Nos. 19-1434, 19-1452 and 19-1458
`
`In the
`Supreme Court of the United States
`
`UNITED STATES OF AMERICA,
`
`v.
`ARTHREX, INC., et al.,
`
`Petitioner,
`
`Respondents.
`
`SMITH & NEPHEW, INC., et al.,
`
`v.
`ARTHREX, INC., et al.,
`
`Petitioners,
`
`Respondents.
`
`SMITH & NEPHEW, INC., et al.,
`
`v.
`ARTHREX, INC., et al.,
`
`Petitioners,
`
`Respondents.
`
`On Writs Of CertiOrari tO the United states
`COUrt Of appeals fOr the federal CirCUit
`
`BRIEF OF B.E. TECHNOLOGY, LLC AS AMICUS
`CURIAE IN SUPPORT OF ARTHREX AND IN
`SUPPORT OF REVERSAL
`
`davId hoyle
`b.e. teChnology, llC
`160 Pine Grove Drive
`Canton, GA 30114
`
`James m. hood, III
`Counsel of Record
`WeIsbrod, matteIs & Copley, pllC
`1200 New Hampshire Avenue NW,
`Suite 600
`Washington, DC 20036
`(202) 499-7900
`jimhood@wmclaw.com
`Counsel for Amicus Curiae
`
`300886
`
`
`
`In the
`Supreme Court of the United States
`
`UNITED STATES OF AMERICA,
`
`v.
`ARTHREX, INC., et al.,
`
`Petitioner,
`
`Respondents.
`
`SMITH & NEPHEW, INC., et al.,
`
`v.
`ARTHREX, INC., et al.,
`
`Petitioners,
`
`Respondents.
`
`SMITH & NEPHEW, INC., et al.,
`
`v.
`ARTHREX, INC., et al.,
`
`Petitioners,
`
`Respondents.
`
`On Writs Of CertiOrari tO the United states
`COUrt Of appeals fOr the federal CirCUit
`
`BRIEF OF B.E. TECHNOLOGY, LLC AS AMICUS
`CURIAE IN SUPPORT OF ARTHREX AND IN
`SUPPORT OF REVERSAL
`
`davId hoyle
`b.e. teChnology, llC
`160 Pine Grove Drive
`Canton, GA 30114
`
`James m. hood, III
`Counsel of Record
`WeIsbrod, matteIs & Copley, pllC
`1200 New Hampshire Avenue NW,
`Suite 600
`Washington, DC 20036
`(202) 499-7900
`jimhood@wmclaw.com
`Counsel for Amicus Curiae
`
`300886
`
`
`
`i
`
`TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . i
`
`TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . ii
`
`INTERESTS OF AMICUS CURIAE . . . . . . . . . . . . . . .1
`
`SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . .1
`
`ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
`
`I. ADMINISTRATIVE PATENT JUDGES
`
`ARE PRINCIPAL OFFICERS . . . . . . . . . . . . . .7
`
`II. SEVERANCE WILL NOT REMEDY
`
`DUE PROCESS VIOLATIONS . . . . . . . . . . . . .11
`
`A. AIA Shenanigans Discussed . . . . . . . . . . . .11
`
`B. Patent Trial Appeals Board Bias . . . . . . . .16
`
`CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
`
`TABLE OF CONTENTS
`
`Page
`
`
`
`ii
`
`CASES
`
`Atlas Roofing Co. v. Occupational Safety
`and Health Review Comm’n,
`430 U.S. 442, 455, 97 S.Ct. 1261,
`51 L.Ed.2d 464 (1977) . . . . . . . . . . . . . . . . . . . . . . . . .12
`
`
`
`
`Buckley v. Valeo,
`
`424 U.S. 1 (1976), superseded by statute
` as stated by McConnell v. Federal Election
` Com’n, 540 U.S. 93 (2003) . . . . . . . . . . . . . . . . . 8-9, 11
`
`Cuozzo Speed Technologies v. Lee,
`
`136 S. Ct. 2131 (2016) . . . . . . . . . . . . . . . . . . 2, 13, 17, 21
`
`Edmond v. United States,
`
`520 U.S. 651 (1997). . . . . . . . . . . . . . . . . . . . . . . . . .8, 11
`
`Florida Prepaid Postsecondary Ed. Expense Bd.
`v. College Savings Bank,
`527 U.S. 627, 119 S.Ct. 2199, 144 L.Ed.2d 575 (1999). .13
`
`
`
`Freytag v. Commissioner,
`
`501 U.S. 868 (1991) . . . . . . . . . . . . . . . . . . . . . . . 9, 10, 11
`
`In re Alappat,
`
`33 F.3d 1526, 1535 (C.A.Fed.1994) . . . . . . . . . . . . . . .16
`
`James v. Campbell,
`
`104 U.S. 356, 26 L.Ed. 786 (1882). . . . . . . . . . . . . . . .13
`
`TABLE OF CITED AUTHORITIES
`
`Page
`
`
`
`iii
`
`Lucia v. SEC,
`
`138 S. Ct. 2044 (2018). . . . . . . . . . . . . . . . . . . . .8, 10, 11
`
`Nidec Motor Corp. v.
`Zhongshan Broad Ocean Motor Co. Ltd.,
`868 F.3d 1013, 1020 (C.A.Fed.2017)
`(Dyk, J., concurring), cert. pending, No. 17–751 . . .16
`
`
`
`
`Oil States Energy Servs., LLC v.
`Greene’s Energy Grp., LLC,
`138 S. Ct. 1365 (2018). . . . . . . . . . . . . . . . . . . . . passim
`
`
`
`Thryv, Inc. v. Click-to-Call Technologies, LP,
`
`140 S. Ct. 1367 (2020). . . . . . . . . . . . . . . . . . . . . . . . .6, 7
`
`United States v. Stevens,
`
`559 U.S. 460, 130 S.Ct. 1577,
`
`176 L.Ed.2d 435 (2010). . . . . . . . . . . . . . . . . . . . . . . . .15
`
`U.S. v. Germaine,
`
`99 U.S. 508 (1878). . . . . . . . . . . . . . . . . . . . . . . . . . .9, 11
`
`Weiss v. U.S.,
`
`510 U.S. 163. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
`
`STATUTES AND OTHER AUTHORITIES
`
`U.S. Const. Art. I, § 8 . . . . . . . . . . . . . . . . . . . . . . . . .11, 12
`
`U.S. Const. Art. II, § 2, Cl. 2 . . . . . . . . . . . . . . . . . . . . . . .7
`
`Cited Authorities
`
`Page
`
`
`
`iv
`
`U.S. Const. Art. III. . . . . . . . . . . . . . . . . . . . . . . . .1, 12, 18
`
`U.S. Const. Art. III, § 1 . . . . . . . . . . . . . . . . . . . . . . . . . .14
`
`15 U.S.C. § 1067 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
`
`33 U.S.C. § 3(b)(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
`
`35 U.S.C. § 3(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
`
`35 U.S.C. § 3(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
`
`35 U.S.C. § 6(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 10, 16
`
`35 U.S.C. § 6(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 16
`
`35 U.S.C. § 6(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
`
`35 U.S.C. § 42(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
`
`35 U.S.C. § 141(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
`
`35 U.S.C. § 145 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
`
`35 U.S.C. § 306. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
`
`35 U.S.C. § 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
`
`35 U.S.C. § 314(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
`
`Cited Authorities
`
`Page
`
`
`
`v
`
`35 U.S.C. § 319 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10, 12
`
`35 U.S.C. § 321(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
`
`Brief for the Federal Respondent as Amicus Curiae,
`Oil States Energy Servs., LLC v. Greene’s
` Energy Grp., LLC, 138 S. Ct. 1365 (2018). . . . . . . . . .8
`
`Glenn J. McLoughlin, U.S. Patent and Trademark
`Office Appropriations Process: A Brief
` Explanation (RS20906 Aug. 28, 2014) . . . . . . . . . . . . .4
`
`Patent and Trademark Administrative Judges
`Appointment Authority Revision, Pub.
` L. 110-313, 122 Stat. 3014 (2008) . . . . . . . . . . . . . . . . .2
`
`Patent Trial and Appeal Board, Trial Statistics 10
`
`(Feb. 2020). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
`
`Setting and Adjusting Patent Fees During Fiscal
` Year 2017, 82 Fed. Reg. 52 (Nov. 14, 2017). . . . . . . . . .4
`
`Setting and Adjusting Patent Fees, Final Rule,
`
`78 Fed. Reg. 4212 (Jan. 18, 2013) . . . . . . . . . . . . . . . . .3
`
`Sup. Ct. Rule 37.3(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
`
`Sup. Ct. Rule 37.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
`
`The Federalist No. 78 . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
`
`Cited Authorities
`
`Page
`
`
`
`vi
`
`The Federalist No. 79 (C. Rossiter ed. 1961) . . . . . .14, 20
`
`Transcript of Oral Argument, Return Mail, Inc. v.
` U.S. Postal Service, 139 S. Ct. 1853 (2019) . . . . . . . .19
`
`Cited Authorities
`
`Page
`
`
`
`1
`
`INTERESTS OF AMICUS CURIAE1
`
`B.E. Technology, LLC (“BE”) was granted ten patents
`in twelve years. After we filed an infringement action
`against Google in 2012 in U.S. District Court, Western
`District of Tennessee, Google filed a petition with the
`Patent Trial and Appeal Board (“PTAB”) against two of
`our patents. In 2015, the PTAB invalidated both patents.
`We now have pending patent infringement actions seeking
`to defend three of our patents and our rights. Without
`these ten patents, our twenty-three years of work,
`dedication, and millions in risk capital may all evaporate,
`depending on this Court’s decision here.
`
`BE asks this Court: to find the PTAB “judges” were
`never properly appointed; to find the court of appeals did
`not and cannot cure the Appointment Clause defect; and
`to restore inventors’ constitutional right to an impartial
`trial heard by Article III judges nominated and appointed
`for life with fixed salaries.
`
`Patents are how we build America’s future.
`
`SUMMARY OF ARGUMENT
`
`The Federal Circuit correctly concluded that
`Administrative Patent Judges (“APJ”) of the Patent Trial
`
`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
`preparation or submission of this brief.
`
`
`
`2
`
`and Appeal Board (“PTAB”) are “principal” officers under
`the Appointments Clause, but it erred in its attempt to
`remedy a corrupted process by severance. In 2016, this
`Court used the term “shenanigans” to describe the due
`process problems with the Patent and Trademark Office’s
`(“PTO”) implementation of the America Invents Act of
`2011 (“AIA”). Cuozzo Speed Technologies v. Lee, 136 S.Ct.
`2131, 2142 (2016). These “shenanigans” could never have
`occurred without the PTAB judges first being elevated
`to the level of a principal officer.
`
`The remedy by the Federal Circuit will not fix what
`has occurred, and is still occurring. In 2008, Congress
`tried to repair an Appointments Clause problem with
`the Board of Patent Appeals and Interferences (BPAI),
`which was the predecessor to the PTAB created under
`the AIA. Congress retroactively made the APJs appointed
`by the Secretary of Commerce instead of by the Director
`of the Patent and Trade Office and included the defense
`that they were de facto officers. Patent and Trademark
`Administrative Judges Appointment Authority Revision,
`Pub.L. 110-313, sec. 1(a)(1)(B) and sec. 1(d), 122 Stat. 3014
`(2008) (codified as amended at 35 U.S.C. § 6(a) and (d)
`(2012)).
`
`However, this time the situation is much more dire
`and is beyond the attempted remedy by the Federal
`Circuit with another round of de facto officer defenses.
`After the passage of the AIA, unsurprisingly, the men of
`commerce cooked up a scheme to inject money into the
`judicial process, most notably by paying bonuses to APJs,
`with one APJ receiving a bonus as high as $41,800. https://
`www.federalpay.org/employees/patent-and-trademark-
`office/saindon-william-v. These bonuses are paid from
`
`
`
`3
`
`fees of approximately $41,500 per petition, which is paid
`by the party contesting a patent. https://www.uspto.gov/
`learning-and-resources/fees-and-payment/uspto-fee-
`schedule.
`
`In spite of the cost, petitioners are able to increase
`their odds by filing multiple petitions and paying multiple
`fees to kill patents previously issued to inventors,
`knowing that the “trial phase” fee for any petition not
`accepted by the PTAB is refunded back to the petitioner.
`Setting and Adjusting Patent Fees, Final Rule, 78 Fed.
`Reg. 4212, 4233-34 (Jan. 18, 2013); https://www.uspto.
`gov/sites/default/files/documents/PTAB%20E2E%20
`Frequently%20Asked%20Questions%20July%2011%20
`2016.pdf at page 13, Question E7. The fee fund is managed
`by the Patent and Trade Office. https://www.gao.gov/
`assets/660/658359.pdf at page numbered 2.
`
`The bonuses are approved by either the Chief Judge
`or the Vice Chief Judge of the PTAB itself. See https://
`usinventor.org/wp-content/uploads/2020/05/FOIA-F-
`19-00277-2019-11-04-APJ-PAPS.pdf, 1, pp. 2-47. The
`Director does not have the authority to approve or issue
`such bonuses:
`
`The Director may fix the rate of basic pay for
`the administrative patent judges appointed
`pursuant to section 6 and the administrative
`trademark judges appointed pursuant to section
`17 of the Trademark Act of 1946 (15 U.S.C.
`1067) at not greater than the rate of basic pay
`payable for level III of the Executive Schedule
`under section 5314 of title 5. The payment of a
`rate of basic pay under this paragraph shall not
`
`
`
`4
`
`be subject to the pay limitation under section
`5306(e) or 5373 of title 5.
`
`33 U.S.C.A section 3(b)(6).
`
`The PTO is a fee-funded agency that “operates like
`a business.” Setting and Adjusting Patent Fees During
`Fiscal Year 2017, 82 Fed. Reg. 52, 780 (Nov. 14, 2017).
`It is generally appropriated the full amount of revenue
`generated from AIA proceedings. https://fas.org/sgp/crs/
`misc/RS20906.pdf. Plus, the §42 of the AIA established
`a Patent and Trademark Fee Reserve Fund (“Reserve
`Fund”) in the Treasury. 35 U.S.C. § 42 (c)(2). The Reserve
`Fund is for fees “collected in excess of the appropriated
`amount.” Id. While the PTO is funded by the congressional
`appropriations process, the fees in the Reserve Fund
`are available only to the PTO. Id. U.S. Congressional
`Research Service. U.S. Patent and Trademark Office
`Appropriations Process: A Brief Explanation (RS20906
`Aug. 28, 2014), by Glenn J. McLoughlin. Text in https://
`fas.org/sgp/crs/misc/RS20906.pdf.
`
`Unlike many other agencies, the PTO sets its own fees,
`without congressional approval. The PTO sets AIA post-
`grant proceeding fees at whatever it deems a “reasonable”
`amount, taking into account “aggregate costs.” 35 U.S.C.
`§§ 311(a), 321(a).
`
`Big businesses have been taking advantage of a
`provision of the AIA that denies the right of patent owners
`to obtain judicial review of adverse USPTO decisions in
`ex parte patent reexaminations by civil action in district
`court – a right that has existed under 35 U.S.C. § 306
`and § 145 since the inception of reexamination in 1980.
`
`
`
`5
`
`Abolishing this right leaves direct appeal to the Federal
`Circuit as the only judicial recourse. This provision
`exacerbates ex parte reexamination abuses by creating an
`unprecedented end-run around Federal District Courts
`in practically all patent disputes. Alleged infringers
`simply file ex parte reexamination requests with USPTO
`and receive a final agency decision subject only to
`Federal Circuit review, essentially bypassing Federal
`courts. Large numbers of prospective/alleged infringers
`have chosen this favorable path to challenge a patent,
`overwhelming the USPTO, causing much lengthier delays
`in reexamination, and holding up patentees’ patent rights
`for years.
`
`Given the built-in economic incentives, the “Business
`Unit” of the USPTO, the PTAB, is more than willing
`to institute petitions because in so doing, it feeds the
`“business unit’s” budget. To keep this flow continuing, the
`PTAB has placed itself in a vice that favorable decisions
`for the petitioners must be in the majority or else new
`petitions – money flowing into the PTAB budget - will dry
`up and so too will APJ Bonuses.
`
`The results speak for themselves. After the AIA was
`implemented the tech companies went on a patent killing
`spree. Seventy-four percent of contested proceedings were
`brought by tech, internet and communications companies.
`https://www.ipwatchdog.com/2014/03/24/ptab-death-
`squads-are-all-commercially-viable-patents-invalid/
`id=48642. Since passage of the AIA, approximately
`2,925 patents have been subject to written opinions by
`the PTAB and 2,469 have been killed. https://usinventor.
`org/assessing-ptab-invalidity-rates/. Approximately 84%
`of the patents (not petitions) adjudicated in full have been
`
`
`
`6
`
`killed on appeal. https://usinventor.org/assessing-ptab-
`invalidity-rates/.
`
`Justice Gorsuch recognized the patent killing field at
`the Patent and Trial Appeals Board:
`
`Some say the new regime represents a
`particularly efficient new way to “kill” patents.
`Certainly, the numbers tell an inviting story
`for petitioners like Thryv. In approximately
`80% of cases reaching a final decision, the
`Board cancels some or all of the challenged
`claims. Patent Trial and Appeal Board, Trial
`Statistics 10 (Feb. 2020), https://www.uspto.
`gov/sites/default/files/documents/ Trial_
`Statistics_2020_02_29.pdf. The Board has been
`busy, too, instituting more than 800 of these new
`proceedings every year. See id., at 6.
`
`Thryv, Inc. v. Click-to-Call Technologies, LP, 140 S.Ct.
`1367, 1379 (2020) (Gorsuch, J., dissenting).
`
`Justice Gorsuch was prophetic in his dissent in Thryv,
`supra, wherein observed the underlying problems with
`the PTAB:
`
`The abdication of our judicial duty comes
`with a price. The Director of the Patent and
`Trademark Office is a political appointee. The
`AIA vests him with unreviewable authority to
`institute (or not) inter partes review. Nothing
`would prevent him, it seems, from insulating his
`favorite firms and industries from this process
`entirely. Those who are not so fortunate proceed
`
`
`
`7
`
`to an administrative “trial” before a panel of
`agency employees that the Director also has the
`means to control. The AIA gives the Director
`the power to select which employees, and how
`many of them, will hear any particular inter
`partes challenge. It also gives him the power to
`decide how much they are paid. And if a panel
`reaches a result he doesn’t like, the Director
`claims he may order rehearing before a new
`panel, of any size, and including even himself.
`
`No one can doubt that this regime favors
`those with political clout, the powerful and the
`popular. But what about those who lack the
`resources or means to influence and maybe even
`capture a politically guided agency?
`
`Thryv, 140 S.Ct. at 1388 (Gorsuch, J., dissenting).
`
`It is respectfully submitted that this Court affirm
`the Federal Circuit on the issue that the Patent Appeals
`Judges are principal officers appointed in violation of the
`Appointments Clause.
`
`ARGUMENT
`
`I. ADMINISTRATIVE PATENT JUDGES ARE
`PRINCIPAL OFFICERS
`
`The first question before this Court is “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 Office are principal officers who must
`be appointed by the President with the Senate’s advice
`
`
`
`8
`
`and consent, or “inferior Officers” whose appointment
`Congress has permissibly vested in a department head.
`
`The government itself has recognized that there is a
`“functional resemblance between inter partes review and
`litigation,” and that the Board uses “trial-type procedures
`in inter partes review.” 2017 WL 4805230 at *26, *31, Brief
`for the Federal Respondent as Amicus Curiae, Oil States
`Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138
`S. Ct. 1365 (2018).
`
`In Lucia v. SEC, 138 S.Ct. 2044, 2053-54 (2018), the
`Supreme Court held that SEC administrative law judges
`(“ALJs”) are inferior officers of the United States and not
`mere employees. Based on this status, the Court held that
`the process of appointing SEC ALJs was unconstitutional
`because the appointments were not done by a method
`approved in the Appointments Clause. The Appointments
`Clause requires inferior officers to be appointed by one of
`four methods: (1) by the President with advice and consent
`of the Senate; (2) by the President alone; (3) by the “courts
`of law”; or (4) by the “heads of departments.” Lucia, 138
`S.Ct. at 2051.
`
`In Edmond v. United States, 520 U.S. 651, 663 (1997),
`the Supreme Court held that “generally” inferior officers
`are those who are directed and supervised by others who
`have been appointed by the President with the advice and
`consent of the Senate. In view of Edmond, officers that
`issue final executive decisions, subject only to Presidential
`review, are likely to be considered principal officers.
`
`In Buckley v. Valeo, 424 U.S. 1, 125 (1976) (per
`curiam), superseded by statute as stated by McConnell
`
`
`
`9
`
`v. Federal Election Com’n, 540 U.S. 93 (2003), this court
`held the Appointments Clause of Article II is more
`than a matter of “etiquette or protocol”; it is among the
`significant structural safeguards of the constitutional
`scheme. By vesting the President with the exclusive power
`to select the principal (noninferior) officers of the United
`States, the Appointments Clause prevents congressional
`encroachment upon the Executive and Judicial Branches.
`See id., at 128-131; Weiss v. U.S., 510 U.S. 163, 183-85
`(Souter, J., concurring); Freytag v. Commissioner, 501
`U.S. 868, 904, and n.4 (1991)(Scalia, J., concurring).
`
`Two decisions set out this Court’s basic framework
`for distinguishing between officers and employees. U.S.
`v. Germaine, 99 U.S. 508 (1878), held that “civil surgeons”
`(doctors hired to perform various physical exams) were
`mere employees because their duties were “occasional or
`temporary” rather than “continuing and permanent.” Id.,
`at 511–512. Stressing “ideas of tenure [and] duration,”
`the Court there made clear that an individual must
`occupy a “continuing” position established by law to
`qualify as an officer. Id., at 511. Buckley then set out
`another requirement, central to this case. It determined
`that members of a federal commission were officers only
`after finding that they “exercis[ed] significant authority
`pursuant to the laws of the United States.” Buckley, 424
`U. S. at 126. The inquiry thus focused on the extent of
`power an individual wields in carrying out his assigned
`functions.
`
`In Freytag, the Court ruled that U.S. Tax Court
`“special trial judges” (STJs) were officers because
`they met the elements required under Germaine and
`Buckley, and because they had significant discretion
`
`
`
`10
`
`in addition to considerable responsibilities in presiding
`over administrative proceedings. These responsibilities
`included “tak[ing] testimony, conduct[ing] trials, rul[ing]
`on the admissibility of evidence, and hav[ing] the power
`to enforce compliance with discovery orders.” Freytag,
`501 U.S. at 881-82. The Court reasoned that the SEC’s
`ALJs in Lucia, like the STJs in Freytag, held a continuing
`office established by law, and exercised the same degree
`of discretion when carrying out the same functions as the
`STJs. Lucia, 138 S.Ct. at 2053. But in contrast with the
`Tax Court STJs, whose decisions were always required
`to be reviewed by a regular Tax Court judge, the SEC
`ALJs’ decisions were not always subject to review; if
`the SEC decided against review then the ALJ’s decision
`would become final and be “deemed the action of the
`Commission.” Lucia, 138 S.Ct. at 2049, 2053. As such,
`the SEC ALJs were officers of the United States subject
`to the Appointments Clause.” Lucia, 138 S.Ct. at 2055.
`
`While the PTAB has replaced the BPAI in the AIA,
`the process of appointing PTAB APJs remains unchanged.
`And “[a]ny reference in any Federal law, Executive
`order, rule, regulation, or delegation of authority, or any
`document pertaining to the Board of Patent Appeals and
`Interferences is deemed to refer to the Patent Trial and
`Appeal Board.” 35 U.S.C. § 6 (a) (2012).
`
`The federal agency’s “determination . . . whether to
`institute an inter partes review under this section” is
`“final and nonappealable.” 35 U. S. C. §314(d). The Board’s
`patentability decisions are final, subject only to rehearing
`by the Board or appeal to the U.S. Court of Appeals to
`the Federal Circuit. See 35 U.S.C. §§ 6(c), 141(c), 319.
`Like the special trial judges (“STJs”) of the Tax Court in
`
`
`
`11
`
`Freytag, who “take testimony, conduct trials, rule on the
`admissibility of evidence, and have the power to enforce
`compliance with discovery orders,” 501 U.S. at 881– 82,
`and the SEC Administrative Law Judges in Lucia, who
`have “equivalent duties and powers as STJs in conducting
`adversarial inquiries,” 138 S. Ct. at 2053, the APJs of the
`USPTO exercise significant authority rendering them
`Officers of the United States.
`
`In light of the Lucia, Edmond, Germaine, Buckley
`and Freytag decisions, and more importantly, because
`of the power the PTAB APJs exert, PTAB APJs are
`principal officers. Because of the Appointments Clause,
`U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges
`of the U.S. Patent and Trademark Office are principal
`officers who must be appointed by the President with the
`Senate’s advice and consent and should be appointed for
`life with fixed salaries increasing over time.
`
`II. SEVERA NCE WILL NOT REMEDY DUE
`PROCESS VIOLATIONS
`
`A. AIA Shenanigans Discussed
`
`Of all the professions we should protect, it is our
`inventors and writers. Our founding fathers recognized
`the importance of inventors and writers to the American
`economic future by providing for a system to protect their
`rights in Article I, section 8 of the Constitution, which
`provides in pertinent part:
`
`The Congress shall have Power . . .;
`To promote the Progress of Science and useful
`Arts, by securing for limited Times to Authors
`
`
`
`12
`
`and Inventors the exclusive Right to their
`respective Writings and Discoveries;
`To constitute Tribunals inferior to the supreme
`Court; . . .
`
`Article I, section 8 United States Constitution; emphasis
`added.
`
`Interestingly, the power g ranted Cong ress
`immediately following the patent provision is the power of
`Congress to establish inferior tribunals. These provisions
`are at the heart of this case.
`
`This Court has shown admirable restraint to allow
`Congress to establish inferior tribunals. In Oil States
`Energy Servs., LLC, supra, this Court observed that due
`process claims remain viable for judicial review in stating:
`
`We emphasize the narrowness of our holding.
`We address the constitutionality of inter partes
`review only. We do not address whether other
`patent matters, such as infringement actions,
`can be heard in a non-Article III forum. And
`because the Patent Act provides for judicial
`review by the Federal Circuit, see 35 U.S.C.
`§ 319, we need not consider whether inter
`partes review would be constitutional “without
`any sort of intervention by a court at any
`stage of the proceedings,” Atlas Roofing Co.
`v. Occupational Safety and Health Review
`Comm’n, 430 U.S. 442, 455, n. 13, 97 S.Ct. 1261,
`51 L.Ed.2d 464 (1977). Moreover, we address
`only the precise constitutional challenges that
`Oil States raised here. Oil States does not
`
`
`
`13
`
`challenge the retroactive application of inter
`partes review, even though that procedure was
`not in place when its patent issued. Nor has Oil
`States raised a due process challenge. Finally,
`our decision should not be misconstrued as
`suggesting that patents are not property for
`purposes of the Due Process Clause or the
`Takings Clause. See, e.g., Florida Prepaid
`Postsecondary Ed. Expense Bd. v. College
`Savings Bank, 527 U.S. 627, 642, 119 S.Ct. 2199,
`144 L.Ed.2d 575 (1999); James v. Campbell, 104
`U.S. 356, 358, 26 L.Ed. 786 (1882).
`
`Oil States, 138 S.Ct. at 1379.
`
`In Cuozzo, supra, Justice Breyer for the majority and
`Justices Alito and Sotomayor in the concurrence/dissent,
`recognized the Court should intervene when necessary to
`preserve due process/constitutional rights regarding the
`AIA. Cuozzo, supra, 136 S.Ct. at 2141.
`
`In Oil States, supra, Justice Gorsuch, joined by Chief
`Justice Roberts, raised due process concerns, as follows:
`
`After much hard work and no little investment
`you devise something you think truly novel.
`Then you endure the further cost and effort of
`applying for a patent, devoting maybe $30,000
`and two years to that process alone. At the end
`of it all, the Patent Office agrees your invention
`is novel and issues a patent. The patent affords
`you exclusive rights to the fruits of your labor
`for two decades. But what happens if someone
`later emerges from the woodwork, arguing
`
`
`
`14
`
`that it was all a mistake and your patent
`should be canceled? Can a political appointee
`and his administrative agents, instead of an
`independent judge, resolve the dispute? The
`Court says yes. Respectfully, I disagree.
`
`We sometimes take it for granted today that
`independent judges will hear our cases and
`controversies. But it wasn’t always so. Before
`the Revolution, colonial judges depended on
`the crown for their tenure and salary and
`often enough their decisions followed their
`interests. The problem was so serious that
`the founders cited it in their Declaration of
`Independence (see ¶ 11). Once free, the framers
`went to great lengths to guarantee a degree of
`judicial independence for future generations
`that they themselves had not experienced.
`Under the Constitution, judges “hold their
`Offices during good Behaviour” and their
`“Compensation ... shall not be diminished
`during the[ir] Continuance in Office.” Art. III,
`§ 1. The framers knew that “a fixed provision”
`for judges’ financial support would help secure
`“the independence of the judges,” because “a
`power over a man’s subsistence amounts to a
`power over his will.” The Federalist No. 79,
`p. 472 (C. Rossiter ed. 1961) (A. Hamilton)
`(emphasis deleted). They were convinced,
`too, that “[p]eriodical appointments, however
`regulated, or by whomsoever made, would,
`in some way or other, be fatal to [the courts’]
`necessary independence.” The Federalist No.
`78, at 471 (A. Hamilton).
`
`
`
`15
`
`Today, the government invites us to retreat
`from the promise of judicial independence.
`Until recently, most everyone considered an
`issued patent a personal right—no less than
`a home or farm—that the federal government
`could revoke only with the concurrence of
`independent judges. But in the statute before
`us Congress has tapped an executive agency,
`the Patent Trial and Appeal Board, for the job.
`Supporters say this is a good thing because
`the Patent Office issues too many low quality
`patents; allowing a subdivision of that office to
`clean up problems after the fact, they assure
`us, promises an efficient solution. And, no doubt,
`dispensing with constitutionally prescribed
`procedures is often expedient. Whether it is
`the guarantee of a warrant before a search, a
`jury trial before a conviction—or, yes, a judicial
`hearing before a property interest is stripped
`away—the Constitution’s constraints can slow
`things down. But economy supplies no license
`for ignoring these—often vitally inefficient—
`protections. The Constitution “reflects a
`judgment by the American people that the
`benefits of its restrictions on the Government
`outweigh the costs,” and it is not our place to
`replace that judgment with our own. United
`States v. Stevens, 559 U.S. 460, 470, 130 S.Ct.
`1577, 176 L.Ed.2d 435 (2010).
`
`Oil States Energy Services, supra 138 S.Ct. 1380
`(Gorsuch, J., dissenting).
`
`
`
`16
`
`B. Patent Trial Appeals Board Bias
`
`Justices Gorsuch and Chief Justice Roberts recognized
`the political bias of the Director and his/her ability to stack
`the deck with biased judges, as follows:
`
`Consider just how efficient the statute before
`us is. The Director of the Patent Office is a
`political appointee who serves at the pleasure
`of the President. 1381 35 U.S.C. §§ 3(a)(1), (a)
`(4). He supervises and pays the Board members
`responsible for deciding patent disputes. §§ 1(a),
`3(b)(6), 6(a). The Director is allowed to select
`which of these members, and how many of them,
`will hear any particular patent challenge. See
`§ 6(c). If they (somehow) reach a result he does
`not like, the Director can add more members
`to the panel—including himself—and order the
`case reheard. See §§ 6(a), (c); In re Alappat, 33
`F.3d 1526, 1535 (C.A.Fed.1994) (en banc); Nidec
`Motor Corp. v. Zhongshan Broad Ocean Motor
`Co. Ltd., 868 F.3d 1013, 1020 (C.A.Fed.2017)
`(Dyk, J., concurring), cert. pending, No. 17–751.
`Nor has the Director proven bashful about
`asserting these statutory powers to secure
`the “ ‘policy judgments’ ” he seeks. Brief for
`Petitioner 46 (quoting Patent Office Solicitor);
`see also Brief for Shire Pharmaceuticals LLC
`as Amicus Curiae 22–30.
`
`Oil States Energy Services, supra 138 S.Ct. 1380-1381
`(Gorsuch, J., dissenting).
`
`
`
`17
`
`The Director and named defendant in Cuozzo,
`supra, Michelle K. Lee, served as Under Secretary of
`Commerce for Intellectual Property and as Director,
`Patent and Trademark Office form 2014-2017 during the
`tech patent killing spree and resultant bonus increases.
`Lee was deputy general counsel and head of patents and
`patent strategy at Google from 2003 to 2012. https://
`www.linkedin.com/in/mlee95070; https://www.uspto.gov/
`about-us/executive-biographies/michelle-k-lee. Lee is
`now the vice president of Amazon Web Services. https://
`en.wikipedia.org/wiki/Michelle_K._Lee.
`
`From 2014-2018 Google alone filed 263 IPR
`petitions, killing 108 patents, losing 14, giving it an
`89% chance of success at the PTAB. https://portal.
`unifiedpatents.com/ptab/caselist?petitioners=Google+
`LLC&sort=-filing_date; https://portal.unifiedpatents.
`com/ptab/caselist?filing_date=2012-09-01--2018-12-
`31&petitioners=Google+LLC&sort=-filing_date&up_
`status=Terminated&up _substatus=Final+Writte
`n+Decision; and https://portal.unifiedpatents.com/
`ptab/caselist?f iling _date=2 012 - 09 - 01- -2 018 -12 -
`31&petitioners=Google+LLC&sort=-filing_date&up_
`status=Terminated&up_substatus=Adverse+Judgment.
`Plus, it was refunded for 138 cases that were either forced
`to settle or was a multiple petition in which one petition
`was accepted by the PTAB.
`
`The bonuses paid to 139 Patent Appeals Judges from
`the filing fees peaked in 2016 at $3,118,302. Although
`the average per PTAB Judge is $22,433.82, the reality
`is that only 48 Judges were paid in excess of $30,000,
`while one judge made $41,800. https://www.federalpay.
`org/employees/patent-and-trademark-office/saindon-
`william-v.
`
`
`
`18
`
`Justice Gorsuch and Chief Justice Roberts r
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