Federal Circuit Allows Apple’s Fintiv Challenge To Proceed

Although the Patent Trial & Appeal Board’s (PTAB) reliance on Fintiv to deny petitions for Inter Partes Review (IPR) has waned since Kathi Vidal was named Director of the USPTO and the advent of Sotera stipulations, these so-called Fintiv denials remain the subject of intense scrutiny by the patent bar. On March 13, 2023, the Federal Circuit Court of Appeals revived a challenge to the PTAB’s practice of discretionary denials under Fintiv, allowing it to proceed before the district court.^[1] This revival will no doubt be welcomed by patent challengers who dislike the PTAB’s current practice under Fintiv.

The case started as a suit in the Northern District of California, with Apple, Google, Cisco Systems, Intel, and Edwards Lifesciences teaming up to challenge the USPTO and its Fintiv rule. After being dismissed for a lack of jurisdiction, the parties appealed. The Federal Circuit considered several challenges raised by Apple et al., each of which the district court held was unreviewable by the IPR provisions of the patent statute. The Federal Circuit agreed with the district court on each challenge except one: whether the PTAB’s Fintiv practice had to be, but was not, promulgated through notice-and-comment rulemaking under 5 U.S.C. § 553. The Federal Circuit allowed this challenge to proceed under the Administrative Procedure Act (APA), and remanded the case to the district court to determine the merits of the challenge.       

The Federal Circuit’s decision is noteworthy for two key reasons. First, the decision allows Apple’s Fintiv challenge to proceed on the merits—potentially calling into question the PTAB’s present practice regarding discretionary denials under Fintiv. Second, the decision places squarely at issue the USPTO’s ability to issue rules through the mechanism of designating PTAB decisions, such as Fintiv, as precedential or via written guidance from Director Vidal, rather than through traditional notice-and-comment rulemaking. Resolution of these issues could have a significant impact on how the USPTO operates, not only with respect to IPR practice, but potentially even more broadly.