`
`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.,
`Respondents.
`SMITH & NEPHEW, INC., et al.,
`Petitioners,
`
`v.
`ARTHREX, INC., et al.,
`Respondents.
`
`ARTHREX, INC.,
`
`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 AMICI CURIAE ACUSHNET
`AND CLEVELAND GOLF IN SUPPORT OF
`PETITIONERS IN NOS. 19-1434 AND 19-1452
`--------------------------------- ♦ ---------------------------------
`PETER J. BRANN
`(Counsel of Record)
`DAVID SWETNAM-BURLAND
`STACY O. STITHAM
`BRANN & ISAACSON
`184 Main St., P.O. Box 3070
`Lewiston, ME 04243-3070
`(207) 786-3566
`pbrann@brannlaw.com
`Attorneys for Amici Curiae
`================================================================================================================
`COCKLE LEGAL BRIEFS (800) 225-6964
`WWW.COCKLELEGALBRIEFS.COM
`
`
`
`
`
`i
`
`TABLE OF CONTENTS
`
`Page
`Interest of Amici Curiae ......................................
`1
`Summary of Argument ........................................
`3
`Argument .............................................................
`5
`The PTAB Conducts Specialized Agency Pro-
`ceedings Subject to Substantial Constraints
`that Improve Patent Quality and Limit Unnec-
`essary and Counterproductive Litigation ........
` A. The PTAB Conducts Specialized Agency
`Proceedings Subject to Substantial Con-
`straint by the USPTO Director .................
` B. The PTAB Resolves Matters More Effi-
`ciently, Economically, and Effectively than
`Federal Patent Litigation .......................... 10
` C. The PTAB Shares Features with Many
`Other Federal Government Boards and Ad-
`judicators, and so the Decision Here Could
`Have Major Implications ............................ 18
`Conclusion ............................................................ 20
`
`
`5
`
`5
`
`
`
`ii
`
`TABLE OF AUTHORITIES
`
`Page
`
`CASES
`Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131
`(2016) ................................................................. 6, 7, 8
`In re Global Holdings, LLC, 927 F.3d 1373 (Fed.
`Cir. 2019) ................................................................... 9
`Mathews v. Eldridge, 424 U.S. 319 (1976) .................. 18
`Oil States Energy Servs., LLC v. Greene’s Energy
`Grp., LLC, 138 S. Ct. 1365 (2018) ............................. 9
`SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348
`(2018) ......................................................................... 7
`Thryv, Inc v. Click-to-Call Techs., LP, 140 S. Ct.
`1367 (2020) ...................................................... 5, 6, 10
`Uniloc 2017 LLC v. Hulu, LLC, 966 F.3d 1295
`(Fed. Cir. 2020) .......................................................... 9
`
`
`STATUTES
`5 U.S.C. §§ 554-557 ..................................................... 18
`35 U.S.C. § 2(a)(1) ......................................................... 5
`35 U.S.C. § 3(a)(1) ..................................................... 5, 7
`35 U.S.C. § 3(b)(1) ......................................................... 7
`35 U.S.C. § 3(b)(2)(A) .................................................... 7
`35 U.S.C. § 6(a) .......................................................... 7, 8
`35 U.S.C. § 6(c) .......................................................... 7, 8
`35 U.S.C. § 102 .............................................................. 6
`35 U.S.C. § 103 .............................................................. 6
`
`
`
`iii
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`35 U.S.C. § 111(a) .......................................................... 6
`35 U.S.C. § 131 .............................................................. 6
`35 U.S.C. § 134 .............................................................. 6
`35 U.S.C. § 311(a) .......................................................... 6
`35 U.S.C. § 311(b) .......................................................... 6
`35 U.S.C. § 311(c) .......................................................... 6
`35 U.S.C. § 314(d) .......................................................... 6
`35 U.S.C. § 315(b) .......................................................... 6
`35 U.S.C. § 316(a)(5) ..................................................... 7
`35 U.S.C. § 316(a)(10) ................................................... 8
`35 U.S.C. § 316(a)(11) ............................................. 7, 12
`35 U.S.C. § 317(a) .......................................................... 8
`35 U.S.C. § 318(a) .......................................................... 8
`35 U.S.C. § 318(b) .......................................................... 9
`35 U.S.C. § 319 .............................................................. 9
`Leahy-Smith America Invents Act (AIA), Pub. L.
`No. 112-29, 125 Stat. 284 (2011) ............................... 5
`
`
`RULES
`37 C.F.R. § 42.51 ........................................................... 7
`37 C.F.R. § 42.70(a) ....................................................... 8
`37 C.F.R. § 42.71(d) ....................................................... 8
`37 C.F.R. § 42.108(c) ..................................................... 6
`
`
`
`iv
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`
`Patent Trial and Appeal Board, Standard Oper-
`ating Procedure 1 (Rev. 15), § III.M (expanded
`panels) (available at https://www.uspto.gov/
`sites/default/files/documents/SOP%201%20R15
`%20FINAL.pdf) ......................................................... 8
`Patent Trial and Appeal Board, Standard Oper-
`ating Procedure 2 (Rev. 10), § II.B (available
`at https://www.uspto.gov/sites/default/files/
`documents/SOP2%20R10%20FINAL.pdf) ............... 9
`Patent Trial and Appeal Board, Standard Oper-
`ating Procedure 2 § II.C (available at https://
`www.uspto.gov/sites/default/files/documents/
`SOP2%20R10%20FINAL.pdf) .................................. 9
`S. Ct. R. 37.2(a) ............................................................. 1
`S. Ct. R. 37.6 .................................................................. 1
`
`MISCELLANEOUS
`America Invents Act Blog, Federal Circuit PTAB
`Appeal Statistics Through April 30, 2020 (May
`29, 2020) (available at https://www.finnegan.
`com/en/insights/blogs/america-invents-act/
`federal-circuit-ptab-appeal-statistics-through-
`april-30-2020.html) ................................................. 17
`American Intellectual Property Law Associa-
`tion, 2019 Report of the Economic Survey ............. 13
`Henry J. Friendly, Some Kind of Hearing, 123 U.
`Pa. L. Rev. 1267 (1975) ............................................ 18
`
`
`
`v
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`
`Kent Barnett and Russell Wheeler, Non-ALJ
`Adjudicators in Federal Agencies: Status, Se-
`lection, Oversight, and Removal, 53 Ga. L. Rev.
`1 (2018) .................................................................... 19
`M. Andrew Holtman, et al., Explain Yourself:
`Federal Circuit Review of PTAB Decisions un-
`der the APA, 18 Chi.-Kent J. Intell. Prop. 142
`(2019) ......................................................................... 7
`Michael Frakes and Melissa Waterman, Patent
`Trial and Appeal Board Consistency-Enhanc-
`ing Function, 104 Iowa L. Rev. 2417 (2019) ........... 17
`Patent Office, Appeal and Interference Statistics
`(Oct. 31, 2020) (available at https://www.
`uspto.gov/sites/default/files/documents/appeal_
`and_interference_statistics_oct2020.pdf) ......... 10, 11
`Patent Office, Trial Statistics: IPR, PGR, CBM
`(Sept. 2020)
`(available at https://www.
`uspto.gov/sites/default/files/documents/trial_
`statistics_20200930.pdf ) ......................................... 11
`Patent Office, U.S. Patent Statistics Chart: Cal-
`endar Years 1963-2019 (available at https://
`www.uspto.gov/web/offices/ac/ido/oeip/taf/us_
`stat.htm) .................................................................. 12
`Patent Office, USPTO Recognizes Patents on
`Golf-Related Inventions as Masters Tourna-
`ment Opens (Apr. 24, 2002) (available at
`https://www.uspto.gov/about-us/news-updates/
`uspto-recognizes-patents-golf-related-inventions-
`masters-tournament-opens) ..................................... 2
`
`
`
`vi
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`
`PwC, Patent Litigation Survey (May 2018)
`(available at https://www.pwc.com/us/en/services/
`forensics/library/patent-litigation-study.html) ...... 12
`Rachel C. Hughey & Joseph W. Dubis, Navi-
`gating Post–Grant Proceedings: What Two
`Years of Federal Circuit Decisions and the Su-
`preme Court’s Cuozzo Decision Tell Us About
`Post–Grant Proceedings Before the PTAB, 64–
`FEB Fed. Law 70 (Jan./Feb. 2017) .......................... 16
`Robert P. Merges, As Many as Six Impossible Pa-
`tents Before Breakfast: Property Rights for
`Business Concepts and Patent System Reform,
`14 Berkeley Tech. L.J. 577 (1999) ............................ 16
`Rochelle Cooper Dreyfuss, Nonobviousness: A
`Comment on Three Learned Papers, 12 Lewis
`& Clark L. Rev. 431 (2008) ...................................... 15
`Sean B. Seymore, Patent Asymmetries, 49 U.C.
`Davis L. Rev. 963 (Feb. 2016) .................................. 14
`Shawn P. Miller, Where’s the Innovation: An
`Analysis of the Quantity and Qualities of An-
`ticipated and Obvious Patents, 18 Va. J.L. &
`Tech. 1 (Fall 2013) ................................................... 16
`Stephen Yelderman, The Value of Accuracy in the
`Patent System, 84 U. Chi. L. Rev. 1217 (2017) ......... 14
`U.S. Gov’t Accountability Off., GAO-16-883T, Pa-
`tent Office Has Opportunities to Further Im-
`prove Application Review and Patent Quality
`(2016) (available at http://www.gao.gov/assets/
`680/679830.pdf) ....................................................... 15
`
`
`
`1
`
`INTEREST OF AMICI CURIAE*
`Two of America’s most prominent golf equipment
`
`manufacturers, Acushnet Company, and Roger Cleve-
`land Golf Company, Inc., submit this amicus curiae
`brief in support of a simple proposition—the congres-
`sional legislation “designed to establish a more effi-
`cient and streamlined patent system that will improve
`patent quality and limit unnecessary and counterpro-
`ductive litigation costs” works. A critical component of
`this more efficient and streamlined patent system is
`the United States Patent and Trademark Office
`(USPTO or Patent Office) Patent Trial and Appeal
`Board (PTAB or Board).
`
`Amici collectively have obtained thousands of pa-
`
`tents that are critical building blocks undergirding
`their varied businesses. The Patent Office has high-
`lighted the numerous patents underlying every aspect
`of a game of golf:
`
`Golf is one of America’s most popular sports,
`and those who play it for fun or for fortune
`spend countless hours of time and money try-
`ing to improve their games. The thousands of
`patents on golf-related
`inventions are
`
`
`* Pursuant to S. Ct. R. 37.6, counsel for amici curiae repre-
`
`sent that they authored this brief in its entirety and that none of
`the parties or their counsel, nor any other person or entity other
`than the amici curiae or their counsel, made a monetary contri-
`bution intended to fund the preparation or submission of this
`brief. Pursuant to S. Ct. R. 37.2(a), counsel represent that all par-
`ties have given blanket consent to the filing of amicus curiae
`briefs in support of petitioners, respondents, or neither party, all
`of which have been docketed by the Clerk.
`
`
`
`2
`
`testament to that. In the past five years alone,
`more than 8,000 patents have been granted
`on golf-related equipment and gadgets. More
`than 1,400 of these are associated with golf
`clubs. . . . Nearly 1,000 more patents are re-
`lated to golf balls. . . .
`
`Patent Office, USPTO Recognizes Patents on Golf-
`Related Inventions as Masters Tournament Opens (Apr.
`24, 2002) (available at https://www.uspto.gov/about-
`us/news-updates/uspto-recognizes-patents-golf-related-
`inventions-masters-tournament-opens) (ellipses added).
`
`Although this case concerns the role of the Board
`
`in reviewing previously-issued patents, the bulk of the
`Board’s caseload constitutes appeals from the refusal
`of patent examiners to grant patent applications. Like
`many would-be inventors, on occasion Amici have had
`their patent applications rejected, and Amici have ap-
`pealed those rejections to the Board. The ability to ap-
`peal patent rejections to the Board is important to
`Amici and to a fully functioning patent system.
`
`In addition to knowing the value of obtaining pa-
`
`tents to protect important innovations, Amici also
`know the cost of defending against baseless assertions
`of infringement of patents that should never have been
`issued in the first place. They are frequent targets of
`resource-draining, “hold-up” patent litigation by non-
`practicing entities seeking settlements that cost sub-
`stantially less than invalidating low-grade patents in
`federal court.
`
`
`
`3
`
`Thus, Amici also have filed petitions seeking less
`
`expensive inter partes review (IPR) by the Board of
`previously-issued patents. Amici have found first-hand
`that the IPR process succeeds in its purpose to cancel
`weak and invalid patents expeditiously and economi-
`cally. Amici seek to bring this experience and perspec-
`tive to the Court in this case.
`
`--------------------------------- ♦ ---------------------------------
`
`SUMMARY OF ARGUMENT
`Amici submit this brief to make three points. First,
`
`the Court correctly characterized the Board proceed-
`ings as akin to specialized agency proceedings, as op-
`posed to conventional
`litigation. The Board
`is
`composed of individuals with technical expertise and
`experience who take a second look at patent rejections
`and grants by patent examiners. Under the governing
`statutes and regulations, the Board’s actions are
`closely cabined and subject to considerable constraints
`by the USPTO Director.
`
`Second, the Board resolves matters more expedi-
`
`tiously, economically, and effectively than federal court
`litigation. Contrary to the caricature of critics, the
`Board is not a “death squad” intent on killing pa-
`tents—today, it often declines to initiate an IPR. Fur-
`thermore, in over one-third of the appeals from patent
`rejections, it overturns the rejection, while in over 20%
`of the IPRs, it affirms the challenged patent claims.
`And the Board reaches its nuanced decisions in much
`less time than a federal lawsuit—usually about a
`
`
`
`4
`
`year—and at much less cost than a federal lawsuit—a
`few hundred thousand, instead of millions, of dollars.
`
`But the acid test is whether the Board resolves
`
`these matters correctly. Here, the evidence supports
`the conclusion that it does. The Board’s decisions are
`affirmed, often summarily, by the Federal Circuit
`about 80% of the time. Also, a recent study of nearly 4
`million patent applications concluded that the Board’s
`decisions are also contributing to greater uniformity
`and consistency among patent examiners. The Board
`is making good on the promise to improve patent qual-
`ity.
`
`Third, the arguments in this case possibly extend
`
`far beyond the fate of the Patent Trial and Appeal
`Board. There are over 10,000 people scattered across
`27 agencies in the federal government who conduct ad-
`judications that share characteristics with the Board
`proceedings. This includes over 8,000 patent examin-
`ers who make the initial decision whether to grant or
`reject a patent application. There could be serious
`collateral damage if the Court strikes down this spe-
`cialized agency proceeding that, to repeat, works expe-
`ditiously, economically, and effectively.
`
`--------------------------------- ♦ ---------------------------------
`
`
`
`
`
`
`
`
`5
`
`ARGUMENT
`The PTAB Conducts Specialized Agency Pro-
`ceedings Subject to Substantial Constraints
`that Improve Patent Quality and Limit Unnec-
`essary and Counterproductive Litigation.
`
`The Patent Trial and Appeal Board was created by
`the Leahy-Smith America Invents Act (AIA), Pub. L.
`No. 112-29, 125 Stat. 284 (2011). “The legislation is de-
`signed to establish a more efficient and streamlined
`patent system that will improve patent quality and
`limit unnecessary and counterproductive litigation
`costs.” Thryv, Inc v. Click-to-Call Techs., LP, 140 S. Ct.
`1367, 1374 (2020) (quoting H.R. Rep. No. 112–98, pt. 1
`at 40). Before turning to whether the Board accom-
`plishes that objective, we consider the Board’s struc-
`ture and procedures and the constraints within which
`it operates.
`
`
`A. The PTAB Conducts Specialized Agency
`Proceedings Subject to Substantial Con-
`straint by the USPTO Director.
`The USPTO, “subject to the policy direction of the
`
`Secretary of Commerce” (Secretary), “is responsible for
`the granting and issuing of patents.” 35 U.S.C.
`§ 2(a)(1). The “powers and duties” of the USPTO are
`“vested” in the Director of the USPTO, “who shall be
`appointed by the President, by and with the advice and
`consent of the Senate.” Id. § 3(a)(1). “The Director shall
`be a person who has a professional background and ex-
`perience in patent or trademark law.” Id.
`
`
`
`6
`
`“An inventor obtains a patent by applying to the
`
`Patent Office.” Cuozzo Speed Techs., LLC v. Lee, 136
`S. Ct. 2131, 2136 (2016); see 35 U.S.C. § 111(a). “A pa-
`tent examiner with expertise in the relevant field re-
`views an applicant’s patent claims, considers the prior
`art, and determines whether each claim meets the ap-
`plicable patent law requirements.” Cuozzo, 136 S. Ct.
`at 2136-37 (citations omitted); see 35 U.S.C. § 131.
`
`If the patent application is finally rejected by the
`
`patent examiner, i.e., the Patent Office, the disap-
`pointed applicant can appeal to the Board. 35 U.S.C.
`§ 134. If, on the other hand, the patent is issued, any
`“person who is not the owner of a patent” may file a
`petition seeking inter partes review by the Board of the
`patent’s validity. Id. § 311(a). The petition generally
`must be filed at least nine months after the patent is-
`sued, id. § 311(c), but within a year after the petitioner
`has been sued for infringement by the patent owner.
`Id. § 315(b); see also Thryv, 140 S. Ct. at 1370 (Direc-
`tor’s determination of timeliness is final and nonap-
`pealable). The petitioner may only challenge the
`patent’s validity on the grounds of novelty and obvi-
`ousness and then “only on the basis of prior art consist-
`ing of patents or printed publications.” 35 U.S.C.
`§ 311(b); see id. §§ 102, 103. The Director has discretion
`whether to institute inter partes review, see Cuozzo,
`136 S. Ct. at 2140; cf. 37 C.F.R. § 42.108(c) (Director
`delegated discretion to Board), and the Director’s deci-
`sion is “final and nonappealable.” 35 U.S.C. § 314(d).
`
`For any administrative appeal from a patent rejec-
`
`tion, and any derivation proceeding, post-grant review
`
`
`
`7
`
`(PGR), covered business method review (CBM), or IPR,
`the matter is considered by the three members of the
`Board, who are designated by the Director. Id. § 6(c).
`As established by Congress, id. § 6(a), the Board con-
`sists of the Director; the Deputy Director (appointed by
`the Secretary, id. § 3(b)(1)); the Commissioners of Pa-
`tent and Trademarks (appointed by the Secretary, id.
`§ 3(b)(2)(A)); and administrative patent judges (APJs)
`(appointed by the Secretary, in consultation with the
`Director, id. § 6(a)). Each Board member is required to
`have specialized expertise and experience. See id.
`§§ 3(a)(1), 3(b)(1), 3(b)(2)(A), 6(a). In other words, tech-
`nocrats within the agency chosen by the Director con-
`duct a second review of a patent examiner’s decision to
`reject or grant a patent.
`
`Although the Court has said that Board review
`
`“mimics civil litigation,” SAS Institute, Inc. v. Iancu,
`138 S. Ct. 1348, 1352 (2018), in “significant respects,
`inter partes review is less like a judicial proceeding and
`more like a specialized agency proceeding.” Cuozzo,
`136 S. Ct. at 2143. The Board generally must complete
`its review within a year, although it may extend that
`deadline for six months for good cause. 35 U.S.C.
`§ 316(a)(11). Although the statute allows for some dis-
`covery, see id. § 316(a)(5); 37 C.F.R. § 42.51, in actuality,
`very little discovery occurs because the petitioner has
`already submitted the prior art it wants to rely upon.
`See M. Andrew Holtman, et al., Explain Yourself: Fed-
`eral Circuit Review of PTAB Decisions under the APA,
`18 Chi.-Kent J. Intell. Prop. 142, 144 (2019). Similarly,
`although these proceedings occur before the Patent
`
`
`
`8
`
`Trial and Appeals Board, see 35 U.S.C. § 6(a), in actu-
`ality, the parties receive at most an oral argument fol-
`lowing written submissions. Id. § 316(a)(10); 37 C.F.R.
`§ 42.70(a). In short, the “trial” before the Board in an
`IPR largely consists of written arguments concerning
`the written prior art that the patent examiner alleg-
`edly should have considered in the first place before
`deciding whether to grant the challenged patent. See
`also Cuozzo, 136 S. Ct. at 2144 (“The name and accom-
`panying procedures suggest that the proceeding offers
`a second look at an earlier administrative grant of a
`patent.”).
`
`If the petitioner drops out of the proceeding with-
`
`out a written settlement, either before the Board or on
`appeal, the Patent Office, under the direction of the Di-
`rector, may continue the inter partes review or appeal.
`35 U.S.C. § 317(a). Stated differently, the Director can
`not only designate the Board members, which could in-
`clude the Director, but can decide in certain circum-
`stances whether to pursue the IPR before that
`designated Board.
`
`After the Board issues its written decision con-
`
`cerning the patentability of any challenged claim, id.
`§ 318(a), any dissatisfied party can seek rehearing. Id.
`§ 6(c); 37 C.F.R. § 42.71(d). Although it may raise other
`issues in another case, for purposes of the Appoint-
`ments Clause in this case, it should be noted that the
`Director can expand the size of the Board to rehear the
`challenge. See PTAB, Standard Operating Procedure 1
`(Rev. 15), § III.M (expanded panels) (available at
`https://www.uspto.gov/sites/default/files/documents/SOP
`
`
`
`9
`
`%201%20R15%20FINAL.pdf ); cf. Oil States Energy
`Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct.
`1365, 1381 (2018) (Gorsuch, J., dissenting) (“If they
`(somehow) reach a result he does not like, the Director
`can add more members to the panel—including him-
`self—and order the case reheard.”). The Director also
`has created a three-member Precedential Opinion
`Panel (Panel), which includes the Director or designee,
`see PTAB, Standard Operating Procedure 2 (Rev. 10),
`§ II.B (available at https://www.uspto.gov/sites/default/
`files/documents/SOP2%20R10%20FINAL.pdf), and
`the Director has discretion to convene the Panel to de-
`termine if a PTAB opinion should be designated as
`precedential governing future Board proceedings. Id.
`§ II.C.
`
`Finally, PTAB decisions are not self-executing.
`
`Once the time to appeal has expired, or an appeal has
`been “terminated,” the Director will issue a certificate
`cancelling or confirming the patent’s claims in accord-
`ance with the unappealed PTAB decision or the Fed-
`eral Circuit ruling. 35 U.S.C. § 318(b). If an appeal is
`filed, id. § 319, the Federal Circuit reviews the Board’s
`legal conclusions de novo and its factual findings for
`substantial evidence. See In re Global Holdings, LLC,
`927 F.3d 1373, 1376 (Fed. Cir. 2019) (appeal following
`Board affirmance of patent rejection); Uniloc 2017 LLC
`v. Hulu, LLC, 966 F.3d 1295, 1300 (Fed. Cir. 2020) (ap-
`peal following IPR). We agree, therefore, with the
`United States and other petitioners that given these
`numerous constraints, Board members should be con-
`sidered “inferior officers” under the Appointments
`
`
`
`10
`
`Clause. We turn our focus to the efficacy of this system,
`the structure of which has well served the purpose for
`its creation.
`
`
`B. The PTAB Resolves Matters More Effi-
`ciently, Economically, and Effectively than
`Federal Patent Litigation.
`Statistics support the conclusion that the PTAB
`
`actually does accomplish the stated goal of “a more ef-
`ficient and streamlined patent system that will im-
`prove patent quality and limit unnecessary and
`counterproductive litigation costs.” Thryv, 140 S. Ct. at
`1374 (quotation omitted). We consider first the statis-
`tics concerning the number and outcome of Board pro-
`ceedings; then compare the efficiency and cost of Board
`proceedings to federal patent litigation; and finally,
`consider the evidence that the Board not only is cor-
`rectly resolving these matters, but its actions are im-
`proving patent quality.
`
`PTAB Statistics. The vast majority of matters
`
`before the Board are appeals of patent rejections. Since
`the Board began operation in 2012, the number of
`pending appeals each year has ranged from a high of
`25,527 in FY 2014 to a low of 7,506 in FY 2020, with
`an annual average of 15,044. See Patent Office, Appeal
`and Interference Statistics, at 3 (Oct. 31, 2020) (availa-
`ble at https://www.uspto.gov/sites/default/files/documents/
`appeal_and_interference_statistics_oct2020.pdf ). Cur-
`rently, the PTAB decides the average appeal 13.4
`months after filing. Id. at 4. In terms of results, the
`
`
`
`11
`
`Board currently reverses the examiner’s rejections in
`34.6% of the appeals, affirms the examiner in 53.5% of
`the appeals, and reaches a mixed or other outcome in
`the remaining appeals. Id. at 6. With over one-third of
`patent rejection appeals succeeding, the PTAB is
`scarcely the “death squad” portrayed by some critics.
`
`Since it began operation in 2012, the Board has
`
`considered 12,147 matters involving some form of post-
`grant proceedings, with 93%, or 11,299, constituting
`inter partes review. Patent Office, Trial Statistics: IPR,
`PGR, CBM, at 3 (Sept. 2020) (available at https://
`www.uspto.gov/sites/default/files/documents/trial_
`statistics_20200930.pdf ). These post-grant proceed-
`ings, therefore, are approximately 10% of the matters
`considered by the Board. We note that the institution
`rate has declined from 87% when the program first be-
`gan to 56% today. Id. at 6. In concluded proceedings,
`the Director has denied institution of review in 3,340,
`or 33%, of the petitions, and the parties have settled in
`2,863, or 29%, of the petitions either before or after in-
`stitution of review. Id. at 11. In the 3,414, or 28%, of the
`petitions that proceeded to a final written PTAB deci-
`sion, id. at 10, the outcomes are not monolithic—in 673
`matters, or 20%, the PTAB found all claims were pa-
`tentable; in 2,114 matters, or 62%, the PTAB found all
`claims were unpatentable; and in the remaining 627
`matters, or 18%, the PTAB reached a mixed result. Id.
`From Amici’s perspective, these statistics buttress the
`conclusion that the Board is carefully weighing
`whether the petitions are likely to be meritorious, and
`then weeding out weak and invalid patents.
`
`
`
`12
`
`Although thousands of matters being handled by
`
`the Board may sound significant, it is a proverbial drop
`in the bucket of overall patent grants. Since 2012, the
`USPTO has issued over 2,400,000 patents. See Patent
`Office, U.S. Patent Statistics Chart: Calendar Years
`1963-2019 (available at https://www.uspto.gov/web/of-
`fices/ac/ido/oeip/taf/us_stat.htm). That the Board fi-
`nally concluded that some or all patent claims should
`be cancelled in fewer than 3,000 petitions pales in com-
`parison to the number of patent applications processed
`by the USPTO.
`
`PTAB Cost and Efficiency. Board proceedings
`
`are both quicker and less expensive than federal court
`patent litigation. As noted above, the Board is statuto-
`rily obligated to resolve an IPR within a year, subject
`to a six-month enlargement for good cause. 35 U.S.C.
`§ 316(a)(11). This contrasts favorably to the average
`2.5 years it took pre-pandemic for a patent case to get
`to trial (as opposed to final disposition). PwC, Patent
`Litigation Survey, at 4 (May 2018) (available at https://
`www.pwc.com/us/en/services/forensics/library/patent-
`litigation-study.html).
`
`In its regular surveys, the American Intellectual
`
`Property Law Association (AIPLA) routinely confirms
`that it costs substantially less to resolve validity issues
`before the Board than federal court. To be sure, it is not
`inexpensive to prosecute an IPR before the PTAB. Ac-
`cording to the most recent survey, the median cost for
`pursuing an IPR involving electrical or computer pa-
`tents was $105,000 through filing a petition; $275,000
`through the end of motion practice; $325,000 through
`
`
`
`13
`
`a PTAB hearing; and $450,000 through appeal to the
`Federal Circuit. AIPLA, 2019 Report of the Economic
`Survey, at 52. Meanwhile, the median cost for pursuing
`an IPR involving mechanical patents similarly was
`$100,000 through filing a petition; $238,000 through
`the end of motion practice; $300,000 through a PTAB
`hearing; and $400,000 through appeal to the Federal
`Circuit. Id.
`
`These costs begin to look reasonable, however,
`
`when compared to the cost of federal patent litigation.
`The costs of defending a substantial patent infringe-
`ment lawsuit are multiples of the cost of proceeding
`before the PTAB. When there was less than $1 million
`at risk, the median costs of patent litigation were:
`$250,000 through discovery, motion practice, and claim
`construction; and $700,000 through pre- and post-trial
`and appeal. Id. at 50. When there was $1-$10 million
`at risk, the median costs were: $600,000 through dis-
`covery, motion practice, and claim construction; and
`$1,500,000 through pre- and post-trial and appeal. Id.
`When there was $10-$25 million at risk, the median
`costs were: $1,225,000 through discovery, motion prac-
`tice, and claim construction; and $2,700,000 through
`pre- and post-trial and appeal. Finally, when there was
`more than $25 million at risk, the median costs were:
`$2,375,000 through discovery, motion practice, and
`claim construction; and $4,000,000 through pre- and
`post-trial and appeal. Id. In short, Board proceedings
`are substantially speedier and cheaper than federal
`patent litigation.
`
`
`
`14
`
`PTAB Quality. It would not matter that Board
`
`proceedings were more efficient and cost-effective than
`federal court litigation if the Board regularly failed to
`reach the right result. Because the Federal Circuit—
`the specialized court responsible for patent appeals—
`routinely affirms the Board’s written decisions, we
`should have confidence that the Board is properly re-
`solving these matters. Additionally, the Board now has
`an eight-year track record to assess, and academic re-
`search is beginning to show that the Board’s actions
`are, in fact, improving patent quality. Before consider-
`ing these indications that the Board for the most part
`is “getting it right,” we briefly consider the reason why
`the Board was established in the first place, namely,
`that the prior system was producing too many low-
`quality patents.
`
`One systemic problem with U.S. patent procedure
`
`is that the pre-issuance examination process is tilted,
`both by design and circumstance, in favor of the issu-
`ance of patents. The procedure for obtaining a patent
`is a one-sided affair, involving only an applicant seek-
`ing a patent and a Patent Office examiner. “The initial
`examination step is hurried, ex parte, and compara-
`tively cursory.” Stephen Yelderman, The Value of Accu-
`racy in the Patent System, 84 U. Chi. L. Rev. 1217, 1281
`(2017). The applicant is presumed to be entitled to a
`patent unless the examiner can show otherwise. See
`Sean B. Seymore, Patent Asymmetries, 49 U.C. Davis L.
`Rev. 963, 977 (Feb. 2016) (“Thus, the burden of proving
`unpatentability rests with the PTO.”).
`
`
`
`15
`
`Patent examiners are overworked, with “notori-
`
`ously little time to think through the relationship be-
`tween the known prior art and the advance claimed”
`by the applicant. Rochelle Cooper Dreyfuss, Nonobvi-
`ousness: A Comment on Three Learned Papers, 12
`Lewis & Clark L. Rev. 431, 434 (2008); see also U.S.
`Gov’t Accountability Off., GAO-16-883T, Patent Office
`Has Opportunities to Further Improve Application Re-
`view and Patent Quality, 3–6 (2016) (“GAO Report”)
`(available at http://www.gao.gov/assets/680/679830.pdf)
`(at least
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