Apple, Cisco, Google and Intel Sue PTO Over New NHK-Finitiv Rule for IPR

Apple Inc., Cisco Systems, Inc., Google LLC, and Intel Corporation filed a complaint for declaratory and injunctive relief on Monday in the Northern District of California against Andrei Iancu in his official capacity as Under Secretary of Commerce for the Intellectual Property and Director and the United States Patent and Trademark Office under the Administrative Procedure Act (APA). The complaint challenged a rule adopted by the defendant governing the Patent and Trademark Office’s (PTO) consideration of petitions to institute an inter partes review (IPR), which the plaintiffs purported hinders Congress’ intention for IPR to determine patentability in order to streamline the patent system and propel inventions.

The plaintiffs noted that the IPR framework “was a centerpiece of Congress’s efforts to strengthen the U.S. patent system” by recognizing that “innovation is inhibited when invalid patents are issued and then deployed in litigation against technology inventors and developers.” Developing IPR helped this by determining patentability through “weeding out” weak or obvious patents, especially with “non-practicing entities that use that patent system not to spur their own innovations, but to extract monetary returns by asserting weak patents in infringement suits,” which can hinder innovation.

The NHK-Finitiv rule, which the plaintiffs are challenging, states that the “PTO could deny a petition for IPR based on a balancing of discretionary factors relating to the pendency of parallel patent infringement litigation.” These factors are reportedly absent from the Leahy-Smith America Invents Act (AIA), which established IPR. Consequently, the plaintiffs stated that the PTO’s “application of that rule has dramatically reduced the availability of IPR, regardless of the weakness of the patent claims being challenged, thereby undermining IPR’s central role in protecting a strong patent system.”

Consequently, Apple and the other plaintiffs averred that the NHK-Finitiv rule violates the AIA because the AIA “allows IPR to proceed in tandem with infringement litigation involving the same patent claims so long as the IPS petition is filed within one year after the petitioner was served with the complaint in the infringement suit.”  The plaintiffs stated that in the AIA, Congress defines when “litigation should take precedence over IPR and vice versa,” however, Apple and the other plaintiffs alleged that the NHK-Finitiv rule “contravenes Congress’s judgment” and “defeats the purpose of IPR.” Moreover, the plaintiffs claimed that the NHK-Finitiv rule is arbitrary, capricious and it is procedurally invalid, which the rule exceeds the director’s authority.

Apple, Cisco, Google, and Intel have asked the court to declare the rule unlawful and set it aside under the APA. Additionally, the plaintiffs have asked the court to permanently enjoin the defendant from applying the rule or its factors to deny IPR, as well as other relief.

The plaintiffs are represented by Wilmer Cutler Pickering Hale and Dorr LLP along with Perkins Coie LLP.