Federal Circuit Blocks Mandamus Relief for USPTO Institution Denials

The U.S. Court of Appeals for the Federal Circuit (CAFC) today issued three decisions denying mandamus relief to inter partes review (IPR) petitioners at the Patent Trial and Appeal Board (PTAB) whose petitions were denied institution.

In Re HighLevel, Inc.

In In Re Highlevel, Inc., Highlevel petitioned for IPR of patents owned by Etison LLC, doing business as ClickFunnels, directed to website creation technology, but the PTAB declined to institute based on parallel district court proceedings. In those proceedings, the district court determined the patents at issue claimed ineligible subject matter, and the PTAB–under then-Acting Director Coke Morgan Stewart’s new discretionary denial process–discretionarily denied the IPR petitions, explaining that “the efficiency and integrity of the patent system is best served by denying institution.” HighLevel then filed a petition for writ of mandamus asking the CAFC to direct the USPTO to vacate and reconsider the institution decisions.

The CAFC denied the petition, rejecting HighLevel’s constitutional due process claims as well as its non-constitutional claims, and also dismissing its argument that the USPTO should have promulgated its rules on discretionary denial considerations via notice-and-comment rulemaking. Since that challenge can be raised in an Administrative Procedure Act proceeding in district court, “there appears to be an adequate alternative avenue for relief,” said the CAFC. “While High-Level seeks to use this challenge to vacate the non-institution decisions and reconsider institution based on only certain criteria, as explained in Motorola, ‘that request is nothing but an attempted end run around § 314(d)’s bar on review’ and foreclosed by precedent,” concluded the order.

In Re Cambridge Industries USA Inc.

In In Re Cambridge Industries USA Inc., the CAFC denied mandamus relief to Cambridge based on much the same reasoning it articulated in HighLevel, but additionally addressed Cambridge’s argument that the USPTO’s recently-implemented “settled expectations” doctrine as a basis for denying institution of IPR “exceeds the PTO’s authority and is unreasonable.”

Cambridge petitioned for IPR of five of Applied Optoelectronics, Inc.’s patents for opto-electronics modules and the USPTO denied institution on two of them. For the ’826 and ’116 patents, the Office found that Applied Optoelectronics had “settled expectations” due to the patents being in force for “nine and seven years, respectively,” and discretionarily denied institution. In the other three IPRs, the patents had only been in force since 2020 or 2019 and therefore settled expectations were not a factor (although the Office has since found that patents as young as six can benefit from settled expectations).

With respect to Cambridge’s settled expectations argument, the CAFC said that “Cambridge has not adequately demonstrated—for purposes of meeting the ‘especially difficult’ mandamus standard…how these challenges are reviewable.” The CAFC explained:

“At bottom, Cambridge’s arguments are about what factors the Director may consider when deciding whether to institute IPR. Unlike Cambridge’s assertions regarding the failure to employ notice and comment rulemaking, these contentions appear to ‘focus directly and expressly on institution standards,’…and turn on ‘the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review,’ which are not generally reviewable.”

The CAFC rejected Cambridge’s arguments that the use of settled expectations to deny IPRs implicates constitutional separation of powers issues, stating in a footnote that the Supreme Court held that “claims simply alleging that the President has exceeded his statutory authority are not ‘constitutional’ claims,” in Dalton v. Specter, 511 U.S. 462, 473–74 (1994). “We agree with the PTO that this challenge presents no colorable constitutional claim,” said the CAFC.

However, the court left the door open to other means of challenging the settled expectations rule, emphasizing that “we do not decide whether the PTO’s actions are correct or whether the use of this factor is permitted under the statutes.” The court also said it was not opining on whether there may be other ways to obtain mandamus relief for challenges to institution decisions based on non-constitutional grounds. “We decide only that Cambridge has failed to show a clear and indisputable right to the relief requested given the limits on our review of the PTO’s decision to deny institution.”

In Re Sandisk Technologies

Finally, in In Re Sandisk Technologies, Western Digital Technologies, Inc., the CAFC reiterated the points made above where Polaris PowerLED Technologies, LLC’s patents being challenged via IPR by Sandisk were in force for 9, 12 and 12 years, and the IPRs were denied institution based on settled expectations. The court said:

“As with the petitioner in Cambridge, Petitioners here have failed to identify the kind of property rights or retroactivity concerns that might give rise to a colorable constitutional claim. And, for the same reasons provided in Cambridge, Petitioners’ non-constitutional challenges to the PTO’s consideration of ‘settled expectations’ as a factor in declining to institute IPR do not establish a clear and indisputable right to relief.”