PTAB Discretion in Flux: Lessons from Stellar LLC v. Motorola Solutions Inc.
Overview
Following the Patent Trial and Appeal Board’s (PTAB) new guidance on discretionary denials, the PTAB proceeding in Stellar LLC v. Motorola Solutions Inc., IPR2024-01208, presents an early case study for PTAB practitioners navigating discretionary denials under 35 U.S.C. § 314(a).
This decision highlights how the PTAB is now weighing Fintiv factors, including Sotera stipulations, the effort the parties have spent on co-pending litigation and the existence of additional invalidity grounds in the litigation. As such, this case offers a lens into how discretionary standards are shifting in practice following the rescission of the Guidance Memo.
Why This Case Matters
This case is notable for three primary reasons:
It tests the boundaries of Fintiv factor analysis after the USPTO issued a new guidance memo on discretionary denials.
It forces consideration of how Sotera stipulations are weighed when parallel litigation includes invalidity contentions based on grounds that cannot be addressed in inter partes review (IPR).
It underscores the importance of timing, completeness and strategic framing, both at the Petition and Patent Owner Preliminary Response stages.
Key Lessons for Practitioners
Sotera Stipulations Are Still Powerful but Not Bulletproof: Although a Sotera stipulation can reduce overlapping issues, it may not fully mitigate the Director’s concerns if the petitioner raises broader invalidity arguments in district court, including prior use system prior art not covered by the stipulation.
Advanced Parallel Litigation Can Prompt Denial: The Director stressed that when a district court case is far along, especially with substantial resources already invested and a trial date that precedes the projected PTAB final written decision, this factor strongly favors denial.
Stay of Litigation Entered After Institution of IPR Does Not Factor Into Discretionary Denial: The Director acknowledged that the underlying litigation had been stayed pending the outcome of the IPR but dismissed that fact in a footnote suggesting that the Director will not give any weight to a stay entered after the institution of IPR proceedings.
Fintiv Factor Analysis Remains the Primary Consideration: The Director’s memo confirms that the Fintiv factors are still the focus of the analysis but that the weighing of these factors may change going forward. As this decision demonstrates, even if certain factors (like a Sotera stipulation) weigh against denial, other factors (like the significant investment in the parallel proceeding) can tip the scales toward discretionarily denying institution.
This decision highlights the need for petitioners and patent owners to recalibrate their strategies considering the evolving PTAB approach toward discretionary denials. Petitioners must act swiftly, frame petitions comprehensively and understand how Sotera stipulations, while still valuable, may no longer be sufficient in cases involving advanced district court proceedings or broader invalidity issues.
For patent owners, this decision underscores the strategic importance of building a robust litigation record early to fortify the Fintiv-based challenges. As the PTAB’s discretionary standards continue to shift, timing, procedural posture and substantive alignment across forums will be critical to succeed.
Daniela Della Rosa: The Legal Mind Behind Luxury Brands
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Last Mile Logistics Comes to the End of the Road – Dei Gratia v Commissioner of Patents [2024] FCA 1145
In Dei Gratia Pty Ltd v Commissioner of Patents [2024] FCA 1145 (Dei Gratia), the Federal Court of Australia dismissed an appeal by Dei Gratia and confirmed the decision of the Commissioner of Patents to refuse the patent application for ‘last mile logistics’. The claimed invention purported to facilitate the delivery of goods from the last point in a distribution chain to end consumers. By selecting a preferred local outlet, customers would be able to overcome delivery issues such as the need to be at home at a specific time and the protection of perishable goods that have been left at doors in high temperatures.
The decision shed light on the difference between an invention that aims to advance computer technologies and new business and logistic methods. To be patentable, the invention must be a “manner of new manufacture.” In other words, it “must be more than an abstract idea; it must involve the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed.”
Submissions
Dei Gratia argued that its claim is not a mere idea to improve the delivery system, but rather a “practical implementation to achieve that idea.” It also contended that computerisation should not be limited to the improvement of the computer technology itself.
The Commissioner of Patents submitted that the claimed invention is not different from a regular business scheme implemented by generic and already known computer technologies and that “no new technology in the sense of improved functioning of computer equipment was involved.”
Decision
Section 18(1)(a) of the Patents Act 1990 defines invention as “any manner of new manufacture.” On the question of whether the claimed invention was, in fact, a manner of new manufacture, the court pointed out that although the application does not characterise the invention as a new “computer-implemented” idea, in substance it nevertheless places the computer as a central part of the logistic system, which would not function without the use of a computer. In this regard, both parties accepted that there would be no technical ingenuity involved in selecting modified delivery outlets.
In rejecting the application, the court made a clear distinction between an innovative scheme and patentable invention. As the claimed invention addressed a business problem (an improved logistics scheme), rather than a technical one, it was not patentable as it could not be characterised as a manner of new manufacture. The decision confirms that the implementation of the logistics scheme on a computer that does not involve any advance in computer technology is not patentable.
China’s National Intellectual Property Administration Releases 2025 Budget and Targets – Expecting Over 5 Million Patent Applications in 2025
On March 26, 2025, China’s National Intellectual Property Administration (CNIPA) released its 2025 budget (国家知识产权局2025年部门预算) listing performance targets. Some 2025 targets include:
receiving over 5.135 million invention and utility model patent applications;
lowering the examination period for invention patents to 15 months or less;
examining 2.026 million invention patent applications;
4,500 or more people will pass the patent agent qualification examination;
examining 5.97 million trademark applications; and
the average examination period for trademark registration will be 4 months or less.
In contrast, in the 2024 Budget, CNIPA expected to examine over 2.026 million patent applications with an examination period of less than 16 months and total new applications (including invention and utility model applications) was expected to be equal or greater than 4.79 million applications. As 1,044,777 invention patents were granted in 2024, that implies only a 51.6% grant rate for invention patents in 2024 (although the number of examined invention patent applications could be higher, implying a lower grant rate). Examination might be getting even tougher as Chinese statistics showed that the number of invention patents granted in the first two months of 2025 were down some 15%.
2025 CNIPA Patent Targets
2025 CNIPA Trademark Targets
The full text is available here (Chinese only).
China’s National Intellectual Property Administration: Accelerate the Use of AI in Examination
On March 28, 2025, China’s National Intellectual Property Administration (CNIPA) held a press conference to discuss their work goals in light of the recent National People’s Congress and to “implement the spirt of General Secretary Xi Jinping’s important speech” at the Congress. Heng Fuguang, spokesperson and director of CNIPA stated it will implement that spirit in seven aspects: 1. improve the legal system of intellectual property rights; 2. improve the quality of intellectual property creation; 3. improve the efficiency of intellectual property use; 4. strengthen intellectual property protection; 5. optimize public services for intellectual property rights; 6. expand international cooperation and exchanges on intellectual property; and 7. consolidate the foundation for the development of intellectual property.
Some highlights of the press conference include:
Accelerate the revision of the Trademark Law (this was also mentioned in the Opinions on Further Improving the Business Environment in the Field of Intellectual Property) and the Regulations on the Protection of Integrated Circuit Layout Designs;
Accelerate the application of artificial intelligence models in examination work;
Deepen the implementation of the trademark brand strategy, create more “national fashion brands”, promote the transformation of Made in China to Created in China, and the transformation of Chinese products to Chinese brands;
We will comprehensively strengthen foreign-related intellectual property protection, improve the overseas intellectual property dispute response guidance system, and effectively safeguard the legitimate interests of Chinese companies overseas;
Plan the development of the “15th Five-Year Plan” for intellectual property;
Continue to improve the overseas risk early warning mechanism, strengthen the early warning monitoring of disputes such as 337 investigations, cross-border e-commerce litigation, and malicious trademark registration;
345,000 patent pre-examination requests were accepted , and the average authorization period for invention patents authorized after passing the pre-examination was less than 3 months.
A full transcript is available here (Chinese only).
PTAB Unveils Updated Practices for Proceedings
The USPTO’s Patent Trial and Appeal Board (PTAB) policy shifts demand and heightens strategic awareness. Clients are reminded that they must continue to align their PTAB and litigation efforts, leveraging timing, venue insights and tailored arguments to maximize their chances of success in this evolved landscape. These recent policy changes by the U.S. Patent and Trademark Office (USPTO) have significantly impacted discretionary denials and briefing procedures in PTAB cases.
Rescission of Prior Guidance on Discretionary Denials
On February 28, 2025, the USPTO rescinded the June 21, 2022, memorandum titled “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation.” This action restores the PTAB’s reliance on precedential decisions such as Apple Inc. v. Fintiv, Inc. and Sotera Wireless, Inc. v. Masimo Corp. for guidance on discretionary denials.
Updated Guidance from Chief Administrative Patent Judge Boalick
Following the rescission, on March 24, 2025, Chief Administrative Patent Judge Scott R. Boalick issued a memorandum providing further direction:
Application Scope: The rescission applies to cases where the PTAB has not issued an institution decision or where a request for rehearing or Director Review is pending. The PTAB will consider timely requests for additional briefing on the rescission’s application on a case-by-case basis.
Fintiv Analysis Adjustments: The PTAB will continue applying the Fintiv factors, with notable clarifications.
ITC Proceedings: The Board is more likely to deny institution if the International Trade Commission’s (ITC) projected final determination date precedes the PTAB’s deadline for a final written decision. Conversely, if the ITC’s determination date is after the PTAB’s deadline, discretionary denial is less likely.
Sotera Stipulations: A timely filed Sotera stipulation remains highly relevant but is not dispositive in the discretionary denial analysis.
Merits of the Petition: The strength of the inter partes review (IPR) challenge’s merits will be evaluated within the Fintiv analysis but will not be solely determinative.
PTAB’s New Interim Workload Management Processes and Potential Budget Implications
On March 26, 2025, the USPTO introduces short-term strategies for the PTAB to manage backlogs and optimize judicial resources so that the PTAB can continue its work of adjudicated ex parte patent appeals and inter partes review proceedings. These measures that take effect on April 1, are described as “temporary in nature” and will remain in place until at least October 1, 2025. Although the memo does not explicitly mention budget cuts, its emphasis on shifting certain pre-institution tasks to non-Administrative Patent Judge (APJ) staff and prioritizing cases may be reflectively of broader federal efficiency efforts. These changes could be the result of budget reductions for the USPTO resulting from efforts by the Department of Government Efficiency (DOGE), which has discussed trying to achieve a 10–15% cut to the workforce across all federal agencies.
Key Points:
Resource Reallocation: Pre-institution tasks (like petition reviews) will be handled more often by non APJ staff, reducing APJ involvement at early stages.
Potential Backlog Effects: With roughly 1,500+ annual inter partes and post-grant proceedings, fewer APJs or hiring freezes could exacerbate existing backlogs.
Limits inter partes review: Adds additional non-merits briefing to the inter partes review process that could limit the total number of inter partes review proceeding instituted.
Timeline: This six-month window aligns with the federal fiscal year reset on October 1, hinting that the USPTO might anticipate further changes (either potential relief or deeper cuts) at that time.
New Briefing Procedures for Discretionary Denials
To enhance efficiency and consistency, the USPTO has implemented interim processes for discretionary denial briefing:
Separate Briefing Schedule: Patent owners may file a brief outlining bases for discretionary denial within two months of the PTAB’s Notice of Filing Date Accorded to a petition. Petitioners can file an opposition brief within one month of the patent owner’s brief. Leave to file further briefing may be permitted for good cause.
Word Limits: Consistent with 37 C.F.R. § 42.24, discretionary denial briefs are limited to 14,000 words and reply briefs to 5,600 words.
Recent Guidance on PTAB Hearings
Effective March 14, 2025, PTAB judges conducting virtual hearings will appear from a PTAB hearing room at a USPTO office, absent special circumstances. Parties are encouraged to participate in person when possible but those who have scheduled virtual hearings may continue to appear virtually. The public is also encouraged to observe hearings in person but remote public access for virtual hearings remains available upon request.
Implications for Practice
Parallel Proceedings: Assess the timelines and statuses of parallel district court or ITC proceedings, as these factors significantly influence the PTAB’s discretionary decisions.
Sotera Stipulations: While still influential, Sotera stipulations should be part of a comprehensive strategy rather than a standalone solution to avoid discretionary denial.
Evidence Submission: Provide detailed evidence regarding the expected resolution timelines of parallel proceedings to strengthen arguments against discretionary denial.
Polsinelli will continue monitoring these developments and inform you of any significant changes. Please contact us with questions about how these interim measures may affect your PTAB proceedings.
Sources:
USPTO Rescinds Memorandum Addressing Discretionary Denial Procedures: https://www.uspto.gov/about-us/news-updates/uspto-rescinds-memorandum-addressing-discretionary-denial-procedures?utm_source=chatgpt.com
Guidance on USPTO’s Recission of “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation”: https://www.uspto.gov/sites/default/files/documents/guidance_memo_on_interim_procedure_recission_20250324.pdf?utm_source=chatgpt.com
Interim Processes for PTAB Workload Management (March 26, 2025): https://www.uspto.gov/sites/default/files/documents/InterimProcesses-PTABWorkloadMgmt-20250326.pdf?utm_campaign=subscriptioncenter&utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=
From Pharaohs to Vikings: The Origins of Branding and Counterfeiting
In today’s world, advertising is inescapable. We are bombarded every day by marketing messages on our phones, computer screens and television screens. Even while reading a newspaper online, pop-up ads frequently appear, often to our annoyance. One might wonder: how did all this come about, and what purpose does it serve? As we’ve previously written, […]
The post From Pharaohs to Vikings: The Origins of Branding and Counterfeiting appeared first on Attorney at Law Magazine.
Best Method Challenge Continues to Offer “a Material Advantage” – Zoetis Services LLC v Boehringer Ingelheim Animal Health USA Inc [2024] FCAFC 145
Finding against Zoetis, the Full Federal Court held that Zoetis’ three patent applications relating to pig vaccines were invalid due to the failure to disclose the best method.
The Court’s analysis focused on one of Zoetis’ patent applications (the 535 Application), as the parties agreed that the finding would apply to the other patent applications. The key issue was whether Zoetis’ disclosure of a range of varying antigen concentrations for its investigational vaccine products (IVPs) satisfied the best method requirement. Notably, the antigen concentration disclosed in the specification was provided relative to a reference vaccine, the concentration of which was not disclosed.
The best method arguments centered around the observations in Apotex v Servier that the patentee “has an obligation to include aspects of the method of manufacture that are material to the advantages it is claimed the invention brings“. In addressing this question, the Full Court concluded:
The specific (absolute) antigen concentration was material to the alleged advantages of the claimed invention and therefore had to be disclosed;
Zoetis knew the specific (absolute) antigen concentration that conferred the advantages as it had produced IVPs and conducted trials;
Within the antigen ranges claimed by Zoetis, different experimental compositions demonstrated different levels of efficacy; and
The disclosure of a possible range of concentration of antigens failed the best method requirement as it was not a ‘fair disclosure’ of the best method.
Zone of Natural Expansion Is a Shield, Not a Sword
The US Court of Appeals for the Federal Circuit upheld a Trademark Trial & Appeal Board decision to partially cancel trademarks, ruling that an opposition challenger could not use the zone of natural expansion doctrine to claim priority because the doctrine is strictly defensive. Dollar Financial Group, Inc. v. Brittex Financial, Inc., Case No. 23-1375 (Fed. Cir. Mar. 19, 2025) (Prost, Taranto, Hughes, JJ.)
Dollar Financial Group (DFG) is a loan financing and check cashing business that has used the mark MONEY MART since the 1980s. In 2012, DFG expanded and started using the mark in connection with pawn brokerage and pawn shop services. DFG registered MONEY MART for these new services in 2014. Brittex petitioned to cancel the registration on several grounds, including that the registrations were improperly issued in violation of the Lanham Act, which bars registration of a mark that “so resembles . . . a mark or trade name previously used in the United States by another and not abandoned, as to be likely, when used on or in connection with the goods of the applicant, to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. § 1052(d). Brittex has operated pawn shops under the names Money Mart Pawn and Money Mart Pawn & Jewelry since the 1990s and claimed prior common law rights to the MONEY MART mark for pawn services.
The Board ruled in favor of Brittex, finding that Brittex had priority over DFG for pawn services due to its earlier use of the mark. The Board also determined that DFG could not rely on the zone of natural expansion doctrine to establish priority because this doctrine is purely defensive and does not grant a proactive right to register a mark on an expanded line of goods or services. The Board also concluded that there was a likelihood of confusion between the marks, given their high similarity and the overlapping nature of the services provided by both parties. DFG appealed.
The Federal Circuit agreed that Brittex had established priority because it was the first to use the MONEY MART mark in connection with pawn services. The Court also rejected DFG’s zone of natural expansion argument, reiterating that the doctrine is defensive and cannot be used to establish priority offensively.
The doctrine of natural expansion, as explained in Orange Bang v. Ole Mexican Foods (TTAB 2015), states that:
[T]he first user of a mark in connection with particular goods or services possesses superior rights in the mark as against subsequent users of the same or similar mark for any goods or services which purchasers might reasonably expect to emanate from it in the normal expansion of its business under the mark.
However, the doctrine does not give the senior mark user an offensive or proactive use.
The Federal Circuit also addressed DFG’s argument regarding the doctrine of tacking, which allows trademark holders to make minor modifications to their own mark while retaining the priority position of the older mark. Tacking is generally permitted to allow trademark holders to make minor adjustments to their marks to reflect changing consumer preferences, aesthetics, and marketing styles. However, the Federal Circuit determined that DFG had forfeited this argument by failing to present it during the initial cancellation proceeding before the Board. Consequently, the Court declined to consider the tacking argument on appeal.
What’s the (Re)issue? Patent Term Extensions for Reissue Patents
Addressing the calculation of patent term extensions (PTEs) under the Hatch-Waxman Act, the US Court of Appeals for the Federal Circuit affirmed a district court decision that under the act the issue date of the original patent should be used to calculate the extension, not the reissue date. Merck Sharp & Dohme B.V. v. Aurobindo Pharma USA, Inc., Case No. 23-2254 (Fed. Cir. Mar. 13, 2025) (Dyk, Mayer, Reyna, JJ.)
Merck owns a patent that is directed to a class of 6-mercapto-cyclodextrin derivatives. Four months after the patent issued, Merck applied to the US Food & Drug Administration (FDA) for approval of sugammadex, which it intended to market as Bridion®. During FDA’s review of Merck’s new drug application (NDA), Merck filed a reissue application that included narrower claims. The reissue application issued and included all the original claims and 12 additional claims. FDA regulatory review continued throughout the examination of the reissue application and extended almost two years beyond the date the patent reissued. In all, the FDA regulatory review lasted nearly 12 years.
The Hatch-Waxman Act provides owners of patents related to pharmaceutical products a process to extend the term of their patent rights to compensate for time lost during regulatory review of their NDAs. The act contains a clause providing that “the term of a patent . . . shall be extended by the time equal to the regulatory review period . . . occur[ring] after the date the patent is issued.” Having been unable to market the invention covered by the patent for almost 12 years because of FDA’s regulatory review, Merck filed a PTE application for its reissue patent seeking a five-year extension (the maximum allowed under the act) based on the patent’s original issue date. The US Patent & Trademark Office (PTO) agreed and granted the five-year extension.
Between the reissue date and the PTO’s grant of the five-year extension, Aurobindo and other generic manufacturers had filed abbreviated new drug applications (ANDAs) seeking to market generic versions of Bridion®. Merck sued for infringement. At trial, Aurobindo argued that the PTO improperly calculated the PTE by using the original issue date instead of the reissue date because only 686 days of FDA’s regulatory review occurred after the reissue date, as opposed to the almost 12 years which had passed since the initial issue date. The district court disagreed, finding that Aurobindo’s proposed construction “would undermine the purpose of the Hatch-Waxman Act.” Aurobindo appealed.
Aurobindo argued that the act’s reference to “the patent” referred to the reissue patent because that is the patent for which the patentee was seeking term extension. Merck argued that the act’s text, read in light of other patent statutes and the history of patent reissue, required the opposite conclusion (i.e., a PTE based on the original issue date).
The Federal Circuit agreed with Merck, explaining that while the language of the PTE text may be ambiguous, that ambiguity may be resolved by considering the PTE text in light of the history of the Hatch-Waxman Act and its place within the statutory scheme. The purpose of the act is “to compensate pharmaceutical companies for the effective truncation of their patent terms while waiting for regulatory approval of new drug applications,” and “the statute should be liberally interpreted to achieve that end.”
Having found that the Hatch-Waxman Act contemplates PTE for patents claiming drug products for which exclusivity was delayed by FDA review, the Federal Circuit found no reason to deny Merck compensation for the PTE period calculated by the PTO based on the original patent issue date.
When “It’s Obvious” Just Isn’t Enough: Challenger’s Burden to Prove Obviousness
The US Court of Appeals for the Federal Circuit affirmed the Patent Trial & Appeal Board’s decision that a patent was not obvious because the petitioner failed to show sufficient support of obviousness based on prior art. AMP Plus, Inc. v. DMF, Inc., Case No. 23-1997 (Fed. Cir. Mar. 19, 2025) (Lourie, Bryson, Reyna, JJ.)
DMF owns a patent directed to a compact recessed lighting system designed for installation in a standard electrical junction box. In 2019, AMP, doing business as ELCO, petitioned for inter partes review of several claims of the patent on three grounds of unpatentability:
Anticipation by a prior reference
Obviousness based on a combination of two references
Further obviousness based on an additional source.
The Board found that one claim was anticipated but ruled that ELCO failed to prove unpatentability of the other claims, including the claim at issue on appeal. The claim at issue describes a system with wires connected to a driver and a first connector, coupled to a second connector that in turn is connected to the building’s electrical system. This specific connection was referred to as “Limitation M.” ELCO appealed. In that earlier appeal (2022), the Federal Circuit affirmed the Board’s ruling on all claims except the claim at issue and remanded the case back to the Board for further analysis.
On remand, the Board concluded that ELCO failed to demonstrate the unpatentability of the claim at issue because ELCO’s petition lacked a substantive analysis of Limitation M. The Board found ELCO’s argument that a prior art marine lighting system could be adapted for the claimed building use unsupported by evidence and ruled that the claim at issue was not obvious. Again, ELCO appealed.
ELCO raised two main arguments. First, it argued that the Board erred in not determining that the claim at issue was anticipated by a prior reference, as the Board had previously found another claim to be anticipated by the same reference. The Federal Circuit rejected this argument because ELCO had only challenged the claim at issue on the basis of obviousness in its original petition, not anticipation. Since the issue of anticipation was not raised in the petition, the Court determined that ELCO could not introduce this new ground of unpatentability on appeal.
Second, ELCO argued that its petition had sufficiently demonstrated the obviousness of Limitation M based on the prior references. The Federal Circuit disagreed, finding that ELCO’s petition did not adequately address the specific requirement for coupling the system to a building’s electrical infrastructure. The petition failed to discuss how the recessed lighting system would be installed in a building, and the references cited did not provide adequate support for the argument of obviousness for this particular limitation.
The Federal Circuit emphasized that it was not the Board’s responsibility to supplement the petitioner’s arguments or search for evidence to support an inadequately supported claim challenge. The Court reiterated that an obviousness analysis does not require the Board to fill gaps in the petitioner’s original filing. In this case, the Board had appropriately determined that ELCO failed to meet its burden of demonstrating the obviousness of Limitation M.
No APA Review of Commission Refusal to Issue Sua Sponte Show Cause Order
The US Court of Appeals for the Federal Circuit dismissed an appeal challenging a US International Trade Commission decision that upheld an administrative law judge’s (ALJ) order, ruling that such an order was within the Commission’s discretion and unreviewable. Realtek Semiconductor Corp. v. International Trade Commission, Case No. 23-1095 (Fed. Cir. Mar. 18, 2025) (Moore, C.J.; Reyna, Taranto, JJ.)
DivX filed a complaint at the Commission against Realtek alleging a violation of § 1337 of the Tarriff Act. DivX later withdrew the complaint. Realtek subsequently filed a motion for sanctions against DivX, alleging certain misconduct. The ALJ denied the motion on procedural grounds. Realtek subsequently petitioned for Commission review, asking the Commission to exercise its authority to issue a sua sponte order requiring DivX to show cause explaining why it had not engaged in sanctionable conduct. The Commission decided not to review and adopted the ALJ’s order without comment.
Realtek appealed, contending that the Commission violated the Administrative Procedure Act (APA) by not issuing a sua sponte show cause order. The Commission argued that Realtek’s appeal should be dismissed, contending that the issue raised was unreviewable.
The Federal Circuit agreed with the Commission, stating that under § 701(a)(2) of the APA, decisions made by an agency are unreviewable by the Court when they are entrusted to the agency’s discretion by law. The Court explained that the sua sponte issuance of a show cause order is a decision that “may be, not must be,” entered by the ALJ or on the Commission’s initiative. Therefore, the decision not to act sua sponte is a decision that remains wholly within the agency’s discretion.
The Federal Circuit rejected Realtek’s argument that the Commission’s refusal to act was reviewable because the Commission failed to provide reasoning, and that Commission review would have allowed the Court to determine if there were “illegal shenanigans” in exercising discretion. However, the case cited by Realtek involved the review of “shenanigans” that fell within the Court’s reviewable categories, not one related to the Commission’s refusal to issue a show cause order sua sponte. The Court found no support for Realtek’s claim that discretionary agency actions under § 701(a)(2) become reviewable under the APA simply because the agency fails to provide its reasoning.