717 Madison Place

In this earlier post [link], I noted that a reader had pointed me in the direction of the pending Knowles v. Matal case at the Federal Circuit.  In the briefing of that case, the DOJ and USPTO have indicated that in rare circumstances the USPTO might choose to take a position opposite to that rendered by the PTAB, when the PTAB’s decision is appealed to the Federal Circuit.  I thought it might be of interest to post the pertinent portion of the brief below (with footnotes moved to the end and emphasis added in bolded underlines):

___________________________________________________________________

 

Instead, Congress added a sentence addressing the agency’s authority to intervene, at its discretion, in appeals from inter partes cases, including inter partes reexaminations. The new sentence states, “The Director shall have the right to intervene in an appeal from a decision entered by the Patent Trial and Appeal Board . . . in an inter partes or post-grant review under chapter 31 or 32.” 35 U.S.C. § 143 (2012). Although that sentence does not specifically mention inter partes reexaminations, which were being phased out by the AIA, Congress explained elsewhere in the Act that “the Director’s right under the fourth sentence of section 143”—the sentence just quoted—“to intervene in an appeal from a decision entered by the Patent Trial and Appeal Board shall be deemed to extend to inter partes reexaminations.” AIA, Pub. L. No. 112-29 § 7(e)(4), 125 Stat. 284, 315 (2011); see also 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl) (“In the effective-date provision at the end of section [7], various existing [appeal] authorities are extended so that they may continue to apply to inter partes reexaminations commenced under the old system.”); see also Joseph Matal, Legislative History of the America Invents Act: Part II of II, 21 FED. CIR. B.J. 539, 542 n.25 (2012).

Furthermore, the Director’s right to intervene in inter partes reexaminations extends to those reexaminations “that are requested . . . before the effective date” of the AIA. Pub. L. No. 112-29 § 7(e)(4), 125 Stat. 284, 315. In other words, the change in the law was made applicable to all inter partes reexaminations that were requested before the AIA came into effect. Thus, the USPTO’s participation in appeals from inter partes reexaminations went from an obligation to a right, even for inter partes reexaminations that were already pending.

The statute thus spells out the situations in which the Director has the right to intervene, which include inter partes reexaminations, inter partes reviews, and other inter partes cases in the USPTO. This Court therefore routinely asks the USPTO if it plans to intervene in inter partes cases, particularly in cases like this one where the Court would otherwise lose the benefit of the adversarial process. The statute also clearly specifies the cases in which the Director is automatically a party—ex parte cases. 35 U.S.C. § 143 (2012).

The statute does not discuss or limit the positions the Director may take in any type of case. In ex parte cases, the statute merely specifies that the Director must “address[ ] all of the issues raised in the appeal,” 35 U.S.C. § 143 (2012); in inter partes cases, even that requirement does not exist. Although the Director typically intervenes on the side of the appellee, even in that posture, the Director may take any substantive position he likes.2

 

Indeed, Ingalls directly addresses the Director’s position in these appeals, not as a representative of the Board but as a representative of the agency as a whole. When the Board—the USPTO’s adjudicator—makes a decision, the “order of the agency’s designated adjudicator is in reality an order of the agency itself.” 519 U.S. at 268. The agency “may then be free to designate its enforcer/litigator as its voice before the courts of appeals.” Id. The agency’s litigator—in this case the USPTO Solicitor—while appearing on the side of the appellee, “is free to argue on behalf of the petitioner and to challenge the decision of the Board.” Id. at 270. Thus, if the Director (or Solicitor) disagrees with the Board’s decision, he need not argue in support of affirmance. This prevents “a ‘lopsided’ scheme whereby the Director can appear only in defense of the [Board’s] decisions.” Id. (citations omitted).3

In practice, the USPTO Director typically intervenes in appeals from inter partes cases in only two particular types of situations. Recognizing that the two parties can adequately represent the adverse sides of the dispute if both are present but not when the appellee has dropped out of the case, the Director will often intervene when the appellee has dropped out to preserve the adversarial presentation of the issues and to support the agency’s decision. Other than that, the Director often intervenes when the dispute on appeal implicates broader USPTO or government interests. Those interests may involve the validity or interpretation of federal statutes, of the USPTO’s procedures, or of USPTO regulations. So, for example, if an appellant argues that a regulation that the Board followed is contrary to the Patent Act, the Director may intervene to support the regulation. Although the Director could choose to intervene, under the statute, in every inter partes case, he instead selects cases in which his participation would be most important to the agency and helpful to the Court.

The Director’s presence is not required, however, for the appeal to proceed. As discussed above, the appellant has a justiciable controversy because it stands to lose its patent. The lack of USPTO participation does not moot the appellant’s case any more than does the reexamination requester’s declining to participate, discussed above.

In the unlikely event that the government were to decline to defend the Board’s decision in a case in which no other party was defending it, the Court could simply decide to hear the patentee’s appeal without the benefit of an adverse party. Alternatively, the Court could appoint or invite an amicus to defend the Board’s decision. The Supreme Court, for example, often chooses that route when the government confesses error and declines to defend a favorable decision from a lower tribunal. See, e.g., Becker v. Montgomery, 532 U.S. 757, 762 n.1 (2001) (“Without any party to defend the Sixth Circuit’s position, we invited [attorney] Stewart A. Baker to brief and argue this case, as amicus curiae, in support of the judgment below. His able representation . . . permit[s] us to decide this case[,] satisfied that the relevant issues have been fully aired.” (citations omitted)). Or, if the government confesses error and the Court concludes that, in consequence, there is nothing substantial remaining to be decided, the Court may simply vacate and remand. See Lawrence on Behalf of Lawrence v. Chater, 516 U.S. 163, 169-73 (1996); Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744 (1985) (“If the record before the agency does not support the agency action, if the agency has not considered all relevant factors, or if the reviewing court simply cannot evaluate the challenged agency action on the basis of the record before it, the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation.”).

Regardless, because the USPTO typically intervenes to defend the Board’s decision and tries to avoid situations in which a Board decision that it disagrees with is heard on appeal, the situation rarely arises. Far more common, and preferable, is a situation like this, in which the USPTO Director chooses to intervene to support the Board’s decision.

The Patently-O blog recently reported on the new petition for writ of certiorari in R&L Carriers, Inc. v. Intermec Technologies Corp. [Cert. petition]. The question presented asks:

Stated differently, where’s the factual inquiry?

I couldn’t help but be reminded of the classic Wendy’s commercial:

While the Federal Circuit has recently been fond of saying that §101 is a question of law, the court in the past has repeatedly said that factual issues can underlie the §101 analysis:

Whether a claim is directed to statutory subject matter is a question of law. Although determination of this question may require findings of underlying facts specific to the particular subject matter and its mode of claiming . . . .

Arrhythmia Research Technology v. Corazonix Corp., 958 F.2d 1053 (Fed. Cir. 1992).

It is well-established that “whether the asserted claims … are invalid for failure to claim statutory subject matter under 35 U.S.C. § 101, is a question of law which we review without deference.” AT & T Corp. v. Excel Commc’ns, Inc.,172 F.3d 1352, 1355 (Fed.Cir.1999). As a question of law, lack of statutory subject matter is a “ground [for affirmance] within the power of the appellate court to formulate.” Chenery, 318 U.S. at 88, 63 S.Ct. 454. While there may be cases in which the legal question as to patentable subject matter may turn on subsidiary factual issues, Comiskey has not identified any relevant fact issues that must be resolved in order to address the patentability of the subject matter of Comiskey’s application. Moreover, since we would review a Board decision on the issue of patentability without deference, see AT & T, 172 F.3d at 1355, the legal issue concerning patentability is not “a determination of policy or judgment which the agency alone is authorized to make.” Chenery, 318 U.S. at 88, 63 S.Ct. 454.

In re Comiskey, 554 F.3d 967 (Fed. Cir. 2009)(Judge Dyk writing for the court).

Moreover, in McRo v. Bandai, the Federal Circuit pointed to a lack of evidence in an abstract idea challenge:

McRO v. Bandai, 837 F.3d 1299, 1314 (Fed. Cir. 2016)(emphasis added).

In the administrative context, the PTO’s solicitor’s office noted in its briefing of Apple v. Ameranth:

USPTO Brief in Apple et al. v. Ameranth at page 13 (Associate Solicitor Joe Matal signing for the Office).

USPTO Brief in Apple et al. v. Ameranth at page 20 (Associate Solicitor Joe Matal signing for the Office).

In Versata II, the Federal Circuit stated:

The section 101 analysis applied by the PTAB was not legally erroneous under Mayo and Alice. And its underlying fact findings and credibility determinations are supported by substantial evidence in the record. See Microsoft Corp. v. Proxyconn, Inc., Nos. 14-1542, -1543, 789 F.3d 1292, 1297, 2015 WL 3747257, at *2 (Fed.Cir. June 16, 2015)(noting that as a general matter, we review the PTAB’s findings of fact for substantial supporting evidence in the record).

Versata Dev. Group, Inc. v. SAP America, Inc. (“Versata II”), 793 F.3d 1306, 1336 (2015).

UPDATE 2/1/2018:

The infamous In re Comiskey decision came up recently in the oral argument of TAKEDA PHARMACEUTICAL COMPANY LIMITED v. ARRAY BIOPHARMA INC., No. 2017-1079 (Fed. Cir. Dec. 26, 2017).

Judge Moore had some frank comments about the In re Comiskey opinion.  She referred to In re Comiskey as an “administrative law nightmare” and “horrifically wrongly decided.”

You can listen to Judge Moore’s comments here:

You can read the Takeda v. Array opinion here: [Link].

You can read the In re Comiskey en banc order here, which includes Judge Moore’s dissent: [Link].

You can read the In re Comiskey reissued opinion here: [Link].

You can listen to then Assistant Solicitor Chen respond to questioning from Judge Dyk in the oral argument of In re Comiskey here:

After posting the previous post about the SEC Supreme Court matter, I got sidetracked into looking at some SEC cases that dealt with the constitutional issue of whether ALJ’s are appointed under the Appointments Clause of the Constitution.  In some previous SEC matters, plaintiffs sought  TRO’s or preliminary injunctions in district court in order to have a district court decide the constitutional issue, rather than the SEC.  See, e.g., Duka v. SEC, 2015 WL 4940057 (S.D.N.Y. Aug. 3, 2015); Hill v. SEC, 2015 WL 4307088 (N.D. Ga. June 8, 2015)

That made me wonder about the current sovereign immunity cases at the PTAB and whether any of the affected parties in those proceedings would opt for pursuing a TRO or preliminary injunction in order to have a district court, rather than the PTO, decide the constitutional* issue of sovereign immunity protection.  Apparently, there is some Supreme Court authority for the proposition that administrative agencies are not well-suited to decide constitutional issues:

3. Plaintiff’s Constitutional Claims Are Outside the Agency’s Expertise.

The SEC claims that Plaintiff’s challenges “fall within the Commission’s expertise,” and the “SEC is in the best position to interpret its own policies and regulations in the first instance.” Dkt. No. [12] at 13. The Court finds that Plaintiff’s Article I, Seventh Amendment, and Article II claims are outside the agency’s expertise.^[6]

1310*1310 Plaintiff’s constitutional claims are governed by Supreme Court jurisprudence, and “the statutory questions involved do not require technical considerations of agency policy.” Free Enterprise, 561 U.S. at 491, 130 S.Ct. 3138(alteration and internal quotations omitted) (quoting Johnson v. Robison, 415 U.S. 361, 373, 94 S.Ct. 1160, 39 L.Ed.2d 389 (1974)); see also Thunder Basin, 510 U.S. at 215, 114 S.Ct. 771 (“[A]djudication of the constitutionality of congressional enactments has generally been thought beyond the jurisdiction of administrative agencies.”) (quoting Johnson, 415 U.S. at 368, 94 S.Ct. 1160). These claims are not part and parcel of an ordinary securities fraud case, and there is no evidence that (1) Plaintiff’s constitutional claims are the type the SEC “routinely considers,” or (2) the agency’s expertise can be “brought to bear” on Plaintiff’s claims as they were in Elgin. Elgin, 132 S.Ct. at 2140.

The Court finds that as to this factor, Plaintiff’s constitutional claims are outside the SEC’s expertise, and that this Court has subject matter jurisdiction.

Hill v. SEC, 114 F. Supp. 3d 1297, 1309-10 (N.D. Ga. 2015).

Also, in Public Utilities Comm’n v. United States, 355 U. S. 534, 539 (1958) the Supreme Court said:

But where the only question is whether it is constitutional to fasten the administrative procedure onto the litigant, the administrative agency may be defied and judicial relief sought as the only effective way of protecting the asserted constitutional right.

* Categorizing sovereign immunity as a constitutional issue appears to be strongest in the state-owned patent IPR’s, see, e.g., Pennsylvania v. Union Gas Co., 491 U.S. 1, 7  (1989), as opposed to the tribe-owned patent IPR’s where tribal sovereign immunity might be considered a common law doctrine rather than a constitutional issue.

The Supreme Court in its conference tomorrow will review the petition for writ of certiorari in Lucia v. SEC.  The question presented is whether administrative law judges of the SEC are considered to be  employees or officers of the United States under the Appointments Clause.

I believe the USPTO encountered a similar issue a few years ago.

You can read the petition here: [Link].

Update 1/12/2018:

The Supreme Court granted the petition for certiorari in this case today.

I sometimes wonder when listening to oral arguments whether judges are straying outside the record.  If you are looking for a topic to write about, a helpful article might address the authority or lack of authority for the Federal Circuit to rely on extra-record evidence.  The Sixth Circuit case of Inland Bulk Transfer Co. v. Cummins Engine Co., 332 F. 3d 1007 (6th Cir. 2003) suggests that there is a split among the circuits on whether circuit courts of appeal possess equitable power to permit supplementation of the record.  In my quick search, I did not find any support either way for whether the Federal Circuit has weighed in on this issue.   A sub-topic of the article might be whether such extra-record evidence is permitted at all for review of agency determinations—e.g., TTAB proceedings—as opposed to district court cases.

There is an interesting new petition for writ of certiorari pending before the Supreme Court of the United States.  The question presented is:

“A patent is property carried to the highest degree of abstraction — a right in rem to exclude, without a physical object or content.”

Oliver Wendell Holmes, Jr. in his letter to Frederick Pollock dated June 26, 1894.

I found myself feeling a bit nostalgic for the articulate and insightful questioning during oral arguments of retired Chief Judges Michel and Rader.  If you are like me, and appreciated their knowledge of patent law, I thought you might enjoy listening to an oral argument recording from the past that features them both, along with Judge Linn — a formidable trio.

Here is the oral argument from 2007 in Ortho-McNeil v. Mylan Labs:

I happened to see a report on TV the other day about aroma marketing.  For example, Westin Hotels uses aroma marketing by circulating a White Tea aroma at the entrances to their hotels. [Link].  It would be interesting to see an article that updates how many trademark/service mark applications have been allowed for aromas/scents.  Here’s a link for more on aroma marketing: [Link].

While takings of patent rights is an unusual cause of action faced by the Federal Circuit, the court recently encountered an even more unusual takings case — one related to sleep deprivation caused by barking dogs. Barth v. U.S.  Of course, this case “begs” the question:  “Who let the dogs out?”

If somebody is looking for an article to write, let me suggest one.  I think it would be helpful to have a scholarly article published somewhere that discusses the role, responsibilities, and decision making processes of the Solicitor’s Office (SO) of the USPTO.  Particularly, it would be interesting to know the decision process the SO goes through in deciding which IPR decisions of the PTAB to defend and which not to weigh in on at the Federal Circuit.  Also, it would be interesting to know the decision making process the SO goes through in deciding whether to defend a PTAB decision or admit that the PTAB was simply wrong.  And, it would be helpful to understand if/when the SO can simply send a decision back to the PTAB for reconsideration.  Moreover, it would be interesting to know how such authority is vested in the SO.

One of these instances popped up today at the Federal Circuit and made me wonder about this topic.  The SO of the USPTO effectively vetoed a portion of a PTAB decision by conceding to the Federal Circuit that the PTAB erred.  Because the PTAB erred — i.e., the Federal Circuit ruled that way today — the decision by the SO in retrospect seems like it was the right thing to do.  It was an expeditious way of proceeding; it prevented the SO from wasting the court’s time; and, it prevented officers of the court from making frivolous arguments to the court.  However, what about closer calls.  The authority of the SO to concede that the PTAB erred effectively gives the Director power to reverse a decision of the PTAB that the Director does not like.

The case that I am referring to was decided today, In re Mouttet [Link].  The pertinent portion of the Federal Circuit opinion is quoted below:

Brenner v. Manson, 383 U.S. 519, 523 (1966)(emphasis added).

Perhaps there has been some intervening legislation since Brenner v. Manson that no longer causes the Commissioner (now Director) to be bound by Board determinations.  But, if that is not the case, then it would be interesting to know whether “being bound by Board determinations” requires the Director to defend all of the Board’s determinations.

At any rate, if you write such an article, I would be pleased to read it.

Update 1/25/18:

A reader was kind enough to point me in the direction of some material that touches on the issues raised above:

1. Professor Dmitry Karshtedt’s recent article: “Acceptance Instead of Denial: Pro-Applicant Positions at the PTO” [Link]; and

2.  The DOJ/USPTO’s brief in Knowles v. Matal (decision pending) [Link].  Interestingly, the DOJ/USPTO assert that the USPTO solicitor’s office can assert any position it chooses — and even argue against the PTAB position–when the appeal is taken to the Federal Circuit.  That might be unsettling to the 300+ PTAB judges at the USPTO.

Query#1:  If PTAB judges are required to meet certain legal and technical qualifications in order to provide the particular expertise of the Patent Office, are similar qualifications required of the SO’s office, i.e., the people asserting the right to take any position they choose on appeal?

Query#2:  The USPTO’s brief relies on the Supreme Court’s Ingalls v. Office of Workers’ Compensation Programs case — is the PTO really structured the same as the Office of Workers’ Compensation Programs?

Query#3:  If the SO’s office were ever to refuse to defend a PTAB decision, could the PTAB represent itself?  See Justice Scalia’s dissenting opinion in Ingalls at 273 (“The second argument offered in support of the view that the Director is a proper respondent when review is sought of an order of the Board is that (1) Rule 15(a) requires the naming of someone representing the agency, and (2) the Director is certainly a more sensible candidate than the Board. Ante, at 267, 268. The second part of this analysis, the faute de mieux point, is questionable: The Board could readily develop a staff to defend its judgments, and it is hard to imagine a worse defender than an entity that is free to disagree (and often does disagree) with the order under review.”).

Update 1/29/18:

Query #4: If PTAB judges are required to submit financial data to ensure impartiality, does the same requirement apply to other members of the Office who take a position opposite to the PTAB position on appeal?

Query #5:  When the USPTO handles an initial PTAB decision “administratively,” how is that memorialized on PAIR?

The oral argument of the day is from IN RE LEVENSTEIN, No. 2017-1067 (Fed. Cir. Oct. 10, 2017).

The oral argument focuses on 35 U.S.C. §101.  If you have not heard, section 101 has been in the news in recent years.

You can listen to the oral argument below:

You can review the Federal Circuit judgment [here].

You might recall that in Nidec v. Zhongshan the Federal Circuit frowned upon some of the USPTO’s joinder practices under the AIA.  It was unnecessary for the Federal Circuit to resolve the joinder issue in Nidec, however, because the Federal Circuit was able to affirm the PTAB without having to reach the joined issue.

The Federal Circuit will have another opportunity to address joinder in an upcoming matter.   A petition for a writ of mandamus has been filed in In re Windy City Innovations.  The matter concerns joined IPR’s brought by Facebook against Windy City Innovations.

You can review the briefing here:

Petitioner’s brief: [Link]

Respondent’s brief: [Link]

Petitioner’s reply brief: [Link].

The PTAB’s opinion is available as an Exhibit to the Petitioner’s brief.

In a curious turn of events, two of the three PTAB judges noted in concurring remarks in the PTAB opinion that they did not believe that the statute authorized same-party joinder; however, despite that belief, they ruled in favor of permitting joinder because the Director had noted in a previous case that same-party joinder should be permitted:

In the oral argument of Oil States, Justice Kennedy asked what would be the situation if the stacking of panels by the Chief Judge of the PTAB were rampant:

11   MR. KISE: Well, Mr. Chief Justice,

12   the panel packing, if you will, mentioned by

13   Petitioner in the briefs, I don’t believe -­

14   and — and I’ll leave it to the government to

15   — to have the exact statistics — precise

16   statistics, but I don’t believe that’s taken

17   place more than one or two times, and I don’t

18   believe it’s taken place with respect -­

19   JUSTICE KENNEDY: Well, suppose it

20   were rampant.

I suppose rampant is a subjective term; but, in the oral argument of Nidec v. Zhongshan, the Solicitor for the USPTO, who once served as the acting Chief Judge of the PTAB, commented that over the years panels of the Board have been expanded “many, many times.”

You can listen to the sound bite from Nidec here: [Listen].  Or, you can find it at the 25 min 40 second mark of the oral argument in Nidec Motor Corp. v. ZHONGSHAN BROAD OCEAN MOTOR, 868 F.3d 1013 (Fed. Cir. 2017), available at: [Link].   Or, you can review the exchange from Nidec below:

Judge Reyna: What kind of uniformity or certainty do we have in that where the PTAB can look at a prior decision and say well we don’t like that, let’s jump back in there and change that?

PTO: Well, ….

Judge Wallach: How does the Director choose which judge to assign to expand the panel?

PTO: Uh, that’s provided, your Honor, by our standard operating procedure. And, the Chief Judge actually makes that decision.And, the judges are selected based on their technical and legal competency. And, over the years, many many panels at the Board have been expanded. In fact if you looked at the thirty . . . .

Judge Reyna: Are they selected on whether they’re going to rule in a certain way?

PTO: Uh, well, people can be placed on the panel . . . for example, the Director can place him or herself on the panel, and certainly the Director knows how they’re going to rule. Nidec has not said and they say at their blue brief at page 43 that they don’t challenge the independence of these judges on this panel. Um, these judges were not selected and told to make a particular decision. If judges could be told to make a particular decision, there would be no need to expand a panel in the first place.