IP Law Daily, PATENT NEWS—USAA challenges Federal Circuit’s narrow APA ‘like cases alike’ standard at High Court, (Aug 15, 2025)

By Saurabh Kashyap, B.A., M.A., LL.B., LL.M.

USAA seeks reversal of PTAB rulings that invalidated two mobile deposit patents and Supreme Court clarification that agencies must explain divergent outcomes in materially similar cases.

The United Services Automobile Association (USAA) has petitioned the U.S. Supreme Court to review a Federal Circuit decision upholding the Patent Trial and Appeal Board's (PTAB) invalidation of two patents covering USAA's pioneering mobile check deposit technology. In its filing, USAA contends that the PTAB reached directly opposite conclusions in substantively identical inter partes review (IPR) proceedings involving different challengers—Wells Fargo and PNC Bank—without explaining the inconsistency. The petition frames the case as an ideal vehicle for resolving a longstanding split between the D.C. Circuit and the Federal Circuit over the scope of an agency's duty to treat "like cases alike" under the Administrative Procedure Act (APA) (United Services Automobile Association v. PNC Bank N.A., Dkt. No. 25-149 (U.S. filed Aug. 5, 2025)).

Background. USAA, a member-owned association serving current and former members of the U.S. military and their families, developed technology enabling customers to deposit checks from anywhere using a mobile device. Before this innovation, remote deposit required specialized desktop scanners—a barrier for deployed service members worldwide.

USAA’s asserted U.S. Patent Nos. 8,977,571 (the ’571 patent) and 8,699,779 (the ’779 patent) cover an “autocapture” feature designed to ensure compliance with the Check 21 Act, which governs the use of electronic check images in place of paper checks. The technology automatically captures an image only when specific quality criteria—such as proper lighting, contrast, and alignment—are met. The '779 patent adds a requirement for projecting an alignment guide in the display of the mobile device before capture.

PTAB Proceedings. Both Wells Fargo and PNC introduced mobile deposit features incorporating similar autocapture functionality, and each initiated IPR proceedings to challenge the validity of the '571 and '779 patents. In both instances, the challengers argued that the patents were obvious under 35 U.S.C. § 103 in view of a combination of two types of prior art: (1) references describing remote deposit of checks via a mobile device, and (2) references describing automatic image capture of business cards once aligned within a guide.

In 2020, the PTAB considered Wells Fargo’s petitions, which relied on a patent called Nepomniachtchi (describing mobile check deposit) and a published application by Yoon (describing alignment-based autocapture of business cards). The Board concluded that a person of ordinary skill in the art would not have been motivated to combine these teachings. It reasoned that such a combination would likely increase computational burden, yield minimal additional alignment benefits, and could result in a higher number of unusable check images.

PNC's petitions, filed while the Wells Fargo reviews were ongoing, used different but substantively equivalent references—Acharya instead of Nepomniachtchi, and Luo in place of Yoon. USAA entered the Wells Fargo references into the PNC record and obtained admissions from PNC's expert that the PNC references disclosed nothing that the Wells Fargo references had not already taught. Nevertheless, a different PTAB panel found motivation to combine and held the claims unpatentable, adopting rationales that the earlier Wells Fargo panel had expressly rejected.

Federal Circuit affirmance. USAA appealed the PNC decisions, arguing that the PTAB had violated the APA by failing to reconcile its departure from the Wells Fargo outcomes. The Federal Circuit, however, affirmed. It endorsed the Board's position that the differences in the specific prior art references—although substantively indistinguishable—were sufficient to avoid any obligation to explain the inconsistency. Applying a deferential substantial evidence standard, the court concluded that the Board’s obviousness determinations should stand.

The decision had immediate collateral consequences. In separate district court litigation, a jury awarded USAA $218.5 million in damages against PNC, part of which was related to the infringement of the '571 patent. The Federal Circuit relied on the PTAB's unpatentability ruling in the PNC IPR to reverse that portion of the judgment on preclusion grounds.

Claimed circuit split. USAA’s petition places the case within a broader administrative law dispute. According to USAA, the D.C. Circuit consistently vacates agency actions that treat materially similar cases differently without adequate explanation. In Grayscale Investments, LLC v. SEC, 82 F.4th 1239 (D.C. Cir. 2023), for example, the court held that the Securities and Exchange Commission acted arbitrarily when it approved exchange-traded funds tied to bitcoin futures but not those tied to bitcoin itself, without addressing evidence of their salient similarity. Under that approach, USAA argues, the PTAB’s unexplained divergence from the Wells Fargo rulings would be deemed arbitrary and capricious.

The Federal Circuit, by contrast, has limited its scrutiny of inconsistent agency decisions to situations involving virtually identical parties, records, and issues—effectively collapsing the APA’s consistency requirement into a rule of issue preclusion. USAA contends that this standard allows agencies within the Federal Circuit’s jurisdiction, including the PTAB, to reverse course without justification so long as they can point to minor, cosmetic differences in the record.

Framework. The petition invokes the APA’s mandate that reviewing courts “set aside agency action” that is “arbitrary” or “capricious,” 5 U.S.C. § 706(2)(A), and cites Supreme Court precedent in Encino Motorcars, LLC v. Navarro, 579 U.S. 211 (2016), and FCC v. Fox Television Stations Inc., 556 U.S. 502 (2009), to emphasize that “unexplained inconsistency” in agency decision-making is a recognized basis for reversal. USAA argues that the PTAB’s shift from finding no motivation to combine in Wells Fargo to finding such motivation in PNC—on a materially identical record—squarely meets that standard.

The petition stresses that while agencies may change their positions, they must acknowledge and justify departures from prior reasoning when deciding cases that are similar in relevant respects. This duty, USAA asserts, promotes predictability, ensures fair treatment, and facilitates meaningful judicial review.

Policy concerns. USAA warns that the Federal Circuit’s narrow approach has serious practical consequences. With the PTAB’s high invalidation rates—studies show that in up to 70% of IPRs, all challenged claims are cancelled—and the frequency of repeat challenges by different parties, patent owners face a heightened risk of inconsistent outcomes. A favorable decision in one proceeding offers no assurance against a contrary decision in the next, while an adverse decision can preclude enforcement of the patent entirely.

According to USAA, this asymmetry invites strategic behavior by challengers, undermines the stability of patent rights, and diminishes confidence in agency adjudication. The petition characterizes the problem as especially acute in multimember tribunals like the PTAB, where case outcomes can turn on the composition of the panel rather than the merits.

Reliefs. USAA asks the Supreme Court to grant certiorari to resolve the conflict between the D.C. Circuit’s and the Federal Circuit’s approaches to agency consistency. Specifically, it seeks a ruling that agencies must explain divergent results reached on materially similar facts, regardless of party identity, and that failure to do so renders the decision arbitrary and capricious under the APA. USAA further requests that the Court reverse the Federal Circuit’s judgment or remand for reconsideration under the proper standard.

The Case is Dkt. No. 25-149.

Attorneys: Lisa Glasser (Irell & Manella LLP) for United Services Automobile Association.

Companies: United Services Automobile Association; PNC Bank N.A.

News: Patent FedCirNews USPTO GCNNews