`
`MICHAEL D. GRANSTON
`Deputy Assistant Attorney General
`LESLEY FARBY
`Assistant Branch Director
`GARY FELDON, D.C. Bar No. 987142
`Trial Attorney
`United States Department of Justice
`Civil Division, Federal Programs Branch
`1100 L Street, NW
`Washington, D.C. 20044
`Telephone: (202) 598-0905
`Facsimile: (202) 616-8470
`Email: gary.d.feldon@usdoj.gov
`
`Attorneys for Defendant
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`SAN JOSE DIVISION
`
`
`
`) Case No.: 5:20-cv-06128-EJD
`APPLE INC., et al.
`)
`
`) Defendant’s Reply in Support of the Motion
`
`Plaintiffs,
`) to Dismiss Plaintiffs’ Amended Complaint
`
`
`)
`v.
`
`
`) Hon. Edward J. Davila
`
`
`
`)
`ANDREW HIRSHFELD,
`) Hearing Set for March 11, 2021, 9:00 a.m.
`Performing the Functions and Duties of the
`Under Secretary of Commerce for Intellectual )
`Property and Director of the United States
`)
`Patent and Trademark Office,
`)
`
`
`
`)
`
`
`Defendant.
`)
`
`
`
`
`
`
`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 2 of 21
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`TABLE OF CONTENTS
`
`
`
`ARGUMENT ................................................................................................................................. 1
`
`I.
`
`Plaintiffs’ Claims Should Be Dismissed for Lack of Standing. ..................................... 1
`
`A.
`
`B.
`
`Denial of a Procedure, Without More, Is Not a Concrete Right Sufficient
`to Confer Standing. ................................................................................................. 1
`
`Plaintiffs Are Not Entitled to a Permanent Injunction, So Success on Their
`Claims Would Not Redress Their Purported Injury. .............................................. 3
`
`II.
`
`Plaintiffs’ Claims Are Non-Justiciable Under the APA. ............................................... 4
`
`A.
`
`B.
`
`The America Invents Act Displaces the APA’s Default Cause of Action. ............. 4
`
`The Director’s Unreviewable Discretion Over the Institution Decision
`Encompasses the Factors He Considers in Reaching that Decision. ...................... 7
`
`1.
`
`2.
`
`The AIA Contains No Meaningful Standard for the Director’s
`Discretionary Denial of IPR Petitions. ....................................................... 7
`
`In Making the IPR Institution Decision, the Director Must Balance
`Considerations Particularly Within the Agency’s Expertise. ................... 10
`
`C.
`
`The Director Adopting the Fintiv Factors Was Not a Final Agency Action
`Reviewable Under the APA. ................................................................................. 11
`
`CONCLUSION ........................................................................................................................... 13
`
`Defendant’s Reply in Support of the Motion to Dismiss Plaintiffs’ Amended Complaint
`Case No.: 5:20-cv-06128-EJD
`
`
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`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 3 of 21
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Almond Bros. Lumber v. United States,
`721 F.3d 1320 (Fed. Cir. 2013)................................................................................................... 9
`
`
`Am. Tort Reform Ass’n v. OSHA,
`738 F.3d 387 (D.C. Cir. 2013) .................................................................................................. 13
`
`
`Arden Wood, Inc. v. U.S. Customs & Immig. Servs.,
`480 F. Supp. 2d 141 (D.D.C. 2007) .......................................................................................... 11
`
`
`Bennett v. Spear,
`520 U.S. 154 (1997) .................................................................................................................. 11
`
`
`Block v. Cmty. Nutrition Inst.,
`467 U.S. 340 (1984) ................................................................................................................ 4, 5
`
`
`Broadgate Inc. v. U.S. Citizenship & Immig. Servs.,
`730 F. Supp. 2d 240 (D.D.C. 2010) .......................................................................................... 12
`
`
`Cal. Clinical Lab. Ass’n v. Sec’y of Health & Human Servs.,
`104 F. Supp. 3d 66 (D.D.C. 2015) .............................................................................................. 2
`
`
`Clarian Health W., LLC v. Hargan,
`878 F.3d 346 (D.C. Cir. 2017) .................................................................................................. 12
`
`
`Ctr. for Auto Safety v. Nat’l Highway Traffic Safety Admin.,
`452 F.3d 798 (D.C. Cir. 2006) .................................................................................................. 12
`
`
`Ctr. for Policy Analysis on Trade & Health (CPATH) v. Office of U.S. Trade Representative,
`540 F.3d 940 (9th Cir. 2008), as amended (Oct. 8, 2008) .................................................... 7, 10
`
`
`Cuozzo Speed Techs., LLC v. Lee,
`136 S. Ct. 2131 (2016) ....................................................................................................... passim
`
`
`Energy Transfer Partners, LP. v. FERC,
`567 F.3d 134 (5th Cir. 2009) .................................................................................................... 11
`
`
`Franklin v. Massachusetts,
`505 U.S. 788 (1992) .................................................................................................................. 12
`
`
`FTC v. Standard Oil Co. of Cal.,
`449 U.S. 232 (1980) ............................................................................................................ 11, 13
`
`
`Heckler v. Chaney,
`470 U.S. 821 (1985) ...................................................................................................... 7, 8, 9, 10
`
`
`
`Defendant’s Reply in Support of the Motion to Dismiss Plaintiffs’ Amended Complaint
`Case No.: 5:20-cv-06128-EJD
`
`
`
`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 4 of 21
`
`
`Hyatt v. OMB,
`908 F.3d 1165 (9th Cir. 2018) .................................................................................................... 5
`
`
`Inst. for Fisheries Resources v. Hahn,
`424 F. Supp. 3d 740 (N.D. Cal. 2019) ...................................................................................... 13
`
`
`JEM Broad. Co., Inc. v. FCC,
`22 F.3d 320 (D.C. Cir. 1994) .............................................................................................. 12, 13
`
`
`Judulang v. Holder,
`565 U.S. 42 (2011) .................................................................................................................... 10
`
`
`Lujan v. Defenders of Wildlife,
`504 U.S. 555 (1992) ................................................................................................................ 1, 2
`
`
`Lujan v. Nat’l Wildlife Fed’n,
`497 U.S. 871 (1990) .................................................................................................................. 11
`
`
`Miller v. French,
`530 U.S. 327 (2000) .................................................................................................................... 4
`
`
`Monsanto Co. v. Geertson Seed Farms,
`561 U.S. 139 (2010) .................................................................................................................... 4
`
`
`Oil States Energy Servs., LLC v. Greene’s Energy Grp, LLC,
`138 S. Ct. 1365 (2018) ................................................................................................................ 8
`
`
`People of Cal. v. FCC,
`39 F.3d 919 (9th Cir. 1994) ...................................................................................................... 10
`
`
`Planned Parenthood of Wis., Inc. v. Azar,
`316 F. Supp. 3d 291 (D.D.C. 2018) .......................................................................................... 12
`
`
`Pregis Corp. v. Kappos,
`700 F.3d 1348 (Fed. Cir. 2012)................................................................................................... 7
`
`
`RCM Techs., Inc. v. DHS,
`614 F. Supp. 2d 39 (D.D.C. 2009) ............................................................................................ 11
`
`
`Saint Regis Mohawk Tribe v. Mylan Pharm. Inc.,
`896 F.3d 1322 (Fed. Cir. 2018)................................................................................................... 8
`
`
`Sec. People, Inc. v. Iancu,
`971 F.3d 1355 (Fed. Cir. 2020)............................................................................................... 6, 7
`
`
`
`
`
`Defendant’s Opposition to Plaintiffs’ Motion for Summary Judgment
`Case No.: 5:20-cv-06128-EJD
`
` iii
`
`
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`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 5 of 21
`
`
`St. Clair v. City of Chico,
`880 F.2d 199 (9th Cir. 1989) ...................................................................................................... 3
`
`
`Summers v. Earth Island Inst.,
`555 U.S. 488 (2009) .................................................................................................................... 2
`
`
`Thryv, Inc. v. Click-to-Call Techs., LP,
`140 S. Ct. 1367 (2020) ................................................................................................................ 6
`
`
`Tribal Vill. of Akutan v. Hodel,
`869 F.2d 1185 (9th Cir. 1988) .................................................................................................. 10
`
`
`Ukiah Valley Med. Ctr. v. FTC,
`911 F.2d 261 (9th Cir. 1990) .................................................................................................... 13
`
`
`United States v. Alameda Gateway Ltd.,
`213 F.3d 1161 (9th Cir. 2000) .................................................................................................. 12
`
`
`Valero Energy Corp. v. EPA,
`927 F.3d 532 (D.C. Cir. 2019) .................................................................................................. 13
`
`
`Webster v. Doe,
`486 U.S. 592 (1988) .................................................................................................................... 8
`
`Statutes
`
`5 U.S.C. § 701 ................................................................................................................................. 8
`
` 5
`
` U.S.C. § 706 ............................................................................................................................. 7, 8
`
`
`35 U.S.C. § 141 ............................................................................................................................... 5
`
`35 U.S.C. § 314 ........................................................................................................................... 3, 4
`
`35 U.S.C. § 319 ........................................................................................................................... 3, 4
`
`
`Other Authorities
`
`Apple Inc. v. Fintiv, Inc.,
`IPR2020-00019, Paper 11 (P.T.A.B. Mar. 20, 2020) ....................................................... 1, 4, 12
`
`
`John R. Allison, et al, 82 U. Chi. L. Rev. 1073 (2015) .................................................................. 3
`
`Jonathan H. Ashtor, Does Patented Information Promote the Progress of Technology?,
`113 Nw. U. L. Rev. 943 (2019) .................................................................................................. 3
`
`
`
`Defendant’s Opposition to Plaintiffs’ Motion for Summary Judgment
`Case No.: 5:20-cv-06128-EJD
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` iv
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`
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`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 6 of 21
`
`
`
`
`U.S. Patent & Trademark Office, PTAB Trial Statistics FY20 End of Year Outcome Roundup,
`IPR, PGR, CBM,
`https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2020_roundup.pdf................ 3
`
`
`
`Defendant’s Opposition to Plaintiffs’ Motion for Summary Judgment
`Case No.: 5:20-cv-06128-EJD
`
` v
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`
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`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 7 of 21
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`In Plaintiffs’ Memorandum in Opposition to Defendant’s Motion to Dismiss the
`Amended Complaint (“Opposition”), ECF No. 92, Plaintiffs fail to demonstrate either that they
`have standing to assert their claims or that their claims are justiciable under the Administrative
`Procedure Act (“APA”). The Court should therefore grant the Motion to Dismiss Plaintiffs’
`Amended Complaint (“Motion”), ECF No. 64, and dismiss with prejudice Plaintiffs’ Amended
`Complaint for Declaratory and Injunctive Relief (“Amended Complaint”), ECF No. 54.
`ARGUMENT
`The APA does not permit federal courts to intervene in the workings of administrative
`agencies whenever a regulated entity disagrees with agency policy. Before a court can even
`consider the merits of an APA claim, plaintiffs must establish that they have standing to
`challenge a policy and that the APA permits review of the challenged agency action. Here,
`Plaintiffs have failed to demonstrate standing and have not brought cognizable APA claims.
`I.
`Plaintiffs’ Claims Should Be Dismissed for Lack of Standing.
`Plaintiffs lack standing to assert the claims in the Amended Complaint because Plaintiffs
`have not alleged either an injury in fact or that any such injury would be redressed by relief that
`the Court could provide. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).
`
`A. Denial of a Procedure, Without More, Is Not a Concrete Right Sufficient to Confer
`Standing.
`Plaintiffs cannot establish an injury in fact—i.e., “an invasion of a legally protected
`interest”—because there is no legal entitlement to inter partes review (“IPR”). Id.; see Cuozzo
`Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2140 (2016). Plaintiffs contend that they have
`nonetheless suffered a concrete injury because the application of the factors enumerated in Apple
`Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (P.T.A.B. Mar. 20, 2020), creates an increased risk
`that their IPR petitions will be denied, thus depriving them of their preferred procedure for
`contesting patent validity. Opp’n at 6-9. “But deprivation of a procedural right without some
`concrete interest that is affected by the deprivation—a procedural right in vacuo—is insufficient
`
`Defendant’s Reply in Support of the Motion to Dismiss Plaintiffs’ Amended Complaint
`Case No.: 5:20-cv-06128-EJD
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`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 8 of 21
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`to create Article III standing.” Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009); see also
`Lujan, 504 U.S. at 572 n.7. The injuries Plaintiffs identify—the loss of administrative patent
`judges’ expertise, more detailed decisions, and a lower standard of proof—are merely procedural
`differences between adjudicating patent validity in a district court trial versus an IPR proceeding.
`Opp’n at 7. “[T]he benefit . . . [of] the right to seek review . . . is a procedural right that is not
`nearly on par with the tangible substantive benefits” necessary for standing. Cal. Clinical Lab.
`Ass’n v. Sec’y of Health & Human Servs., 104 F. Supp. 3d 66, 77 (D.D.C. 2015) (emphasis in
`original) (internal quotation marks omitted). The concrete interests at stake in IPR proceedings
`are patent rights and their enforceability, and IPR institution or its denial does not alter those
`rights. Plaintiffs’ preference for one procedure over another to determine the validity of an
`existing patent is not the kind of right or benefit that can establish standing.
`Plaintiffs’ implicit suggestion that the difference in the number of patent claims
`invalidated in IPR proceedings compared with judicial proceedings constitutes a concrete interest
`fails both legally and factually. As a matter of law, the mere possibility that a patent will be
`invalidated at the end of a proceeding cannot be the basis for standing because it is inherently
`“conjectural or hypothetical,” not “actual or imminent.” Lujan, 504 U.S. at 560 (citation
`omitted). A patent challenge is not a game of chance, where the outcome depends on raw
`probability. Whether decided by an Article III court or the Patent Trial and Appeal Board
`(“Board”), patent validity is determined on the merits by competent decision-makers empowered
`to make such decisions. The Director’s discretion over IPR institution—discretion he exercised
`long before he adopted the Fintiv factors and which he could exercise based on factors less
`favorable to Plaintiffs than the Fintiv factors—does not determine any right to which Plaintiffs
`are legally entitled. See Cuozzo, 136 S. Ct. at 2140.
`In addition, Plaintiffs’ factual assertion in support of their standing is unavailing.
`Plaintiffs assert that district courts invalidate 23% of patent claims, Opp’n at 7, but studies that
`control for bad data show that the percent invalidated is around twice what Plaintiffs claim.
`
`Defendant’s Reply in Support of the Motion to Dismiss Plaintiffs’ Amended Complaint
`Case No.: 5:20-cv-06128-EJD
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`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 9 of 21
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`Jonathan H. Ashtor, Does Patented Information Promote the Progress of Technology?, 113 Nw.
`U. L. Rev. 943, 965 (2019) (54.7% invalidated); John R. Allison, et al, 82 U. Chi. L. Rev. 1073,
`1100 (2015) (42.6% invalidated). Moreover, Plaintiffs cannot compare apples to oranges.
`Unlike a patent invalidity defense raised in a district court infringement proceeding, the Board
`can decide a patent’s validity only after an IPR petition demonstrates that the petitioner is
`reasonably likely to succeed on the merits. 35 U.S.C. § 314(a). Of patent claims challenged in
`IPR petitions in the past two fiscal years, the Board’s final written decisions found fewer than
`30% unpatentable.1 Thus, even if the possibility of a difference in outcomes between the two
`types of proceedings were relevant—and it most assuredly is not—Plaintiffs would not have met
`their burden to establish a concrete injury from the denial of inter partes review. See St. Clair v.
`City of Chico, 880 F.2d 199, 201 (9th Cir. 1989) (plaintiff bears burden on standing).
`
`B. Plaintiffs Are Not Entitled to a Permanent Injunction, So Success on Their Claims
`Would Not Redress Their Purported Injury.
`Plaintiffs contend that, presuming they are successful on their claims, their purported
`injury would be redressed because the Court could “set aside the [Fintiv factors] under the APA
`[and] enjoin their application.” Opp’n at 9 (quoting the Amended Complaint). Setting aside the
`precedential designations of NHK and Fintiv would not prevent the Director from considering
`any factors he deems relevant when exercising his statutory authority under 35 U.S.C. § 314(a)
`to decline to institute inter partes review. Thus, to provide Plaintiffs redress, the Court would
`have to issue a sweeping injunction against the Director considering the Fintiv factors or similar
`factors by another name in his decision-making. Plaintiffs admit as much. Opp’n at 11 n.6.
`However, the injunction Plaintiffs seek would not be appropriate for the Court to issue.
`
`
`1 U.S. Patent & Trademark Office, PTAB Trial Statistics FY20 End of Year Outcome Roundup,
`IPR, PGR, CBM,
`https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2020_roundup.pdf, at slide 13;
`U.S. Patent & Trademark Office, PTAB Trial Statistics FY19 End of Year Outcome Roundup,
`IPR, PGR, CBM,
`https://www.uspto.gov/sites/default/files/documents/ptab_aia_fy2019_roundup.pdf, at slide 15.
`
`
`Defendant’s Reply in Support of the Motion to Dismiss Plaintiffs’ Amended Complaint
`Case No.: 5:20-cv-06128-EJD
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`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 10 of 21
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`A permanent “injunction is a drastic and extraordinary remedy, which should not be
`granted as a matter of course.” Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 165
`(2010). Congress has entrusted the Director with providing policy guidance to the U.S. Patent
`and Trademark Office (“USPTO”) and committed the IPR institution decision to his discretion.
`Granting the requested injunction would put the Court in the untenable position of policing the
`Director’s deliberations when he makes institution decisions. Moreover, one of the Fintiv factors
`is the catch-all “other circumstances that impact the Board’s exercise of discretion, including the
`merits,” Fintiv, Paper 11 at 6, which underscores the difficulty of enforcing such a sweeping
`injunction. The Director would literally be enjoined from complying with his statutory
`obligation to consider the merits of IPR petitions when deciding whether to institute IPR
`proceedings. See 35 U.S.C. § 314(a). Finally, an injunction would invite disappointed IPR
`petitioners to seek relief in this Court whenever they asserted that the Director violated the
`Court’s injunction by considering a Fintiv factor in making an institution decision. The Court
`would then be improperly exercising its equitable powers to engage in precisely the kind of
`review Congress prohibited in § 314(d). See Miller v. French, 530 U.S. 327, 336-37 (2000)
`(clear statutory prohibition on jurisdiction forecloses courts’ equitable powers). As such,
`Plaintiffs have failed to establish redressability.
`Plaintiffs’ Claims Are Non-Justiciable Under the APA.
`II.
`The APA provides for judicial review only when (A) Congress has not displaced the
`APA’s default cause of action, (B) the challenged agency action is not committed to agency
`discretion by law, and (C) the action is final for purposes of APA review. Although failure to
`meet any one criterion for review would be fatal to the claims in the Amended Complaint,
`Plaintiffs fail to meet any of the three.
`A. The America Invents Act Displaces the APA’s Default Cause of Action.
`“[W]henever congressional intent to preclude judicial review is fairly discernable in the
`statutory scheme,” the APA does not provide a cause of action. Block v. Cmty. Nutrition Inst.,
`
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`Defendant’s Reply in Support of the Motion to Dismiss Plaintiffs’ Amended Complaint
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`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 11 of 21
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`467 U.S. 340, 351 (1984) (quotation marks omitted). Here, § 314(d) evinces Congress’s intent to
`preclude judicial review of claims like Plaintiffs’ challenge to the Director adopting the Fintiv
`factors as a framework in deciding whether to exercise discretion to deny inter partes review.
`Plaintiffs’ arguments to the contrary lack merit.
`Plaintiffs initially argue that § 314(d)’s preclusion of judicial review of the Director’s
`denial of IPR institution does not apply because they are not bringing a direct appeal.2 They
`instead contend that the general presumption of judicial review under the APA applies “only [to]
`the exact type of [agency action] specified in th[e] provision” precluding review.3 Opp’n at 18-
`19 (citing Hyatt v. OMB, 908 F.3d 1165, 1170 (9th Cir. 2018), and claiming the two cases are
`“on all fours”). Not only does Hyatt not support this sweeping pronouncement, but Plaintiffs’
`contention is contrary to Supreme Court precedent. Hyatt considered only the “demonstratively
`narrow” bar on judicial review in the Paperwork Reduction Act and held only that it did not
`preclude the particular claim at issue in that case. 908 F.3d at 1171. Moreover, the Supreme
`Court has held that, in light of the statutory scheme of the America Invents Act (“AIA”),
`§ 314(d) establishes a broad bar on judicial review that encompasses all claims based on
`“questions that are closely tied to the application and interpretation of statutes related to the
`Patent Office’s decision to initiate inter partes review.” Cuozzo Speed Techs., 136 S. Ct. at 2140
`(quoting 5 U.S.C. § 704); see also id. at 2142 (precluding challenge based on § 312 pleading
`requirement). Whether raised on direct appeal or in a collateral attack under the APA, Plaintiffs’
`
`
`2 Under this point, Plaintiffs inaccurately claim that the Director has “urge[d] the Court to infer
`that §§ 141(c)’s and 319’s provisions addressing review of one type of challenge preclude all
`other challenges.” Opp’n at 18. As noted in the Motion, these statutes are relevant because they
`demonstrate that Congress envisioned a specific statutory scheme of judicial review of IPR
`decisions. As part of this scheme, under § 314(d), Congress made the decision to affirmatively
`bar judicial review of “whether to institute” IPR proceedings. That preclusion of review is what
`bars Plaintiffs’ claims here.
`3 Notably, Plaintiffs’ argument is at odds with Plaintiff Apple Inc.’s position in other cases,
`where it claims that there is direct review of the denial of IPR petitions. See Appellant Apple
`Inc.’s Combined Petition for Panel Rehearing and Rehearing En Banc, Apple Inc. v. Maxell, Ltd.,
`Nos. 2020-2132, -2211, -2212, -2213, 2021-1033, ECF No. 40 (Fed. Cir. Dec. 14, 2020).
`
`
`Defendant’s Reply in Support of the Motion to Dismiss Plaintiffs’ Amended Complaint
`Case No.: 5:20-cv-06128-EJD
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`Case 5:20-cv-06128-EJD Document 95 Filed 02/04/21 Page 12 of 21
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`substantive claims are nothing more than challenges to the Director’s application of his statutory
`discretion to initiate IPR proceedings and are thus barred by § 314(d). See id.; see also Sec.
`People, Inc. v. Iancu, 971 F.3d 1355, 1357-58 (Fed. Cir. 2020) (holding that the AIA’s explicit
`review provisions “foreclosed the possibility of collateral APA review of inter partes review
`decisions by district courts” challenging the same agency action).
`Next, Plaintiffs rely on a misrepresentation of the Supreme Court’s language in Cuozzo
`concerning the availability of review. In the partial concurrence in Cuozzo, Justice Alito
`expressed concern that, if courts interpreted the AIA’s other prohibitions on judicial review
`consistent with the majority’s interpretation of § 314(d), the USPTO could disregard statutory
`eligibility requirements and thereby invalidate patents under one type of review proceeding on
`grounds that Congress reserved to another type. Cuozzo Speed Techs., 136 S. Ct. at 2154 (Alito,
`J., concurring in part). One hypothetical that Justice Alito posed was the possibility that the
`USPTO could institute post-grant review after it should have been time-barred—meaning that
`inter partes review should be the only type of review available—and invalidate a patent on legal
`grounds not available under inter partes review. Id. (Alito, J., concurring in part). In response to
`this example, the majority noted that it did “not categorically preclude review of a final decision”
`by direct or APA review when the USPTO “act[s] outside its statutory limits by, for example,”
`engaging in the hypothetical “shenanigans” that Justice Alito posited. Id. at 2141-42 (emphasis
`added). However, the Court went on to explain that, “[b]y contrast,” a claim based on “a statute
`closely related to th[e] decision to institute inter partes review” did not raise this troubling
`hypothetical. Id. at 2142.4 Here, Plaintiffs do not challenge the invalidation of a patent on
`grounds reserved to another type of administrative proceeding (which, incidentally, would be the
`
`
`4 Notably, the Supreme Court subsequently held that § 314(d)’s preclusion on judicial review
`was so robust that even an institution that allegedly violated a statutory time bar in the AIA was
`immune from review. Thryv, Inc. v. Click-to-Call Techs., LP, 140 S. Ct. 1367, 1373-74 (2020).
`Here, where Plaintiffs are complaining about agency inaction, their suggestion that Congress
`intended the courts to police the institution decision is even more far-fetched.
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`Defendant’s Reply in Support of the Motion to Dismiss Plaintiffs’ Amended Complaint
`Case No.: 5:20-cv-06128-EJD
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`type of concrete injury necessary for standing), nor are they challenging a final decision by the
`Board. Rather, they are challenging the Director’s interpretation and application of § 314(a), the
`statute governing institution. Thus, their claims are precisely the sort that the Court held would
`fall within the scope of § 314(d), which the Court explicitly distinguished from the improper
`invalidation of patent claims for which direct or APA review might be available.5 See id.; see
`also Sec. People, 971 F.3d at 1357-58 (explicit review provisions in AIA foreclose collateral
`attacks on same grounds).
`B. The Director’s Unreviewable Discretion Over the Institution Decision Encompasses
`the Factors He Considers in Reaching that Decision.
`An agency action is committed to the agency’s discretion, and thus exempt from judicial
`review, when a statute does not provide a “meaningful standard against which to judge the
`agency’s exercise of discretion” or when the action “requires a complicated balancing of a
`number of factors which are peculiarly within [the agency’s] expertise.” Ctr. for Policy Analysis
`on Trade & Health (CPATH) v. Office of U.S. Trade Representative, 540 F.3d 940, 944 (9th Cir.
`2008) (alteration in original), as amended (Oct. 8, 2008); see also Heckler v. Chaney, 470 U.S.
`821, 830 (1985). Here, both analyses support holding that the factors the Director considers
`when deciding whether to institute IPR proceedings are inappropriate for judicial review.
`1. The AIA Contains No Meaningful Standard for the Director’s Discretionary
`Denial of IPR Petitions.
`The AIA contains no standards by which the Court could judge the Director’s exercise of
`his unreviewable discretion under § 314(a).6 Despite Plaintiffs’ assertion to the contrary, they do
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`5 Under this section of the Opposition, Plaintiffs also devote a paragraph to attempting to
`distinguish the instant case from Pregis Corp. v. Kappos, 700 F.3d 1348 (Fed. Cir. 2012). Opp’n
`at 19-20. However, the Director cited that case as an example of an instance in which a court
`found “APA actions precluded in even less clear-cut contexts” than the one here. Mot. at 11-12.
`That remains true, but the Director was not suggesting that Pregis—which concerned the
`availability of APA review under pre-AIA statutes—was controlling. Plaintiffs’ argument
`concerning that case is thus unavailing.
`6 Plaintiffs make the odd assertion that Heckler does not apply whenever a plaintiff frames its
`claim as a challenge to the scope of agency authority under 5 U.S.C. § 706(2)(C) because such
`claims depend only on statutory interpretation. Opp’n at 20-21. The Supreme Court in Heckler
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`Defendant’s Reply in Support of the Motion to Dismiss Plaintiffs’ Amended Complaint
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`not cite a single provision of the AIA that supplies any standard for the Court to apply in
`assessing whether the Director’s adoption of the Fintiv factors was arbitrary or capricious. See
`Opp’n at 20-21. Instead, Plaintiffs quote inapposite cases for the uncontroverted and
`unremarkable proposition that statutes committing a decision to agency discretion are rare. Rare
`though it may be, § 314(a) is just such a statute. Oil States Energy Servs., LLC v. Greene’s
`Energy Grp, LLC, 138 S. Ct. 1365, 1371 (2018) (“The decision whether to institute inter partes
`review is committed to the Director’s discretion.”); Saint Regis Mohawk Tribe v. Mylan Pharm.
`Inc., 896 F.3d 1322, 1327 (Fed. Cir. 2018) (stating that the Director “has complete discretion to
`decide not to institute review” and may deny review for “reasons such as administrative
`efficiency”). Indeed, in Cuozzo, the Supreme Court specifically cited § 701(a)(2) in observing
`that “the agency’s decision to deny a petition is a matter committed to the Patent Office’s
`discretion.” 136 S. Ct. at 2140 (no mandate to institute review).
`The only specific standard Plaintiffs identify is from the APA, not any provision of the
`AIA. Opp’n at 21 (arguing that the