Holding: The Director’s instructions to the PTAB regarding institution of IPRs are not subject to formal notice-and-comment rulemaking since these instructions constitute general statements of policy rather than substantive rules.
Apple and four other companies challenged instructions issued by the Director of the PTO to the PTAB concerning how the Board should exercise the Director’s discretionary authority to decline to institute IPR proceedings. Apple argued that these instructions resulted in too many non‑institution decisions and were contrary to 35 U.S.C. ch. 31, arbitrary and capricious, and issued without the notice‑and‑comment procedures required by the APA. In an earlier appeal, the Federal Circuit held that Apple’s statutory and arbitrary‑and‑capricious challenges were unreviewable, but that the notice‑and‑comment challenge was reviewable. The court remanded for the district court to consider that issue.
On remand, the district court held that the Director’s instructions were general statements of policy exempt from the notice‑and‑comment rulemaking procedures of 5 U.S.C. § 553. The Federal Circuit agreed. The court emphasized that the Director’s non‑institution authority is insulated from judicial review when no constitutional claim is presented, and that the Director retains the authority to make a non‑institution decision even after the PTAB has issued an initial decision.
Under the AIA, Congress gave the Director—not the PTAB—the authority to decide whether to institute an IPR. There is no law compelling institution, and the Director may decline to institute even when statutory preconditions are met. The instructions at issue in this case addressed situations where the parties to an IPR petition were already litigating the same patent in district court. These instructions were issued as precedential PTAB decisions (NHK[1] and Fintiv[2]) and a Director memorandum issued in June 2022.[3] Each applied only to the PTAB’s exercise of delegated authority and did not bind the Director himself.
Not all rules require notice‑and‑comment procedures under Section 553. The statute expressly excludes “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.” A general statement of policy is a pronouncement made by an agency to advise the public prospectively of how it plans to exercise discretionary power. The Federal Circuit concluded that the NHK‑Fintiv instructions fit squarely within this category because they guide the PTAB’s initial decision making but do not bind the Director, alter legal rights, or impose obligations with the force of law.
The court also addressed developments occurring after the district court’s decision. In February 2025, the June 2022 Memo was rescinded. In October 2025, Director Squires announced that he would personally make institution decisions, with the PTAB no longer issuing initial institution decisions. The PTO also published a notice of proposed rulemaking that would modify the institution standard for IPRs and apply directly to the PTO, not just the PTAB. The proposed rule would prevent institution of an IPR if a district court trial addressing Section 102 or Section 103 validity challenges was more likely than not to occur before the statutory deadline for a final written decision.
Despite, the new guidance provided by Director Squires, the original instructions based on NHK, Fintiv, and the June 2022 Memo at issue in this case are not moot. NHK and Fintiv remain precedential PTAB decisions and would remain precedent if the PTAB were to go back to making institution decisions. Additionally, the proposed rule restricting institution of IPRs is still simply a proposal and has no current effect. Therefore, a ruling in this case regarding the instructions provided in NHK and Fintiv remains a live controversy.
Apple argued that the Federal Circuit’s earlier holding that Apple had standing to pursue the rulemaking‑process claim necessarily meant that the challenged instructions were substantive legislative rules subject to notice‑and‑comment requirements. The court rejected this argument. Standing analysis asks only whether the plaintiff has suffered a concrete and particularized injury; it does not determine whether an agency pronouncement is a substantive rule under Section 553.
Further, 35 U.S.C. § 316 also does not require notice-and-comment rulemaking for the Director’s instructions. Section 316 states that the “Director shall prescribe regulations” regarding “establishing and governing inter partes review.” However, the use of the word “regulations” does not automatically create a notice-and-comment rulemaking requirement for these regulations. Interpretative rules that have been deemed not subject to the notice-and-comment rulemaking requirement have been referred to as regulations in other contexts. Therefore, there must be more than the simple use of the term regulation in the statute to make the rule subject to the notice-and-comment rulemaking requirement.
A substantive or legislative rule that is subject to the notice-and-comment rulemaking requirement alters the landscape of individual rights and obligations and binds parties with the force of law. General statements of policy that are not subject to the notice-and-comment rulemaking requirement do not have the force of law and simply advice the public prospectively of the way in which the agency proposes to exercise its discretionary power.
In this case, the Federal Circuit determined that the NHK–Fintiv instructions are statements of a general policy. The NHK–Fintiv instructions are not binding on the Director. The Director retains the right to institute or not institute an IPR regardless of the initial decision made by the PTAB. Instead, the instructions advise the public of how the Director has informed the PTAB to exercise the Director’s discretionary power. These instructions could be later changed by the Director.
No party has a right to an IPR, while the Director has broad discretion to either institute or not institute an IPR. A decision to start an enforcement action is traditionally regarded as agency discretion and not reviewable by the courts. Additionally, since a non-institution decision has no legal effect on the underlying patent rights and patent challengers may still litigate the validity of the patent in court, no individual right is affected by non-institution of an IPR. This supports treating the NHK–Fintiv instructions as general statements of policy that are not subject to the notice-and-comment rulemaking requirement rather than being substantive rules.
[1] NHK Spring Co. v. Intri-Plex Technologies, Inc., IPR2018-00752, 2018 WL 4373643 (P.T.A.B. Sept. 12, 2018)
[2] Apple Inc. v. Fintiv, Inc., IPR2020-00019, 2020 WL 2126495 (P.T.A.B. Mar. 20, 2020)
[3] Memorandum from Katherine K. Vidal, Under Secretary of Commerce for Intellectual Property and Director of the PTO, to Members of the Board, Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation at 2–3 (June 21, 2022).
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