered—the Director designated both NHK and Fintiv

“precedential.” This after-the-fact maneuvering made

these decisions “binding” on the Board “in subsequent matters involving similar facts or issues.” Patent Trial and Appeal Board, Standard Operating

Procedure 2 (Rev. 10) (“SOP-2”), at 11 (Sept. 20,

2018). By doing so, the Director adopted those decisions as a “rule”—“an agency statement of general or

particular applicability and future effect.” 5 U.S.C.

§ 551(4). The designation process is done behind

closed doors at the PTO, and the public is given neither notice nor an opportunity for comment. SOP-2

at 8-11.

Procedural History

1. Mylan filed an abbreviated new drug application and Paragraph IV certification for paliperidone

palmitate in 2019. Janssen sued Mylan several

months later. Janssen Pharm., Inc. v. Mylan Labs.

Ltd., No. 19-cv-16484 (D.N.J. filed Aug. 8, 2019). By

this time, Janssen had already sued another generic

pharmaceutical company (Teva) and litigated the atissue patent for over a year. Janssen Pharm., Inc. v.

Teva Pharm. USA, Inc., No. 18-cv-00734 (D.N.J. filed

Jan. 17, 2018). On February 7, 2020—less than six

months after Janssen filed suit—Mylan petitioned

for IPR. Mylan Labs. v. Janssen Pharmaceutica NV,

IPR2020-00440 (hereinafter “Mylan IPR”), Paper 3

(PTAB Feb. 07, 2020).

About a month after Mylan filed its petition, the

Board issued its decision in Fintiv, and soon thereafter made both it and NHK precedential. Janssen

then urged the Board to deny Mylan’s petition in

light of the supposed advanced state of district-court

litigation involving the at-issue patent. Mylan IPR,

Paper 8, at 6-20 (PTAB Jun. 19, 2020).

Originally, Janssen tried to argue that IPR would

be a waste because the Mylan litigation was too far

along. Id. at 6-11; see also id. at 11-16. But that argument was not persuasive because trial was not

scheduled in the Mylan litigation, no depositions had

been taken, and the district court would have taken

no material action in the case by the time of institution. Mylan IPR, Paper 16, at 1-2 (PTAB July 20,

2020). So in a sur-reply, Janssen argued that the

Board should deny Mylan’s petition because trial in

the Teva litigation was “imminent.” Mylan IPR, Paper 14, at 1 (PTAB July 17, 2020).

2. The Board sided with Janssen. It concluded

that granting Mylan’s petition would be inefficient in

light of co-pending district-court litigation on the atissue patent. Pet.App.43a. Though it cited to both the

Mylan and the Teva litigations as bases for its decision, the Board focused on the state of the Teva litigation. Pet.App.25a-41a. It factored the Teva litigation into all five of the main NHK-Fintiv factors, and

it placed particular emphasis on the fact that Teva

was (at the time) scheduled to go to trial at the end

of September 2020. Pet.App.27a, 30a-31a, 33a, 34a35a, 36a.

Of the Mylan litigation, the Board could only

surmise that there was a “reasonable likelihood” that

trial might occur before it could render a final written decision (at the time, and to this day, trial had

not been set). Pet.App.36a. It also gave no weight to

the fact that the “defendant in the Teva litigation is,

self-evidently, an unrelated party” to Mylan, concluding that it was good enough that the same patent

and similar arguments were presented in Teva’s

case. Pet.App.39a-40a. Finally, the PTAB did not

delve into the merits of the case, deeming the sixth

NHK-Fintiv factor neutral. Pet.App.42a.

Meanwhile, the district court has still not rendered a decision in the Teva litigation. The case did

not go to trial until mid-October 2020. And closing

arguments were not held until March 2021. See

Janssen Pharm., Inc. v. Teva Pharm. USA, Inc., No.

18-cv-00734, ECF No. 151 (D.N.J. Oct. 30, 2020).

Mylan’s district-court litigation against Janssen is

presently stayed pending the outcome of the Teva

litigation.

3. Mylan appealed to the Federal Circuit.

Janssen moved to dismiss the appeal for want of jurisdiction, arguing principally that § 314(d) barred

the appeal because the NHK-Fintiv Rule is an appropriate exercise of the Director’s discretion under

§ 314(a) and, in any event, the Federal Circuit lacked

jurisdiction over a non-institution decision. The Director intervened and amplified the latter point.

In a precedential decision, the panel below dismissed Mylan’s appeal. It concluded that it lacked

jurisdiction because § 314(d) establishes a categorical

bar on non-institution decisions. Pet.App.5a-8a. Because of this, the panel found there was no “appeal”

over which to assert jurisdiction pursuant to

§ 1295(a)(4)(A). Id. The court never engaged the substance of Cuozzo and its progeny. Instead, the panel

said that these cases apply only to “an appeal from a

final written decision—not an institution decision.”

Pet.App.7a.

The panel concluded that it had jurisdiction to

hear an alternative request for mandamus,

Pet.App.12a, but it ultimately refused to grant any

relief. Notably, the panel held that, “[w]hen a mandamus petition challenges a decision denying institution, the mandamus standard will be especially difficult to satisfy.” Pet.App.13a. And it stated that “it is

difficult to imagine a mandamus petition that challenges a denial of institution and identifies a clear

and indisputable right to relief,” because, in the panel’s view, the Director had virtually unfettered discretion to deny review. Pet.App.14a-15a. Though the

panel left the door cracked ajar to future mandamus

relief, it observed that the extraordinary writ is a

functionally useless device in the context of a noninstitution decision.

REASONS FOR GRANTING THE WRIT

Review of the NHK-Fintiv Rule is of extreme importance to the patent community. Since it was formalized in May 2020, the Board has used the rule to

procedurally terminate over one hundred IPR petitions, and it has spawned a flurry of litigation—

mostly in the Federal Circuit. The decision below

erects a massive jurisdictional roadblock to judicial

review of the NHK-Fintiv Rule and other ultra vires

conduct by the Director.

In holding that it did not have jurisdiction to consider the Rule, the Federal Circuit departed from

this Court’s precedent. Contrary to SAS and Cuozzo,

the Federal Circuit held that § 314(d) bars all judicial review of “decisions denying institution,”

Pet.App.3a—even if the Director “act[s] outside [his]

statutory limits,” SAS, 138 S. Ct. at 1359. In so hold-

ing, the Federal Circuit cast aside SAS as involving

“an appeal from a final written decision—not an institution decision.” Pet.App.7a. But SAS reviewed

the Director’s decision to partially not institute IPR,

and it rejected the Director’s contention that § 314(d)

barred this Court’s review of that practice. 138 S. Ct.

at 1359. If SAS did not implicate § 314(d), this Court

would have said so. Instead, this Court held that

§ 314(d) does not bar judicial review where, as

there—and here—the Director denies institution on

a ground “the statute forbids.” Id.

I. The Decision Below Is Erroneous

Conflicts With This Court’s Precedent.

and

A. The Federal Circuit Had Jurisdiction to

Hear This Case.

The Federal Circuit has jurisdiction under 28

U.S.C. § 1295(a)(4)(A) to review a final “decision” of

the Board “with respect to … inter partes review.”

That grant of authority is broad enough to encompass Mylan’s appeal, which challenges the substantive and procedural lawfulness of the NHK-Fintiv

Rule used by the Board to deny its IPR petition. See

infra Section I.B. (explaining why the NHK-Fintiv

Rule is unlawful). Even the panel below acknowledged the “language in § 1295(a)(4) seems … broad

enough to reach an appeal from a decision denying

institution” standing alone. Pet.App.6a.

Nothing in 35 U.S.C. § 314(d) withdraws that jurisdiction. The Board relied exclusively upon the

NHK-Fintiv Rule to reject Mylan’s IPR petition and

made no assessment of the merits of patentability.

So Mylan’s appeal presented a clean question of

whether the Board exceeded the statutory discretion

granted to the Director under the AIA, which is appealable according to the applicable statutory text of

35 U.S.C. § 314(d) and this Court’s precedent. The

Federal Circuit’s decision to the contrary is wrong.

1. Congress delegated discretion to the Director

to determine whether to institute IPR. 35 U.S.C.

§ 314(a). When exercised within the confines of his

congressionally vested authority, the Director’s discretion whether to institute IPR is unreviewable on

appeal. 35 U.S.C. § 314(d). As this Court explained in

Cuozzo, § 314(d) “bar[s] judicial review” or “mine-run

claim[s]” that challenge the Director’s determination

under § 314(a) that “there is a reasonable likelihood

that the petitioner would prevail with respect to at

least 1 of the claims challenged.” 136 S. Ct. at 2136,

2142. The “legal dispute” in Cuozzo was “an ordinary

dispute about the application of certain relevant patent statutes concerning the Patent Office’s decision

to institute inter partes review.” Id. at 2139 (challenging the Board’s determination that the IPR petition had been pled “with particularity” pursuant to

§ 312).

But the Court in Cuozzo did not construe § 314(d)

as a complete jurisdictional blackout of review over

all institution-phase errors. It “emphasize[d]” that its

“interpretation [of § 314(d)] applies where the

grounds for attacking the decision to institute inter

partes review consist of questions that are closely

tied to the application and interpretation of statutes

related to the Patent Office’s decision to initiate inter

partes review.” Id. at 2141. It did not “decide the precise effect of § 314(d) on appeals that implicate constitutional questions, that depend on other less close-

ly related statutes, or that present other questions of

interpretation that reach, in terms of scope and impact, well beyond ‘this section.’” Id. That came later

in SAS.

Relying on Cuozzo, the Court in SAS held that, if

a party challenges a decision of the Board as “exceeding its statutory bounds, judicial review remains

available consistent with the Administrative Procedure Act, which directs courts to set aside agency action ‘not in accordance with law’ or ‘in excess of statutory jurisdiction, authority, or limitations.’” SAS

Inst. Inc., 138 S. Ct. at 1359 (quoting Cuozzo, 136 S.

Ct. at 2141). Such was the case in SAS itself. The

challenger in SAS petitioned for review of over a

dozen patent claims, but the Board “instituted review on only some” of them. Id. at 1354. It “denied

review on the rest” pursuant to a “regulation that

purported to recognize a power of ‘partial institution.’” Id. The Court struck the rule down as unlawful because it contravened the AIA. Id. at 1355-59.

SAS’s holding is consistent with the text of

§ 314(d) itself, which strips jurisdiction only where

the Director has exercised his discretion “under this

section”—namely, § 314 and related provisions. Section 314(d) is not a bar when the Director exceeds his

authority under law. This Court said as much in

SAS. When the Director invoked § 314(d) to prevent

review of the unlawful partial-institution rule, this

Court observed that the statute “does not enable the

agency to act outside its statutory limits.” 138 S. Ct.

at 1359 (internal quotation marks omitted). Nothing

in § 314(d) or Cuozzo “withdraws [the Court’s] power

to ensure that an inter partes review proceeds in accordance with the law’s demands.” Id.

The Court’s recent decision in Thryv v. Click-ToCall Technologies, LP fits squarely within this

framework. The issue in Thryv concerned the Board’s

application of the statutory prerequisites for initiating IPR—namely, when the statutory clock starts for

the one-year time bar. 140 S. Ct. 1367, 1373 (2020).

Critically, neither party in Thryv questioned whether

the time bar applied to the case; rather the patentee

just disagreed with the decision of when the one-year

clock started to run. Id. But in SAS, the Board completely ignored the statute and acted in excess of the

boundaries placed on it by Congress. Put another

way, there is a difference between misapplying the

statute and ignoring the statute altogether. The appellate bar stops aggrieved parties from challenging

the former. The latter is fair game for the courts.

The rule carved out by Cuozzo, SAS, and Thryv

accords with first principles of federal jurisdiction

and administrative law. There is a “‘strong presumption’ in favor of judicial review” that this Court applies when it “interpret[s] statutes, including statutes that may limit or preclude review.” Cuozzo, 136

S. Ct. at 2140; SAS, 138 S. Ct. at 1359 (observing

limits on § 314(d) in light of the presumption). Similarly, this Court has expressed reluctance to eliminate judicial review of agency action that exceeds

congressional limits on the agency’s power to act.

Leedom v. Kyne, 358 U.S. 184, 187-89 (1958).

Mylan’s challenge to the NHK-Fintiv Rule fits

neatly within the statutory text and the ultra vires

exception to § 314(d). Unlike in Cuozzo, Mylan is not

challenging the Board’s determination whether there

is a reasonable likelihood that at least one of its invalidity arguments would prevail on the merits. And

unlike in Thryv, Mylan is not challenging the Board’s

application of a statutory prerequisite to instituting

IPR. Rather, as explained in detail below, Mylan’s

argument is that that Board altogether ignored congressional imitations on the Director’s discretion. See

infra Section I.B. Cuozzo and SAS make clear arguments like this are reviewable on appeal notwithstanding § 314(d).

2. The Federal Circuit did not try to apply Cuozzo and its progeny to this case. It instead read

§ 314(d) to categorically foreclose appeal of all noninstitution decisions. Pet.App.6a. (“Section 314(d)

prevents ‘appeal’ from a decision denying institution.”). It brushed aside this Court’s limits on the

scope of § 314(d) by concluding they apply only to “an

appeal from a final written decision—not an institution decision.” Pet.App.7a. Because the Federal Circuit decided there was “no appeal” of a noninstitution decision, it held that it lacked jurisdiction

under 28 U.S.C. § 1295(a)(4)(A). Pet.App.6a-8a.

The distinction drawn by the Federal Circuit is

unmoored from the statutory text of § 314(d) and atodds with this Court’s decision in SAS. Section

§ 314(d) applies to “determination[s] … whether to

institute” made “under this section.” (Emphasis added.) The text is agnostic as to whether the Director’s

“determination” is institution, partial institution, or

non-institution The provision applies all the same,

which means this Court’s decisions construing the

provision apply, too, and those decisions limit the bar

to the Director’s actions taken consistent with “this

section” and the law more generally. By finding a

non-existent distinction in § 314(d), the Federal Circuit committed a sin this Court warned against in

Cuozzo: it “reads into [§ 314(d)] … a limitation …

that the language nowhere mentions and that is unnecessary.” 136 S. Ct. at 2140.

It is also impossible to square the decision below

with the outcome in SAS. There, the Court reviewed

(and overturned) a partial non-institution decision.

138 S. Ct. at 1359. The Court held that “the statute

forbids [t]his partial institution practice.” Id. In so

holding, the Court expressly rejected the Director’s

contention that § 314(d) precluded “judicial review of

any legal question bearing on the institution of inter

partes review.” Id. Because “SAS contend[ed] that

the Director exceeded his statutory authority by limiting the review to fewer than all of the claims SAS

challenged,” this Court concluded it had power to review and correct the Director’s overreach: “nothing in

§ 314(d) or Cuozzo withdraws our power to ensure

that an inter partes review proceeds in accordance

with the law’s demands.” Id.

Likewise, the fact that SAS proceeded to a partial

final written decision is irrelevant to the operation of

§ 314(d). Cuozzo and Thryv both proceeded to final

written decisions. Yet the Court still applied § 314(d)

with full force because the issues presented in those

cases fell within the prohibitive scope of the provision. Indeed, the Court in Cuozzo considered and rejected a reading of § 314(d) that hinged upon whether the Board issues a final written decision, concluding that Congress did not intend to make this atextual distinction. 136 S. Ct. at 2140.

The Federal Circuit tried to smooth over this issue by asserting that 35 U.S.C. § 319—not 28 U.S.C.

§ 1295(a)(4)(A)—provided the jurisdictional basis for

Cuozzo, SAS, and Thryv. Pet.App.7a. That is incor-

rect.

The

Federal

Circuit

itself

invoked

§ 1295(a)(4)(A) as the basis for its jurisdiction in all

three cases. In re Cuozzo Speed Techs., LLC, 793

F.3d 1268, 1272 (Fed. Cir. 2015); SAS Inst., Inc. v.

ComplementSoft, LLC, 825 F.3d 1341, 1347 (Fed.

Cir. 2016); Click-To-Call Techs., LP v. Ingenio, Inc.,

899 F.3d 1321, 1328 (Fed. Cir. 2018). And in any

event, § 319 does not speak in jurisdictional language; it is a basic sign-posting provision that alerts

parties when the agency process has reached a point

where an appeal may be taken.

Nor does the discretion to institute review under

§ 314(a) make this case unreviewable under 5 U.S.C.

§ 701(a)(2). Pet.App.7a-8a. This Court has read the

exception in § 701(a)(2) “quite narrowly, restricting it

to ‘those rare circumstances where the relevant statute is drawn so that a court would have no meaningful standard against which to judge the agency’s exercise of discretion.’” Weyerhaeuser Co. v. U.S. Fish

& Wildlife Serv., 139 S. Ct. 361, 370 (2018) (quoting

Lincoln v. Vigil, 508 U.S. 182, 191 (1993)). As discussed below, there are “meaningful”—indeed,

clear—standards laid out by Congress against which

to judge the purported exercise of the Director’s discretion.

Simply put, the institution/non-institution distinction drawn by Federal Circuit is cut from whole

cloth. It is nowhere supported in the text of § 314(d)

and is fundamentally at odds with this Court’s decisions construing the statute.

Had the court below faithfully applied the statutory text and this Court’s binding case law, it would

have concluded that § 314(d) is not an impediment to

its jurisdiction. Mylan is not challenging the Direc-

tor’s determination on the merits of its petition, nor

“the application and interpretation of statutes related to the Patent Office’s decision to initiate inter

partes review.” Cuozzo, 136 S. Ct. at 2141. Mylan

claims instead that the Director has not exercised

discretion under “this section,” 35 U.S.C. § 314(d)—

specifically, that he has “exceed[ed] [his] statutory

bounds” by using the NHK-Fintiv Rule to dismiss

Mylan’s petition. SAS, 138 S. Ct. at 1359. In these

circumstances, “judicial review remains available

consistent with the Administrative Procedure Act,

which directs courts to set aside agency action ‘not in

accordance with law’ or ‘in excess of statutory jurisdiction, authority, or limitations.’” Id. (quoting Cuozzo, 136 S. Ct. at 2141). As a result, the Federal Circuit plainly had jurisdiction under the catch-all provided by 28 U.S.C. § 1295(a)(4)(A), which authorizes

that court to review an “appeal” from a “decision” of

the Board “with respect to … inter partes review.”

B. The NHK-Fintiv Rule Exceeds the

Authority that Congress Delegated to the

Director.

Section 314(d) forbids appellate review only when

the Director lawfully exercises his discretion under

§ 314(a), but the NHK-Fintiv Rule is not a lawful exercise of the Director’s discretion. Congress placed

both substantive and procedural limits on the Director’s authority under § 314(a). The NHK-Fintiv Rule

exceeds both.

1. Agencies are creatures of Congress. “[A]n

agency literally has no power to act … unless and

until Congress confers power upon it.” La. Pub. Serv.

Comm’n v. FCC, 476 U.S. 355, 374 (1986). A corollary

of this proposition is that Congress can limit or condition whatever power it decides to bestow upon an

agency. “Both their power to act and how they are to

act is authoritatively prescribed by Congress[.]” City

of Arlington v. FCC, 569 U.S. 290, 297 (2013) (emphasis added). When agencies act outside the boundaries set by Congress, “what they do is ultra vires.”

Id.

Here, Congress allows the Director to “authorize

an inter partes review to be instituted” if he “determines that the information presented in the petition”

shows “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).

Congress gave the Director discretion, to be sure. But

it “d[id] not leave his discretion unbounded.” Dep’t of

Comm. v. New York, 139 S. Ct. 2551, 2568 (2019).

Far from it, the AIA contains a number of conditions

on the Director’s discretion.

For example, Congress made institution an all-ornothing proposition. The Director cannot partially

institute review on fewer than all the claims challenged in the petition. 35 U.S.C. §§ 314(a), 318(a);

SAS, 138 S. Ct. at 1354. Additionally, the statute

says an IPR petition cannot be filed (and thus cannot

be considered) until 9 months after the patent is

granted or post-grant review is completed. 35 U.S.C.

§ 311(c). And IPR cannot be instituted if the petitioner previously filed a civil action challenging the validity of a claim of the patent in issue. Id. § 315(a)(1).

The one-year time bar established by § 315(b) is

no less a congressional limit on the Director’s discretion than any of these other provisions. It reflects a

deliberate policy choice by Congress to balance the

petitioner’s need for time to marshal its evidence and

prepare a document that complies with the requirements of § 312(a), with the need for patent litigation

in district court to move forward efficiently and without undue delay. Indeed, statutorily defined time

limits inherently “take[] account of delay.” Petrella v.

Metro-Goldwyn-Mayer, Inc., 572 U.S. 663, 677

(2014). For this reason, the Court has repeatedly

frowned on efforts to truncate congressionally mandated limitations periods using equitable or judgemade rules. Id. at 679 (“[I]n face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief[.]”); see also SCA Hygiene

Prods. Aktiebolag v. First Quality Baby Prods., LLC,

137 S. Ct. 954, 959-960 (2017); Holmberg v. Armbrecht, 327 U.S. 392, 395 (1946). This concern is particularly salient in this case, given that Congress

considered—and rejected—shorter time limits on filing for IPR. 1

The problem with the NHK-Fintiv Rule is that it

allows the Director to substitute his judgment of

what constitutes a timely filed petition (which is subject to change case-to-case) for that of Congress. In

the Director’s judgment, a petition may be untimely

if it is filed “six months before the statutory deadline,” as was the case here. Pet.App.34a. If a parallel

infringement suit is pending in an exceptionally fast

court, the Director may deem the petition too late if

it is filed less than one month after service of the

Patent Reform Act of 2011, S. 23, 112th Cong. § 315(b) (introduced Jan. 25, 2011) (three months); Patent Reform Act of

2011, S. 23, 112th Cong. § 315(b) (reported Feb. 3, 2011) (six

months); America Invents Act, H.R. 1249, 112th Cong. § 315(b)

(introduced Mar. 30, 2011) (nine months).

complaint. Philip Morris Prod., S.A. v. Rai Strategic

Holdings, Inc., No. IPR2020-00921, 2020 WL

6750120, at *7 (PTAB Nov. 16, 2020). Outcomes like

this cannot be reconciled with the one-year time bar

enacted by Congress. 2

The Director does this all in the name of “efficiency,” “fairness,” and avoiding “duplication of efforts” in

light of parallel proceedings. Fintiv Inc., 2020 WL

2126495, at *2-3. Those may well be laudable goals

in theory, but the problem is that Congress already

made a determination of what it thought to be efficient and fair when it comes to the timing of IPR.

That judgment is baked into § 315(b). Petrella, 572

U.S. at 677. No amount of discretion allows the Director to overrule Congress’s judgment; “how [the Director is] to act” in this regard “is authoritatively

prescribed by Congress[.]” City of Arlington, 569 U.S.

at 297.

Importantly, Congress had parallel proceedings in

mind when it crafted the AIA. That is clear from the

fact that service of an infringement complaint is the

trigger point for starting the clock. 35 U.S.C.

§ 315(b). Congress recognized that IPR would often

overlap with an infringement action pending in district court, and it was okay with that so long as an

Also troubling is the fact that the “clock” might start running in the Director’s mind long before a petitioner is even sued

for patent infringement. Here, the main reason the Board denied Mylan’s petition was because litigation involving Teva—a

third party and commercial rival over whom Mylan has no control—had allegedly progressed too far for Mylan’s IPR to be

worthwhile. Pet.App.27a-36a. This, too, undermines Congress’s

judgment as to when it is reasonable for the petitioner (not an

unrelated third party) to take action.

IPR petition was filed within the statutory limitations period.

Congress passed other regulations on parallel

proceedings in addition to the one-year time limit. It

prohibited the Director from instituting review if the

petitioner previously “filed a civil action challenging

the validity of a claim of the patent.” Id. § 315(a)(1).

And if a petitioner files such a civil suit after petitioning for IPR, Congress decided that suit will be

“automatically stayed” until the patent owner either

asks for the stay to be lifted or files its own claims for

patent infringement, or if the petitioner dismisses

the action. Id. § 315(a)(2). It also gave the Director

discretion to deny a petition if “the same or substantially the same prior art or arguments previously

were presented” to the PTO in other proceedings. Id.

§ 325(d). And it gave the Director discretion on how

to handle overlap between IPR and other proceedings

in the PTO, including “stay, transfer, consolidation,

or termination of any such matter or proceeding.” Id.

§ 315(d).

Plainly, Congress considered the “efficiency” and

“fairness” of IPR in the face of co-pending proceedings, and it created a number of statutory provisions

regulating the interplay between IPR and proceedings in other fora, including the one-year time bar.

The Director cannot wield his discretion under

§ 314(a) to override Congress’s policy decisions with

the NHK-Fintiv Rule. Indeed, it would have made

little sense for Congress to direct how IPR and overlapping proceedings should be managed “if, in truth,

the Director enjoyed the discretion” to deny IPR petitions based on parallel litigation, as he claims he

may. SAS, 138 S. Ct. at 1356. The truth of the matter

is that Congress has already struck what it believes

to be the right balance between IPR and parallel proceedings, and that balance is reflected in the text of

the AIA. “Where a statute’s language carries a plain

meaning,” the Director’s duty “is to follow its commands as written, not to supplant those commands

with others it may prefer.” SAS, 138 S. Ct. at 1355.

2. The NHK-Fintiv Rule is procedurally defective, too. The Director created the rule by labeling

two decisions of the Board “precedential” many

months after they were issued. This process does not

reflect lawful rulemaking—whether by notice-andcomment rulemaking or policymaking by adjudication.

It is textbook administrative law that the APA

“mandates that an agency use notice-and-comment

procedures before issuing legislative rules.” Kisor v.

Wilkie, 139 S. Ct. 2400, 2420 (2019) (citing 5 U.S.C.

§ 553(b), (c)). The AIA provides that the Director

“shall prescribe regulations … setting forth the

standards for the showing of sufficient grounds to institute a review under section 314(a),” and “establishing and governing inter partes review under this

chapter and the relationship of such review to other

proceedings under this title.” 35 U.S.C. § 316(a)(2),

(4). The contemplated regulations do not merely “advise the public” as to how the Director will exercise

his power, but instead “bind private parties” who

participate in the IPR process. Kisor, 139 S. Ct. at

2420. They accordingly must be promulgated using

“notice-and-comment procedures” under § 553 of the

APA. Id.; see also 35 U.S.C. § 2(b)(2)(B) (stating the

PTO may establish regulations, “which … shall be

made in accordance with section 553 of title 5”). In-

deed, the Director has previously used notice-andcomment rulemaking to promulgate regulations under § 316(a). See supra p. 8.

The NHK-Fintiv Rule likewise should have been

promulgated using the notice-and-comment procedure. It is “an agency statement of general or

particular applicability and future effect.” 5 U.S.C.

§ 551(4) (defining “rule”). And it is not a mere policy

statement. By designating NHK and Fintiv “precedential,” the Director made their standard “binding”

on the Board “in subsequent matters involving similar facts or issues.” SOP-2 at 11. The NHK-Fintiv

Rule therefore has the “force and effect of law” and

constitutes a substantive rule. Perez v. Mortg. Bankers Ass’n, 575 U.S. 92, 96 (2015).

Adopting the NHK-Fintiv Rule through the

“precedential” designation process violated the AIA’s

and APA’s notice-and-comment requirements. The

designation of NHK and Fintiv as precedential was

entirely internal, involving (at most) only the

recommendations of entities within the PTO. SOP-2

at 7. There was no opportunity for public comment

and no consideration by the Director of any public

input. Aqua Prods., Inc. v. Matal, 872 F.3d 1290,

1331-1332 (Fed. Cir. 2017) (Moore, J., concurring)

(“precedential Board decisions are not subject to

notice and comment”).

By creating NHK-Fintiv in this closed-door manner, the Director thwarted the entire purpose of notice-and comment rulemaking, which is to “give interested persons an opportunity to participate in

the rule making through submission of written data,

views, or arguments.” 5 U.S.C. § 553(c). The agency

“must consider and respond to significant comments

received during the period for public comment.” Perez, 575 U.S. at 96. Had the public been given a

chance to weigh in, they could have identified the

rule’s many defects, and the Director would have had

to alter the rule to address those defects or else

provide a reasoned explanation for refusing to do so.

NHK-Fintiv cannot be defended as a rule adopted

through adjudication. See SEC v. Chenery Corp., 332

U.S. 194, 203 (1947). Indeed, it was not adopted

through a binding adjudication at all. The NHKFintiv Rule only became binding (“precedential”)

based upon the Director’s say-so months (and years)

after the decisions were rendered. See SOP-2 at 1011. Importantly, the process employed by the Director here lacks the procedural protections that a true

adjudicative rulemaking would have. Neither the litigants nor the public had an opportunity to weigh in

on the Director’s post hoc decision to make NHK and

Fintiv precedential.

All the more troubling, there was no opportunity

for judicial review. By stamping NHK and Fintiv

“precedential,” and then invoking the appellate bar

to preclude review of the resulting standard, the Director has prevented review of the legality of the

NHK-Fintiv Rule that would have occurred in the

normal course had he engaged in formal rulemaking—and that’s on top of Congress’s command that

the Director “shall” promulgate rules through notice

and comment governing these procedures. 35 U.S.C.

§ 316(a).

The requirements of formal rulemaking are

meant to prevent administrative tyranny. The requirement for notice and public comment create

transparency and allows for participation by inter-

ested stakeholders in the rulemaking process. Opportunity for judicial review prevents unelected bureaucrats from usurping the courts’ power to say what the

law is. The process used to promulgate the NHKFintiv Rule circumvents all of these protections. It is

procedurally unlawful.

II. THE

QUESTIONS

PRESENTED

EXCEPTIONALLY IMPORTANT.

ARE

The issues presented here are extremely important. The Federal Circuit’s jurisdictional ruling

slams the door shut on the best (and perhaps only)

avenue for reviewing the NHK-Fintiv Rule and other

types of overreach like it. Particularly in light of the

Director’s aggressive use of the NHK-Fintiv Rule to

deny IPR petitions, immediate correction by this

Court is required.

A. The Federal Circuit’s Misapplication of

§ 314(d) Severely Limits the Ability to

Challenge Misconduct by the Director

and Has Created Confusion Regarding

Appellate Jurisdiction over IPRs.

The Federal Circuit’s flawed jurisdictional ruling

warrants this Court’s intervention. By construing

§ 314(d) to categorically foreclose review of noninstitution decisions, the court below effectively

handed the Director and the Board carte blanche to

deny IPR petitions for any random (and potentially

unlawful) reason they can dream up. The Board

could categorically refuse to hear certain kinds of

cases (e.g., pharmaceutical patents) in the name of

conserving scarce resources for other types of cases

that are of greater interest to the Director. Or it

could engage in outright arbitrary behavior by denying petitions based upon a lottery, coin flips, or drawing names out of a hat. The fact that the Director has

discretion to determine whether to institute review

does not mean that he can wield that discretion in an

arbitrary or discriminatory manner. Yet the decision

below renders courts powerless to police conduct well

outside the boundaries of the Director’s discretion.

To be sure, the panel left the door to mandamus

review cracked ajar. Pet.App.14a. But in doing so,

the panel stated that “it is difficult to imagine a

mandamus petition that challenges a denial of institution and identifies a clear and indisputable right to

relief,” because, in the panel’s view, the Director had

virtually unfettered discretion to deny review. Id.

Indeed, the Federal Circuit has previously “made

clear that where section 314(d) bars an appeal from a

Board decision not to institute inter partes review,

the petitioning party ‘has no “clear and indisputable”

right to challenge [the] non-institution decision directly in this court, including by way of mandamus.’”

In re Power Integrations, Inc., 899 F.3d 1316, 1320

(Fed. Cir. 2018) (quoting In re Dominion Dealer

Sols., LLC, 749 F.3d 1379, 1381 (Fed. Cir. 2014)).

Given this precedent, it is hard to see how mandamus is anything but a toothless remedy.

These problems are compounded by the fact that

the decision below created a three-way intra-circuit

split on the Federal Circuit’s IPR jurisdiction under

28 U.S.C. § 1295—an issue the en banc court has already refused to fix. Back in 2014, a Federal Circuit

panel said in dicta that the broad jurisdictional language in 28 U.S.C. § 1295(a)(4)(A) is limited exclusively to IPRs that proceed to a final written decision

under 35 U.S.C. §§ 318 and 141(c). St. Jude Med.,

Cardiology Div., Inc. v. Volcano Corp., 749 F.3d

1373, 1375-76 (Fed. Cir. 2014). A few years later, another panel authoritatively rejected that view. Arthrex, Inc. v. Smith & Nephew, Inc., 880 F.3d 1345,

1349 (Fed. Cir. 2018) (concluding it was “not bound

by the language in St. Jude” related to § 1295 because it did not “squarely address” the issue). Arthrex held—correctly—that “a final decision … dispos[ing] of an IPR proceeding … is a ‘decision’ from

the Board with respect to IPRs” for jurisdictional

purposes under § 1295. Id. The decision below now

partially resurrects the dicta from St. Jude by using

a flawed understanding of § 314(d) to limit the plain

language of § 1295. Pet.App.6a-7a. Notably, the panel below relegated Arthrex to a curt footnote, stating

(without explanation) that the panel saw “no conflict”

with its decision. Pet.App.6a.

Litigants have rightly disagreed on that last

point. Three en banc petitions have presented the irreconcilable conflict on this issue to the full Federal

Circuit—two of which have already been denied. 3

Granting certiorari and reversing the decision below,

whether here or in Apple, Inc. v. Optis Cellular

Tech., LLC, No. 21-118 (filed July 26, 2021), will

have the additional benefit of clearing up the confusion on this issue.

Apple Inc. v. Maxell, Ltd., No. 20-2132, ECF No. 49 (Fed.

Cir. Feb. 22, 2021); Apple Inc. v. Optis Cellular Tech., LLC, No.

21-1043, ECF No. 22 (Fed. Cir. Feb. 26, 2021); Intel Corp. v.

VLSI Tech. LLC, No. 21-1614, ECF No. 22 (Fed. Cir. June 21,

2021).

B. The NHK-Fintiv Rule Has Evaded

Judicial Review and Continues to

Disrupt the IPR System.

The lawfulness of the NHK-Fintiv Rule likewise

warrants this Court’s review. That rule is wrong, exceeds congressionally mandated limits on the Director’s power, and is disrupting Congress’s careful design of the IPR system. Yet, notwithstanding multiple attempts by numerous litigants in a variety of

fora, the rule has evaded judicial review for months.

No court has addressed the merits of the NHK-Fintiv

Rule.

This is due in no small measure to a concerted effort by the Director to prevent such review. At least

twenty-two appeals have been filed in the Federal

Circuit from NHK-Fintiv denials. The Director has

intervened in all of them and successfully argued

that they must be dismissed on jurisdictional

grounds. 4 As just noted, the Federal Circuit has been

presented with three en banc petitions urging it to

review panel decisions dismissing NHK-Fintiv appeals, two of which have already been rejected. See

supra p. 31. Finally, a group of plaintiffs has filed an

In addition to this case: Cisco Sys. Inc. v. Ramot at Tel Aviv

Univ. Ltd., 834 F. App’x 571 (Fed. Cir. 2020); Apple Inc. v. Maxell, Ltd., Nos. 20-2132, -2211-2213, 21-1033, ECF No. 38 (Fed.

Cir. Oct. 30, 2020) (dismissing five consolidated appeals);

Google LLC v. Uniloc 2017 LLC, No. 20-2040, ECF No. 21 (Fed.

Cir. Oct. 30, 2020); Apple Inc. v. Optis Cellular Tech., LLC, Nos.

21-1043, -1044, -1046, ECF No. 19 (Fed. Cir. Dec. 21, 2020)

(dismissing three consolidated appeals); Intel Corp. v. VLSI

Tech. LLC, Nos. 21-1614, -1616-1617, -1673-1677, -1738-1741,

ECF No. 21 (Fed. Cir. May 5, 2021) (dismissing twelve consolidated and related appeals).

APA action against the Director challenging NHKFintiv. The Director has moved to dismiss, arguing

the plaintiffs lack standing because his “unreviewable discretion” supposedly “displaces any cause of action” under the APA. 5 The matter is pending. Taken

as whole, the message from the Director’s various litigation positions is clear: no court can touch NHKFintiv—a troubling and unacceptable proposition.

Absent judicial review, the NHK-Fintiv Rule will

continue to create chaos for the IPR system. Since its

inception, the Director has wielded the NHK-Fintiv

Rule to dispose of numerous IPR petitions. By one

count, NHK-Fintiv was responsible for 85 denials in

2020. 6 The number is in the hundreds today and will

doubtlessly continue to rise without this Court’s intervention. 7

Worse, the rule has created a host of perverse incentives that jeopardize the congressional purpose of

IPR. By pegging the prospect of a discretionary denial to the speed of the schedule set by the district

court, patent plaintiffs are incentivized to file suit in

Apple Inc. v. Iancu, No. 20-cv-6128, ECF No. 64 at 1 (N.D.

Cal. Nov. 23, 2020). A separate group of plaintiffs filed a different APA action in the Eastern District of Texas seeking to compel a formal rulemaking on NHK-Fintiv and to enjoin all IPRs

in the meantime. That action has been dismissed for lack of

standing. US Inventor Inc. v. Hirshfeld, No. 21-CV-00047, 2021

WL 2936385, at *6 (E.D. Tex. July 13, 2021).

Unified Patents, PTAB Discretionary Denials Up 60%+ in

2020: Fueled Entirely by 314(a) Denials (Jan. 5, 2021),

https://www.unifiedpatents.com/insights/2020-ptabdiscretionary-denials-report

Unified Patents, Portal, https://bit.ly/3fCDI5b (last visited

Aug. 5, 2021).

jurisdictions that advertise fast-moving dockets. As

an example, many patent plaintiffs are flocking to

Waco in the Western District of Texas because the

judge’s “aggressive default schedule helps ensure

that, in most cases, [the NHK-Fintiv] factors will favor denying institution.” 8 Indeed, the judge in Waco

has “explicitly stated that part of his motivation [for]

setting such early trial dates is to allow litigants in

his courtroom to avoid PTAB review.” 9

This type of gamesmanship frustrates Congress’s

objective in creating the IPR system. “Setting a case

schedule that essentially eliminates the prospect of

PTAB review undermines the system Congress set

up in the AIA to weed out low quality patents.” 10 But

this behavior is exactly what the NHK-Fintiv Rule

allows and tacitly encourages. Indeed, as one commentator has observed, the NHK-Fintiv Rule has

created “significant blackout zones”—federal districts like the Eastern District of Virginia, the Eastern District of Texas, and the Western District of

Texas that move so fast that “it will not be possible

for a litigation defendant to use PTAB review.” 11 The

J. Jonas Anderson & Paul Gugliuzza, Federal Judge Seeks

Patent Cases, 71 DUKE L.J. (forthcoming 2021) (manuscript at

46), available at https://papers.ssrn.com/sol3/papers.cfm?

abstract_id=3668514

Id. (manuscript at 47).

Id.

Mapping the Contours of PTAB Discretionary Denials In

2020, LAW360 (Dec. 15, 2020), https://www.law360.com/

articles/1335699/mapping-the-contours-of-ptab-discretionarydenials-in-2020

two Texas districts are already among the most popular for patent plaintiffs. 12

The NHK-Fintiv Rule needs to be reviewed and

overturned—and soon. Given the Director’s so-far

successful campaign to preclude review, intervention

by this Court is necessary.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

DEEPRO R. MUKERJEE

LANCE A. SODERSTROM

KATTEN MUCHIN

ROSENMAN LLP

575 Madison Avenue

New York, NY 10022

ROBERT T. SMITH

Counsel of Record

ERIC T. WERLINGER

KATTEN MUCHIN

ROSENMAN LLP

2900 K Street, NW

Washington, DC 20007

August 9, 2021

Counsel for Petitioner

Judge Albright Now Oversees 20% of New US Patent Cases,

(Mar.

10,

2021),

https://www.law360.com/

LAW360

articles/1361071/judge-albright-now-oversees-20-of-new-uspatent-cases.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.