`
`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.
`
`--------------------------------- ♦ ---------------------------------
`On Writs Of Certiorari To The
`United States Court Of Appeals
`For The Federal Circuit
`--------------------------------- ♦ ---------------------------------
`BRIEF OF AMICI CURIAE THE COMPUTER &
`COMMUNICATIONS INDUSTRY ASSOCIATION
`AND U.S. MANUFACTURER’S ASSOCIATION FOR
`DEVELOPMENT AND ENTERPRISE IN SUPPORT
`OF UNITED STATES AND SMITH & NEPHEW
`--------------------------------- ♦ ---------------------------------
`
`JOSHUA LANDAU
` Counsel of Record
`COMPUTER & COMMUNICATIONS
` INDUSTRY ASSOCIATION
`25 Massachusetts Ave. NW
`Suite 300C
`Washington, DC 20001
`(202) 783-0070 x116
`jlandau@ccianet.org
`Counsel for Amici Curiae
`
`[Additional Captions On Inside Cover]
`
`================================================================================================================
`COCKLE LEGAL BRIEFS (800) 225-6964
`WWW.COCKLELEGALBRIEFS.COM
`
`
`
`
`
`
`
`--------------------------------- ♦ ---------------------------------
`
`SMITH & NEPHEW, INC., ET AL.,
`Petitioners,
`
`v.
`
`ARTHREX, INC., ET AL.
`
`--------------------------------- ♦ ---------------------------------
`
`ARTHREX, INC.,
`
`
`
`v.
`
`Petitioner,
`
`SMITH & NEPHEW, INC., ET AL.
`
`--------------------------------- ♦ ---------------------------------
`
`
`
`
`
`
`i
`
`TABLE OF CONTENTS
`
`4
`
`5
`
`Page
`TABLE OF AUTHORITIES .................................
`iii
`INTERESTS OF AMICI CURIAE .......................
`1
`SUMMARY OF ARGUMENT ..............................
`2
`ARGUMENT ........................................................
`4
`
`I. THE DIRECTOR ALONE HAS THE
`ABILITY TO FORMULATE POLICY .......
`A. The Director Formulates Policy Via
`Rulemaking; APJs Implement That
`Policy ...................................................
`B. The Director Formulates Policy Via
`Designation of Opinions as Precedential;
`APJs Are Bound to Follow That
`Precedent .............................................
` II. THE DIRECTOR HAS THE ABILITY TO
`EFFECTIVELY DIRECT AND CONTROL
`ADMINISTRATIVE PATENT JUDGES,
`RENDERING
`THEM
`INFERIOR
`OFFICERS .................................................
`A. The Director Bears Sole Authority to
`Set the Policies the APJs Must Follow,
`Directing Their Actions .......................
`B. The Director Controls Whether an
`APJ Will Hear Any Particular Case, or
`Even Whether the APJ Will Hear Any
`Cases at All ..........................................
`
`8
`
`6
`
`7
`
`8
`
`
`
`ii
`
`TABLE OF CONTENTS—Continued
`
`9
`
`Page
`1. The independent counsel in Morrison
`was sufficiently subject to control by
`the Attorney General .......................
`2. APJs are subject to analogous, but
`greater, control by the Director ...... 10
`3. If the independent counsel of Morri-
`son is an inferior officer, then APJs—
`subject to greater control and less in-
`sulated from removal—must also
`be ..................................................... 11
`C. The Director Can Unilaterally Determine
`to Rehear an APJ’s Decision, and Can
`Do So Accompanied by Hand-Picked
`Subordinates to Ensure the Desired
`Outcome ............................................... 12
` III. UNIFORM ADHERENCE BY ADMINI-
`STRATIVE PATENT JUDGES TO THE
`DIRECTOR’S EXTRASTATUTORY POLI-
`CIES SIGNALS THE DIRECTOR’S
`EFFECTIVE CONTROL ........................... 15
` IV. INTER PARTES REVIEW HAS SIGNI-
`FICANTLY IMPROVED THE FUNCTION
`OF THE PATENT SYSTEM AND
`CONGRESS WOULD NOT WISH TO
`DISTURB THAT IMPROVEMENT ........... 16
`CONCLUSION ..................................................... 18
`
`
`
`iii
`
`TABLE OF AUTHORITIES
`
`Page
`
`CASES
`Apple et al. v. Iancu, Case No. 5:20-CV-6128
`(N.D. Cal., filed Aug. 31, 2020) ................................ 15
`Arthrex, Inc. v. Smith & Nephew, Inc., 953 F.3d
`760 (Fed. Cir. 2020) ................................................. 12
`Ayotte v. Planned Parenthood of N. New
`England, 546 U.S. 320 (2006) ................................. 17
`Broad Institute v. Regents of the University of
`California, Interference No. 106,115 ...................... 18
`Cisco Systems, Inc. v. Ramot At Tel Aviv
`University, Ltd., IPR2020-00123, Paper No. 14
`(May 15, 2020) ......................................................... 15
`Cuozzo Speed Technologies, LLC v. Lee, 136
`S. Ct. 2131 (2016) .................................................... 14
`Edmond v. United States, 520 U.S. 651 (1997) .... 5, 7, 9
`Morrison v. Olson, 487 U.S. 654 (1988) ... 4, 9, 10, 11, 12
`Murphy v. NCAA, 138 S. Ct. 1461 (2018) ................... 18
`
`STATUTES
`5 U.S.C. § 7513 ............................................................ 11
`28 U.S.C. § 592 ............................................................ 10
`28 U.S.C. § 594 ............................................................ 10
`28 U.S.C. § 596 ............................................................ 10
`35 U.S.C. § 3 ............................................................ 8, 13
`35 U.S.C. § 3(a)(1) ......................................................... 7
`
`
`
`iv
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`35 U.S.C. § 6 ...................................................... 9, 10, 13
`35 U.S.C. § 311 et seq. ................................................... 4
`35 U.S.C. § 312 ............................................................ 10
`35 U.S.C. § 314 ........................................................ 9, 10
`35 U.S.C. § 316 ...................................................... 4, 5, 8
`
`OTHER AUTHORITIES
`AIPLA, Report of the Economic Survey 2019
`(2019) ....................................................................... 16
`H.R. Rep. No. 112-98 (2011) ....................................... 17
`Landau, IPR and Alice Appear Responsible for
`Reduced Patent Litigation Costs, Patent
`Progress (Oct. 18, 2018) .......................................... 16
`Transcript of Argument in Oil States v. Greene’s
`Energy (Nov. 27, 2017) ............................................ 13
`Unified Patents, 2019 Patent Dispute Report—
`Year in Review (Jan. 1, 2020) .................................. 16
`USPTO Performance and Accountability Report,
`FY2020 (Nov. 2020) ................................................. 13
`USPTO, PTAB Standard Operating Procedure 1
`(Revision 15) ........................................................ 9, 10
`USPTO, PTAB Standard Operating Procedure 2
`(Revision 10) .............................................................. 6
`
`
`
`
`
`
`
`
`v
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`
`REGULATIONS
`83 Fed. Reg. 39989 (Aug. 13, 2018) .............................. 5
`83 Fed. Reg. 51340 (Oct. 11, 2018) ............................... 5
`84 Fed. Reg. 33925 (July 16, 2019) ............................... 5
`84 Fed. Reg. 50 (Jan. 7, 2019) ....................................... 5
`84 Fed. Reg. 9497 (Mar. 15, 2019) ................................ 5
`
`
`
`1
`
`INTERESTS OF AMICI CURIAE1
`The Computer & Communications Industry Asso-
`
`ciation (CCIA) is an international, nonprofit associa-
`tion
`representing
`a
`broad
`cross-section
`of
`communications and technology firms. For nearly fifty
`years, CCIA has promoted open markets, open sys-
`tems, and open networks. CCIA members employ more
`than 1.6 million workers, invest more than $100 billion
`in research and development, and contribute trillions
`of dollars in productivity to the global economy.2 CCIA
`regularly files amicus briefs in this and other courts to
`promote balanced patent policies that reward, rather
`than stifle, innovation.
`
`U.S. Manufacturers’ Association for Development
`
`and Enterprise (US MADE) is a nonprofit association
`representing companies manufacturing diverse goods
`in the United States. US MADE members range from
`some of the largest U.S. manufacturers to the smallest
`father and son business. While US MADE members
`have collectively received hundreds of thousands of pa-
`tents to undergird their innovative enterprises, they
`have also been the targets of abusive patent litigation.
`Thus, US MADE was specifically created to preserve
`and strengthen efficient and cost-effective mechanisms
`
`
`1 Pursuant to Supreme Court Rule 37.3, all parties have
`
`given consent to the filing of this brief. Pursuant to Rule 37.6, no
`counsel for any party authored this brief in whole or part; no party
`or counsel made a monetary contribution intended to fund its
`preparation or submission; and no person other than amici made
`such a contribution.
`2 CCIA’s members are listed at http://www.ccianet.org/members.
`
`
`
`
`2
`
`to cancel improvidently granted patents that can be
`used to threaten U.S. manufacturing.3
`The inter partes review (IPR) proceeding, created
`
`to provide the United States Patent and Trademark
`Office (USPTO) with the ability to review the patenta-
`bility of patents after they were issued, has had a sig-
`nificant positive impact on the innovation ecosystem.
`Litigation costs and patent litigation frequency have
`come down from their peak, and the quality of patents
`asserted in litigation has increased.
`Amici’s members regularly file petitions for IPR.
`
`They rely on an effective and consistent IPR system as
`part of their innovative activities, in particular to man-
`age risk and cost from patent assertions by non-prac-
`ticing entities. The Arthrex decision threatens not just
`the efficient operation of the IPR system, but the ben-
`efits that IPR has brought to the patent ecosystem as
`a whole.
`
`--------------------------------- ♦ ---------------------------------
`
`SUMMARY OF ARGUMENT
`
`Administrative Patent Judges (APJs) of the Pa-
`
`tent Trial and Appeal Board (PTAB) unquestionably
`exercise significant authority on behalf of the United
`States. This renders them officers.
`
`However, the Director maintains the sole ability to
`
`formulate policy for the PTAB. APJs have no ability to
`
`3 US MADE’s members are listed at: https://us-made.org/
`
`members/.
`
`
`
`3
`
`formulate policy that binds the United States; to the
`extent any decision may become binding policy, that
`occurs only with the Director’s approval. This lack of
`policy-making authority is a signal that APJs are infe-
`rior officers, not principals.
`
`Further, the authority APJs exercise is fundamen-
`
`tally subordinated to the direction and authority of the
`Director of the USPTO. They are bound to abide by the
`policy directives he creates, exercise authority only
`with his permission, may have their exercise of author-
`ity in a case terminated by his sole decision, and their
`decisions are subject to re-hearing at his discretion.
`These tools of control and supervision are fundamen-
`tally the type of tools applied by a principal officer to
`direct an inferior officer.
`
`Finally, the Director has created policies that lie
`
`outside those authorized by the PTAB’s organic stat-
`ute. These policies have led to challenges under the
`Administrative Procedure Act. Despite this, there have
`been no instances in which a PTAB judge failed to ad-
`here to them. This uniform adherence to questionable
`policy guidance illustrates the effective control that
`the Director exerts over APJs.
`
`For each of these reasons, this Court should find
`
`that APJs are inferior officers and reverse the under-
`lying decision on that basis alone.
`
`By providing additional review of patent validity,
`
`IPR and PGR have helped mitigate flaws in the patent
`system. The advent of the inter partes review (IPR)
`and post-grant review (PGR) proceedings has led to
`
`
`
`4
`
`reduced patent litigation rates and reduced patent lit-
`igation costs. While amici argue that severance of civil
`service protections is unnecessary, Congress would not
`have wished to have such an effective program termi-
`nated when it could be saved by a minor change. If this
`Court finds that APJs are principal officers, it should
`bless the curing action taken by the Arthrex court and
`uphold severance of APJs civil service protections.
`--------------------------------- ♦ ---------------------------------
`
`ARGUMENT
`I. THE DIRECTOR ALONE HAS THE ABILITY
`TO FORMULATE POLICY
`
`The America Invents Act (AIA), as codified in 35
`
`U.S.C. § 311 et seq., gave the Director of the USPTO the
`authority to prescribe regulations “establishing and
`governing inter partes review under this chapter.” 35
`U.S.C. § 316(a)(4). The Director has also promulgated
`rules establishing that he and he alone is the final au-
`thority on what decisions of the PTAB will become
`precedential.
`
`In contrast, the authority of an APJ “does not in-
`
`clude any authority to formulate policy for the Govern-
`ment or the Executive Branch, nor does it give
`appellant any administrative duties outside of those
`necessary to operate her office.” Morrison v. Olson, 487
`U.S. 654, 671-72 (1988).
`
`The Director, not any APJ, has complete authority
`
`over how IPR will be conducted, subject only to the
`
`
`
`5
`
`limits imposed in the statutory text, and thus complete
`authority to direct APJs in the conduct of their work.
`See Edmond v. United States, 520 U.S. 651, 663 (1997).
`This policy control alone illustrates that APJs are
`inferior officers whose superior principal officer is the
`Director.
`
`
`
`A. The Director Formulates Policy Via Rule-
`making; APJs Implement That Policy
`
`The Director’s rulemaking authority extends
`
`broadly across those regulations that establish and
`govern inter partes review. 35 U.S.C. § 316(a)(4). In the
`past two years alone, the Director has employed this
`authority to: make changes to the substantive stand-
`ard employed by APJs when interpreting claims, 83
`Fed. Reg. 51340 (Oct. 11, 2018); create new factors not
`found in statute to be evaluated by APJs during the
`institution process, 83 Fed. Reg. 39989 (Aug. 13, 2018);
`re-interpret how 35 U.S.C. § 101 is to be applied by
`Office personnel, including APJs conducting post-grant
`reviews, 84 Fed. Reg. 50 (Jan. 7, 2019); create pilot pro-
`grams making it easier to amend patents during an
`IPR, 84 Fed. Reg. 9497 (Mar. 15, 2019); and discourage
`institution of more than one proceeding on the same
`patent, 84 Fed. Reg. 33925 (July 16, 2019). And as
`described in Section III, infra, no APJ has ignored or
`contradicted those policies.
`
`No individual APJ has authority to formulate pol-
`
`icy via rules and guidance, and all must follow the
`rules and guidance established by the Director. By
`
`
`
`6
`
`setting out the policy that APJs apply, the Director
`effectively directs the fashion in which APJs conduct
`their work. This is quintessentially supervision of an
`inferior officer.
`
`
`
`B. The Director Formulates Policy Via Des-
`ignation of Opinions as Precedential;
`APJs Are Bound to Follow That Prece-
`dent
`
`Beyond the Director’s authority to promulgate
`
`rules and guidance for APJs to obey, the Director also
`retains final authority over all determinations of
`precedent at the PTAB. In fact, “no decision will be
`designated or de-designated as precedential or in-
`formative without the approval of the Director.” USPTO,
`PTAB Standard Operating Procedure 2 (Revision 10),
`https://www.uspto.gov/sites/default/files/documents/
`SOP2%20R10%20FINAL.pdf (“SOP2”).
`
`This requirement ensures that the Director con-
`
`trols both the formal rulemaking apparatus for setting
`policy and the precedential caselaw that controls pol-
`icy and procedure of the Board. By choosing to desig-
`nate as precedential only those decisions that
`implement the Director’s desired policy, the Director
`exercises a second layer of direction and control over
`the work of APJs.
`
`Again, this type of supervision via setting the pol-
`
`icy to be applied is the type of supervision found
`throughout
`the
`federal government, permitting
`
`
`
`7
`
`principal officers to set policy and allowing inferior
`officers to carry out the execution of that policy.
`
`The policy-based control of APJs by the Director,
`
`and the lack of policy control for APJs, is a strong sig-
`nal that APJs are in fact inferior officers. But in addi-
`tion to the policy control the Director exerts over APJs,
`the Director also retains significant ability to directly
`affect the decisions and work of the APJs.
`
`
`II. THE DIRECTOR HAS THE ABILITY TO
`EFFECTIVELY DIRECT AND CONTROL
`ADMINISTRATIVE PATENT JUDGES, REN-
`DERING THEM INFERIOR OFFICERS
`
`Another fundamental distinction that marks an
`
`officer as an inferior officer, rather than a principal
`officer, is that inferior officers are “officers whose work
`is directed and supervised at some level by” a principal
`officer. Edmond v. United States, 520 U.S. 651, 663
`(1997).
`
`The Director of the USPTO is a principal officer.
`
`35 U.S.C. § 3(a)(1). In that role, he exhibits significant
`direction and supervision of the work conducted by the
`APJs of the Board. This direction includes binding
`APJs to policy guidance the Director devises and sin-
`gle-handedly designating opinions as having preceden-
`tial status, determining which IPRs APJs will hear,
`determining if there will be an instituted IPR for an
`APJ to hear, and even rehearing and revising APJ’s
`opinions through a panel convened at the Director’s
`
`
`
`8
`
`sole discretion and composed of the Director and his
`hand-picked subordinates.
`
`These tools, all available to the Director, allow the
`
`Director to completely control the exercise of authority
`by a judge of the Patent Trial and Appeal Board. No
`APJ may issue an effective decision that implements a
`policy contrary to the Director’s desired policy; if one
`tries, they would be subject to reversal at the Director’s
`initiative and, if necessary, to removal from their role.
`All of these practices are hallmarks of the direction
`and supervision of an inferior officer by a principal
`officer.
`
`
`
`A. The Director Bears Sole Authority to
`Set the Policies the APJs Must Follow,
`Directing Their Actions
`As discussed in Section I, supra, the Director bears
`
`sole responsibility for policy-making for the policies
`APJs must implement. 35 U.S.C. § 3(a)(2)(A); 35 U.S.C.
`§ 316(a). And APJs are bound to follow that direction.
`A failure to follow the Director’s policy guidance may
`lead to removal from an IPR, removal from hearing
`any IPRs, or even removal from the Board altogether.
`
`
`
`B. The Director Controls Whether an APJ
`Will Hear Any Particular Case, or Even
`Whether the APJ Will Hear Any Cases
`at All
`
`Beyond general policy-setting authority, the Direc-
`
`tor also is given the sole statutory authority to
`
`
`
`9
`
`designate which APJs will hear each inter partes re-
`view. 35 U.S.C. § 6(c). And while the Director has per-
`mitted the Chief Judge of the PTAB to assign panel
`members in general, the Director explicitly “retains
`his or her own statutory authority to designate pan-
`els.” USPTO, PTAB Standard Operating Procedure 1
`(Revision 15), https://www.uspto.gov/sites/default/files/
`documents/SOP%201%20R15%20FINAL.pdf (“SOP1”).
`In addition to authority to determine which proceed-
`ings an APJ may participate in, the Director is also the
`sole party authorized to determine if a proceeding
`should be instituted at all. 35 U.S.C. § 314(a).
`
`The net result of these twin authorities is that the
`
`Director may determine whether any given APJ will
`hear any cases at all, and determines for any given
`case which APJs will be permitted to hear it. This
`type of control via assignment is a quintessential form
`of supervision, rendering the Director the principal
`officer who is the superior of the inferior officer APJ.
`Edmond, 520 U.S. at 662. It is also strongly analogous
`to the independent counsel of Morrison. Morrison v. Ol-
`son, 487 U.S. 654 (1988).
`
`
`
`1. The independent counsel in Morri-
`son was sufficiently subject to con-
`trol by the Attorney General
`In Morrison, the Attorney General—a principal
`
`officer—could, based on information received, prelimi-
`narily investigate whether there are “reasonable
`grounds to believe that further investigation or
`
`
`
`10
`
`prosecution is warranted.” 28 U.S.C. § 592(b)(1). In the
`event that such grounds exist, the Attorney General,
`in conjunction with the Special Division, would select
`an independent counsel and define the jurisdiction of
`the independent counsel. Morrison, 487 U.S. at 661.
`The independent counsel would then pursue the pro-
`posed investigation, independent of any direct super-
`vision by the Attorney General or Special Division.
`While not directly supervised by the Attorney General,
`the independent counsel was still obliged to follow the
`established policies of the Department of Justice in
`their investigation. 28 U.S.C. § 594(f ). The Attorney
`General could remove the independent counsel, but
`only “for good cause, physical disability, mental inca-
`pacity, or any other condition that substantially im-
`pairs the performance of such independent counsel’s
`duties.” 28 U.S.C. § 596(a)(1).
`
`
`
`2. APJs are subject to analogous, but
`greater, control by the Director
`
`Similarly, the Director of the USPTO receives a
`
`petition for inter partes review. 35 U.S.C. § 312. If the
`Director determines that there is “a reasonable likeli-
`hood that the petitioner would prevail with respect to
`at least 1 of the claims challenged in the petition,” he
`may choose to authorize an inter partes review. 35
`U.S.C. § 314(a). And if the Director chooses to institute
`a proceeding, he selects the APJs who will be assigned
`to that proceeding. 35 U.S.C. § 6(c). The Director is per-
`mitted to remove APJs from any case at any time, for
`any reason. 35 U.S.C. § 6(c); see also SOP1 (“authority
`
`
`
`11
`
`of the Director to designate, de-designate, or otherwise
`alter in any way at any time, panels in his or her sole
`discretion”). APJs are bound to follow the guidance of
`the Director. See Section I, supra. The Director can
`also remove APJs from employment entirely “for such
`cause as will promote the efficiency of the service.” 5
`U.S.C. § 7513(a).
`
`
`
`3. If the independent counsel of Morri-
`son is an inferior officer, then APJs—
`subject to greater control and less in-
`sulated from removal—must also be
`Both the independent counsel of Morrison and
`
`APJs are selected by a principal officer to serve a spe-
`cific purpose within a limited jurisdiction, whether a
`specific investigation of crimes or a specific investiga-
`tion of a patent. Each only receives that grant of au-
`thority if the principal officer issues a preliminary
`decision that the assignment is reasonably likely to
`bear fruit. Both are bound to the general policy set
`forth by their principal officer. And while APJs main-
`tain their membership in the Board when not hearing
`a proceeding, that membership itself comes with no
`specific authority to exercise the authority of the
`United States; their sole authority stems from their
`assignment to specific proceedings by the Director.
`They are, in practice if not in Human Resources files,
`temporary appointees to each proceeding, with their
`offices being created and terminated as they are as-
`signed to and removed from proceedings.
`
`
`
`12
`
`Further, the Director has significantly greater
`
`powers of removal than the Attorney General in Mor-
`rison. The Attorney General could remove the counsel
`only with cause; the Director can remove an APJ from
`a proceeding without any cause whatsoever, and can
`terminate an APJ’s employment entirely based on a
`determination that their conduct harms the efficiency
`of the service. One such cause, as expressed by the dis-
`sent from denial of rehearing en banc, would be “[f ]ail-
`ing or refusing to follow the Director’s policy or legal
`guidance.” Arthrex, Inc. v. Smith & Nephew, Inc., 953
`F.3d 760, 787 (Fed. Cir. 2020) (Hughes, J., dissenting).
`
`Given the significant similarities between APJs
`
`and the independent counsel of Morrison, ranging from
`the way in which they are assigned to proceedings to
`their obligation to abide by the policy guidance of their
`principal officer, the Morrison holding leads to the con-
`clusion that APJs are inferior officers.
`
`
`
`C. The Director Can Unilaterally Deter-
`mine to Rehear an APJ’s Decision, and
`Can Do So Accompanied by Hand-
`Picked Subordinates to Ensure the De-
`sired Outcome
`
`If an APJ were to reach a disfavored outcome not
`
`yet subject to guidance or even to ignore the Director’s
`policy guidance, then the Director retains the ability to
`unilaterally determine that that decision should be re-
`heard and retains the ability to have it reheard by the
`Director’s chosen panel. This process was previously
`
`
`
`13
`
`discussed by this Court in the Oil States argument,
`where Chief Justice Roberts described the situation
`where the Director “can change [the] panels if she
`doesn’t agree with the direction they’re going, that she
`can add new judges to the panel . . . and I think consti-
`tutionally this may be fine, [is] a tool of the executive
`activity.” Transcript of Argument in Oil States v.
`Greene’s Energy at 33:2-8 (Nov. 27, 2017).
`
`SOP2 sets out the process by which the Director
`
`achieves this panel stacking. Per SOP2, the “Director
`may convene a Precedential Opinion Panel to review a
`decision in a case and determine whether to order sua
`sponte rehearing, in his or her sole discretion.” SOP2
`at 5. Having convened such a panel, “Precedential
`Opinion Panel members are selected by the Director.”
`SOP2 at 4. The members of the PTAB include the
`Director, the Deputy Director, the Commissioner for
`Patents, and the Commission for Trademarks, as well
`as more than 200 APJs. 35 U.S.C. § 6(a); USPTO Per-
`formance and Accountability Report, FY2020 (Nov.
`2020). The Deputy Director is nominated by the Direc-
`tor and appointed by the Secretary of Commerce. 35
`U.S.C. § 3(b)(1).
`
`Faced with a decision the Director objects to, it is
`
`within the Director’s power and authority to sua sponte
`convene a Precedential Opinion Panel, removing the
`original APJ from the matter and placing the Director
`himself onto the panel. He may also select the Deputy
`Director, who owes her position to the Director’s selec-
`tion and nomination, as well as the Director’s choice of
`any APJ from among more than 200 APJs. The ability
`
`
`
`14
`
`to select the officials charged with hearing or rehear-
`ing the proceeding is effectively the ability to select
`the outcome, particularly when each of the members of
`the Board is obligated to follow the policy guidance of
`the Director at the potential cost of losing their posi-
`tion.
`
` While one or two APJs might theoretically disa-
`gree with that guidance, the ability to express to a se-
`lected APJ what the Director believes to be the correct
`interpretation of the statute and policy is a strong tool
`to ensure that the selected APJ will abide by the Di-
`rector’s interpretation. In practice, the ability to select
`and stack precedential panels is equivalent to a power
`to directly and individually review a decision.
`
`The ability to panel-stack to achieve the desired
`
`outcome is another mechanism by which the Director
`controls and supervises APJs, further cementing
`their status as inferior officers. Panel-stacking might
`or might not create a due process concern or result
`in a policy that exceeds the Director’s authorized
`role, but such “shenanigans” are properly the subject
`of the Administrative Procedure Act or constitutional
`challenges to particular decisions. Cf. Cuozzo Speed
`Technologies, LLC v. Lee, 136 S. Ct. 2131, 2142
`(2016).
`
`
`
`
`
`
`
`
`15
`
`III. UNIFORM ADHERENCE BY ADMINIS-
`TRATIVE PATENT JUDGES TO THE DI-
`RECTOR’S EXTRASTATUTORY POLICIES
`SIGNALS THE DIRECTOR’S EFFECTIVE
`CONTROL
`
`Concerns regarding these shenanigans are not hy-
`
`pothetical. Several of the policies set by the Director in
`recent years are currently subject to challenge under
`the Administrative Procedure Act as exceeding his
`statutory authority. See Apple et al. v. Iancu, Case No.
`5:20-CV-6128 (N.D. Cal., filed Aug. 31, 2020). And these
`policies have led at least one APJ to file a lengthy dis-
`sent from the way in which his panel applied that pol-
`icy, a rare event at the PTAB. See Cisco Systems, Inc. v.
`Ramot At Tel Aviv University, Ltd., IPR2020-00123, Pa-
`per No. 14 (May 15, 2020) (Crumbley, APJ, dissenting).
`But even in disagreeing with the application of the
`precedent, the APJ did not ignore the Director’s extra-
`statutory policy.
` While amici agree with the challengers in that
`case that the policy in question is not one the Director
`is authorized to create, amici are unaware of, and Ar-
`threx has not identified, any instance in which an APJ
`has ignored policy set by the Director in favor of his or
`her own preferred policy. The uniform adherence of
`more than 200 APJs to the Director’s preferred policy
`is itself evidence of the Director’s de facto control and
`direction of the APJs, made all the more salient when
`at least some of those policies may be without statu-
`tory backing.
`
`
`
`16
`
`IV. INTER PARTES REVIEW HAS SIGNIFI-
`CANTLY IMPROVED THE FUNCTION OF
`THE PATENT SYSTEM AND CONGRESS
`WOULD NOT WISH TO DISTURB THAT
`IMPROVEMENT
`Since the creation of the inter partes review pro-
`
`cess, the amount and cost of patent litigation has fallen
`significantly. From a peak of 6,114 patent lawsuits filed
`in 2013, disputes have fallen to 3,347 in 2019. Unified
`Patents, 2019 Patent Dispute Report—Year in Review,
`Fig. 1 (Jan. 1, 2020), https://www.unifiedpatents.com/
`insights/2019/12/30/q4-2019-patent-dispute-report. And
`the cost of those lawsuits has fallen as well, from a me-
`dian of $5,500,000 for a single patent lawsuit in 2013
`to a median of $4,000,000 in 2019. AIPLA, Report of
`the Economic Survey 2019 at 50 (2019). Much of this
`decline appears attributable to the impacts of IPR.
`Landau, IPR and Alice Appear Responsible for Reduced
`Patent Litigation Costs, Patent Progress (Oct. 18, 2018),
`https://www.patentprogress.org/2018/10/18/ipr-and-
`alice-appear-responsible-for-reduced-patent-litigation-
`costs/.
`Amici’s members have benefited from these posi-
`
`tive changes to the patent system. Rather than devote
`financial and employee resources to legal disputes
`over intellectual property—especially disputes over
`the kind of invalid patents IPR was designed to elimi-
`nate—they have instead been able to devote those re-
`sources to creating new innovation. This is precisely
`what Congress envisioned in creating the inter partes
`
`
`
`
`17
`
`review process—the creation of “quick and cost effec-
`tive alternatives to litigation.” H.R. Rep. No. 112-98, at
`48 (2011).
`
`Further, while this case focuses on the role of APJs
`
`in hearing inter partes reviews, that is not their only
`function. They also hear ex parte appeals from patent
`applications under examination, hear appeals of ex
`parte reexaminations, and conduct interference and
`derivation proceedings to determine which of two ap-
`plicants for the same invention is entitled to a patent
`right. Finding their appointment to be unconstitu-
`tional throws into question those other proceedings as
`well. The work of similar employees in roles across the
`federal government would also be questioned if the
`Board’s APJs were determined to be unconstitution-
`ally appointed principal officers.
` While amici believe no fix is necessary, as the APJs
`are inferior officers operating under the direction, con-
`trol, and supervision of the Director, amici submit that
`the severance of removal protections would have been
`preferred by Congress to striking down the appoint-
`ments of all PTAB judges. In determining whether a
`provision is severable, a court must ask whether “the
`legislature [would] have preferred what is left of its
`statute to no statute at all.” Ayotte v. Planned
`Parenthood of N. New England, 546 U.S. 320, 330
`(2006). The remainder of the statute is presumptively
`severable unless it is evident that its continued en-
`forcement would produce “a scheme sharply different
`
`
`
`
`
`18
`
`from what Congress contemplated.” Murphy v. NCAA,
`138 S. Ct. 1461, 1482 (2018).
`
`Striking down PTAB appointments entirely would
`
`disrupt patent examination, with applicants unable to
`appeal to the Board adverse decisions from examiners.
`It would block the other long-standing reexamination
`process, ex parte reexamination. And it would block
`derivation proceedings, which are used to determine
`ownership of some of the most valuable technologies
`today. S
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