The Federal Circuit recently addressed whether the PTO must conduct notice‑and‑comment rulemaking before issuing instructions that guide how the Board should exercise discretion at the institution stage of IPRs. The court held that no such rulemaking is required. Instructions to the Board regarding its use of the Director’s delegated discretionary authority not to institute review are merely general statements of policy exempt from notice-and-comment rulemaking.
The focus of this case centered around the Board’s application of two precedential Board decisions, NHK and Fintiv 1, as well as a related memo issued by the Director 2. Together, these materials set forth instructions regarding the relevant factors and procedures the Board should consider when deciding whether to deny institution on discretionary grounds. Appellants challenged the instructions in NHK-Fintiv and the memo, arguing they were legally defective because they issued without formal notice-and-comment rulemaking and resulted in “too many non-institution decisions.”
The parties did not dispute that the challenged instructions came within the notion of a “rule” under the Administrative Procedures Act (APA). Thus, the key question here was whether the instructions amounted to substantive/legislative rules or general statements of policy. Substantive/legislative rules bind the agency with the force of law and are subject to notice-and-comment rulemaking. General statements of policy, by contrast, explain how an agency intends to exercise its discretionary power. Such statements do not create binding authority, and are not subject to notice-and-comment rulemaking.
The court determined that the Director’s instructions fell squarely in the category of general statements of policy. First, the instructions bound only the Board. The Director preserved her discretionary authority and remained free to make any institution decision in the first instance or change any initial decision made by the Board. The Director also remained free to withdraw or revise her instructions at any time. Additionally, the court noted that the instructions did not impact appellants’ rights. There is no legal entitlement to institution of an IPR, and a non-institution decision has no legal effect on the underlying patent or the challenger’s ability to contest its validity in a district court. Finally, the court emphasized that the Director maintains broad discretion within the statute to determine whether an IPR should be instituted even when the statutory preconditions are met, and the Director’s exercise of that discretion is a statutorily unreviewable decision. For these reasons, the court held the instructions did not carry the force of law, and were therefore exempt from notice-and-comment rulemaking.
Practice Tip: Although this decision focused on the Board’s NHK-Fintiv decisions and the Director’s memo related to those decisions, the reasoning here is likely to apply with equal force to recent Director guidance to the Board regarding discretionary denial of IPRs and PGRs.
Apple Inc. et al. v. Squires, No. 2024‑1864 (Fed. Cir. Feb. 13, 2026).
1 NHK Spring Co. v. Intri-Plex Technologies, Inc., IPR2018-00752, 2018 WL 4373643 (P.T.A.B. Sept. 12, 2018) and Apple Inc. v. Fintiv, Inc., IPR2020-00019, 2020 WL 2126495 (P.T.A.B. Mar. 20, 2020).
2 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).