`
`
`
`IN THE
`pìéêÉãÉ=`çìêí=çÑ=íÜÉ=råáíÉÇ=pí~íÉë=
`
`
`
`
`
`UNITED STATES OF AMERICA,
`
`Petitioner,
`
`v.
`ARTHREX, INC., ET AL.,
`
`
`
`Respondents.
`
`On Writs Of Certiorari
`To The United States Court Of Appeals
`For The Federal Circuit
`
`
`
`RESPONSE AND REPLY BRIEF
`FOR SMITH & NEPHEW, INC.
`AND ARTHROCARE CORP.
`
`
`
`MARK A. PERRY
`
`
` Counsel of Record
`KELLAM M. CONOVER
`CHARLES T. STEENBURG
`BRIAN A. RICHMAN
`NATHAN R. SPEED
`MAX E. SCHULMAN
`RICHARD F. GIUNTA
`GIBSON, DUNN & CRUTCHER LLP
`WOLF, GREENFIELD & SACKS, P.C.
`1050 Connecticut Avenue, N.W.
`600 Atlantic Avenue
`Washington, D.C. 20036
`Boston, MA 02210
`(202) 955-8500
`(617) 646-8000
`MPerry@gibsondunn.com
`
`
`
`JESSICA A. HUDAK
`MARK J. GORMAN
`GIBSON, DUNN & CRUTCHER LLP
`SMITH & NEPHEW, INC.
`3161 Michelson Drive
`7135 Goodlett Farms Parkway
`Irvine, CA 92612
`Cordova, TN 38016
`(949) 451-3837
`(901) 399-6903
`Counsel for Smith & Nephew, Inc. and ArthroCare Corp.
`
`(Additional captions listed on inside cover.)
`
`
`
`
`
`
`
`
`
`
`SMITH & NEPHEW, INC., ET AL.,
`Petitioners,
`
`v.
`ARTHREX, INC., ET AL.,
`
`
`ARTHREX, INC.,
`
`Respondents.
`
`Petitioner,
`
`v.
`SMITH & NEPHEW, INC., ET AL.,
`Respondents.
`
`
`
`
`
`
`
`
`
`QUESTIONS PRESENTED
`1. Whether, for purposes of the Appointments
`Clause, U.S. Const. art. II, § 2, cl. 2, administrative
`patent judges of the U.S. Patent and Trademark Of-
`fice are principal Officers who must be appointed by
`the President with the Senate’s advice and consent, or
`“inferior Officers” whose appointment Congress has
`permissibly vested in a Department head.
`2. Whether, if administrative patent judges are
`principal Officers, the court of appeals properly cured
`any Appointments Clause defect in the current statu-
`tory scheme prospectively by severing the application
`of 5 U.S.C. § 7513(a) to those judges.
`
`
`
`
`
`
`
`ii
`
`TABLE OF CONTENTS
`
`Page
`SUMMARY OF ARGUMENT ..................................... 1
`ARGUMENT ............................................................... 4
`I. APJS ARE INFERIOR OFFICERS OF THE
`UNITED STATES ................................................ 4
`A. Administrative Patent Review Has
`Deep Historical Roots .............................. 5
`B. APJs Are Inferior Officers Under
`Edmond’s Established Framework ....... 12
`C. Arthrex’s Attempt To Rewrite
`Edmond Fails ......................................... 18
`1. Precedent Forecloses Arthrex’s
`Bright-Line Test .............................. 19
`2. The Constitution Forecloses
`Arthrex’s Test .................................. 23
`3. APJs’ Removal Protections Do Not
`Make Them Principal Officers ........ 30
`D. Arthrex’s Proposal Would Require
`Revisiting Humphrey’s Executor ........... 32
`II. ARTHREX IS NOT ENTITLED TO THE
`EXTRAORDINARY RELIEF IT REQUESTS .......... 35
`A. The Only Appropriate Arthrex-
`Specific Relief Is A Declaration ............. 36
`B. Overturning The IPR Regime Is Not
`An Appropriate “Fix” ............................. 44
`1. The Court Should Use A Scalpel,
`Not A Bulldozer ............................... 44
`2. The Contours Of Any Surgical
`Solution Would Depend On The
`Court’s Merits Analysis ................... 47
`CONCLUSION .......................................................... 52
`
`
`
`
`
`iii
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`
`Apple Inc. v. Iancu,
`No. 20-cv-6128-EJD
`(N.D. Cal. filed Aug. 31, 2020) ............................. 16
`
`Barr v. Am. Ass’n of Political Consultants, Inc.,
`140 S. Ct. 2335 (2020) .......................... 3, 45, 46, 49
`
`United States ex rel. Bernardin v. Duell,
`172 U.S. 576 (1899) ................................................ 6
`
`BioDelivery Scis. Int’l, Inc. v.
`Aquestive Therapeutics, Inc.,
`935 F.3d 1362 (Fed. Cir. 2019) ...................... 15, 17
`
`Bowsher v. Synar,
`478 U.S. 714 (1986) .............................................. 46
`
`Buckley v. Valeo,
`424 U.S. 1 (1976) ...................................... 22, 46, 47
`
`Butterworth v. United States,
`112 U.S. 50 (1884) ............................................ 8, 17
`
`City & County of San Francisco v. Sheehan,
`135 S. Ct. 1765 (2015) .......................................... 42
`
`Clark v. Martinez,
`543 U.S. 371 (2005) .............................................. 33
`
`
`
`
`
`iv
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Comcast Corp. v.
`Nat’l Ass’n of African Am.-Owned Media,
`140 S. Ct. 1009 (2020) .......................................... 43
`
`Cuozzo Speed Techs., LLC v. Lee,
`136 S. Ct. 2131 (2016) .............................. 11, 15, 50
`
`Customedia Techs., LLC v. Dish Network Corp.,
`941 F.3d 1173 (Fed. Cir. 2019) ............................ 41
`
`Decker v. Nw. Envtl. Def. Ctr.,
`568 U.S. 597 (2013) .............................................. 43
`
`Dep’t of Transp. v. Ass’n of Am. R.Rs.,
`575 U.S. 43 (2015) .................................... 21, 24, 29
`
`Edmond v. United States,
`520 U.S. 651 (1997) ......................... 1, 2, 4, 5, 8, 12,
`13, 14, 17, 19, 20,
`21, 22, 23, 25, 26,
`27, 29, 31, 35, 51
`
`Free Enter. Fund v.
`Pub. Co. Accounting Oversight Bd.,
`561 U.S. 477 (2010) ......................... 3, 6, 12, 20, 44,
`45, 46, 47, 50
`
`
`Freytag v. Comm’r,
`501 U.S. 868 (1991) ...................... 11, 13, 19, 27, 28
`
`FW/PBS, Inc. v. City of Dallas,
`493 U.S. 215 (1990) .............................................. 43
`
`
`
`
`
`v
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Glidden Co. v. Zdanok,
`370 U.S. 530 (1962) ................................................ 8
`
`Go-Bart Importing Co. v. United States,
`282 U.S. 344 (1931) .............................................. 19
`
`Harper v. Va. Dep’t of Taxation,
`509 U.S. 86 (1993) ................................................ 50
`
`Ex parte Hennen,
`38 U.S. (13 Pet.) 230 (1839) ................................. 19
`
`Hormel v. Helvering,
`312 U.S. 552 (1941) ........................................ 38, 39
`
`Humphrey’s Ex’r v. United States,
`295 U.S. 602 (1935) .............................. 2, 32, 33, 34
`
`Intercollegiate Broad. Sys., Inc. v.
`Copyright Royalty Bd.,
`684 F.3d 1332 (D.C. Cir. 2012) ............................ 18
`
`Kappos v. Hyatt,
`566 U.S. 431 (2012) .............................................. 10
`
`Lucia v. SEC,
`138 S. Ct. 2044 (2018) ............. 3, 13, 19, 22, 27, 28,
`36, 37, 38, 41, 43
`
`Marathon Pipeline Co. v.
`N. Pipeline Constr. Co.,
`12 B.R. 946 (D. Minn. 1981) ................................ 42
`
`
`
`
`
`vi
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Marbury v. Madison,
`5 U.S. (1 Cranch) 137 (1803) ............................... 45
`
`McCulloch v. Maryland,
`17 U.S. (4 Wheat.) 316 (1819) ........................ 23, 24
`
`Medtronic, Inc. v.
`Robert Bosch Healthcare Sys., Inc.,
`839 F.3d 1382 (Fed. Cir. 2016) ............................ 40
`
`Morrison v. Olson,
`487 U.S. 654 (1988) ........................................ 23, 24
`
`Myers v. United States,
`272 U.S. 52 (1926) .......................................... 23, 33
`
`N. Pipeline Constr. Co. v.
`Marathon Pipe Line Co.,
`458 U.S. 50 (1982) .................................... 42, 46, 47
`
`NLRB v. Noel Canning,
`573 U.S. 513 (2014) .......................................... 1, 11
`
`Norfolk S. Ry. Co. v. Sorrell,
`549 U.S. 158 (2007) ........................................ 41, 43
`
`Oil States Energy Servs., LLC v.
`Greene’s Energy Grp., LLC,
`138 S. Ct. 1365 (2018) .............. 9, 10, 14, 34, 44, 50
`
`PHH Corp. v. CFPB,
`881 F.3d 75 (D.C. Cir. 2018) ................................ 33
`
`
`
`
`
`vii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Republic of Argentina v. NML Capital, Ltd.,
`573 U.S. 134 (2014) ........................................ 37, 43
`
`Ryder v. United States,
`515 U.S. 177 (1995) ........................ 2, 36, 37, 38, 39
`
`Saint Regis Mohawk Tribe v.
`Mylan Pharm. Inc.,
`896 F.3d 1322 (Fed. Cir. 2018) ............................ 16
`
`SAS Inst., Inc. v. ComplementSoft, LLC,
`825 F.3d 1341 (Fed. Cir. 2016) ............................ 40
`
`Seila Law LLC v. CFPB,
`140 S. Ct. 2183 (2020) ....................... 2, 5, 6, 22, 23,
`30, 33, 34, 35, 42,
`44, 45, 50
`
`Shoaf v. Dep’t of Agric.,
`260 F.3d 1336 (Fed. Cir. 2001) ............................ 31
`
`Shoaf v. Dep’t of Agric.,
`158 F. App’x 267 (Fed. Cir. 2005) ........................ 31
`
`SoundExchange, Inc. v. Librarian of Congress,
`571 F.3d 1220 (D.C. Cir. 2009) ............................ 24
`
`Thryv, Inc. v. Click-To-Call Techs., LP,
`140 S. Ct. 1367 (2020) .............. 9, 10, 15, 40, 44, 48
`
`Tokyo Kikai Seisakusho, Ltd. v. United States,
`529 F.3d 1352 (Fed. Cir. 2008) ............................ 48
`
`
`
`
`
`viii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`United States v. Armstrong,
`517 U.S. 456 (1996) .............................................. 39
`
`United States v. Jones,
`565 U.S. 400 (2012) .............................................. 41
`
`United States v. L.A. Tucker Truck Lines, Inc.,
`344 U.S. 33 (1952) .................................... 36, 38, 41
`
`United States v. Olano,
`507 U.S. 725 (1993) .............................................. 41
`
`Visa v. Osborn,
`137 S. Ct. 289 (2016) ............................................ 42
`
`Weiss v. United States,
`510 U.S. 163 (1994) .............................................. 19
`
`Wiener v. United States,
`357 U.S. 349 (1958) ........................................ 32, 34
`
`Woodford v. Ngo,
`548 U.S. 81 (2006) .......................................... 38, 41
`
`Statutes
`
`5 U.S.C. § 3105 .......................................................... 32
`
`5 U.S.C. § 5335 .......................................................... 32
`
`5 U.S.C. § 7513 .............................................. 13, 32, 49
`
`5 U.S.C. § 7521 .................................................... 31, 49
`
`
`
`
`
`ix
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`26 U.S.C. § 7443A ...................................................... 28
`
`35 U.S.C. § 3 ................................ 13, 26, 30, 32, 38, 49
`
`35 U.S.C. § 6 ........................................... 14, 29, 30, 31,
`32, 47, 48, 49
`
`35 U.S.C. § 134 .......................................................... 26
`
`35 U.S.C. § 141 .......................................................... 48
`
`35 U.S.C. § 143 .................................................... 15, 17
`
`35 U.S.C. § 314 .............................................. 14, 29, 40
`
`35 U.S.C. § 315 .................................................... 15, 40
`
`35 U.S.C. § 318 ............................ 14, 17, 21, 30, 40, 48
`
`35 U.S.C. § 319 .............................................. 17, 40, 48
`
`38 U.S.C. § 7104 ........................................................ 25
`
`38 U.S.C. § 7111 ........................................................ 25
`
`38 U.S.C. § 7252 ........................................................ 25
`
`38 U.S.C. § 7266 ........................................................ 25
`
`42 U.S.C. § 1316 ........................................................ 25
`
`Act of July 4, 1836,
`ch. 357, 5 Stat. 117 ................................................. 6
`
`
`
`
`
`x
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`Section 1, 5 Stat. 117 ........................................ 6
`
`Section 7, 5 Stat. 119 ........................................ 6
`
`Section 16, 5 Stat. 123 ...................................... 6
`
`Act of Mar. 2, 1861,
`ch. 88, 12 Stat. 246 ................................................. 7
`
`Section 2, 12 Stat. 246 ...................................... 7
`
`Act of Mar. 2, 1927,
`ch. 273, 44 Stat. 1335 ............................................. 8
`
`Section 3, 44 Stat. 1335 .................................... 8
`
`Act of Aug. 5, 1939,
`ch. 451, 53 Stat. 1212 ............................................. 8
`
`Section 1, 53 Stat. 1212 .................................... 8
`
`Section 2, 53 Stat. 1212 .................................... 8
`
`Section 3, 53 Stat. 1212 .................................... 8
`
`Section 4, 53 Stat. 1212 .................................... 8
`
`Act of Aug. 25, 1958,
`Pub. L. No. 85-755, 72 Stat. 848 ............................ 8
`
`Section 1, 72 Stat. 848 ...................................... 8
`
`
`
`
`
`xi
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Act of Jan. 2, 1975,
`Pub. L. No. 93-601, 88 Stat. 1956 ........................ 49
`
`Section 2, 88 Stat. 1956 .................................. 49
`
`Administrative Procedure Act,
`Pub. L. No. 79-404,
`60 Stat. 237 (1946) ............................................... 49
`
`Constitutional Provisions
`
`U.S. Const. art. II, § 2 ......................................... 13, 24
`
`Rules
`
`Sup. Ct. R. 15 ............................................................. 37
`
`Other Authorities
`
`117 Cong. Rec. S3220 (Mar. 16, 1971) ........................ 9
`
`Administrative Conference of the United
`States, Non-ALJ Adjudicators in Federal
`Agencies: Status, Selection, Oversight,
`and Removal (Sept. 24, 2018) .............................. 26
`
`Arthrex, Inc. v. KFx Med., LLC,
`Case IPR2016-01697, 2018 WL 1100770
`(P.T.A.B. Feb. 26, 2018) ....................................... 39
`
`H.R. Rep. No. 112-98 (2011) ...................................... 48
`
`
`
`
`
`xii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Jeffrey P. Kushan,
`The Fruits of the Convoluted Road to Patent
`Reform: The New Invalidity Proceedings of
`the Patent and Trademark Office,
`30 Yale L. & Pol’y Rev. 385 (2012) ...................... 11
`
`Patent Trial and Appeal Board Standard
`Operating Procedure 2 (Revision 10)
`(Sept. 20, 2018) .................................. 14, 16, 26, 29
`
`State of Affairs at the Patent Office,
`13 Sci. Am. 125 (Dec. 26, 1857) ............................. 7
`
`To Amend Title 35, United States Code,
`“Patents,” and for Other Purposes:
`Hearing on S. 1254 Before Subcomm. No. 3
`of the H. Comm. on the Judiciary,
`92d Cong. 43 (1971) ............................................... 9
`
`U.S. Patent Office,
`Annual Report of the Commissioner of
`Patents for 1855 (Jan. 31, 1856) ............................ 7
`
`U.S. Patent Office,
`U.S. Patent Activity Calendar Years 1790
`to the Present, https://www.uspto.gov/
`web/offices/ac/ido/oeip/taf/h_counts.htm ............. 26
`
`
`
`
`
`
`
`
`
`RESPONSE AND REPLY BRIEF
`FOR SMITH & NEPHEW, INC.
`AND ARTHROCARE CORP.
`
`
`SUMMARY OF ARGUMENT
`I. No one—not the three parties, nor any of the
`31 amici curiae—defends the Appointments Clause
`analysis applied by the Federal Circuit. Instead, Ar-
`threx now insists that there is a single “exclusive cri-
`terion” for determining whether administrative adju-
`dicators are principal or inferior Officers. This Court,
`however, has squarely held to the contrary. Edmond
`v. United States, 520 U.S. 651, 661 (1997). APJs are
`inferior Officers under Edmond.
`I.A. As Arthrex does not dispute (at 32–33), Con-
`gress has always treated APJs and their predecessors
`as inferior Officers, empowering them to decide pa-
`tentability—with judicial review before their deci-
`sions become final—for nearly 100 years. This same
`framework has governed reconsideration of issued pa-
`tent claims, such as the IPR proceeding at issue here,
`for 40 years. From a structural perspective, the roles
`and responsibilities of APJs in the AIA regime are nei-
`ther novel nor unusual, and the co-equal branches’
`“‘[l]ong settled and established practice’” merits defer-
`ence. NLRB v. Noel Canning, 573 U.S. 513, 524
`(2014) (alteration in original; citation omitted).
`I.B. Under the Court’s established Appointments
`Clause framework, Congress permissibly made APJs
`inferior Officers appointed by the Secretary of Com-
`merce. Throughout the federal government, adminis-
`trative adjudicators have always been deemed inferior
`Officers, and APJs are no different: They do not make
`policy (the Director does). Their actions are not final
`
`
`
`
`
`2
`
`(unless permitted by the Director). And their work is
`“directed and supervised” by the Director and other
`Officers before, during, and after they make patenta-
`bility decisions. Edmond, 520 U.S. at 663.
`I.C. Unable to defend the decision below, Arthrex
`advances (at 20) the radical proposition that “admin-
`istrative judges cannot be inferior officers absent a su-
`perior who can review and modify their decisions.”
`Arthrex derives its pronouncement from just three
`sentences taken out of context from previous opinions.
`This approach finds no footing in the Court’s actual
`precedents, which have never adopted such a rigid
`rule. Indeed, the Court has never deemed any admin-
`istrative adjudicator a principal Officer, even where
`the adjudicator could issue decisions not subject to ex-
`ecutive review.
`I.D. If the Court were to deem hundreds of APJs
`principal Officers, it would have to confront the con-
`tinued viability of Humphrey’s Executor v. United
`States, 295 U.S. 602 (1935). Because Congress gave
`APJs removal protections (which Arthrex contends
`are constitutionally required), a ruling that APJs are
`principal Officers would squarely raise the question
`whether the President’s removal authority can be so
`limited. See Seila Law LLC v. CFPB, 140 S. Ct. 2183,
`2192 (2020) (plurality op.).
`II. Because APJs are inferior Officers, there is
`nothing for this Court to remedy or fix. If the Court
`were to deem APJs principal Officers, however, it
`should deny the case-specific and systemic relief that
`Arthrex requests.
`II.A. The only particularized relief that is “appro-
`priate” given the circumstances of this case, Ryder v.
`
`
`
`
`
`3
`
`United States, 515 U.S. 177, 182–83 (1995), is a de-
`claratory judgment. Arthrex is not entitled to a new
`hearing because it failed to make a “timely” Appoint-
`ments Clause challenge “before the [agency].” Lucia
`v. SEC, 138 S. Ct. 2044, 2055 (2018). Nor should the
`Court grant Arthrex’s cursory request for “dismissal”
`of the IPR proceeding. A court cannot order “dismis-
`sal” in any IPR proceeding and especially here, where
`Arthrex settled related civil litigation with S&N in an
`agreement contingent on having the IPR “continue.”
`U.S. Pet. App. 86a. And Arthrex forfeited any such
`request by failing to seek dismissal before the agency,
`before the Federal Circuit panel, or indeed before this
`Court in its petition for a writ of certiorari.
`II.B. If the Court were to find any constitutional
`defect in how APJs are appointed, it should reject Ar-
`threx’s attempt to “ride a discrete constitutional flaw
`. . . to take down the whole” IPR system. Barr v. Am.
`Ass’n of Political Consultants, Inc., 140 S. Ct. 2335,
`2351 (2020) (plurality op.). This Court has a “decisive
`preference for surgical severance rather than whole-
`sale destruction.” Id. at 2350–51. Depending on what
`(if anything) the Court finds problematic on the mer-
`its, the Court should “‘limit the solution to the prob-
`lem.’” Free Enter. Fund v. Pub. Co. Accounting Over-
`sight Bd., 561 U.S. 477, 508 (2010) (citation omitted).
`The judgment below should be reversed.
`
`
`
`
`
`
`
`
`4
`
`ARGUMENT
`I. APJS ARE INFERIOR OFFICERS OF THE
`UNITED STATES.
`Arthrex asks this Court to second-guess a series
`of reasonable policy choices, stretching back to the
`early Republic, about how to design and implement an
`administrative system for granting and reviewing pa-
`tents. The political branches have always treated
`APJs and their predecessors as inferior Officers since
`their creation. For nearly 100 years, those same infe-
`rior Officers have made decisions on patent grants
`that have been reviewable only by a court before they
`become final; and for nearly 40 years, they have con-
`ducted “second look” proceedings, such as today’s
`IPRs, in the same manner.
`Like other administrative adjudicators, APJs are
`inferior Officers under this Court’s established frame-
`work. Indeed, every facet of their work is “directed
`and supervised” by other Officers, Edmond v. United
`States, 520 U.S. 651, 663 (1997), especially the Sen-
`ate-confirmed Director. Only the Director can finally
`cancel or confirm patent claims at the conclusion of an
`IPR, and no APJ decision becomes a “final decision . . .
`unless permitted” by the Director, id. at 665, who can
`pursue rehearing, intervene in any judicial review,
`and de-institute the IPR proceeding. APJ decisions
`are also subject to review by the Federal Circuit—an
`Article III court—before they become final.
`Arthrex does not defend the three-step framework
`applied by the Federal Circuit, insisting instead that
`“Principal Officer Review of Decisions” is the sine qua
`non of inferior-officer status. Arthrex Br. 20 (empha-
`sis removed). But it cannot cite a single case adopting
`any bright-line test for inferior Officers, much less a
`
`
`
`
`
`5
`
`rigid rule that “administrative judges cannot be infe-
`rior officers absent a superior who can review and
`modify their decisions.” Ibid. And Arthrex does not
`dispute that this Court has repeatedly held a wide va-
`riety of administrative adjudicators to be inferior Of-
`ficers, and has never found such an adjudicator to be
`a principal Officer—even where their decisions were
`not subject to administrative review.
`At bottom, Arthrex asks this Court to throw over-
`board its own Appointments Clause precedents and
`the centuries-old views of the political branches based
`on a single sentence from Edmond and two sentences
`from other opinions construing Edmond. See Arthrex
`Br. 20–21. Edmond actually held, however, that there
`is no “exclusive criterion” for inferior-officer status;
`and in conducting its holistic analysis, the Court
`found “significant” not review and correction by a
`principal Officer—as Arthrex insists—but the inabil-
`ity to “render a final decision . . . unless permitted to
`do so by other Executive officers.” 520 U.S. at 661, 665
`(emphases added). Because that statement equally
`applies to APJs, Edmond says everything this Court
`needs to hold that APJs are inferior Officers.
`A. Administrative Patent Review Has
`Deep Historical Roots.
`Arthrex and its amici repeatedly accuse Congress
`of setting up an “anomalous” regime of administrative
`patent review when it enacted the AIA in 2011. Ar-
`threx Br. 17; see, e.g., U.S. Lumber Coal. Br. 14 (“ab-
`erration”). Their strategy is clear: They aim to ride
`the coattails of other recent cases in which the Court
`has viewed with skepticism other, genuinely “novel
`governmental structures.” Seila Law LLC v. CFPB,
`140 S. Ct. 2183, 2207 (2020). The history of the
`USPTO, however, tells quite a different story.
`
`
`
`
`
`6
`
`The current regime of administrative patent re-
`view is neither new nor untraditional. The Patent Of-
`fice as a separate entity dates to 1836, at which time
`examiners appointed by the Secretary of State—not
`principal Officers appointed by the President—spoke
`the agency’s last word on patentability decisions. See
`Act of July 4, 1836, ch. 357, §§ 1, 7, 16, 5 Stat. 117,
`117–24. The continuation of that historical practice is
`a far cry from 21st-century novelties such as single-
`director “‘independent’” agencies, Seila Law, 140
`S. Ct. at 2207, or dual for-cause limitations, Free En-
`ter. Fund v. Pub. Co. Accounting Oversight Bd., 561
`U.S. 477, 492 (2010).
`1. As S&N and the United States have ex-
`plained—and Arthrex does not actually dispute—the
`political branches have always treated APJs and their
`predecessors as inferior Officers since their creation
`in the mid-19th century. S&N Br. 43–49; U.S. Br. 41–
`45; Arthrex Br. 32–34. For nearly 100 years, Congress
`has elected to have those inferior Officers make deci-
`sions on patent grants that are reviewable only by a
`court before they become final. And for nearly 40
`years, Congress has elected to have them conduct
`“second look” proceedings, such as today’s IPRs, in the
`same manner.
`Arthrex’s assertion (at 34) that the AIA “de-
`part[ed]” from “150 years of tradition” of having prin-
`cipal-officer review of patent decisions has no basis in
`the historical record. Throughout this Nation’s his-
`tory, Congress has “experiment[ed]” with various
`forms of administrative patent review—including by
`allowing “panels of arbitrators to review the Commis-
`sioner’s decisions,” as Arthrex acknowledges (at 34
`n.5). Final patent adjudication by non-principal Offic-
`ers itself dates back to 1793. See United States ex rel.
`
`
`
`
`
`7
`
`Bernardin v. Duell, 172 U.S. 576, 583 (1899) (under
`the Patent Act of 1793, interference decisions by three
`arbitrators chosen by private parties and the Secre-
`tary of State were “final, as respected the granting of
`the patent”).
`Indeed, patent examiners—who are unquestiona-
`bly not principal Officers—have always spoken the
`last word over patent grants without any principal-of-
`ficer review. And by 1855 at the latest, they were giv-
`ing the Patent Office’s de facto last word on rejected
`patents too. As the Patent Office explained, by that
`time it had become “wholly impossible” to administer
`a system of direct appeals to the Commissioner, and
`“a rejection by the examiner [wa]s, in point of fact, fi-
`nal.” U.S. Patent Office, Annual Report of the Com-
`missioner of Patents for 1855 (Jan. 31, 1856),
`https://www.ipmall.info/sites/default/files/hosted_re-
`sources/PatentHistory/poar1855.htm. The Commis-
`sioner thus supervised patent decisions primarily by
`“lay[ing] down the [applicable] general rules and prin-
`ciples,” State of Affairs at the Patent Office, 13 Sci. Am.
`125 (Dec. 26, 1857), https://www.ipmall.info/con-
`tent/patent-history-materials-index-patent-materi-
`als-scientific-american-vol-13-old-series-sep.
`By 1861, when examiners-in-chief were created
`for “revis[ing] and determin[ing]” patentability deci-
`sions, those Officers—undisputedly the predecessors
`of APJs along with interference examiners, see Ar-
`threx Br. 3, 33—would have taken over this de facto
`last-word authority from patent examiners. Act of
`Mar. 2, 1861, ch. 88, § 2, 12 Stat. 246, 246–47.
`Starting in 1927, Congress codified this practice,
`giving the Commissioner ex ante power to designate
`appeals panels of examiners-in-chief, while making
`those panels’ decisions reviewable by courts (not the
`
`
`
`
`
`8
`
`Commissioner) before they became final. Act of Mar.
`2, 1927, ch. 273, § 3, 44 Stat. 1335, 1335–36. In 1939,
`Congress took the same approach with interference
`proceedings. Act of Aug. 5, 1939, ch. 451, §§ 1–4, 53
`Stat. 1212, 1212–13. Arthrex conveniently omits that
`those proceedings were directly appealable through a
`“bill in equity” to an Article III court, which would pro-
`vide judicial review of a non-final decision as merely
`“one step in the statutory proceeding . . . whereby that
`tribunal is interposed in aid of the patent-office.” But-
`terworth v. United States, 112 U.S. 50, 60–61 (1884).
`Contrary to Arthrex’s assertion (at 34), intra-execu-
`tive review thus was not the historical “tradition.”1
`Arthrex notes that for much of their history exam-
`iners-in-chief (though never interference examiners)
`were “appointed in the manner required for principal
`officers,” Arthrex Br. 4 (emphasis added)—but that is
`not remotely the same as showing that they were prin-
`cipal Officers. As Arthrex well knows, presidential
`appointment and senatorial confirmation is also the
`“default” method to appoint inferior Officers. Ed-
`mond, 520 U.S. at 660. When Congress was consider-
`ing whether to give a Head of Department authority
`to appoint examiners-in-chief, it confirmed that exam-
`
`
` 1 Arthrex mistakenly states (at 33) that in 1939 Congress
`made interference decisions separately appealable to “an Execu-
`tive Branch tribunal” called the Court of Customs and Patent
`Appeals (CCPA). In fact, Congress always considered the CCPA
`an Article III court: After this Court deemed the CCPA an Arti-
`cle I court, Congress “pronounced its disagreement” and made
`clear that the CCPA is and always has been an Article III court.
`Glidden Co. v. Zdanok, 370 U.S. 530, 531–32 (1962) (plurality
`op.) (citing Act of Aug. 25, 1958, Pub. L. No. 85-755, § 1, 72 Stat.
`848, 848).
`
`
`
`
`
`9
`
`iners-in-chief “always have been[ ] positions of a pro-
`fessional character, rather than political-type ap-
`pointments,” To Amend Title 35, United States Code,
`“Patents,” and for Other Purposes: Hearing on S. 1254
`Before Subcomm. No. 3 of the H. Comm. on the Judi-
`ciary, 92d Cong. 43 (1971) (statement of Edward J.
`Brenner, former Commissioner of Patents), and that
`there would remain “clear and direct responsibility in
`the Commissioner of Patents for all aspects of the ad-
`ministration of the patent system,” 117 Cong. Rec.
`S3220 (Mar. 16, 1971) (remarks of Sen. McClellan).
`Thus, the real history found in the statute books
`and Patent Office records, not the pages of Arthrex’s
`brief, shows that there is nothing anomalous about
`the modern regime at all. For many decades, Con-
`gress and the President have chosen not to require di-
`rect principal-officer review of every patentability de-
`cision. And this “[h]istory provides no sound basis for
`classifying administrative patent judges as principal
`officers” today. U.S. Br. 41 (emphasis removed).
`2. Forty years ago, Congress built on the tradi-
`tional administrative regime for granting patent
`claims by allowing the USPTO “to reconsider and can-
`cel patent claims that were wrongly issued.” Oil
`States Energy Servs., LLC v. Greene’s Energy Grp.,
`LLC, 138 S. Ct. 1365, 1370 (2018). Congress sensibly
`chose to assign these “second look” proceedings “to the
`very same bureaucracy that granted the patent in the
`first place.” Thryv, Inc. v. Click-To-Call Techs., LP,
`140 S. Ct. 1367, 1374 n.7 (2020). Notwithstanding
`four decades of institutional pedigree, Arthrex con-
`tends that the AIA’s review proceedings marked a
`“sharp break” from tradition in two respects. Arthrex
`Br. 27–35. Neither contention has any force.
`
`
`
`
`
`10
`
`Arthrex first asserts (at 27) that the AIA broke
`from a broader “tradition,” exemplified by the Admin-
`istrative Procedure Act of 1946, of having principal-
`officer review of administrative adjudicators’ deci-
`sions. Administrative patentability determinations,
`however, long predate the APA and draw on a sepa-
`rate, much older “history” that “can be traced back to”
`the creation of the Patent Office in 1836. Kappos v.
`Hyatt, 566 U.S. 431, 439 (2012). This particular ped-
`igree must “begin [the] inquiry,” as the more general
`(and modern) “background principles of administra-
`tive law” on which Arthrex relies are of limited rele-
`vance to patentability determinations. Id. at 438–39.
`And that pedigree unmistakably shows that inferior
`Officers have been deciding patentability without
`principal-officer review since the mid-19th century.
`Arthrex also argues (at 33) that second-look pro-
`ceedings including IPRs “vastly expanded APJs’ au-
`thority.” That is overstated. Prior to 1980, interfer-
`ence examiners had long been adjudicating adversar-
`ial proceedings that could ultimately revoke issued
`patents; and examiners-in-chief heard appeals from
`decisions on patent applications. S&N Br. 43–46. Af-
`ter 1980, the only changes that occurred are unre-
`markable from a constitutional perspective: Congress
`authorized “the very same bureaucracy” of examiners-
`in-chief to reconsider its initial patent grant. Thryv,
`140 S. Ct. at 1374 n.7. This Court has repeatedly up-
`held Congress’s authority to establish such a system
`for reconsidering bad patent claims. See ibid. (reject-
`ing view “that Congress lacks authority to permit sec-
`ond looks”); Oil States, 138 S. Ct. at 1373 (“Congress
`has permissibly reserved the PTO’s authority to con-
`duct that reconsideration”).
`
`
`
`
`
`11
`
`Arthrex further ignores that, both substantively
`and procedurally, the AIA “dr[ew] extensively from”
`earlier interference and reexamination proceedings.
`Jeffrey P. Kushan, The Fruits of the Convoluted Road
`to Patent Reform: The New Invalidity Proceedings of
`the Patent and Trademark Office, 30 Yale L. & Pol’y
`Rev. 385, 390–91 (2012). While Arthrex contends (at
`6, 33) that the AIA instituted adjudicative features,
`interference proceedings had long had such adjudica-
`tive features. An additional “problem with [Arthrex’s]
`argument . . . is that, in other significant respects, in-
`ter partes review is less like a judicial proceeding and
`more like a specialized agency proceeding.” Cuozzo
`Speed Techs., LLC v. Lee, 136 S. Ct. 2131,