Apple, Google, Cisco and Intel, the plaintiffs have filed a “complaint for declaratory and temporary relief” against Andrei Iancu, Secretary of State for Intellectual Property and Director of the U.S. Patent Office (PTO). The director supervises the power take-off operation and has statutory authority to decide whether to introduce IPR for a patent claim.
The plaintiffs claim that the U.S. Patent Office under Iancu does not follow IPR procedures, which were a key point in Congress’ efforts to strengthen the U.S. patent system in Leahy-Smith. America Invents Act (“AIA”).
At the adoption of the AIA in 2011, Congress recognized that innovation is hampered when invalid patents are issued and then distributed in lawsuits against technology inventors and developers.
The plaintiffs accuse the director of the Patent Office of challenging AIA with what is known as the “NHK-Fintiv rule”
The following is directly from the lawsuit under the section entitled “Introduction with all weight in yellow added by Patently Apple to highlight various points:
This action under the Administrative Procedure Code (“APA”) challenges a rule adopted by the Director of the U.S. Patent and Trademark Office (“PTO”) that governs the Office’s processing of applications for inter-party review (“IPR”) – an administrative procedure to determine the patentability of previously issued patent claims.
A strong patent system is crucial to protect the enormous research and development investments that drive the plaintiffs’ innovative products and services. And a crucial element of any strong patent system is a mechanism for “weeding out” weak patents that should never have been granted because the claimed invention was not new or would have been obvious in the light of prior art.
Such patents threaten innovation – especially in the hands of non-practicing entities [also known as Patent Trolls] who use the patent system not to incentivize their own inventions, but to extract monetary returns by asserting weak patents in infringement suits.
As frequent targets for such tactics, plaintiffs have a strong interest in having an effective and accessible means of challenging weak patents that should never have been issued to ensure that such patents cannot hinder innovation.
IPR was a key point in Congress’ efforts to strengthen the U.S. patent system in the Leahy-Smith America Invents Act (“AIA”). At the adoption of the AIA in 2011, Congress recognized that innovation is hampered when invalid patents are issued and then distributed in lawsuits against technology inventors and developers. And Congress found that existing procedures to challenge already issued patents, including lawsuits, were insufficient to protect the patent system.
Consequently, Congress created IPR to provide a more efficient and streamlined administrative alternative to litigation to determine patentability for specialized patent judges. IPR has served to improve the U.S. patent system and strengthen U.S. technology and innovation by weeding out thousands of invalid patent claims.
To ensure that IPR fulfills its purpose as a superior alternative to patent litigation, AIA specifically considers that IPR will be available to determine the patentability of patent claims that are also the subject of pending patent infringement lawsuits.
In the agency action that was challenged in this case (here referred to as the “NHK-Fintiv rule”), however, the director decided that the PTO could refuse a request for intellectual property rights based on a balance of discretionary factors related to the application of a parallel patent. infringement lawsuits – factors that do not appear anywhere in the AIA. The Office’s application of this rule has dramatically reduced the availability of IPR, regardless of the weakness of the claims being challenged, thus undermining IPR’s central role in protecting a strong patent system.
The NHK-Fintiv rule violates the AIA, which allows IPR to continue with infringement cases involving the same patent claims as long as the IPR petition is filed within one year after the petitioner was served with the complaint in the infringement case. The Congress dictated in AIA exactly when trials should take place before IPR and vice versa, and the NHK-Fintiv rule violates the Congress’ ruling. In fact, the NHK-Fintiv rule defeats the purpose of IPR, which is to provide a streamlined and specialized mechanism for removing invalid patents that should never have been issued, and to do so without the significant costs, burdens and delays in litigation.
The NHK-Fintiv rule is also arbitrary and capricious because its vague factors lead to speculative, unpredictable and unfair results and will not advance the agency’s stated goal of promoting administrative efficiency.
Finally, even if it was not in violation of the law, the NHK-Fintiv rule is procedurally invalid because it was not adopted through regulations on notice and comment. Both the APA and the AIA obliged the Director to follow this procedure, but nevertheless the Director proposed the NHK-Fintiv rule through an internal process in the PTO to establish binding rules by designating selected decisions of the Patent Trial and Appeal Board as “precedent” —A process which does not provide an opportunity for or assessment of public input.
The court should therefore declare the NHK-Fintiv rule illegal and set it aside under the APA. The court should further order the director to permanently apply the rule or the non-statutory factors it incorporates to deny the institution of IPR. “
Under the plaintiff’s section of the lawsuit, Apple is described as follows:
“Apple is a US success story and developer of iconic consumer devices and software that has transformed the US economy. With more than 90,000 employees in the US, Apple is one of the country’s largest employers in the high-tech business. Apple supports 2.4 million jobs in all 50 Last year, Apple spent more than $ 60 billion with more than 9,000 domestic suppliers nationwide, including production sites in 36 states. Apple invests billions of dollars annually in US research and development, and they own more than 22,000 US patents that protect the investment. “
For more information, read Apple’s full complaint filed in court throughout the SCRIBD document below, courtesy of Patently Apple.
Apple v Andrei Iancu by Jack Purcher