The US Court of Appeals for the Federal Circuit concluded that the United States Patent and Trademark Office’s (USPTO) framework for discretionary denials of inter partes review (IPR) is a general statement of policy, not a substantive rule, and therefore is exempt from the Administrative Procedure Act’s notice‑and‑comment requirements.
The USPTO Director issued a trio of related instructions to the Patent Trial & Appeal Board for its exercise of delegated non-institution authority, addressing the common situation where the IPR petitioner and the patent owner are already involved in a district court litigation over the patent at issue. Two of the instructions were in the form of precedential Board decisions, which set forth six exclusive factors, weighing in favor or against institution, that the Board must assess. These instructions are generally referred to as the NHK-Fintiv instructions that, as Board precedent, bind only the Board and not the USPTO Director.
Several IPR petitioners argued that the Director’s instructions to the Board effectively bind the USPTO as an agency and thus should have been promulgated through formal rulemaking.
The Federal Circuit disagreed, emphasizing that institution decisions rest ultimately with the USPTO Director. The Court explained that while the NHK-Fintiv framework provides guidance on how that discretionary authority may be exercised, the Director retains the ability to depart from the framework in any given case. To that end, the guidance does not carry the force and effect of law and does not impose legally binding obligations on the agency or the public.
Practice note: The decision reinforces the Federal Circuit’s post‑Arthrex theme that the Director enjoys broad and largely unreviewable discretion at the IPR institution stage.
