Federal Circuit Starts Year on Tricky Patent Office Powers Case

Five years of legal scrapping will come to a head at the Federal Circuit when a group of tech companies and the US Patent and Trademark Office lay out competing visions of the agency’s power to curtail access to its administrative patent tribunal.

The patent-centric appeals court will hear argument Monday in the administrative-law challenge brought by Apple Inc., Cisco Systems Inc., Google LLC, and Intel Corp. Those companies say the agency’s adoption of discretionary factors to limit the number of validity challenges the Patent Trial and Appeal Board hears on the merits violated the Administrative Procedure Act because they were put in place without a notice-and-comment rulemaking process.

The agency has countered that the factors are an appropriate exercise of director discretion, distinguishing them from the type of “substantive” or legislative” rules that can only be applied through rulemaking.

Big Tech has long seen the PTAB—a popular forum for validity fights established in 2012—as a bulwark against frivolous patent lawsuits, while inventors’ groups have viewed it with skepticism or outright hostility due to its role in canceling patents. Trump administration PTO directors in 2020 and 2025 built a framework to turn away IPR petitions based on discretionary factors set out in PTAB decisions they’ve designated as precedential and in guidance memos.

The case puts the US Court of Appeals for the Federal Circuit in a difficult position, said Timothy Hsieh, an Oklahoma City University law professor who teaches patent and administrative law.

Even if the judges sympathize with Apple’s position, Hsieh said, they’ll likely be wary of “opening up the floodgates” to additional APA litigation targeting any number of changes PTO Director John Squires has implemented since being confirmed in September.

But the US Supreme Court’s 2024 Loper Bright decision reduced the deference courts give to agencies construing federal statutes, Hsieh noted. As a result, a Federal Circuit opinion that’s too deferential to Squires in interpreting the PTAB’s enabling statute “might be scrutinized under a more intense light if it ever goes up on cert” to the high court.

Discretionary Factors

The tech companies’ APA challenge filed in August 2020 in the US District Court for the Northern District of California has twice been dismissed and appealed.

The discretionary denial practice the suit challenged was scaled back considerably during the Biden administration. As the tech companies’ second appeal from a second dismissal was pending at the Federal Circuit, however, President Donald Trump’s PTO brought it back and created additional factors to turn away IPR petitions.

Squires also centralized the pre-screening of IPR petitions, issuing summary decisions granting or denying institution, and denial rates have jumped.

The PTO also in October published proposed rules in the Federal Register to solidify certain changes to the patent validity process. In a Dec. 29 letter to the court, the tech company appellants addressed the proposed rulemaking, and said it reinforces their argument that the changes to the IPR process done without formal rulemaking don’t pass muster because they “significantly affect individual rights and obligations and are thus substantive rules under the APA.”

Individual tech firms have also responded with more than a dozen separate petitions for writs of mandamus at the Federal Circuit that seek to undo discretionary denials and attack the factors. The court denied the first six of these mandamus actions without oral argument.

Those orders emphasized the high bar mandamus petitioners must clear generally, and the specifically high burden they face under a provision in the law establishing the PTAB that sharply limits appeals from IPR institution decisions.

Joe Matal, a former PTO acting director who’s been critical of current agency leadership, said he’s concerned Apple could win at the Federal Circuit and the PTO could simply “ignore it and keep doing summary denials” of IPR petitions, given the frosty reception the Federal Circuit gave that first crop of mandamus actions.

“If the mandamus remedy is nonexistent, I’m not sure the outcome of” Apple’s case matters, Matal said. “It only matters if they’re willing to say, ‘From now on, if you do this without going through rulemaking then people get mandamus relief.’”

WilmerHale represents Apple, Cisco, and Intel. Perkins Coie represents Google. The US Department of Justice and the PTO Solicitor’s Office represent Squires.

The case is Apple Inc. v. Squires, Fed. Cir., 24-1864.