Authored by: Jeremy J. Gustrowsky
When technology giants Apple, Cisco, Google, and Intel challenged the Patent and Trademark Office’s instructions for declining inter partes review (IPR) petitions, they argued the agency should have followed formal notice-and-comment rulemaking procedures. The Federal Circuit disagreed, holding that the PTO Director’s instructions to the Patent Trial and Appeal Board are merely “general statements of policy” that don’t require such procedures under the Administrative Procedure Act.
The case centered on the so-called NHK-Fintiv instructions—guidance the PTO Director issued to the Board identifying factors to consider when deciding whether to deny IPR petitions in cases where parallel district court litigation is pending. Apple contended that these instructions effectively changed the rules for when patent challenges would be heard, making it harder for companies to use the IPR process to challenge patents asserted against them in court. The companies argued this kind of significant policy shift required formal rulemaking with public input.
The Federal Circuit found several reasons why these instructions qualify as exempt policy statements rather than binding rules requiring notice-and-comment procedures. Most importantly, the instructions don’t actually bind the PTO as an agency—they only guide the Board acting as the Director’s delegate. The Director always retained authority to personally make or reverse any institution decision. Additionally, the court emphasized that no one has a legal right to an IPR proceeding; Congress gave the Director broad, unreviewable discretion over whether to institute these proceedings.
The court distinguished this case from others where agencies were found to have violated rulemaking requirements. In those cases, the challenged rules either bound the agency itself with the force of law or directly affected statutory rights of regulated parties. Here, a decision not to institute an IPR leaves a patent challenger’s legal rights unchanged—they can still challenge the patent’s validity in district court or seek reexamination through other PTO procedures.
Though the PTO has since proposed new formal rules governing institution decisions that would bind the agency, the court found the case was not moot because the existing NHK-Fintiv instructions remain precedential and could again govern Board decisions in the future. The ruling affirms that agencies have flexibility to guide their delegated decision-making through policy statements without undertaking the more burdensome formal rulemaking process, at least when the underlying decisions involve unreviewable discretion and don’t create binding legal obligations.