Amicus Curiae Brief — Return Mail, Inc., Petitioner v. United States Postal Service, et al.

No. 17-1594

IN THE

Supreme Court of the United States

RETURN MAIL, INC.,

Petitioner,

v.

UNITED STATES POSTAL SERVICE, ET AL.,

Respondents.

On Writ of Certiorari

To The United States Court of Appeals

For The Federal Circuit

BRIEF FOR THE CATO INSTITUTE AND

PROFESSOR GREGORY DOLIN AS AMICI

CURIAE IN SUPPORT OF PETITIONER

BENJAMIN M. FLOWERS

JONES DAY

325 John H. McConnell

Blvd., Suite 600

Columbus, OH 43220

ILYA SHAPIRO

CATO INSTITUTE

1000 Mass. Ave. N.W.

Washington, D.C. 20001

GREGORY A. CASTANIAS

Counsel of Record

JONES DAY

51 Louisiana Ave., NW

Washington, DC 20001

(202) 879-3939

gcastanias@jonesday.com

DAVID B. COCHRAN

JONES DAY

North Point

901 Lakeside Ave.

Cleveland, OH 44114

Counsel for Amici Curiae

i

QUESTION PRESENTED

Whether the government is a “person” who may

petition to institute review proceedings under the

America Invents Act.

ii

TABLE OF CONTENTS

Page

QUESTION PRESENTED...........................................i

TABLE OF AUTHORITIES ...................................... iii

INTEREST OF AMICI CURIAE ................................ 1

INTRODUCTION ........................................................ 1

SUMMARY OF ARGUMENT ..................................... 2

ARGUMENT ............................................................... 6

I.

Return Mail’s interpretation of

“person” helps preserve the uniform

execution of the patent laws................................. 6

A. Congress must speak clearly to

permit the division of executive

authority ......................................................... 7

B. The proper reading of “person”

reduces intra-Executive conflict .................. 11

II. The Federal Circuit’s interpretation

also raises Due Process concerns ....................... 13

CONCLUSION .......................................................... 17

iii

TABLE OF AUTHORITIES

Page(s)

CASES

Bennett Regulator Guards, Inc. v.

Atlanta Gas Light Co.,

905 F.3d 1311 (Fed. Cir. 2018) ............................ 17

Bond v. United States,

572 U.S. 844 (2014) ................................................ 7

Concrete Pipe & Prods. of Cal., Inc. v.

Constr. Laborers Pension Tr. for S. Cal.,

508 U.S. 602 (1993) .............................................. 17

Dr. Bonham’s Case,

77 Eng. Rep. 646 (C.P. 1610) ............................... 14

Free Enter. Fund v. PCAOB,

561 U.S. 477 (2010) ............................................ 7, 9

Gibson v. Berryhill,

411 U.S. 564 (1973) ...................................... 2, 4, 14

Humphrey’s Ex’r v. United States,

295 U.S. 602 (1935) ............................................ 3, 8

In re Murchison,

349 U.S. 133 (1955) .............................................. 14

Morrison v. Olson,

487 U.S. 654 (1988) ............................................ 8, 9

Nidec Motor Corp. v. Zhongshan Broad

Ocean Motor Co. Matal,

868 F.3d 1013 (Fed. Cir. 2017) .................. 5, 15, 16

iv

TABLE OF AUTHORITIES

(continued)

Page(s)

Oil States Energy Servs., LLC v.

Greene’s Energy Group, LLC,

138 S. Ct. 1365 (2018) .................................. passim

PHH Corp. v. CFPB,

881 F.3d 75 (D.C. Cir. 2018) .............................. 3, 4

S.E.C. v. Fed. Labor Relations Auth.,

568 F.3d 990 (D.C. Cir. 2009) .................. 3, 8, 9, 11

SAS Institute, Inc. v. Iancu,

138 S. Ct. 1348 (2018) .......................................... 14

Shurtleff v. United States,

189 U.S. 311 (1903) ...................................... passim

Tumey v. State of Ohio,

273 U.S. 510 (1927) .............................................. 14

United States v. ICC,

337 U.S. 426 (1949) .............................................. 11

United States v. Schurz,

102 U.S. 378 (1880) .............................................. 10

Webster v. Doe,

486 U.S. 592 (1988) ................................................ 7

Whitman v. Am. Trucking Ass’ns,

531 U.S. 457 (2001) ................................................ 7

CONSTITUTIONAL AND STATUTORY AUTHORITIES

U.S. Const., Art. II, § 1 ............................................ 3, 7

28 U.S.C. § 1498 .................................................... 5, 16

35 U.S.C. § 6 .............................................................. 15

v

TABLE OF AUTHORITIES

(continued)

Page(s)

35 U.S.C. § 143 ...................................................... 3, 12

35 U.S.C. § 303 .................................................... 10, 11

35 U.S.C. § 311 ...................................................... 3, 12

35 U.S.C. § 319 ...................................................... 3, 12

35 U.S.C. § 321 ...................................................... 3, 12

35 U.S.C. § 329 ...................................................... 3, 12

OTHER AUTHORITIES

37 C.F.R. § 1.520 ....................................................... 11

America Invents Act,

Pub. L. No. 112-29,

125 Stat. 284 (2011) ......................................... 3, 12

Steven G. Calabresi,

Some Normative Arguments for the

Unitary Executive,

48 Ark. L. Rev. 23 (1995) ..................................... 10

Scalia & Garner,

READING LAW (2012) .............................................. 6

Jonathan S. Masur,

Patent Inflation,

121 Yale L. J. 470 (2011) ..................................... 15

Saikrishna Prakash,

The Chief Prosecutor,

73 Geo. Wash. L. Rev. 521 (2005) .......................... 9

INTEREST OF AMICI CURIAE*

The Cato Institute is a nonpartisan, public policy

research foundation founded in 1977 and dedicated to

advancing the principles of individual liberty, free

markets, and limited government. Cato’s Robert A.

Levy Center for Constitutional Studies helps restore

the principles of constitutional government that are

the foundation of liberty. To those ends, Cato holds

conferences; publishes books, studies, and the annual

Cato Supreme Court Review; and files amicus briefs.

Professor Gregory Dolin teaches law at the University of Baltimore Law School, where his academic

work focuses on intellectual property; in particular,

patent law.

Amici are interested in preserving the separation

of powers, which in this case is also important to the

stability of legal standards and due process for patentreview proceedings. For the reasons explained in this

brief, the government’s position jeopardizes these interests.

INTRODUCTION

Return Mail’s opening brief provides all the justification this Court needs for reversing the Federal

Circuit. This amicus brief provides two more reasons

for doing so. First, the government’s reading of “person” in the America Invents Act would disrupt the

uniform enforcement and application of the patent

*

In accordance with Supreme Court Rule 37.6, amici state

that no counsel for a party authored this brief in any part, and

that no person or entity, other than amici and their counsel,

made a monetary contribution to fund its preparation and submission. All parties have consented in writing to the filing of this

amicus brief.

2

laws by permitting independent agencies to challenge

the rest of the Executive Branch’s interpretation of

those laws in court. Second, the government’s reading

would create Due Process problems by forcing patentees to defend the patentability of their patents before

the Executive Branch in cases where the Executive

Branch has a direct interest and the power to manipulate the outcome of the proceedings. To avoid these

results, the Court should read “person” as Return

Mail does, and hold that it does not include executive

agencies.

SUMMARY OF ARGUMENT

The Constitution vests all executive power in one

person: the President of the United States. It elsewhere limits the ways in which he can exercise that

power. For example, while this Court’s precedents

permit executive agencies to adjudicate post-grant patentability challenges, the Due Process Clause requires agencies to provide an impartial forum. See Oil

States Energy Servs., LLC v. Greene’s Energy Group,

LLC, 138 S. Ct. 1365, 1370, 1379 (2018); Gibson v.

Berryhill, 411 U.S. 564, 579 (1973). The government’s

position—under which executive agencies are “person[s]” who can institute review proceedings under

the America Invents Act, BIO.8—will cause the Act to

run afoul of these principles in certain applications.

The Court should avoid that by holding that “person,”

as used in the America Invents Act, does not include

executive agencies.

I. If the word “person” in the America Invents Act

included executive agencies, then it would permit independent executive agencies to undermine the uniform enforcement of the patent laws. Indeed, it would

3

allow for “the constitutional oddity of a case pitting

two agencies in the Executive Branch against one another.” S.E.C. v. Fed. Labor Relations Auth., 568 F.3d

990, 996 (D.C. Cir. 2009) (Kavanaugh, J., concurring).

The Act permits “person[s]” to initiate inter partes,

post-grant, and covered-business-method review proceedings before the Patent Trial and Appeal Board.

See 35 U.S.C. §§ 311, 321; America Invents Act

§ 18(a)(1)(B), Pub. L. No. 112-29, 125 Stat. 284, 329–

31 (2011). It permits those same persons to appeal the

Board’s decision to the Federal Circuit, where the

PTO Director may intervene to defend the Board’s decision. See 35 U.S.C. §§ 319, 329, 143; America Invents Act § 18(a)(1), 125 Stat. at 329–31. If these “persons” include executive agencies, then the America Invents Act permits one executive agency—for example,

the Postal Service—to challenge another’s interpretation and application of federal law, and even to litigate

that dispute against the other agency (the PTO) in an

Article III court.

This is an oddity because the Constitution vests

“[t]he executive Power” in the President alone. U.S.

Const., Art. II, § 1, cl. 1. Thus, a case in which one

agency challenges another’s enforcement of the law

amounts to a case in which the President is challenging himself. The oddity can arise because this Court’s

precedents permit Congress to create “independent

agencies”; that is, executive agencies whose heads are

to some degree insulated from Presidential control.

See Humphrey’s Ex’r v. United States, 295 U.S. 602,

630–32 (1935). Because of this insulation, independent agencies (like the Postal Service) can take positions at odds with the President’s own. But see PHH

4

Corp. v. CFPB, 881 F.3d 75, 135 (D.C. Cir. 2018) (Griffith, J., concurring in judgment) (arguing that the

heads of independent agencies can generally be removed “based on policy decisions that amount[] to inefficiency.”). The result is a plural Executive; a multiheaded Executive that may not always agree with itself, and that may even wind up in litigation against

itself.

But even though this Court’s precedents (in contrast to the Constitution) permit Congress to redistribute executive power to independent agencies, they

allow it to do so only with “very clear and explicit language.” Shurtleff v. United States, 189 U.S. 311, 315

(1903). Thus, if Congress wishes to divide executive

power by allowing independent agencies to challenge

the Executive Branch’s application of law in court, it

should have to do so clearly.

The America Invents Act does not even approach

that level of clarity. For all the reasons in Return

Mail’s brief, “person” is best understood not to include

executive agencies. But even if the Court thinks the

issue is close, it should reject the Federal Circuit’s

reading because Congress has not clearly permitted

executive agencies to undermine in court the uniform

execution of the patent laws.

II. The Fifth Amendment’s Due Process Clause

requires the President to provide impartial forums for

any administrative adjudications. See Gibson, 411

U.S. at 579. But if the word “person” in the America

Invents Act includes executive agencies, then it will

be impossible for the Executive to provide a forum free

of actual or apparent bias in certain matters. This follows from three aspects of the patent system.

5

First, the Patent Trial and Appeal Board is composed of administrative patent judges who serve at

the pleasure of the Director; himself a “political appointee who serves at the pleasure of the President.”

Oil States, 138 S. Ct. at 1380 (Gorsuch, J. dissenting)

(citing 35 U.S.C. §§ 3(a)(1), (a)(4)). This creates pressure to achieve the Director’s (and, ultimately, the

President’s) preferred resolution of any given patent

dispute.

Second, the Director may “select which” judges,

“and how many of them, will hear any particular patent challenge.” Id. at 1381 (citing 35 U.S.C. § 6(c)).

Thus, the Director can “stack” panels, selecting judges

who he knows are most likely to reach his preferred

result. “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.” Id. (citing 35 U.S.C. §§ 6(a), (c)). The Director

has in fact exercised this authority on multiple occasions, ordering rehearing and stacking panels to obtain a new result. Infra 15–16; Nidec Motor Corp. v.

Zhongshan Broad Ocean Motor Co. Matal, 868 F.3d

1013, 1020 (Fed. Cir. 2017) (Dyk, J., concurring).

Finally, the Executive Branch has an interest in

the cancellation of certain patents. While it cannot be

sued for infringement, it can be sued for a takings violation if it practices a patented invention without a

license. 28 U.S.C. § 1498.

Combining these three features of the patent system creates a significant problem for the government’s reading of “person.” If this word includes executive agencies, then one executive agency with an

interest in canceling a patent can initiate review before another arm of the Executive, and that second

6

arm of the Executive can rig the proceedings to ensure

(or increase the odds of) cancellation. This creates, at

bare minimum, an unconstitutional appearance of

bias in review proceedings initiated by an executive

agency. The Court can avoid this particular Due Process problem by giving “person” its well-established

meaning, under which it does not include “the sovereign.” Scalia & Garner, READING LAW § 44, p.273

(2012) (“The word person includes corporations and

other entities, but not the sovereign.”).

ARGUMENT

The America Invents Act allows “person[s]” to initiate reviews of patents. The Act means what it says:

only persons can petition for review. Since executive

agencies are not persons—either in everyday English,

under the relevant statutory definitions, or in light of

this Court’s precedents—that should be the end of the

matter. See Petr’s Br. 20–32. But to the extent the

Court finds the issue close, two further concerns militate against the government’s reading. First, that

reading would allow independent agencies to undermine the President’s control over the Executive

Branch. Second, if executive agencies can initiate

these proceedings, then in at least some cases there

will be a risk of actual or perceived bias against the

patentee and in favor of the Executive Branch challenger.

I.

Return Mail’s interpretation of “person”

helps preserve the uniform execution of the

patent laws.

If the America Invents Act’s use of “person” includes executive agencies, then it permits independent agencies to challenge the President’s enforcement

7

and application of the patent laws in court. Assuming

such suits should ever be permitted, statutes should

be read to allow them only when they do so clearly.

The Act’s use of “person” does not satisfy that clearstatement requirement.

A. Congress must speak clearly to permit

the division of executive authority.

Congress does not “hide elephants in mouseholes.”

Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468

(2001). Among the biggest “elephants” are laws that

interfere with, or intrude upon, the powers of other

constitutional actors. Thus, for example, this Court

requires a very clear statement before it will read a

congressional enactment to regulate matters traditionally left to the states, such as “purely local crime.”

See, e.g., Bond v. United States, 572 U.S. 844, 859–60

(2014). Similarly, the Court applies an analogous requirement to laws alleged to strip federal courts of jurisdiction over constitutional claims. See, e.g., Webster v. Doe, 486 U.S. 592, 603 (1988). And, most relevant here, the Court requires “very clear and explicit

language” before it will read a statute to limit the

President’s constitutional powers—for example, his

power to remove executive officers. Shurtleff v.

United States, 189 U.S. 311, 315 (1903); see also Free

Enter. Fund v. PCAOB, 561 U.S. 477, 546 (2010)

(Breyer, J., dissenting) (quoting Shurtleff).

Permitting independent agencies to challenge actions by other parts of the Executive Branch in court

certainly limits the President’s executive authority.

To see why, begin with Article II’s vesting clause:

“The executive Power shall be vested in a President of

the United States.” Art. II, § 1, cl.1. This clause

8

speaks of “[t]he executive power”; not “some of the executive power, but all of the executive power.” Morrison v. Olson, 487 U.S. 654, 705 (1988) (Scalia, J., dissenting). And because this power is vested in a single

person—“a President of the United States”—Congress

may not assign any of it to some other actor. It is the

President’s alone. The complete and indivisible nature of this power is irreconcilable with permitting an

executive agency to undermine the President’s uniform application of the law—such as by challenging

him (or his subordinates) in court. If agencies have

the power to take a position at odds with the President’s understanding of the laws, then the Executive

is in no sense unitary.

That is what makes “a case pitting two agencies

in the Executive Branch against one another” a “constitutional oddity.” SEC, 568 F.3d at 996 (Kavanaugh, J., concurring). Such suits rarely arise; and

they should never arise if the Executive Branch is

properly treated as a unitary entity. These cases arise

nonetheless because this Court has carved out “extraconstitutional” exceptions to Article II’s vesting

clause. Id. at 997. In particular, this Court long ago

approved of independent agencies. See Humphrey’s

Executor, 295 U.S. at 631–32. “Independent agencies

are those agencies whose heads cannot be removed by

the President except for cause and that therefore typically operate with some (undefined) degree of substantive autonomy from the President.” SEC, 568

F.3d at 997 (Kavanaugh, J., concurring). This “independence” permits intra-Executive disputes that the

President is hindered in resolving. It also permits

agencies to be adverse to one another as required for

Article III standing; such adversity is impossible in

9

disputes between non-independent agencies, since

those agencies are “subordinate parts of a single organization” headed by the President. Id.

As alluded to above, the Court’s approval of independent agencies is tempered by a clear-statement

rule: exceptions to the President’s power to remove

(and thus control) agency heads can be imposed only

with “very clear and explicit language.” Shurtleff, 189

U.S. at 315; see also Free Enter. Fund, 561 U.S. at 546

(Breyer, J., dissenting). This ensures that any further

erosion of the unitary Executive—to the extent it is

allowed at all—comes from Congress, and only as a

result of Congress’s deliberate choice.

The same logic that supports a clear-statement

rule for the creation of independent agencies applies a

fortiori to laws permitting independent agencies to

challenge other agencies’ determinations in court. Because such intra-branch challenges put the Executive

Branch at war with itself, they are even more inconsistent with the notion of a unitary Executive than restrictions on removal. The Framers adopted the unitary model to ensure, among other things, “uniform

application of the law.” Morrison, 487 U.S. at 732

(Scalia, J., dissenting); see also The Federalist No 70,

471 (A. Hamilton) (J. Cooke ed. 1965); Saikrishna Prakash, The Chief Prosecutor, 73 Geo. Wash. L. Rev. 521,

538 & n.122 (2005). What could be more contrary to

uniformity than two members of the same Executive

Branch seeking judicial resolution of a dispute regarding the meaning or application of federal law? See

Letter from the Justices of the Supreme Court to

George Washington (Aug. 8, 1793), in 6 Documentary

History of the Supreme Court Of The United States,

1789-1800, at 755 (rejecting the invitation to advise

10

the President on a resolution of a difficult legal question and leaving it to the President’s “Judgment [to]

discern what is Right … [for] the Preservation of the

Rights, Peace, and Dignity of the United States.”).

The Framers similarly believed that a unitary Executive enhanced accountability; if the buck stops at

the President’s desk, he cannot (easily, anyway) attribute his failings to others. See The Federalist No.

70 at 476 (A. Hamilton); Steven G. Calabresi, Some

Normative Arguments for the Unitary Executive, 48

Ark. L. Rev. 23, 42–45 (1995). That accountability is

seriously undermined if the President’s control is so

lacking that one of his subordinates can, without his

approval—or even in the face of his disapproval—

challenge his interpretation and application of the

laws in court.

Of course, the Executive can change its interpretation of federal law. Thus, it may disavow some previously taken position. For example, an executive

agency (independent or otherwise) that disputes a patent’s validity in a federal lawsuit against a private

party is not necessarily acting contrary to the concept

of a unitary Executive; it may be that the entire Executive Branch would now agree that the patent is invalid. In these cases, the Executive merely states that

it erred when it issued the patent and now seeks, as a

matter of equity, judicial cancellation of the same. Cf.

United States v. Schurz, 102 U.S. 378, 401–02 (1880).

This is entirely consistent with the ancient practice of

patent cancellation on a writ of scire facias. See id. at

404; Oil States, 138 S. Ct. at 1376. It is also consistent

with permitting the Patent Office to sua sponte order

patents into ex parte reexamination, see 35 U.S.C.

11

§ 303(a); 37 C.F.R. § 1.520, because, again, the Executive Branch is speaking with one voice, even if the content of its speech has changed. The problem arises

when an agency seeks judicial resolution of a dispute

with another part of the Executive Branch; for example, when an independent agency seeks to overturn an

adverse decision of another agency in court, or (more

starkly) when an independent agency litigates against

the other agency in federal court. That cannot be

squared with the concept of a unitary Executive.

None of this is to deny that this Court’s precedents

permit suits between independent agencies and the

rest of the Executive. They do. See, e.g., United States

v. ICC, 337 U.S. 426, 430 (1949). But just as the Court

requires Congress to speak with “very clear and explicit language” before limiting the President’s removal power, Shurtleff, 189 U.S. at 315, so too should

it require very clear and explicit language before reading a statute to permit independent agencies to seek

in-court resolutions of intra-Executive disputes.

B. The proper reading of “person” reduces

intra-Executive conflict.

The government’s unnatural reading of “person”

in the America Invents Act—under which “the United

States is a ‘person,’” BIO.8—allows for “the constitutional oddity of a case pitting two agencies in the Executive Branch against one another.” SEC, 568 F.3d

at 996 (Kavanaugh, J., concurring). Because the statute is susceptible of other interpretations—indeed, far

better interpretations—Congress has not spoken with

the clarity needed to permit such suits.

12

Three separate provisions of the Act permit a “person” to petition the PTO to institute review proceedings in the Patent Trial and Appeal Board (which is

part of the PTO). See 35 U.S.C. §§ 311, 321; America

Invents Act § 18(a)(1)(B), Pub. L. No. 112-29, 125 Stat.

284, 329–31 (2011). If the Director grants the petition,

the Patent Trial and Appeal Board will reassess the

patentability of the patent that the “person” challenges.

None of those provisions, standing alone, threatens to improperly divide executive power. Indeed, because the PTO is a traditional executive agency (rather than an independent agency), encouraging agencies to take up their disagreements regarding the

PTO’s patent issuance with the PTO itself could help

preserve uniformity in the patent law by channeling

all intra-Executive patent disputes to the President

for a definitive statement of the Executive’s views.

The trouble arises because, if “person” includes

executive agencies, the PTO’s resolution does not definitively resolve the Executive’s views. The Act permits any “party dissatisfied with the final written decision” of the Board to “appeal the decision pursuant

to sections 141 through 144” of the Patent Act. See 35

U.S.C. §§ 319, 329. Sections 141 through 144 permit

an appeal to the Federal Circuit, where the PTO Director can “intervene” and defend the Board’s ruling.

Id. at § 143. Thus, if an agency were to appeal the

Board’s reaffirmation of patentability, its appeal to

the Federal Circuit would risk pitting the Executive

Branch against itself: the PTO Director versus some

other agency. Indeed, even if the Director does not intervene, such appeals still entail a dispute between

13

the appealing agency and the PTO regarding the application of federal law.

This problem could perhaps be avoided in practice

if the President retained control over all agencies; if

that were the case, the President could forbid such appeals. But he lacks this control: independent agencies

can act contrary to his wishes with little repercussion.

This case did not give rise to this scenario, because the

Board happened to agree with the Postal Service—an

independent agency—that Return Mail’s invention is

not patentable. (The Board rejected the Postal Service’s arguments in an earlier ex parte reexamination,

but changed its position in the proceedings below. See

Cert. Petn. 9.) More is at stake, however, than the

result in this case. Under the government’s interpretation of “person,” the America Invents Act allows

agencies to challenge the PTO’s patentability determinations in court. The Court should not sanction that

reading absent “very clear and explicit language” requiring it. Shurtleff, 189 U.S. at 315. Here, there is

none.

*

*

*

All this is perhaps gilding the lily, since the word

“person” does not include the United States for all the

reasons in Return Mail’s brief. But insofar as the

Court finds any ambiguity, it should resolve it against

the government.

II. The Federal Circuit’s interpretation also

raises Due Process concerns.

To say that the President possesses all executive

power is not to say that he can exercise it however he

pleases. The Constitution imposes limits. For exam-

14

ple, while this Court’s precedents permit the Executive to adjudicate certain disputes—including inter

partes and post-grant reviews, Oil States, 138 S. Ct. at

1370—the Due Process Clause requires that it provide

an impartial forum. The government’s reading of

“person” brings the Act into conflict with this requirement, by forcing some patentees to litigate disputes

before the Executive Branch notwithstanding that

branch’s interest in the case and ability to manipulate

the results.

A. “A fair trial in a fair tribunal is a basic requirement of due process.” In re Murchison, 349 U.S. 133,

136 (1955). As a result, officials “acting in a judicial

or quasi judicial capacity are disqualified by their interest in the controversy.” Tumey v. State of Ohio, 273

U.S. 510, 522 (1927). This rule long predates the Constitution. See, e.g., Dr. Bonham’s Case, 77 Eng. Rep.

646, 652 (C.P. 1610). It still applies today to Article

III judges. And, as is true of “(m)ost of the law concerning disqualification,” it applies “with equal force

to . . . administrative adjudicators.” Gibson, 411 U.S.

at 579. Individuals or tribunals may not exercise judicial or quasi-judicial authority over disputes that

implicate their interests.

There is no doubt that inter partes and post-grant

review proceedings are quasi-judicial. Each involves

discovery (including depositions of witnesses), briefing and motion practice, and oral argument in front of

the Patent Trial and Appeal Board prior to its rendering a final written decision. See Oil States, 138 S. Ct.

at 1378. These proceedings “mimic[] civil litigation.”

SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348, 1352

(2018). Thus, they must accord with the dictates of

due process. And even if that were not true, courts

15

should be reluctant to read a congressional act as permitting a hearing before a potentially biased tribunal.

Cf. Oil States, 138 S. Ct. at 1381 (Gorsuch, J. dissenting) (noting potential Due Process problems that arise

from “panel-stacking” in inter partes review).

B. If the government is correct about the meaning

of “person,” a potentially biased tribunal is exactly

what some patentees may receive. To see why, first

consider two aspects of the Director’s authority:

The first important consideration is that the administrative patent judges who sit on the Patent Trial

and Appeal Board serve at the Director’s pleasure.

See 35 U.S.C. § 6(a); see also Jonathan S. Masur, Patent Inflation, 121 Yale L. J. 470, 496 n.106 (2011).

This gives the Director (and the President, to whom

he reports) significant ability to sway the resolution of

any proceeding before these judges. See Oil States,

138 S. Ct. at 1381 (Gorsuch, J., dissenting).

The second important consideration is that the Director can “stack” panels. The Director need not randomly select judges for the Board’s panels, as the

clerk’s office of an appellate court would. Instead, the

Director is free to add as many judges as needed to

obtain the result he prefers. See Oil States, 138 S. Ct.

at 1381 (Gorsuch, J., dissenting). Directors have in

fact exercised this power to alter the outcome of proceedings. See Gregory Dolin, Yes, the PTAB is Unconstitutional, 17 Chi.-Kent J. Intel. Prop. 457, 482–83

(2018). In Nidec Motor Corp. v. Zhongshan Broad

Ocean Motor Co., for example, the Director granted rehearing of a three-judge panel’s decision, added two

more-favorable judges, and changed the result: instead of a 2-1 decision for the patentee, the Board issued a 3-2 decision for the challenger. 868 F.3d at

16

1015–16; see also IPR2015-00762, Paper Nos. 12, 16

(PTAB). In Target Corp. v. Destination Maternity

Corp., the Director, after failing to achieve an unpatentability finding, added two members. The new

panel ruled for the challenger 4-3. IPR2014-00508,

Paper Nos. 18, 28, 31, 32 (PTAB).

These two attributes of the Director’s power give

him—and, by extension, the President—immense

power to sway the outcome of any particular proceeding. See Dolin, 17 Chi.-Kent J. Intel. Prop. at 483 (noting that “if the Director can order the Board to [change

its judgment], so too can her bosses—the Secretary of

Commerce and the President.”). And that is particularly worrisome in cases where one executive agency,

particularly a traditional one under the President’s

control, asks the PTO to review and cancel an alreadyissued patent. The Executive Branch has a direct, financial interest in the cancellation of many patents,

because it can be sued for taking property without just

compensation if it practices a patent without a license.

28 U.S.C. § 1498. Particularly where such a license

would be expensive, the Executive has an obvious interest in cancelling the patent so that it can practice

it for free. The government’s reading of “person”

makes it easier to achieve that result: if “person” includes executive agencies, then the Executive can initiate a review proceeding before the Board and assure

a favorable resolution by manipulating the panel’s

composition—a panel that will in any event consist of

non-independent judges whose professional interests

involve pleasing the Director and the President. This

creates an appearance of bias at best, and actual bias

at worst. The Court should not read a statute to permit such actual or apparent bias.

17

It is no answer to say that the patentee can appeal

any adverse decision to the Federal Circuit. “Even appeal and a trial de novo will not cure a failure to provide a neutral and detached adjudicator.” Concrete

Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension

Tr. for S. Cal., 508 U.S. 602, 618 (1993). And here, the

appeal is not de novo; the Federal Circuit reviews “the

Board’s legal conclusions de novo,” but “its fact findings for substantial evidence.” Bennett Regulator

Guards, Inc. v. Atlanta Gas Light Co., 905 F.3d 1311,

1314 (Fed. Cir. 2018).

This problem, just like the problem discussed in

the previous section, is avoided by giving “person” the

reading for which Return Mail advocates. To be sure,

this may leave the PTO Director with the ability to

manipulate panels to achieve the results he wants—

he may even do so to benefit the Executive Branch.

But reading “person” as not including executive agencies at least eliminates one class of cases in which the

risk of bias is particularly stark.

CONCLUSION

This Court should reverse the Federal Circuit’s

judgment.

18

DECEMBER 17, 2018

Respectfully submitted,

BENJAMIN M. FLOWERS

JONES DAY

325 John H. McConnell,

Blvd., Suite 600

Columbus, OH 43220

GREGORY A. CASTANIAS

Counsel of Record

JONES DAY

51 Louisiana Ave., NW

Washington, DC 20001

(202) 879-3939

gcastanias@jonesday.com

ILYA SHAPIRO

CATO INSTITUTE

1000 Mass. Ave. N.W.

Washington, D.C. 20001

DAVID B. COCHRAN

JONES DAY

North Point

901 Lakeside Ave.

Cleveland, OH 44114

Counsel for Amici Curiae