Nos. 19-1434, 19-1452, 19-1458
`IN THE
`Supreme Court of the United States
`_______________
`
`UNITED STATES OF AMERICA,
`Petitioner,
`
`
`
`
`
`
`
`
`
`
`
`v.
`
`ARTHREX, INC., ET AL.,
`
`On Writs Of Certiorari
`To The United States Court Of Appeals
`For The Federal Circuit
`
`BRIEF OF UNIFIED PATENTS, LLC
`AS AMICUS CURIAE
`IN SUPPORT OF NO PARTY AND
`IN SUPPORT OF REVERSAL
`
`
`Respondents.
`
`
`KEVIN JAKEL
`SHAWN AMBWANI
`JONATHAN STROUD
`
`UNIFIED PATENTS LLC
`1875 Connecticut Ave., NW
`Floor 10
`Washington, DC 20009
`
`WILLIAM G. JENKS
`Counsel of Record
`
`
`JENKS IP LAW PLLC
`1629 K ST., NW
`Suite 300
`Washington, D.C. 20006
`wjenks@jenksiplaw.com
`(202) 412-7964
`Counsel for Amicus Curiae
`(For Continuation of Caption, See Inside Cover)
`
`
`
`
`
`

`

`____________________
`
`SMITH & NEPHEW, INC., ET AL.,
`Petitioners,
`
`
`
`
`
`v.
`
`ARTHREX, INC., ET AL.,
`Respondents.
`____________________
`
`SMITH & NEPHEW, INC., ET AL.,
`Petitioners,
`
`
`
`
`
`v.
`
`ARTHREX, INC., ET AL.,
`Respondents.
`____________________
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`TTABLE OF CONTENTS
`
`Page
`INTERESTS OF AMICUS CURIAE .......................... 1
`STATEMENT .............................................................. 3
`SUMMARY OF ARGUMENT ..................................... 5
`ARGUMENT ............................................................... 7
`I. APJS ARE NOT PRINCIPAL OFFICERS ............... 8
`A. Patent Trial And Appeal Board—
`Members ................................................... 8
`B. Patent Trial And Appeal Board—
`Duties ..................................................... 10
`C. The Director Exercises Sufficient Control
`Over Inter Partes Review To Render APJs
`Inferior Officers ...................................... 13
`II. IF APJS ARE PRINCIPAL OFFICERS, THE COURT
`OF APPEALS CURE WAS EXCESSIVE ............... 19
`A. This Court Could Sever The Statutory
`Requirement That The Director “Shall”
`Issue A Certificate Following Every Final
`Written Decision .................................... 21
`B. This Court Could Sever The Statutory
`Requirement That Three Judges Sit On
`Every Inter Partes Review Panel .......... 23
`C. This Court Could Sever Just The
`Statutory Protections Afforded The
`PTAB’s Executive Members .................. 25
`CONCLUSION .......................................................... 28
`
`

`

`ii
`
`TTABLE OF AUTHORITIES
`
`Cases
`Arthrex, Inc. v. Smith & Nephew, Inc.,
`953 F.3d 760 (Fed. Cir. 2020) ................................ 8
`Bilski v. Kappos, 561 U.S. 593 (2010) ...................... 10
`Crowell v. Benson, 285 U.S. 22 (1932) ....................... 5
`Dickinson v. Zurko, 527 U.S. 150 (1999) .................. 22
`Free Enter. Fund v. Pub. Co. Accounting
`Oversight Bd., 561 U.S. 477 (2010) ..................... 19
`Graham v. John Deere Co. of Kansas City,
`383 U.S. 1 (1966) .................................................... 8
`KSR Int'l Co. v. Teleflex Inc.,
`550 U.S. 398 (2007) ................................................ 5
`Lab. Corp. of Am. Holdings v. Metabolite
`Labs., Inc., 548 U.S. 124 (2006) ............................. 3
`Lear, Inc. v. Adkins, 395 U.S. 653 (1969) ................... 2
`McCormick Harvesting Mach. Co. v. C.
`Aultman & Co., 169 U.S. 606 (1898) ................... 22
`Motion Picture Patents Co. v. Universal
`Film Mfg. Co., 243 U.S. 502 (1917) ....................... 3
`Oil States Energy Servs., LLC v. Greene’s
`Energy Grp., LLC, 138 S. Ct. 1365
`(2018) ................................................................ 4, 12
`Pope Mfg. Co. v. Gormully,
`144 U.S. 224 (1892) ................................................ 3
`Quanta Computer, Inc. v. LG Electronics,
`Inc., 553 U.S. 617 (2008) ........................................ 3
`SAS Inst., Inc. v. Iancu,
`138 S. Ct. 1348 (2018) ............................................ 2
`Constitutional Provisions
`Art. I, § 8, cl. 8 ............................................................. 3
`Statutes
`35 U.S.C. § 134(a) ...................................................... 11
`35 U.S.C. § 141(a) ...................................................... 11
`
`

`

`iii
`
`35 U.S.C. § 151(a) ...................................................... 11
`35 U.S.C. § 151(b) ...................................................... 11
`35 U.S.C. § 2(b)(2)(A) ................................................ 16
`35 U.S.C. § 3(a)(2)(A) ................................................ 22
`35 U.S.C. § 3(a)(4) ....................................................... 8
`35 U.S.C. § 3(b) ............................................................ 8
`35 U.S.C. § 3(b)(2)(C) .................................................. 8
`35 U.S.C. § 3(b)(3) ....................................................... 9
`35 U.S.C. § 3(b)(3)(A),(B)........................................... 16
`35 U.S.C. § 3(b)(6) ....................................................... 9
`35 U.S.C. § 3(c) ............................................................ 9
`35 U.S.C. § 3(c) (2000) ............................................... 23
`35 U.S.C. § 311(a) ........................................................ 2
`35 U.S.C. § 314(b) ...................................................... 16
`35 U.S.C. § 316(a)(11) ............................................... 17
`35 U.S.C. § 316(a)(4) ................................................. 16
`35 U.S.C. § 316(b) ...................................................... 16
`35 U.S.C. § 318(b) ................................................ 13, 21
`35 U.S.C. § 318(c) ...................................................... 22
`35 U.S.C. § 6(a) ........................................................ 8, 9
`35 U.S.C. § 6(b) (2010) .............................................. 24
`35 U.S.C. § 6(b) (2012) .............................................. 24
`35 U.S.C. § 6(b)(1) ..................................................... 10
`35 U.S.C. § 6(b)(4) ..................................................... 12
`35 U.S.C. § 6(c) .................................................... 14, 24
`RRegulations
`37 C.F.R. § 1.183 ....................................................... 21
`37 C.F.R. § 1.313 (a), (b) ...................................... 11, 21
`37 C.F.R. § 41.2 ................................................... 15, 24
`37 C.F.R. § 42.107 ..................................................... 16
`37 C.F.R. § 42.80 ....................................................... 21
`Other Authorities
`Appeal and Interference statistics, Sep.
`7 available at
`2020
`at 5,
`
`

`

`iv
`
`https://www.uspto.gov/patents-
`application-process/patent-trial-and-
`appeal-board/statistics ......................................... 10
`Arthrex, Inc. v. Smith & Nephew, Inc.,
`No. 18-2140, Oral argument available
`at http://www.cafc.uscourts.gov/oral-
`argument-recordings ............................................ 13
`IP Watchdog, What’s Next After Arthrex?
`Reactions Suggest Limited Immediate
`Effect, But Some Question Whether
`CAFC Fix Will Hold available at
`https://www.ipwatchdog.com/2019/11/0
`3/whats-next-arthrex-reactions-
`suggest-limited-immediate-effect-
`question-whether-cafc-fix-will-
`hold/id=115570/ .................................................... 25
`Letter From James Madison to Congress,
`11 April 1816 .......................................................... 4
`Organizational
`Structure
`and
`Administration of the Patent Trial and
`Appeal Board at 2-3
`(“PTAB Org
`Chart”)
`available
`at
`https://www.uspto.gov/patents-
`application-process/patent-trial-and-
`appeal-board/about-ptab ........................................ 9
`PTAB Standard Operating Procedure 1
`(Rev. 15)
`(“SOP 1”) available at
`https://www.uspto.gov/patents-
`application-process/appealing-patent-
`decisions/procedures/standard-
`operating-procedures-0 .................................... 9, 10
`PTAB Standard Operating Procedure 2
`(Rev. 10)
`(“SOP 2”) available at
`https://www.uspto.gov/patents-
`application-process/appealing-patent-
`
`

`

`v
`
`decisions/procedures/standard-
`operating-procedures-0 ........................................ 17
`Richard Torczon, It Matters: A Former
`Administrative Patent Judge’s Take
`on Arthrex, IP Watchdog, Nov. 11, 2019
`available
`at
`https://www.ipwatchdog.com/2019/11/1
`1/matters-former-administrative-
`patent-judges-take-arthrex/id=115779/ .............. 18
`Trial Statistics IPR, PGR, CBM, Sep.
`2020,
`available
`at
`https://www.uspto.gov/patents-
`application-process/patent-trial-and-
`appeal-board/statistics/aia-trial-
`statistics-archive. ................................................. 12
`Unified Patents, 2019 Litigation Annual
`Report
`available
`at
`https://portal.unifiedpatents.com/litiga
`tion/annual-report .................................................. 2
`
`

`

`BBRIEF OF UNIFIED PATENTS, LLC
`AS AMICUS CURIAE
`IN SUPPORT OF RESPONDENTS
`
`INTERESTS OF AMICUS CURIAE1
`Unified Patents, LLC is a membership organiza-
`tion dedicated to deterring patent assertion entities,
`or PAEs, from extracting nuisance settlements from
`operating companies based on patents that are likely
`invalid before the district courts and unpatentable be-
`fore the U.S. Patent Office. Unified’s more than 3,000
`members are Fortune 500 companies, start-ups, au-
`tomakers, industry groups, medical device manufac-
`turers, cable companies, banks, open-source develop-
`ers, manufacturers, and others dedicated to reducing
`the drain on the U.S. economy of now-routine baseless
`litigations asserting infringement of patents of dubi-
`ous validity.
`Unified studies the ever-evolving business mod-
`els, financial backings, and practices of patent asser-
`tion entities (“PAEs”), sometimes called “patent
`trolls.” To better understand PAEs, Unified prepares
`annual patent litigation reports. See, e.g., Unified Pa-
`tents, 2019 Litigation Annual Report available at
`
`1 Pursuant to this Court’s Rule 37.3(a), letters of consent from
`all parties to the filing of this brief have been submitted to the
`Clerk. Pursuant to this Court’s Rule 37.6, amicus states that
`this brief was not authored in whole or in part by counsel for any
`party, and that no person or entity other than amicus or their
`counsel made a monetary contribution intended to fund the prep-
`aration or submission of this brief.
`
`

`

`2
`
`https://portal.unifiedpatents.com/litigation/annual-
`report. The reports distinguish between practicing
`companies, PAEs, and traditional plaintiffs—such as
`universities, small companies, and individual inven-
`tors—that patent inventions but do not market prod-
`ucts. Id.
`Unified also files post-issuance administrative
`challenges—including inter partes review petitions—
`regarding PAE patents it believes are unpatentable or
`invalid. This includes both international and domes-
`tic administrative challenges. Thus, Unified is a de-
`terrence entity that seeks to deter the assertion of
`poor-quality patents. In 2019, Unified was the fifth
`most frequent inter partes review petitioner before
`the Patent Trial and Appeal Board (“PTAB” or
`“Board”), and Unified was by far the leading third-
`party filer in the United States. Sometimes, “bad pa-
`tents slip through.” SAS Inst., Inc. v. Iancu, 138 S. Ct.
`1348, 1353 (2018). When that happens, Unified peti-
`tions the government for redress. Unified thereby
`pursues and frequently exonerates “the important
`public interest in permitting full and free competition
`in the use of ideas which are in reality a part of the
`public domain.” Lear, Inc. v. Adkins, 395 U.S. 653,
`670 (1969).
`In this case, Unified is concerned with ensuring
`that inter partes review and other related Patent Of-
`fice proceedings remain timely and cost-effective tools
`for any member of the public to protect itself from im-
`properly issued patent claims. And that the panels of
`
`

`

`3
`
`administrative patent judges should remain free to
`apply their sound legal judgment and technical exper-
`tise in the public interest, free from political concerns.
`SSTATEMENT
`“[T]he primary purpose of our patent laws is not
`the creation of private fortunes for the owners of pa-
`tents but is ‘to promote the progress of science and the
`useful arts[.]’” Quanta Computer, Inc. v. LG Elecs.,
`Inc., 553 U.S. 617, 626 (2008) (quoting Motion Pic-
`ture Patents Co. v. Universal Film Mfg. Co., 243 U.S.
`502, 518 (1917) (quoting, in turn, U.S. Const., Art. I,
`§ 8, cl. 8)).
`Ensuring that issued patent monopolies have
`claims with the appropriate scope is critical to accom-
`plishing the patent system's constitutionally man-
`dated purpose. Pope Mfg. Co. v. Gormully, 144 U.S.
`224, 234 (1892) (“It is as important to the public that
`competition should not be repressed by worthless pa-
`tents as that the patentee of a really valuable inven-
`tion should be protected in his monopoly.”); see also
`Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc.,
`548 U.S. 124, 126 (2006) (Breyer, J., dissenting from
`dismissal) (“[S]ometimes too much patent protection
`can impede rather than ‘promote the Progress of Sci-
`ence and useful Arts.’”) (citation omitted) (emphasis
`in original). The founding fathers understood this:
`President Madison asked Congress that “further re-
`straints be imposed on the issue of patents to wrongful
`claimants, and further guards provided against fraud-
`ulent exactions of fees by persons possessed of
`
`

`

`4
`
`patents.” Letter From James Madison to Congress, 11
`April 1816.
`This Court long has understood that “the primary
`responsibility for sifting out unpatentable material
`lies in the Patent Office. To await litigation is—for all
`practical purposes—to debilitate the patent system.”
`Graham v. John Deere Co. of Kansas City, 383 U.S. 1,
`18 (1966).
`It follows that the correction of errors in issued
`patents—particularly the issuance of patent claims
`that encompass more than what the patentee in-
`vented—should be done by impartial agency person-
`nel overseen by a presidentially appointed executive.
`And that any oversight is transparent so inventors
`and the public may have full confidence in the process
`and the results.
`Happily, Congress ensured just that situation
`when it passed the inter partes review statute. Before
`the decision below, APJs could apply their expertise
`without fear or favor, and the Director oversaw that
`work through a variety of mechanisms sufficient to
`satisfy this Court’s standards.
`Inter partes review builds on historical and extant
`Patent Office proceedings like reexamination. See Oil
`States Energy Servs., LLC v. Greene’s Energy Grp.,
`LLC, 138 S. Ct. 1365, 1371 (2018). Inter partes re-
`view—and post-grant review, enacted simultane-
`ously—allow the public a more active role and the
`
`

`

`5
`
`Patent Office a second chance to properly define the
`scope of the claims in a patent.
`These post-issuance processes also allow the Pa-
`tent Office to quickly and efficiently review issued pa-
`tents when this Court corrects the Federal Circuit.
`See, e.g., KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398,
`419 (2007) (“The flaws in the analysis of the Court of
`Appeals relate for the most part to the court’s nar-
`row conception of the obviousness inquiry.”). In inter
`partes review, Congress has created an “expert and
`inexpensive method for dealing with a class of ques-
`tions of fact which are particularly suited to examina-
`tion and determination by an administrative agency
`specially assigned to that task.” See Crowell v. Ben-
`son, 285 U.S. 22, 46 (1932). As such, inter partes re-
`view, post-grant review, and other forms of post-issu-
`ance error correction are constitutionally permitted
`proceedings that serve and are inextricably linked
`with the promotion of the useful arts.
`SSUMMARY OF ARGUMENT
`Patent Office APJs are not principal officers.
`Each year, the 250 APJs at the Patent Office decide
`thousands of ex parte appeals and hundreds of inter
`partes review. The ex parte appeals are not of consti-
`tutional concern because they are part of the patent
`application process. The Director controls that pro-
`cess and is entitled to withdraw an allowed patent ap-
`plication at any point before issuance. The relevant
`statute is permissive. Section 151(a) and (b) of the Pa-
`tent Act provide only that “[i]f it appears that an
`
`

`

`6
`
`applicant is entitled to a patent,” procedural require-
`ments are met, and the applicant pays the issue fee,
`then “the patent may issue.”
`The court of appeals held that the inter partes re-
`view process, however, was unconstitutional. In that
`court’s view, the relevant statute is in the form of a
`command that allowed a panel of APJs to tie the Di-
`rector’s hands. This power elevated the APJs to the
`status of principal officers and rendered the statute
`unconstitutional as written. The Federal Circuit ad-
`dressed this problem by increasing the Director’s abil-
`ity to fire the APJs.
`But the lower court failed to understand that re-
`view of APJ panel decisions begins before the com-
`mand is invoked. This pre-issuance review comple-
`ments the Director’s power to designate a new panel
`that orders rehearing of any aberrant decision.
`The Director also has the power to remove APJs
`from their judicial assignments on inter partes review
`panels. For example, the Director may assign any re-
`calcitrant APJs to only ex parte appeal panels. These
`abilities, along with the Director’s other policy and
`standard-setting powers, provide sufficient control
`over APJs to render them inferior officers.
`If this Court holds that APJs are principal offic-
`ers, Amicus presents three options for severing as-
`pects of the statute that better preserve the system
`Congress created. First, the Court may sever the re-
`quirement that the Director “shall” issue a certificate
`
`

`

`7
`
`following the PTAB’s final written decision. This fix
`puts inter partes review on equal footing with patent
`prosecution by assigning the ultimate decision to the
`Director. As in prosecution, the Court may expect the
`Director will rarely invoke this power and if so, will be
`subject to APA review. Second, the Court may sever
`the requirement that three judges sit on inter partes
`review panels. While the Director could continue to
`assign three APJs to the typical case, as required by
`rule, he could assign only one Board Judge, himself,
`to hear or rehear cases of importance or error. Finally,
`this Court could sever the employment protections of
`the three executive members of the Board. This would
`allow the Director to form hearing and rehearing pan-
`els using three executives who have no civil service
`protections.
`Each alternative allows panels of three APJs—
`people of legal and technical skill—to handle the vast
`majority of Patent Office cases without suffering un-
`der the in terrorem effect of at-will employment. Each
`alternative ensures that the Director’s oversight con-
`tinues to be transparent.
` ARGUMENT
`The United States and Smith & Nephew ably ex-
`plain that APJs are not principal officers under this
`Court’s cases. Amicus will not repeat arguments so
`well presented. Instead, Amicus discusses the struc-
`ture and function of the PTAB and how the Board
`member’s “work is directed and supervised at some
`
`

`

`8
`
`level” by the Director. See Edmond v. United States,
`520 U.S. 651, 663 (1997).
`II. APJS ARE NOT PRINCIPAL OFFICERS
`A. Patent Trial And Appeal Board—Mem-
`bers
`The PTAB by statute includes four executive
`members: The Patent Office Director, the Deputy Di-
`rector, the Commissioner for Patents, and the Com-
`missioner for Trademarks. 35 U.S.C. § 6(a). It addi-
`tionally comprises roughly 250 administrative patent
`judges.
`The Director is appointed by the President and
`confirmed by the Senate. He may be removed at will
`by the President. See 35 U.S.C. § 3(a)(4).
`The Secretary of Commerce appoints the other ex-
`ecutive members. See 35 U.S.C. § 3(b). There is no
`removal statute specific to the Deputy; presumably,
`title 5 applies. Arthrex, Inc. v. Smith & Nephew, Inc.,
`953 F.3d 760, 765 n.7 (Fed. Cir. 2020) (Moore, J., con-
`curring in denial of rehearing en banc). The Secretary
`may remove either Commissioner “for misconduct or
`nonsatisfactory performance” under their perfor-
`mance agreements “without regard to the provisions
`of title 5.” Id. § 3(b)(2)(C).
`The Secretary of Commerce appoints the APJs. 35
`U.S.C. § 6(a). Despite this, they are not considered
`political appointees but rather “persons of competent
`legal knowledge and scientific ability” that serve our
`
`

`

`9
`
`nation, deciding patentability questions at the behest
`of applicants, petitioners, and patent owners. Id.
`APJs may be removed from employment subject
`to title 5 protections. 35 U.S.C. § 3(c). The Director
`sets their pay, subject only to an upper bound. Id.
`§ 3(b)(6).
`The PTAB also has a Chief Administrative Patent
`Judge, one Deputy Chief Judge, two Vice Chief
`Judges, and multiple Lead Judges, all of whom work
`and guide the work of others. See Organizational
`Structure and Administration of the Patent Trial and
`Appeal Board at 2-3 (“PTAB Org Chart”) available at
`https://www.uspto.gov/patents-application-pro-
`cess/patent-trial-and-appeal-board/about-ptab. These
`are non-statutory, supervisory positions created by
`the Director using his Section 3(b)(3) powers and are
`typically filled by experienced APJs. 35 U.S.C.
`§ 3(b)(3).
`The Director oversees the Board, and the Chief
`Judge and team assist in the day-to-day supervision
`required for such a large enterprise. For example, the
`Director currently delegates the authority to desig-
`nate PTAB panels to the Chief Judge. PTAB Stand-
`ard Operating Procedure 1 (Rev. 15) at 1-2 (“SOP 1”)
`available at https://www.uspto.gov/patents-applica-
`tion-process/appealing-patent-decisions/proce-
`dures/standard-operating-procedures-0. The delega-
`tion is non-exclusive and revocable at any time. Id.
`The Director “expressly retains” the authority to
`
`

`

`10
`
`“designate, de-designate, or otherwise alter in any
`way at any time, panels in his or her sole discretion.”
`Id.
`
`BB. Patent Trial And Appeal Board—Duties
`The main bulk of the PTAB’s work is currently di-
`vided roughly equally between hearing ex parte ap-
`peals by patent applicants and conducting inter
`partes reviews brought against issued patents by
`members of the public. PTAB panels also consider a
`smattering of ex parte reexamination appeals, post-
`grant review petitions, and derivation proceedings,
`among other things. See Appeal and Interference sta-
`tistics,
`Sep.
`2020
`at 5,
`7 available at
`https://www.uspto.gov/patents-application-pro-
`cess/patent-trial-and-appeal-board/statistics.
`Ex Parte Appeals
`PTAB panels hear ex parte appeals from appli-
`cants that receive adverse decisions on their patent
`applications from the Patent Office’s examining corps.
`35 U.S.C. § 6(b)(1); see, e.g., Bilski v. Kappos, 561 U.S.
`593, 600 (2010). Last fiscal year, the Board decided
`roughly 7,000 ex parte appeals. See Appeal and In-
`terference statistics, Sep. 2020 at 5, Oct. 2020 at 3.
`“By default,” all APJs “work on ex parte appeals.”
`SOP 1 at 4. As detailed in the PTAB’s standard op-
`erating procedures, “some judges are assigned to be
`paneled only on ex parte appeals, while other judges
`also are assigned to be paneled on cases in other
`
`

`

`11
`
`jurisdictions of the Board,” including inter partes re-
`view proceedings. SOP 1 at 4-5.
`Ex parte appeal work should not be of constitu-
`tional concern. A PTAB ex parte appeal panel cannot
`tie the Director’s hand to even the limited extent the
`Arthrex court believed a PTAB trial panel could.
`In an ex parte appeal, the patent applicant asks
`the Board to review an examiner’s decision rejecting
`the claims sought. See 35 U.S.C. § 134(a). The Board
`may affirm the examiner—that is, the three-APJ
`panel may agree with the Director’s other representa-
`tive in the matter—in which case the applicant may
`acquiesce or appeal to the courts. See 35 U.S.C.
`§ 141(a). Or the Board may reverse the examiner, in
`which case no appeal is available, and the case returns
`to the examining corps for further processing. In the
`typical case, the examiner implements the Board’s de-
`cision and either allows the patent claims or rejects
`them on other grounds. Regardless, if it appears that
`the applicant is entitled to a patent, the examiner is-
`sues a notice of allowance, and an issue fee is charged.
`35 U.S.C. § 151(a). But the statute is permissive. If
`the applicant pays the fee, “the patent may issue.” 35
`U.S.C. § 151(b) (emphasis added). But the Patent Of-
`fice may withdraw an application from issue even af-
`ter applicant pays the issue fee if, for example, the Di-
`rector now believes an allowed claim to be unpatenta-
`ble. See 37 C.F.R. § 1.313 (a), (b).
`
`

`

`12
`
`IInter Partes Review
`PTAB trial panels also conduct inter partes re-
`views, like the one at issue here. 35 U.S.C. § 6(b)(4);
`see alsoOil States, 138 S. Ct. at 1371–72 (2018) (de-
`scribing inter partes review process). Last fiscal year,
`petitioners filed about 1,400 inter partes review peti-
`tions. See Trial Statistics IPR, PGR, CBM, Sep. 2020,
`available at https://www.uspto.gov/patents-applica-
`tion-process/patent-trial-and-appeal-board/statis-
`tics/aia-trial-statistics-archive. Some then settle or
`are dismissed; the Director institutes about half of the
`remaining petitions. Id. at 6. The parties typically
`then settle about 20% of instituted cases before the
`PTAB issues a final written decision. Id. at 9. Thus,
`the PTAB is expected to issue roughly 600 Final Writ-
`ten Decisions based on those 1400 petitions.
`The Arthrex panel identified an appointment
`clause infirmity in the inter partes review statute in
`part because the statute is not permissive.
`
`If no party appeals the APJs’ decision,
`the
`Director’s
`hands
`are
`tied. “[T]he Director shall issue and
`publish a certificate canceling any
`claim of the patent finally determined
`to be unpatentable. . . . ” Id. § 318(b)
`(emphasis added). The Director can-
`not, on his own, sua sponte review or
`vacate a final written decision.
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`

`13
`
`U.S. App. at 11a. But the Arthrex panel underesti-
`mated the Director’s power pre- and post-issuance of
`the Final Written Decision.
`CC. The Director Exercises Sufficient Control
`Over Inter Partes Review To Render APJs
`Inferior Officers
`The court of appeals understood that APJs are of-
`ficers of the United States. On this, all parties and
`amici appear to agree. The lower court then looked to
`whether the inter partes review statute elevated them
`from inferior to principal officers. The court below
`then explained that “whether one is an inferior officer
`depends on whether he has a superior, and inferior of-
`ficers are officers whose work is directed and super-
`vised at some level by others who were appointed by
`Presidential nomination with the advice and consent
`of the Senate.” U.S. App. at 9a (quoting Edmond v.
`United States, 520 U.S. 651, 662–63 (1997)) (internal
`marks removed).
`The Federal Circuit condensed this Court’s
`caselaw into what one Judge called at oral argument
`“three buckets.” See, e.g., Arthrex, Inc. v. Smith &
`Nephew, Inc., No. 18-2140, Oral argument at 40:31
`available at http://www.cafc.uscourts.gov/oral-argu-
`ment-recordings. Each bucket represents a factor
`that the lower court drew from Edmond: “(1) whether
`an appointed official has the power to review and re-
`verse the officers’ decision; (2) the level of supervision
`and oversight an appointed official has over the offic-
`ers; and (3) the appointed official’s power to remove
`
`

`

`14
`
`the officers.” U.S. App. at 9 (quoting Edmond at 664-
`65).
`In the panel’s view, each factor is an indicator of
`“the level of control and supervision appointed offi-
`cials have over the officers and their decision-making
`on behalf of the Executive Branch.” U.S. App. at 9.
`The Arthrex panel evaluated each factor separately
`and concluded that it had to bolster the third factor to
`preserve the statute. U.S. App. at 22a; 29a. Essen-
`tially, buckets one and three were insufficiently full
`despite a heavy bucket two, so in response, the panel
`filled bucket three to overflowing.
`Respectfully, and as the United States and Smith
`& Nephew aptly explain, this approach was incorrect
`as a matter of law. It is the cumulative effect of all
`the presidential appointees’ supervisory powers that
`must be considered; to do otherwise was legal error.
`See U.S. Brief at 15, 33-39. But even had the court
`below used the correct approach, it failed to account
`for the Director’s full powers.
`11.
`The Patent Office Director Has Suffi-
`cient Authority To Review And Reverse
`The PTAB Decisions
`As a practical matter, review begins in the Patent
`Office well before a final decision. No one APJ can
`decide an appeal or inter partes review. Regardless of
`the proceeding, at least three APJs will be assigned to
`each case. 35 U.S.C. § 6(c) (“Each appeal, derivation
`proceeding, post-grant review, and inter partes review
`
`

`

`15
`
`shall be heard by at least 3 members of the PTAB, who
`shall be designated by the Director.”).
`The three APJs work together on all decisions.
`SOP 1 at 3. Only the three APJs together may make
`any final decision (though 2-1 decisions are allowed).
`“In all circumstances, all three APJs provide input on
`significant writing assignments except in rare circum-
`stances where fewer than all three APJs are available
`and there is no statutory requirement for a three APJ
`panel.” Id.; see also id. (Significant writing assign-
`ments include final written decisions in inter partes
`review.); 37 C.F.R. § 41.2.
`Aberrant action from one APJ cannot change any
`patent right, and even two rogue APJs would have dif-
`ficulty violating any agency policy. The third APJ
`could sound the alarm by complaining to superiors
`and then drafting a dissent. The Lead Judges, the
`Vice Chief Judges, the Deputy Chief Judge, and the
`Chief Judge provide further supervision and instruc-
`tion. The Chief Judge and the Director can step in
`and delay the issuance of any questionable decision.
`As the United States has shown, the Director has
`further options available to ensure even more rigorous
`internal review pre-issuance should the need arise.
`United States Br. at 39-40. The Director also has the
`power to implement such measures. If the Chief Pa-
`tent Judge, the Deputy Chief, the Vice Chiefs, and the
`Lead Judges cannot provide sufficient supervision,
`the Director can create more offices to implement the
`
`

`

`16
`
`necessary supervision. The Director has the discre-
`tion to appoint officers and employees as the “Director
`considers necessary” and to “define the title, author-
`ity, and duties of such officers and employees” and to
`delegate to them “such of the powers vested in the Of-
`fice as the Director may determine.” 35 U.S.C.
`§ 3(b)(3)(A), (B).
`Similarly, the Director can promulgate any regu-
`lations needed to ensure compliance with the pre-is-
`suance regime. See 35 U.S.C. § 2(b)(2)(A); id.
`§ 316(a)(4) (Director may prescribe regulations “es-
`tablishing and governing inter partes review”). When
`promulgating such rules, the Director is specifically
`authorized to consider “the integrity of the patent sys-
`tem” and “the efficient administration of the Office.”
`Id. § 316(b). Thus, rules that ensure compliance with
`PTO policy and standards by APJs fall neatly under
`the Director’s authority. Finally, the Director is “re-
`sponsible for providing policy direction and manage-
`ment supervision for the Office.” Id. § 3(a)(1). The Di-
`rector can issue policy guidance and meet with the
`Board regularly to guide policy and decision-making.
`The relatively rapid pace of inter partes review is
`no bar to this supervision. Inter partes review moves
`quickly in the Patent Office. Institution decisions are
`made six months after petitions are filed. See 37
`C.F.R. § 42.107; 35 U.S.C. § 314(b). Final written de-
`cisions are issued one year after institution. 35 U.S.C.
`§ 316(a)(11). Keeping to this timeline is one of the
`agency’s great achievements and a testament to the
`
`

`

`17
`
`dedication of the APJs. Nonetheless, the Director has
`the authority to delay the issuance of any opinion by
`up to six months for good cause. See id. § 316(a)(11).
`The need to reconstitute the panel to ensure the deci-
`sion follows the patent law and Patent Office stand-
`ards as the Director understands them would satisfy
`good cause.
`Once a decision issues, the Director can desi