Volkswagen Group of America, Inc. was sued for patent infringement by Longhorn Automotive Group LLC. In response, Volkswagen sought inter partes review (IPR) of Longhorn's patent. However, the Acting Director of the United States Patent and Trademark Office (USPTO) concluded that IPR would not be an appropriate use of agency resources and granted Longhorn's request for a discretionary denial of the petition. Volkswagen petitioned the Federal Circuit for a writ of mandamus, asking the court to vacate the non-institution decision and direct the USPTO to reconsider the petition without regard to discretionary considerations. The Director and Longhorn opposed the petition.
The court addressed Volkswagen's constitutional argument that Congress violated the nondelegation doctrine by granting the Director unbounded discretion to deny institution of IPR. The court acknowledged that while 35 U.S.C. § 314(d) makes institution decisions final and nonappealable, constitutional questions regarding the nondelegation doctrine remain reviewable. However, the court found that the Director's refusal to institute proceedings does not constitute an exercise of legislative power. Citing Heckler v. Chaney, the court explained that an agency's refusal to institute proceedings shares characteristics with a prosecutor's decision not to indict, which is a special province of the Executive Branch charged with faithfully executing the laws. The court distinguished Volkswagen's reliance on Jarkesy v. SEC, noting that Jarkesy involved the delegation of authority to determine whether a defendant receives an Article III jury trial, which is a legislative function. In contrast, the IPR context involves a decision on whether to take a second look at an earlier administrative grant of a patent, which is an executive function. Furthermore, unlike in Jarkesy, a non-institution decision has no legal effect on the underlying patent rights and obligations. Consequently, the court found no persuasive basis to conclude the Director exercises legislative power.
The petition is denied, leaving the USPTO Director's discretionary decision to deny inter partes review in place. The ruling reinforces that the Director's authority to decline institution based on resource allocation or policy is an executive function immune from judicial review under the nondelegation doctrine, provided the decision does not exceed statutory bounds. The underlying patent rights and obligations remain unchanged, and the dispute proceeds in the district court or through other available channels.
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