UNITED STATES PATENT AND TRADEMARK OFFICE
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`GOPRO, INC., GARMIN INT’L, INC. AND GARMIN USA, INC.
`Petitioners
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`vs.
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`CELLSPIN SOFT, INC.,
`Patent Owner
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`Case IPR2019-01107
`Patent No. 9,258,698
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`PATENT OWNER’S OBJECTIONS TO THIS PROCEEDING FOR VIOLATING THE
`APPOINTMENTS CLAUSE OF THE U.S. CONSTITUTION
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`The Patent Owner, Cellspin Soft, Inc. (“Cellspin”) hereby objects to this proceeding,
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`including as joined per Petitioners’ pending motion for joinder, from any joinder or institution
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`decision forward, up to an including any final written decision or further Patent Trial and Appeal
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`Board (PTAB) proceedings, as follows:
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`Although it is likely a futile effort to try to convince an executive body of its
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`unconstitutionality, Cellspin
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`respectfully submits
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`these objections nonetheless.
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` The
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`Administrative Patent Judges (APJs) of the PTAB, including the APJs presiding over this
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`proceeding, were appointed in violation of the Appointments Clause of the Constitution. Arthrex,
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`Inc. v. Smith & Nephew, Inc., 2019 WL 5616010 (Fed. Cir. Oct. 31, 2019). Without limitation,
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`APJs are “principal officers,” including because neither the Secretary of Commerce (who appoints
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`APJs) nor the Director of the USPTO “exercises sufficient direction and supervision” over APJs
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`for them to be inferior officers. Id. at *4. The U.S. Constitution requires “principal officers” to be
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`appointed by the President with the advice and consent of the Senate. U.S. Const. art. II, § 2, cl. 2.
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`As noted below, in an ineffective attempt to cure the identified constitutional violation, the
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`Arthrex court held that the Director of the USPTO must be permitted to remove APJs without
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`cause. This “remedy” was erroneously ruled to allow APJs to be prospectively classified as inferior
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`officers. It also erroneously seeks to have pending PTAB proceedings, including this one, proceed
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`to final determination following defective institution decisions and under still Constitutionally
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`infirm APJs.
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`The Supreme Court’s framework for distinguishing principal officers from inferior officers
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`involves (1) that “an individual must occupy a ‘continuing’ position established by law to qualify
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`as an officer.” Lucia v. SEC, 138 S. Ct. 2044, 2051 (2018); and (2) that the individual must
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`“exercis[e] significant authority pursuant to the laws of the United States.” Id. The Supreme Court
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`has explained that “[w]hether one is an ‘inferior’ officer depends on whether he has a superior.”
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`Edmond v. United States, 520 U.S. 651, 662–63, 117 S.Ct. 1573 (1997). Further, “‘inferior
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`officers’ are officers whose work is directed and supervised at some level by others who were
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`appointed by Presidential nomination with the advice and consent of the Senate.” Id. There is no
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`“exclusive criterion for distinguishing between principal and inferior officers for Appointments
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`Clause purposes.” Id. at 661, 117 S.Ct. 1573. However, the Court in Edmond noted three factors:
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`(1) whether an appointed official has the power to review and reverse the officers’ decision; (2)
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`the level of supervision and oversight an appointed official has over the officers; and (3) the
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`appointed official’s power to remove the officers. See id. at 664–65, 117 S.Ct. 1573.
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`As also noted in Arthrex, in Edmond the Supreme Court deemed it “significant” whether
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`an appointed official has the power to review an officer’s decision such that the officer cannot
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`independently “render a final decision on behalf of the United States.” Edmond, 520 U.S. at 665.
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`In inter partes review proceedings such as this one, no presidentially appointed officer has
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`independent statutory authority to review a final written decision by the APJs before the decision
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`issues on behalf of the United States. Arthrex, 2019 WL 5616010, *4. There are more than 200
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`APJs and a minimum of three must decide each inter partes review. 35 U.S.C. § 6(c). Id. Yet the
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`Director is the only member of the Board who is nominated by the President and confirmed by the
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`Senate. Id.
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`In Arthrex, the panel determined that the first and third control-and-supervision factors
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`supported the conclusion that APJs are principal officers, and that the second did not. With respect
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`to the first factor, “[n]o presidentially-appointed officer has independent statutory authority to
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`review a final written decision by the APJs before the decision issues on behalf of the United
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`States.” Arthrex, 2019 WL 5616010, at *4. Although the Director may actually or theoretically
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`2
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`influence or exercise some degree of control for various aspects of the inter partes review process,
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`he or she clearly lacks “sole authority to review or vacate any decision by a panel of APJs.” Id. at
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`*5. Further, the Director influencing APJ decisions is far different from exercising review
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`authority over those decisions. Including to the extent such influence lacks notice and an
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`opportunity to be heard, it would clearly violate the Due Process Clauses of the Fifth and
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`Fourteenth Amendments.
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`According to the Arthrex panel, the second factor weighed in favor of finding the APJs to
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`be inferior officers, because the PTO Director allegedly “exercises a broad policy-direction and
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`supervisory authority over the APJs.” Arthrex, 2019 WL 5616010, at *5. That authority includes
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`powers to issue policy directives guiding APJs’ decision-making, designate PTAB decisions as
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`precedential and hence binding on future APJ panels, institute inter partes review, designate the
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`panel of judges to decide each review, and adjust APJs’ pay. Id. at *5–6. Contrary to the Federal
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`Circuit’s holding, these powers of the PTO director do not weigh in favor of APJs being inferior
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`officers, including because there is no meaningful nexus between these powers and the substance
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`or finality of the rulings issued by APJs.
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`The third factor favored APJs being deemed principal officers. Here, the law provides that
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`APJs “may be removed ‘only for such cause as will promote the efficiency of the service’” Arthrex,
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`2019 WL 5616010, at *7 (quoting 5 U.S.C. § 7513(a)).
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`The Arthrex panel also acknowledged the possible relevance of other factors beyond the
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`three-part test distilled from Edmond, namely that “the APJs do not have limited tenure, limited
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`duties, or limited jurisdiction.” Arthrex, 2019 WL 5616010, at *8. Although not given weight by
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`the Arthrex panel, these factors also weigh in favor of APJs being principal officers, despite the
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`Federal Circuit’s erroneous attempt to remedy the problem by rewriting 5 U.S.C. § 7513(a).
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`Despite its error in assessing factor 2, the Arthrex panel correctly concluded that APJs
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`qualify as principal officers. Having correctly concluded that the PTAB’s statutory structure
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`violated the Appointments Clause, the Arthrex panel erroneously concluded that it could remedy
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`the situation by ruling the statutory provision of for-cause removal to be unconstitutional as applied
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`to APJs. Arthrex, 2019 WL 5616010, at *9. Specifically, the panel held unconstitutional the
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`application to APJs of 35 U.S.C. § 3(c), which subjects PTO officers and employees to the
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`provisions of title 5 of the United States Code, including the for-cause removal provision in 5
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`U.S.C. § 7513(a). The panel characterized its severability holding as “follow[ing] the Supreme
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`Court’s approach in Free Enterprise Fund” and the D.C. Circuit’s approach in Intercollegiate, both
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`of which cured constitutional violations by “sever[ing] the problematic ‘for-cause’ restriction from
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`the statue rather than holding the larger structure . . . unconstitutional.” Arthrex, 2019 WL
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`5616010, at *9.
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`The Federal Circuit’s “remedy” has not yet become effective because the mandate in
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`Arthrex has not issued and further appellate proceedings are possible if not likely. However,
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`apparently the government has taken the erroneous position that the “remedy” of removing for-
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`cause removal is already in place, despite the current lack of a mandate from the Federal Circuit.
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`Whether or not that is so, this purported “remedy” is insufficient for at least four reasons. First,
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`the Federal Circuit lacked the judicial power to rewrite the statute as erroneously attempted to do
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`in Arthrex. Severability turns on whether “the statute will function in a manner consistent with
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`the intent of Congress.” Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685, 107 S.Ct. 1476, 94
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`L.Ed.2d 661 (1987). Here, there is no Congressional intent supporting the Arthrex decision,
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`including any intent that APJs be removable at will, or for a statutory scheme allowing USPTO
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`Director to exercise authority over APJ decisions by firing them if he or she is displeased with a
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`decision. If anything, the attempted remedy in Arthrex is inconsistent with the intent of Congress
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`for some USPTO employees to be removable at will, with APJs not being included in that category.
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`Here, it should be noted that the ability to remove APJs at will does not address the fundamental
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`problem posed by the independence of their decision-making authority including that “[n]o
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`presidentially-appointed officer has independent statutory authority to review a final written
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`decision by the APJs before the decision issues on behalf of the United States.” See Arthrex, 2019
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`WL 5616010, at *4.
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`Further, the legislative history of the America Invents Act indicates that Congress explicitly
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`declined or rejected a severability amendment. See 157 Cong. Rec. H4491. In particular, in
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`proposing an amendment on behalf of Representative Waters on severability, Representative Watt
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`stated: “[t]his is a straightforward amendment that provides that if one part of the bill is determined
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`to be unconstitutional, it can be severable from the rest of the bill and it doesn’t bring the rest of
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`the provisions down.” Id. However, Representative Watt ultimately withdrew the amendment
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`because he had been mistaken about Representative Waters’ desire to offer it. Id.
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`Second, even if the Federal Circuit’s severance was within its power and in accord with
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`Congressional intent, removing the for-cause firing standard for APJs does not render them inferior
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`officers, because they remain principal officers, including under Edmond and Free Enterprise
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`Fund. All of the factors noted above are applicable, with perhaps the most overriding being factor
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`1 and the still inescapable fact that, that “[n]o presidentially-appointed officer has independent
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`statutory authority to review a final written decision by the APJs before the decision issues on
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`behalf of the United States.” See Arthrex, 2019 WL 5616010, at *4. As noted above, the Supreme
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`Court deemed it “significant” whether an appointed official has the power to review an officer’s
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`decision such that the officer cannot independently “render a final decision on behalf of the United
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`States.” Edmond, 520 U.S. at 665. If an officer can “render a final decision on behalf of the United
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`States,” which APJs unquestionably can do, then they are not sufficiently supervised by anyone
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`else in the executive branch, and they are principal officers for purposes of the Appointments
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`Claus. In Edmond, the holding that judges of the Coast Guard Court of Criminal Appeals were
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`inferior officers was supported by the fact that they “no power to render a final decision on behalf
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`of the United States unless permitted to do so by other Executive officers.” Id. at 664–65. In Free
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`Enterprise Fund, the holding that members of the Public Company Accounting Oversight Board
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`were inferior officers was supported by the Securities and Exchange Commission’s broad “other
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`oversight authority.” Free Enterprise Fund v. Public Company Accounting Oversight Board, 561
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`U.S. 477, 510 (2010). This broad oversight authority included the power of the Securities
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`Exchange Commission to review Board actions including rules or sanctions. See 15 U.S.C. §§
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`7217(b)(2)-(4), (c)(2) & §§ 78y(a)(1), (b)(1), (c)(1). Although the Arthrex panel deemed Free
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`Enterprise Fund to be supportive of its holding, the reality is the opposite.
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`Although the Federal Circuit purported to be following the lead of the D.C. Circuit from
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`the Intercollegiate case, see Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board,
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`684 F.3d 1332 (2012), to the extent Intercollegiate might arguably support APJs still being inferior
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`officers, it improperly conflicts with Supreme Court precedents, including those of Edmond and
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`Free Enterprise Fund.
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`The government has argued that the Director at least theoretically has some supervision or
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`control over APJ decisions because he might be able to essentially rig or stack a panel. However,
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`any such theoretical powers, even if real, would violate the due process rights of patent owners
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`under the Fifth and Fourteenth Amendments to the U.S. Constitution.
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`Third, even if the Federal Circuit’s “remedy” was effective in making APJs into inferior
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`officers going forward, that does not change the fact that the APJs presiding over this case were
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`appointed in an unconstitutional manner, and no reappointment has occurred. Here it should be
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`noted that the Supreme Court has not expressly held that the judicial remedy of severance can
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`transform a principal officer into an inferior officer. The only proper remedy for a panel of APJs
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`who had been appointed in an unconstitutional manner is replacement with APJs who were
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`appointed in a constitutional manner. See generally Arthrex, 2019 WL 5616010, at *11 (“Because
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`the Board’s decision in this case was made by a panel of APJs that were not constitutionally
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`appointed at the time the decision was rendered,” the panel “vacate[d] and remand[ed] the Board’s
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`decision without reaching the merits.”). As noted herein, the current scheme, even as purportedly
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`remedied by the Federal Circuit’s striking the for-cause requirements for firing APJs, is still
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`violative of the Appointments Clause. Thus, at present, the only proper remedy in the absence of
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`validly appointed APJs replacing the currently invalidly appointed APJs is vacating this
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`proceeding.
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`Fourth, even if the Federal Circuit’s “remedy” was effective in making APJs into inferior
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`officers going forward, that does not change the fact that the institution decision for this proceeding
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`was rendered by APJs who had been appointed in an unconstitutional manner. Cellspin
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`acknowledges that the Federal Circuit disagreed with this point in dicta. Arthrex, 2019 WL
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`5616010, at *12 (stating that the underlying decision to institute the inter partes review “is not
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`suspect” on remand, because the identified constitutional violation did not undermine the
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`Director’s institution authority under 35 U.S.C. § 314). However, on this point the Federal Circuit
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`was incorrect. It should be noted that all parties in Arthrex had apparently agreed that
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`severance/remand would fix the problem, but Cellspin does not agree at all with that notion. The
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`notion of the USPTO Director being the one who actually institutes inter partes review proceedings
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`is, if anything, a fiction. The only proper remedy for an institution decision that was in reality and
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`in fact made by APJs who had been appointed in an unconstitutional manner is vacating the
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`institution decision and having it re-addressed, de novo, by APJs who have been appointed in a
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`constitutional manner. See generally Arthrex, 2019 WL 5616010, at *11 (“Because the Board’s
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`decision in this case was made by a panel of APJs that were not constitutionally appointed at the
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`time the decision was rendered,” the panel “vacate[d] and remand[ed] the Board’s decision without
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`reaching the merits.”). But, as noted herein, the current scheme, even as purportedly remedied by
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`the Federal Circuit’s striking the for-cause requirements for firing APJs, is still violative of the
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`Appointments Clause. Thus, at present, the only proper remedy for the infirm institution decision
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`is to vacate it.
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`Finally, as noted in the recent oral argument in the case of Polaris Innovations Ltd. v.
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`Kingston Technology Company, No. 18-1768 (Fed. Cir. argued Nov. 4, 2019), the Arthrex panel
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`did not go far enough in resolving the constitutional infirmity of the APJs. As correctly noted by
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`Polaris, because the Director of the PTO cannot review the APJs’ decisions, and because the court
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`cannot itself authorize such a review, the only remedy is to declare the entire system
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`constitutionally flawed and let Congress fix it.
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`WHEREFORE, premises considered, Cellspin objects to this proceeding, including as
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`joined per Petitioners’ pending motion for joinder, from any joinder or institution decision forward,
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`up to an including any final written decision or further PTAB proceedings. The only proper remedy
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`at this point is that every ruling from institution forward be addressed de novo by APJs appointed
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`in a Constitutional manner, which at present is not possible, making the only real proper remedy
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`the vacating of this entire proceeding including the institution decision.
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`Dated: November 6, 2019
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`Respectfully submitted,
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`/s/ John J. Edmonds
`John J. Edmonds
`Edmonds, & Schlather PLLC
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`Lead Counsel for Patent Owner
`Cellspin Soft, Inc.
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`Certificate of Service
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`I hereby certify that the foregoing objections are being served on the below date by ECF and/or
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`electronic mail to the following:
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`David Xue
`Karineh Khachatourian
`RIMÔN LAW
`David.xue@rimonlaw.com
`karinehk@rimonlaw.com
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`Jennifer Bailey
`Adam Seitz
`ERISE IP, P.A.
`Jennifer.bailey@eriseip.com
`Adam.seitz@eriseip.com
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`Attorneys for Petitioners,
`GOPRO, INC., GARMIN INTERNATIONAL, INC., AND GARMIN USA,
`INC.
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`Dated: November 6, 2019
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`/s/ John J. Edmonds
`John J. Edmonds
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`Counsel for Patent Owner,
`Cellspin Soft, Inc.
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