Nos. 19-1434, 19-1452 and 19-1458
`
`In the
`Supreme Court of the United States
`
`UNITED STATES,
`
`v.
`ARTHREX, INC., et al.,
`
`Petitioner,
`
`Respondents.
`
`SMITH & NEPHEW, INC., et al.,
`
`v.
`ARTHREX, INC., et al.,
`
`ARTHREX, INC.,
`
`Petitioners,
`
`Respondents.
`
`Petitioner,
`
`v.
`SMITH & NEPHEW, INC., et al.,
`Respondents.
`On Writs Of CertiOrari tO the United states
`COUrt Of appeals fOr the federal CirCUit
`
`BRIEF OF THE INTELLECTUAL PROPERTY LAW
`ASSOCIATION OF CHICAGO AS AMICUS CURIAE
`IN SUPPORT OF NO PARTY
`
`MaRgaRet M. duncan
`LoyoLa unIveRsIty chIcago
`schooL of Law
`25 East Pearson Street
`Chicago, IL 60611
`(312) 915-7120
`
`John R LInzeR
`Counsel of Record
`QuaRLes & BRady LLP
`300 N. LaSalle Street,
`Suite 4000
`Chicago, IL 60654
`(312) 715-5059
` john.linzer@quarles.com
`Counsel for Amicus Curiae
`(For Continuation of Appearances See Inside Cover)
`
`300398
`
`
`
`In the
`Supreme Court of the United States
`
`UNITED STATES,
`
`v.
`ARTHREX, INC., et al.,
`
`Petitioner,
`
`Respondents.
`
`SMITH & NEPHEW, INC., et al.,
`
`v.
`ARTHREX, INC., et al.,
`
`ARTHREX, INC.,
`
`Petitioners,
`
`Respondents.
`
`Petitioner,
`
`v.
`SMITH & NEPHEW, INC., et al.,
`Respondents.
`On Writs Of CertiOrari tO the United states
`COUrt Of appeals fOr the federal CirCUit
`
`BRIEF OF THE INTELLECTUAL PROPERTY LAW
`ASSOCIATION OF CHICAGO AS AMICUS CURIAE
`IN SUPPORT OF NO PARTY
`
`MaRgaRet M. duncan
`LoyoLa unIveRsIty chIcago
`schooL of Law
`25 East Pearson Street
`Chicago, IL 60611
`(312) 915-7120
`
`John R LInzeR
`Counsel of Record
`QuaRLes & BRady LLP
`300 N. LaSalle Street,
`Suite 4000
`Chicago, IL 60654
`(312) 715-5059
` john.linzer@quarles.com
`Counsel for Amicus Curiae
`(For Continuation of Appearances See Inside Cover)
`
`300398
`
`
`
`OF COUNSEL
`MaRc v. RIchaRds
`PResIdent
`InteLLectuaL PRoPeRty Law
`assocIatIon of chIcago
`P.O. Box 472
`Chicago, IL 60690
`(312) 321-4200 Counsel for Amicus Curiae
`
`Judy K. he
`haynes and Boone, LLP
`180 North LaSalle Street,
`Suite 2215
`Chicago, IL 60601
`(312) 216-1620
`
`
`
`i
`
`TABLE OF CONTENTS
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Page
`
`TABLE OF AUTHORITIES................................... iii
`
`INTEREST OF AMICUS CURIAE ......................... 1
`
`ISSUES PRESENTED ............................................. 2
`
`SUMMARY OF ARGUMENT .................................. 3
`
`ARGUMENT .............................................................. 4
`
`I. The Appointment of Administrative Patent
`Judges Under Title 35 Does Not Violate the
`Appointments Clause. ............................................. 4
`
`A. The Statutory Scheme of Title 35 Confirms
`Congress’s Intent to Establish Administrative
`Patent Judges As Inferior Officers ...................... 6
`
`B. The Federal Circuit Improperly Created a
`Bright Line Rule from Edmond, Despite the Need
`for a Totality of the Circumstances Analysis ...... 8
`
`C. If the Court Believes this is a Close Case, It
`Should Defer to Congress and Hold that
`Administrative Patent Judges are
`Inferior
`Officers ................................................................ 14
`
`II. Because Administrative Patent Judges are
`Inferior Officers For Purposes of
`the
`Appointments Clause, The Court Need Not
`Address Whether the Arthrex Remedy Was
`Proper. ..................................................................... 15
`
`III. A Holding that APJs are Principal Officers
`and that the Arthrex Remedy Was Not Proper
`Has Far-Reaching Implications Beyond the
`Scope of the Present Cases. ................................ 15
`
`
`
`
`
`
`ii
`ii
`
`CONCLUSION ........................................................ 18
`CONCLUSION ........................................................ 18
`
`
`
`
`
`
`
`
`
`
`
`
`iii
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Arthrex, Inc. v. Smith & Nephew, Inc.,
`941 F.3d 1320 (Fed. Cir. 2019) ..................... 1, 5, 17
`
`Bilski v. Kappos,
`561 U.S. 593 (2010) ................................................. 9
`
`Edmond v. United States,
`520 U.S. 651 (1997) ....................................... passim
`
`Festo Corp. v. Shoketsu Kinzoku Kogyo
`Kabushiki Co.,
`535 U.S. 722 (2002) ............................................... 18
`
`Free Enter. Fund v. Public Co. Acct. Oversight
`Bd.,
`561 U.S. 477 (2010) ............................................... 10
`
`Halo Elecs., Inc. v. Pulse Elecs., Inc.,
`136 S. Ct. 1923 (2016) ............................................. 9
`
`In re Boloro Glob. Ltd.,
`963 F.3d 1380 (Fed. Cir. 2020) ............................. 17
`
`In re Sealed Case,
`838 F.2d 476 (D.C. Cir. 1988) ............................... 14
`
`Keene Corp. v. United States,
`508 U.S. 200 (1993) ................................................. 7
`
`Kirtsaeng v. John Wiley & Sons,
`136 S. Ct. 1979 (2016) ............................................. 9
`
`Morrison v. Olson,
`487 U.S. 654 (1988) ................................... 5, 6, 8, 14
`
`Polaris Innovations Limited v. Kingston Tech.
`Co.,
`792 Fed. App’x 820 (Fed. Cir. Jan. 31, 2020) ......... 8
`
`
`
`
`
`
`iv
`
`Russello v. United States,
`464 U.S. 16 (1983) ................................................... 7
`
`Seila Law LLC v. Consumer Fin. Prot. Bureau,
`140 S. Ct. 2183 (2020) ....................................... 9, 13
`
`USPTO et al. v. Booking.com B.V.,
`140 S. Ct. 2298 (2020) ............................................. 9
`
`VirnetX Inc. v. Cisco Sys., Inc.,
`958 F.3d 1333 (Fed. Cir. 2020) ............................. 17
`
`Weiss v. United States,
`510 U.S. 163 (1994) ............................................... 14
`
`Statutes
`
`35 U.S.C. § 143 .......................................................... 11
`
`35 U.S.C. § 3 (a) ........................................................... 6
`
`35 U.S.C. § 3(a)(2)(A) ................................................ 10
`
`35 U.S.C. § 3(a)(2)(B) ................................................ 10
`
`35 U.S.C. § 3(b)(3)(A)-(B) ............................................ 7
`
`35 U.S.C. § 3(b)(6) ..................................................... 10
`
`35 U.S.C. § 316(a) ...................................................... 11
`
`35 U.S.C. § 326(a) ...................................................... 12
`
`35 U.S.C. § 6(a) ............................................................ 7
`
`35 U.S.C. § 6(c) .......................................................... 11
`
`5 U.S.C. § 7513(a) .................................................... 3, 4
`
`
`Other Authorities
`
`PTAB, Standard Operating Procedure 1
`(Revision 15) Assignment of Judges to Panels,
`https://www.uspto.gov/sites/default/files/docu
`
`
`
`
`
`
`v
`
`ments/SOP%201%20R15%20FINAL.pdf
`(last visited Dec. 2, 2020) ...................................... 11
`
`PTAB, Standard Operating Procedure 2
`(Revision 10) Precedential Opinion Panel to
`Decide Issues of Exceptional Importance
`Involving Policy or Procedure; Publication of
`Decisions and Designation or De-Designation
`of Decisions as Precedential or Informative,
`https://www.uspto.gov/sites/default/files/docu
`ments/SOP2%20R10%20FINAL.pdf
`(last visited Dec. 2, 2020) ...................................... 12
`
`USPTO, Fiscal Year 2017 Patent Trial & Appeal
`Board Receipts and Dispositions by Technology
`Centers Appeal,
`https://www.uspto.gov/sites/default/files/docu
`ments/fy2017_sep_e.pdf
`(last visited Dec. 2, 2020) ...................................... 18
`
`USPTO, Fiscal Year 2018 Patent Trial & Appeal
`Board Receipts and Dispositions by Technology
`Centers Appeal,
`https://www.uspto.gov/sites/default/files/docu
`ments/FY18%20Appeals%20Receipts%20and%
`20Dispositions%20by%20Tech%20Center.pdf
`(last visited Dec 2, 2020) ....................................... 18
`
`USPTO, Fiscal Year 2019 Patent Trial & Appeal
`Board Receipts and Dispositions by Technology
`Centers Appeal,
`https://www.uspto.gov/sites/default/files/docu
`ments/FY19%20Appeals%20Receipts%20and%
`20Dispositions%20by%20TC%20-
`%20September.pdf
`(last visited Dec. 2, 2020) ...................................... 18
`
`
`
`
`
`
`vi
`
`USPTO, Fiscal Year 2020 Patent Trial & Appeal
`Board Receipts and Dispositions by Technology
`Centers Appeal,
`https://www.uspto.gov/sites/default/files/docu
`ments/fy20_appeal_receipts_and_dispositions_
`by_tc_sept2020.pdf
`(last visited Dec. 2, 2020) ...................................... 18
`
`USPTO, Trial Statistics IPR, PGR, CBM
`September 2020,
`https://www.uspto.gov/sites/default/files/docu
`ments/trial_statistics_20200930.pdf
`(last visited Dec. 2, 2020) ...................................... 15
`
`Regulations
`
`37 C.F.R. § 42.12 ....................................................... 16
`
`37 C.F.R. § 42.121 ..................................................... 16
`
`37 C.F.R. § 42.51 ....................................................... 16
`
`Constitutional Provisions
`
`U.S. Const. art. II, § 2, cl. 2 ................................. 2, 3, 5
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`INTEREST OF AMICUS CURIAE1
`
`The Intellectual Property Law Association of
`Chicago (“IPLAC”) respectfully requests that this
`Court reverse the Federal Circuit’s decision in
`Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320
`(Fed. Cir. 2019).2
`
`Founded in 1884 in Chicago, Illinois, a principal
`forum
`for U.S.
`technological
`innovation and
`intellectual property litigation, IPLAC is the country’s
`oldest bar association devoted exclusively
`to
`intellectual property matters. IPLAC has as its
`governing objects, inter alia, to aid in the development
`of intellectual property laws, the administration of
`them, and the procedures of the U.S. Patent and
`Trademark Office, the U.S. Copyright Office, and the
`U.S. courts and other officers and tribunals charged
`with administration. IPLAC’s about 1,000 voluntary
`members include attorneys in private and corporate
`practices
`in the areas of copyrights, patents,
`trademarks, trade secrets, and the legal issues they
`present before federal courts throughout the United
`States, as well as before the U.S. Patent and
`
`
`1 Pursuant to Supreme Court Rule 37.6, no counsel for a
`party authored this brief in whole or in part, and no such counsel
`or party made a monetary contribution intended to fund the
`preparation or submission of this brief. No person or entity other
`than the amicus curiae, its members, or its counsel, made such a
`monetary contribution.
`
`2 Pursuant to Supreme Court Rule 37.3(a), Petitioner and
`Respondents have provided blanket consents to the filing of
`amicus briefs.
`
`
`
`
`
`
`2
`
`
`Trademark Office and the U.S. Copyright Office.3
`IPLAC’s members represent innovators and accused
`infringers in roughly equal measure and are split
`roughly equally between plaintiffs and defendants in
`litigation.
`
`As part of its central objectives, IPLAC is
`dedicated to aiding in developing intellectual property
`law, especially in the federal courts.4
`
`ISSUES PRESENTED
`
`This case presents two issues. The first is whether,
`for purposes of the Appointments Clause, U.S. Const.
`art. II, § 2, cl. 2, administrative patent judges (“APJs”)
`of the U.S. Patent and Trademark Office (“USPTO”)
`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.
`
`
`3 In addition to the statement of footnote 1, after reasonable
`investigation, IPLAC believes that (a) no member of its Board or
`Amicus Committee who voted to prepare this brief, or any
`attorney in the law firm or corporation of such a member,
`represents a party to this litigation in this matter; (b) no
`representative of any party to this litigation participated in the
`authorship of this brief; and (c) no one other than IPLAC, or its
`members who authored this brief and their law firms or
`employers, made a monetary contribution to the preparation or
`submission of this brief.
`
`4 Although over 30 federal judges are honorary members of
`IPLAC, none were consulted on, or participated in, this brief.
`
`
`
`
`
`
`3
`
`
`
`The second issue is whether, if APJs are principal
`Officers, the court of appeals properly cured any
`Appointments Clause defect in the current statutory
`scheme prospectively by severing the application of 5
`U.S.C. § 7513(a) to those judges (“the Arthrex
`remedy”).
`
`On these issues, IPLAC respectfully submits that
`a straightforward approach is warranted: APJs are
`inferior Officers whose appointment Congress has
`permissibly vested in a department head, and, as a
`result, the Court need not address whether the
`Arthrex remedy is a proper cure. To the extent the
`Court finds that APJs are principal Officers, IPLAC
`expresses no opinion regarding the propriety of the
`Arthrex remedy. However, should the Court hold that
`the Arthrex remedy is improper, IPLAC notes that the
`result would have far-reaching implications in the
`patent system that the Court should consider.
`
`SUMMARY OF ARGUMENT
`
`The Court should reverse the Federal Circuit’s
`holding on the first issue and find that, for purposes
`of the Appointments Clause, U.S. Const. art. II, § 2, cl.
`2, APJs are inferior Officers whose appointment
`Congress has permissibly vested in a department
`head. The statutory scheme of Title 35 makes clear
`that Congress considered the Director of the USPTO
`to be a principal Officer, requiring his appointment by
`the President, by and with the Advice and Consent of
`the Senate. Conversely, Congress indicated its belief
`that APJs are inferior Officers, as they are appointed
`by the Secretary of Commerce in consultation with the
`Director. Thus, the only question before the Court
`
`
`
`
`
`
`4
`
`
`with regard to the first issue is whether, in practice,
`the work of APJs is directed and supervised at a level
`that accords with this Congressional intent. While
`there is no bright line rule for distinguishing principal
`and inferior Officers, the statutory provisions of Title
`35 establish a sufficient level of direction and
`supervision required to find APJs inferior.
`
`Because IPLAC’s position is that APJs are inferior
`Officers for purposes of the Appointments Clause,
`IPLAC respectfully submits that the Court need not
`address the second issue, i.e., whether the Federal
`Circuit’s severance of the application of 5 U.S.C. §
`7513(a) to APJs properly cured any alleged defect in
`the current statutory scheme. However, to the extent
`the Court finds that APJs are principal Officers and
`that the Arthrex remedy was not proper, IPLAC notes
`that this result would have far-reaching implications
`in the patent system.
`
`ARGUMENT
`
`I. The Appointment of Administrative Patent
`Judges Under Title 35 Does Not Violate the
`Appointments Clause.
`
` The Court should reverse the Federal Circuit’s
`decision holding that APJs are principal Officers who
`must be appointed by the President with the Advice
`and Consent of the Senate and instead hold that their
`appointment by the Secretary of Commerce, in
`consultation with the Director of the USPTO, under
`Title 35 does not violate the Appointments Clause.
`
`
`
`
`
`
`5
`
`
` Under the Appointments Clause, the President
`“shall nominate, and by and with the Advice and
`Consent of the Senate, shall appoint Ambassadors,
`other public Ministers and Consults, Judges of the
`Supreme Court, and all other Officers of the United
`States, whose Appointments are not herein otherwise
`provided for, and which shall be established by Law:
`but the Congress may by Law vest the Appointment
`of such inferior Officers, as they think proper, in the
`President alone, in the Courts of Law, or in the Heads
`of Departments.” U.S. Const. art. II, § 2, cl. 2.
`
` No party disputes that APJs appointed under Title
`35 are Officers of the United States for purposes of the
`Appointments Clause. See Arthrex, 941 F.3d at 1328
`(“Neither Appellees nor the government dispute that
`APJs are officers as opposed to employees”). Rather,
`the instant dispute is whether APJs at the USPTO are
`principal Officers, who must be appointed by the
`President with the Senate’s Advice and Consent, or
`inferior Officers, who may be appointed by a
`department head.
`
` As the Court recognized decades ago, “[t]he line
`between ‘inferior’ and ‘principal’ officers is one that is
`far from clear.” Morrison v. Olson, 487 U.S. 654, 671
`(1988); see also Edmond v. United States, 520 U.S.
`651, 661 (1997) (“Our cases have not set forth an
`exclusive
`criterion
`for distinguishing between
`principal and inferior officers for Appointments
`Clause purposes”). “Whether one is an ‘inferior’ officer
`depends on whether he has a superior,” such that his
`“work is directed and supervised at some level by
`others who were appointed by Presidential
`nomination with the advice and consent of the
`
`
`
`
`
`
`6
`
`
`Senate.” Edmond, 520 U.S. at 662-63 (emphasis
`added). However, nominal supervision and control
`may be insufficient to render an Officer “inferior.” See
`id. at 667 (“It does not follow, however, that if one is
`subject to some supervision and control, one is an
`inferior officer. Having a superior officer is necessary
`for inferior officer status, but not sufficient to
`establish it”) (Souter, J., concurring in part and
`concurring in the judgment) (citing Morrison, 487
`U.S. at 722 (“To be sure, it is not a sufficient condition
`for ‘inferior’ officer status that one be subordinate to a
`principal officer. Even an officer who is subordinate to
`a department head can be a principal officer”) (Scalia,
`J., dissenting) (emphasis in original)). Thus, the
`inquiry may be better defined as whether the Officer’s
`work is directed and supervised at a sufficient level by
`one or more principal Officers.
`
`IPLAC
`reasons provided below,
`the
` For
`respectfully submits that the USPTO’s APJs are
`directed and supervised at a sufficient level by a
`principal Officer and, as a result, they are inferior
`Officers for purposes of the Appointments Clause.
`
`A.
`
`The Statutory Scheme of Title 35
`Confirms Congress’s Intent to Establish
`Administrative Patent Judges As
`Inferior Officers
`
` Title 35 expressly establishes that the Director of
`the USPTO is a principal Officer and that the
`Secretary of Commerce, another principal Officer,
`consults with him to appoint APJs at the Patent Trial
`and Appeal Board (“PTAB”). As 35 U.S.C. § 3 (a)
`explains, “[t]he powers and duties of the [USPTO]
`
`
`
`
`
`
`7
`
`
`shall be vested in an Under Secretary of Commerce for
`Intellectual Property and Director . . . who shall be a
`citizen of the United States and who shall be
`appointed by the President, by and with the advice and
`consent of the Senate” (emphasis added). The statute
`further provides that the Director shall “appoint such
`officers . . . of the Office as the Director considers
`necessary to carry out the functions of the Office” and
`“define the title, authority, and duties of such officers
`. . . and delegate to them such of the powers vested in
`the Office as the Director may determine.” 35 U.S.C.
`§ 3(b)(3)(A)-(B). Similar to Section 3(b)’s delegation of
`authority to the Director to appoint officers, 35 U.S.C.
`§ 6(a) provides for the appointment of APJs by the
`Secretary of Commerce “in consultation” with the
`Director of the USPTO.
`
` The difference between the latter two sections and
`Section 3(a) confirms that, unlike the Director of the
`USPTO, Congress intended for APJs to be inferior
`Officers. “[W]here Congress
`includes particular
`language in one section of a statute but omits it in
`another . . . , it is generally presumed that Congress
`acts intentionally and purposely in the disparate
`inclusion and exclusion.” Keene Corp. v. United States,
`508 U.S. 200, 208 (1993) (quoting Russello v. United
`States, 464 U.S. 16, 23 (1983)). Had Congress intended
`for APJs to be principal Officers, Congress could have
`easily used the same language from § 3(a) (Director of
`the USPTO) in § 6(a) (APJs). It did not. As a result,
`the Court should defer to the statutory scheme of Title
`35 to presume that APJs are inferior officers, absent
`sufficient evidence to overcome that presumption.
`
`
`
`
`
`
`8
`
`
`
`B.
`
`The Federal Circuit Improperly Created
`a Bright Line Rule from Edmond,
`Despite the Need for a Totality of the
`Circumstances Analysis
`
` Contrary to the Federal Circuit’s analysis,
`Edmond did not establish a bright line rule for
`distinguishing between principal and inferior Officers
`for Appointments Clause purposes. In Edmond, the
`Court observed that some factors that may apply to
`the analysis include: (1) whether the Officer is
`removable by a higher Officer; (2) whether the Officer
`performed limited duties; (3) the scope of the Officer’s
`jurisdiction; and (4) length of tenure. 520 U.S. at 662
`(citing Morrison, 487 U.S. at 671-72). But nowhere in
`Edmond did the Court create a “definitive” test for
`determining “whether an officer is ‘inferior’ under the
`Appointments Clause” in all instances. Id.; see also
`Polaris Innovations Limited v. Kingston Tech. Co., 792
`Fed. App’x 820, 821 (Fed. Cir. Jan. 31, 2020)
`(“Edmond does not lay out a more exacting test than
`this, and we should not endeavor to create one in its
`stead”) (Hughes, J., concurring, in which Wallach, J.,
`joins). In fact, given the wide range of Officers that
`could be implicated by a challenge under the
`Appointments Clause, a “definitive” test would be
`impractical given that certain factors may not apply
`to particular Officers. See, e.g., Edmond, 520 U.S. at
`661 (finding that, “with regard to the office of military
`judge at issue,” the factors of tenure and jurisdiction
`did not apply).
`
` This Court has traditionally frowned on adopting
`similar bright line rules. See, e.g., Halo Elecs., Inc. v.
`Pulse Elecs., Inc., 136 S. Ct. 1923, 1932-33 (2016)
`
`
`
`
`
`
`9
`
`
`(rejecting the Federal Circuit’s two-part test for
`willful infringement in favor of an analysis that
`considers the totality of the circumstances); Bilski v.
`Kappos, 561 U.S. 593, 604 (2010) (“The machine-or-
`transformation test is not the sole test for deciding
`whether an invention is a patent-eligible ‘process’”);
`see also USPTO et al. v. Booking.com B.V., 140 S. Ct.
`2298, 2301 (2020) (rejecting the “PTO’s sweeping rule”
`that “[t]he combination of a generic word and ‘.com’ is
`generic” for trademarks); Kirtsaeng v. John Wiley &
`Sons, 136 S. Ct. 1979, 1988 (2016) (finding that
`“objective reasonableness can be only an important
`factor
`in assessing
`fee applications—not
`the
`controlling one” for copyrights).
`
` Against this backdrop, there is no reason for the
`Court to adopt a bright line rule in this situation,
`particularly as the Appointments Clause should be
`interpreted to provide ample room to “preserve
`political accountability
`relative
`to
`important
`Government assignments.” Edmond, 520 U.S. at 663;
`see also id. at 668 (Souter, J., concurring in part and
`concurring in the judgment) (“What is needed . . . is a
`detailed look at the powers and duties of these judges
`to see whether reasons favoring their inferior officer
`status within the constitutional scheme weigh more
`heavily than those to the contrary”).
`
`Indeed, in the cases following Edmond, this Court
`
`has adopted flexibility and accounted for other factors
`when considering whether an Officer is principal or
`inferior. See, e.g., Seila Law LLC v. Consumer Fin.
`Prot. Bureau, 140 S. Ct. 2183, 2199 n.3 (2020)
`(observing that the Court has previously “examined
`factors such as the nature, scope, and duration of an
`
`
`
`
`
`
`10
`
`
`officer's duties” and, more recently, “focused on
`whether the officer’s work is ‘directed and supervised’
`by a principal officer”); Free Enter. Fund v. Public Co.
`Acct. Oversight Bd., 561 U.S. 477, 510 (2010)
`(reiterating the flexible test as “[w]hether one is an
`‘inferior’ officer depends on whether he has a
`superior”).
`
`In the instant case, the Director of the USPTO
`
`possesses several supervisory powers, including those
`that set the metes and bounds within which APJs
`must conduct their proceedings, which, on balance,
`weigh in favor of finding that he is a superior and that,
`for purposes of the Appointments Clause, establish
`that APJs are inferior to him. By way of illustration,
`a list of the Director’s powers is provided below:
`
`• 35 U.S.C. § 3(a)(2)(A): “The Director shall be
`responsible for providing policy direction and
`management supervision for the Office and for
`the issuance of patents and the registration of
`trademarks[;]”
`
`• 35 U.S.C. § 3(a)(2)(B): “The Director shall
`consult with the Patent Public Advisory
`Committee established in section 5 on a regular
`basis on matters relating to the patent
`operations of the Office . . . and shall consult
`with the respective Public Advisory Committee
`before submitting budgetary proposals to the
`Office of Management and Budget[;]”
`
`• 35 U.S.C. § 3(b)(6): “The Director may fix the
`rate of basic pay for the administrative patent
`
`
`
`
`
`
`11
`
`
`
`judges appointed pursuant to [35 U.S.C.]
`section 6[;]”
`
`• 35 U.S.C. § 6(c)5: The Director shall designate
`members of the PTAB who shall hear each
`“appeal, derivation proceeding, post-grant
`review, and inter partes review[;]”
`
`• 35 U.S.C. § 143: “The Director shall have the
`right to intervene in an appeal from a decision
`entered by the Patent Trial and Appeal Board
`in a derivation proceeding under section 135 or
`in an inter partes or post-grant review under
`chapter 31 or 32[;]”
`
`• 35 U.S.C. § 316(a): “The Director shall prescribe
`regulations – (2) setting forth the standards for
`the showing of sufficient grounds to institute a
`review under section 314(a); . . . (4) establishing
`and governing inter partes review under this
`chapter and the relationship of such review to
`other proceedings under this title; (5) setting
`forth standards and procedures for discovery of
`relevant evidence . . . ; (6) prescribing sanctions
`for abuse of discovery, abuse of process, or any
`
`
`5 According to the PTAB’s Standard Operating Procedure 1,
`“[t]he Director’s authority under 35 U.S.C. § 6(c) to designate
`panels has been delegated to the Chief Judge,” however, “[t]he
`delegated authority is non-exclusive and the Director expressly
`retains his or her own statutory authority to designate panels.”
`PTAB, Standard Operating Procedure 1
`(Revision 15)
`Assignment
`of
`Judges
`to
`Panels,
`https://www.uspto.gov/sites/default/files/documents/SOP%201%
`20R15%20FINAL.pdf (last visited Dec. 2, 2020).
`
`
`
`
`
`
`12
`
`
`
`other improper use of the proceeding . . . ; (9)
`setting forth standards and procedures for
`allowing the patent owner to move to amend
`the patent . . . ; (11) requiring that the final
`determination in an inter partes review be
`issued [by the APJs] not later than 1 year after
`the date on which the Director notices the
`institution of a review under this chapter,
`except that the Director may, for good cause
`shown, extend the 1-year period by not more
`than 6 months, and may adjust the time periods
`in this paragraph in the case of joinder under
`section 315(c);”
`
`• 35 U.S.C. § 326(a): “The Director shall prescribe
`regulations [that are nearly identical to §
`316(a), but with
`respect
`to post-grant
`reviews[;]”6 and
`
`• PTAB’s Standard Operating Procedure 27: “The
`Director may convene a Precedential Opinion
`
`
`6 Although the present case involves inter partes reviews
`instead of post-grant reviews, the latter also are conducted by
`APJs. Thus, the Director’s ability to direct and/or supervise the
`work of APJs in those proceedings is relevant to whether the
`APJs are considered inferior Officers.
`
`7 PTAB, Standard Operating Procedure 2 (Revision 10)
`Precedential Opinion Panel to Decide Issues of Exceptional
`Importance Involving Policy or Procedure; Publication of
`Decisions and Designation or De-Designation of Decisions as
`Precedential
`or
`Informative,
`https://www.uspto.gov/sites/default/files/documents/SOP2%20R
`10%20FINAL.pdf (last visited Dec. 2, 2020).
`
`
`
`
`
`
`13
`
`
`
`Panel to review a decision in a case and
`determine whether to order sua sponte
`rehearing, in his or her discretion and without
`regard to the procedures set forth herein.”
`
` As demonstrated above, the Director of the
`USPTO, i.e., a principal Officer, “direct[s] and
`supervise[s]” a broad range of the work of APJs.
`Edmond, 520 U.S. at 663; see also Seila, 140 S. Ct. at
`2199 n.3 (noting that the Court’s recent focus has been
`on this direction and supervision, as compared to a
`more rigid examination of factors “such as the nature,
`scope, and duration of an officer’s duties”). While it is
`true that the Director is not able to review the merits
`of a final written decision or to remove APJs without
`good cause, those two facts only establish that the
`Director’s direction and supervision over the APJs is
`not absolute. But this Court has never required
`absolute direction and control by a superior to hold
`that an Officer is inferior. See Edmond, 520 U.S. at
`665 (holding that the Court of Criminal Appeal judges
`were inferior Officers despite their superior’s “scope of
`review [being] narrower than that exercised by the
`Court of Criminal Appeals”). On balance, these two
`elements do not undermine the fact that the Director
`exercises sufficient direction and supervision over the
`work of APJs to consider the latter inferior Officers,
`consistent with Congress’s intent to that effect.
`
`
`
`
`
`
`14
`
`
`
`C.
`
`If the Court Believes this is a Close Case,
`It Should Defer to Congress and Hold
`that Administrative Patent Judges are
`Inferior Officers
`
` When “it is ultimately hard to say with any
`
`certainty on which side of the line [certain Officers]
`fall, . . . deference to the political branches’ judgment
`is appropriate.” Weiss v. United States, 510 U.S. 163,
`193-94 (1994) (Souter, J., concurring); see also In re
`Sealed Case, 838 F.2d 476, 532 (D.C. Cir. 1988)
`(Ginsburg, J., dissenting) (“[J]udicial review must fit
`the occasion. Where, as in the matter at hand, the
`label that better fits an officer is fairly debatable, the
`fully rational congressional determination surely
`merits more tolerance . . . .”), rev’d sub nom. Morrison,
`487 U.S. 654.
`
` As explained in section I.A, supra, the statutory
`scheme of Title 35 confirms that Congress did not
`intend for APJs to be principal Officers for purposes of
`the Appointments Clause. A finding to the contrary
`not only renders the appointments of these APJs
`unconstitutional—despite numerous indications that
`the Director exhibits direction and supervision over
`their work in a multitude of ways—but also risks
`“upsetting Congress’ considered judgment on the
`matter.” In re Sealed Case, 838 F.2d at 532 (Ginsburg,
`J., dissenting). As such, should the Court determine
`that this is a close case, with compelling arguments to
`be made in both directions, the Court should defer to
`Congress’ judgment and reverse the Federal Circuit’s
`decision holding that APJs are principal Officers.
`
`
`
`
`
`
`15
`
`
`II. Because Administrative Patent Judges are
`Inferior Officers For Purposes of
`the
`Appointments Clause, The Court Need Not
`Address Whether the Arthrex Remedy Was
`Proper.
`
`The second question on which the Court granted
`certiorari is premised on a determination that the
`APJs are principal Officers. Since the APJs are
`inferior Officers for at least the reasons discussed in
`section I, supra, IPLAC respectfully submits that the
`Court need not address this question.
`
`III. A Holding that APJs are Principal Officers
`and that the Arthrex Remedy Was Not Proper
`Has Far-Reaching Implications Beyond the
`Scope of the Present Cases.
`
`Were the Court to reverse the Federal Circuit with
`regard to both issues on appeal and not craft a
`workable solution, the effect on the patent system
`could be devastating. As of September 30, 2020, the
`USPTO reports that patent challengers have filed
`12,147 petitions for inter partes review (11,299), post
`grant review (246), and covered business method
`review (602) in the eight years since those procedures
`first became available on September 16, 2012. See
`USPTO, Trial Statistics IPR, PGR, CBM September
`2020,
`at
`3,
`https://www.uspto.gov/sites/default/files/documents/t
`rial_statistics_20200930.pdf (last visited Dec. 2,
`2020). Approximately 1,554 of those petitions were
`settled by the parties, and 840 of those petitions are
`still pending, leaving just under 10,000 petitions for
`which those APJs issued rulings dismissing or
`
`
`
`
`
`
`16
`
`
`denying review or for which they instituted review,
`including 3,414 petitions for which the APJs issued
`final written decisions. Id. at 10. Moreover, a decision
`by the Court to strike down the Federal Circuit’s
`remedial framework would nullify not only all of these
`previous institution or declination decisions and the
`3000+ final written decisions, but the tens, if not
`hundreds, of thousands of decisions made by the APJs
`during the course of each review, including, inter alia,
`those related to the scope of discovery8, the ability to
`amend, cancel, or substitute claims9, and the issuance
`of sanctions in the event of conduct determined by
`those APJs to have been improper10.
`
`In addition, the overwhelming majority of these
`post grant petitions were filed by alleged infringers of
`the respective patents, such that there was or is
`concurrent district court litigation involving those
`patents. In the more than 2,000 cases in which the
`APJs issued final written decisions finding all
`challenged claims unpatentable, see id. at 11, those
`decisions effectively e
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