Amicus Curiae Brief — United States, Petitioner v. Arthrex, Inc., et al.

Nos. 19-1434, 19-1452, 19-1458

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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 FOR US INVENTOR INC. AS AMICUS

CURIAE IN SUPPORT OF ARTHREX, INC.

---------------------------------♦--------------------------------ROBERT GREENSPOON

Counsel of Record

FLACHSBART & GREENSPOON, LLC

333 N. Michigan Avenue, Suite 2700

Chicago, Illinois 60601

(312) 551-9500

rpg@fg-law.com

Counsel for Amicus 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.,

Respondents.

---------------------------------♦--------------------------------ARTHREX, INC.,

Petitioner,

v.

SMITH & NEPHEW, INC., ET AL.,

Respondents.

---------------------------------♦---------------------------------

i

QUESTIONS PRESENTED

1. Whether, for purposes of the Appointments

Clause, U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges of the U.S. Patent and Trademark Office

are principal officers who must be appointed by the

President with the Senate’s advice and consent, or “inferior Officers” whose appointment Congress has permissibly vested in a department head.

2. Whether, if administrative patent judges are

principal officers, the court of appeals properly cured

any Appointments Clause defect in the current statutory scheme prospectively by severing the application

of 5 U.S.C. § 7513(a) to those judges.

ii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ................................

i

TABLE OF CONTENTS ......................................

ii

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

iii

INTEREST OF AMICUS CURIAE ......................

1

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

2

CONSTITUTIONAL AND PROCEDURAL BACKGROUND ..........................................................

3

A.

B.

C.

Disposition of a Previous Constitutional

Challenge Sets Up the Problem ................

3

Due Process Impartiality Problems at the

PTAB Magnify the Importance of Proper

APJ Hiring .................................................

6

APJ Hiring Currently Lacks Transparency, Leading to Unjust Outcomes ............

9

ARGUMENT ........................................................ 14

I.

Removing APJ Tenure Protection to Make

Their Jobs More Political Does Not Validly

Remedy the Appointments Clause Violation ............................................................. 14

II.

This Court Can Devise a Better-Targeted

Remedy ...................................................... 19

III.

The Panel Misread Constitutional Case

Law ............................................................ 24

CONCLUSION..................................................... 27

iii

TABLE OF AUTHORITIES

Page

CASES

Alaska Airlines, Inc. v. Brock, 480 U.S. 678 (1987)........ 21

Arthrex, Inc. v. Smith & Nephew, Inc., 953 F.3d

760 (Fed. Cir. 2020) ............................... 15, 17, 22, 27

Edmond v. United States, 520 U.S. 651 (1997) .... 18, 19

Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477

(2010) ............................................................. 24, 25, 26

Hyosung TNS Inc. v. Int’l Trade Comm’n, 926

F.3d 1353 (Fed. Cir. 2019) .......................................21

Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board, 684 F.3d 1332 (D.C. Cir.

2012) ............................................................ 24, 25, 26

Lucia v. SEC, 138 S. Ct. 2044 (2018) ................... 19, 20

New Vision Gaming & Development, Inc. v. SG

Gaming, Inc., No. 20-1399 (Fed. Cir.)................ 6, 8, 9

Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 138 S. Ct. 1365 (2018) .... 3, 4, 5, 18

United States v. Stevens, 559 U.S. 460 (2010) ..............4

CONSTITUTIONAL PROVISIONS

U.S. Const. art. I, § 8, cl. 8.............................................2

iv

TABLE OF AUTHORITIES—Continued

Page

STATUTES

35 U.S.C. § 6(a) ............................................................10

35 U.S.C. § 285 ............................................................23

35 U.S.C. § 318(b) ........................................................20

35 U.S.C. § 328(b) ........................................................20

OTHER AUTHORITIES

Dani Kass, Fed. Cir. Told PTAB’s Fee Model Undercuts Due Process, Law360 (July 2, 2020) ............8

1

INTEREST OF AMICUS CURIAE1

US Inventor, Inc. is an inventor-led and inventorfunded non-profit advocacy organization. We represent

more than 10,000 independent inventors along with

the small businesses they founded, own, and operate.

We seek to educate lawmakers, agencies, and courts on

matters that affect our members, and participate as

permitted in shaping and reforming those policies.

We are neither lawyers nor lobbyists, merely inventors who were shocked and harmed by unintended

consequences of policies from the past and desire a better environment so that the next generation of inventors can flourish and help society. Our directors and

volunteers would prefer to be tinkering in our garages

or launching new products, but we have come to recognize that policymakers and courts benefit from our experiences and viewpoints as they make and apply

patent law.

US Inventor was founded to support the innovation efforts of the “little guy” inventors, seeking reliable patent rights for developing our inventions,

bringing those inventions to a point where they can be

commercialized, creating jobs and industries, and promoting continued innovation. In short, we are proponents of “securing for limited times to . . . inventors the

1

No counsel for a party authored this brief in whole or in

part. No person or entity other than Amicus or its counsel made

a monetary contribution to the preparation or submission of this

brief. Consent for filing this Amicus Brief has been obtained from

all parties, via docket-filed blanket consents.

2

exclusive right to their . . . discoveries” in order to “promote the progress of Science and Useful arts.” U.S.

Const. art. I, § 8, cl. 8. Our broad experience with the

patent system, new technologies, and creating companies, gives us a unique perspective on the important

issues presented in this appeal.

US Inventor’s membership includes litigants involuntarily drawn into proceedings before the Administrative Patent Judges (APJs) identified as having

been appointed in violation of the Appointments

Clause. As a friend of the Court, US Inventor has perspective to supply additional information beyond that

shown by Arthrex for assessing the soundness of the

Federal Circuit remedy (or “fix”) for the adjudged unconstitutionality.

---------------------------------♦---------------------------------

SUMMARY OF ARGUMENT

The court of appeals’ remedy for the Appointments

Clause violation would not have been preferred by

Congress, and overlooks a constitutionally sound and

non-disruptive way to downgrade APJs to inferior or

non-officer status.

---------------------------------♦---------------------------------

3

CONSTITUTIONAL AND

PROCEDURAL BACKGROUND

This Court knows that passing one constitutional

test does not preordain passing another. On the facts

here, just because the Patent Trial and Appeal Board

(PTAB) passes Article III does not mean that the manner in which its Administrative Patent Judges get

their jobs passes the Appointments Clause.

A. Disposition of a Previous Constitutional

Challenge Sets Up the Problem

A divided Court in Oil States Energy Services, LLC

v. Greene’s Energy Group, LLC ruled that when canceling vested patent rights based on a challenger’s invalidity assertions, the PTAB of the United States Patent

and Trademark Office (USPTO) does not assert the “judicial power.” 138 S. Ct. 1365 (2018). Congress’s creation of invalidity trials at the PTAB in 2011 did not

violate Article III Separation of Powers. In dissent,

Justice Gorsuch (joined by the Chief Justice) channeled the thinking of Amicus US Inventor and its

membership.

Justice Gorsuch wrote poignantly about the dilemma the Oil States majority ruling made for individual inventors, and access to justice:

After much hard work and no little investment you devise something you think truly

novel. Then you endure the further cost and

effort of applying for a patent, devoting maybe

$30,000 and two years to that process alone.

4

At the end of it all, the Patent Office agrees

your invention is novel and issues a patent.

The patent affords you exclusive rights to the

fruits of your labor for two decades. But what

happens if someone later emerges from the

woodwork, arguing that it was all a mistake

and your patent should be canceled? Can a political appointee and his administrative

agents, instead of an independent judge, resolve the dispute? The Court says yes. Respectfully, I disagree.

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

(emphasis added). At issue today are those “administrative agents” who hold so much power over the life’s

work of so many. Are they hired properly under the

Constitution?

Justice Gorsuch went on presciently to state the

problem before the Court today. His dissent reviewed

PTAB boosters’ assertion that it is a “good thing” that

the USPTO reviews its “too many low quality patents”

to “clean up problems after the fact,” and the PTAB’s

invalidity trials are an “efficient solution” compared to

federal court trials. Id. Justice Gorsuch retorted that

“it is not our place to replace [ ] with our own” the considered judgment of the American people that the

“ ‘benefits of [the Constitution’s] restrictions on the

Government outweigh the costs.’ ” Id., quoting United

States v. Stevens, 559 U.S. 460, 470 (2010). He then

closed with the point that brings us to the current

question.

5

No doubt this efficient scheme is well intended. But can there be any doubt that it also

represents a retreat from the promise of

judicial independence? Or that when an independent Judiciary gives ground to bureaucrats in the adjudication of cases, the losers

will often prove the unpopular and vulnerable? Powerful interests are capable of amassing armies of lobbyists and lawyers to

influence (and even capture) politically accountable bureaucracies. But what about everyone else?

Id. at 1381 (emphasis added).

Among the “everyone else” mentioned by Justice

Gorsuch are the independent inventors whom Amicus

represents. The title “inventor” is society’s only honorific that any person can earn based solely on personal

achievement. No educational milestone is required.

Many of the most successful American inventors never

attended college, or dropped out: Dean Kamen, Bill

Gates, Steve Jobs, the Wright Brothers, Samuel Morse,

the list goes on. Inventorship is one of the only remaining paths to upward social mobility that remains available to all. Inventors can succeed regardless of

background or educational attainment.

We know that inventors without formal education

will bring us the next breakthrough. But we don’t

know when or from whom. As long as we allow secretly-hired and easily-captured bureaucrats to sit in

judgment of their accomplishments, faith in the system will remain at a nadir. This disincentivizes the

6

innovation society needs. If we must tolerate a patent

system with invalidity trials that are so vulnerable to

lobbyist influence and agency capture, we deserve that

its agents get hired under the brightest possible light

of disinfecting sunshine: under the Appointments

Clause.

B. Due Process Impartiality Problems at the

PTAB Magnify the Importance of Proper

APJ Hiring

The only remaining way to eke out any “promise

of judicial independence” in the context of PTAB “bureaucrats” is the manner of their hiring. The Appointments Clause exists to advance this and several other

policies: (1) that intensive vetting in Congress of important appointments attracts only the finest talent to

high positions; (2) that the identity, skills and work history of the individuals entrusted with the lives and liberties of the public is transparent to the American

people; and (3) that accountability for such hiring decisions gets shared at the top of the political ladder:

among the President and the Senate.

Meanwhile, concern is growing about APJ “judicial

independence.” As this case wound its way up to this

Court, a parallel case has been percolating at the Federal Circuit. In New Vision Gaming & Development,

Inc. v. SG Gaming, Inc., No. 20-1399 (Fed. Cir.), the

appellant asserts that the financial structure of the

PTAB leads to improper judicial bias in favor of institution of trials, and consequent invalidation of patents.

7

That appeal points to the inner workings of agency

budgeting, APJ compensation and bonuses, and APJ

performance evaluations. It asserts that the combined

effect violates Due Process. As appellant New Vision

Gaming ably explains in that proceeding (No. 20201399 (Fed. Cir.), ECF#29), APJs receive bonuses based

on their performance evaluations that are outsized for

administrative judges (potentially up to about $40,000

per year). Those bonuses depend on factors that include how frequently they institute proceedings to

begin an administrative trial. APJs have an incentive

to institute IPRs because they effectively get twice the

credit usable to (a) meet minimum performance evaluation standards (to keep their jobs) and (b) potentially

rake in huge bonuses when exceeding their metrics.

This financial incentive raises serious issues under Supreme Court cases finding due process violations

where adjudicators get paid more for reaching particular results. Augmenting these problems, New Vision

Gaming points out that the personnel who evaluate

APJ performance in the first place are also responsible

for the PTAB’s budget. About 40% of the PTAB’s relevant budget depends on PTAB trial petition and institution receipts. APJs who want to please their bosses

are incentivized to act in a manner that increases

PTAB revenues—a one-way ratchet that only leads to

more frequent inventor-unfriendly trials that carry an

84% chance of an adverse outcome.

The appellant there, New Vision Gaming, recently

stated the problem this way in its final brief:

8

If a district court charged $20,000 to file a

summary judgment motion, and then, after

denying the motion, charged another $27,500

to proceed to the merits—and those fees

funded court operations and the judges’ salaries and bonuses—that scheme would be

deemed unconstitutional. That funding arrangement would create the appearance of

improper pecuniary interests, even without

any actual bias on the part of the judges. Numerous cases have so held. The PTAB process

is little different.

(No. 20-1399 (Fed. Cir.), ECF#77, at 1).

New Vision Gaming’s appeal has been highlighted

in the legal press, with several law professors remarking that the due process challenge is “plausible” and

“might actually have legs.” See Dani Kass, Fed. Cir.

Told PTAB’s Fee Model Undercuts Due Process,

Law360 (July 2, 2020) (quoting the three law professors).

Amicus US Inventor also filed as an amicus there.

In US Inventor’s brief, Amicus revealed statistical evidence showing not just an inference and probability of

bias (as appellant New Vision Gaming argues), but actual bias in judicial outcomes based solely on factors

related to APJ compensation. (See No. 20-1399 (Fed.

Cir.), ECF#62). US Inventor showed with statistical

rigor that there is an “October Effect,” in which the

mere restarting of the federal budget fiscal year (when

APJ decisional counts reset to zero), by itself, creates a

change in how APJs judge their cases. (Id. at 2-7).

9

Since APJ salary and bonuses depend on the quantitative output of APJ decisions, US Inventor explained

this non-random anomaly as APJs “stuffing the pipeline” with patent invalidity cases that normally should

not have to go through the trial process. (Id.). This actual judicial bias against inventors arises because of

extraneous factors of APJ self-interest, whether perceived or invisible, and whether intentional or accidental.

Awareness is growing about the problem of “judicial independence” among APJ “bureaucrats” at the

PTAB. Under the current system, no APJ (with the exception of the USPTO Director, who by statute may sit

as an APJ) gets hired under the Appointments Clause.

The result: (1) the best talent does not gravitate to

those jobs, (2) the American people know very little

about who fills them, and (3) political accountability

for APJ failures remains illusory. Inappropriate hiring

inflames problems already intrinsic to a system biased

against inventors.

C. APJ Hiring Currently Lacks Transparency,

Leading to Unjust Outcomes

The Appointments Clause benefits the American

people by making information about our government

transparent. The governed get notice in advance who

will be governing them. That knowledge disseminates,

giving affected individuals the power to know the background, history and qualifications of high government

hires. Because APJs do not presently go through the

10

Appointments Clause process (nomination and confirmation), America is in the dark. This hurts democracy

and the rule of law.

Astonishingly, the parties cannot agree on a basic

fact of this case. How many APJs are there? This is a

fact that would be readily known had there been presidential appointment and Senate confirmation. The

Government’s November 25, 2020 merits brief (page 4)

states that there are “more than 250” APJs. Smith &

Nephew’s brief filed that day (page 4) states more cautiously that the number is “more than 200.” The Arthrex brief filed December 23, 2020 cites a fiscal year

2020 “Accountability Report” published by the USPTO

on its website to report that the number (as of September 30, 2020) is exactly 221. Circumvention of the

Appointments Clause directly causes material disagreement and uncertainty over the most basic fact of

this litigation. (Without further comment, we will use

the “250” number in this brief.)

Unlike many government positions, APJs by statute must possess baseline qualifications or else they

may not properly become APJs. They must be “persons

of competent legal knowledge and scientific ability.” 35

U.S.C. § 6(a). Yet generally, how the Secretary of Commerce hires them, and what qualifications they bring

to their employment, remain opaque. No one can easily

answer, based on public information, if all 250 APJs

meet their minimum statutory qualifications. CSPAN

did not film their job interviews.

11

This contrasts with properly-appointed officials.

Any member of the public can learn all relevant information about a political appointee, with just a few

clicks. Wikipedia has a page devoted to “Political Appointments by Donald Trump” that leads to additional

pages on a department-by-department basis. Wikipedia also has a page devoted to a “List of federal judges

appointed by Donald Trump.” In fact, through Wikipedia alone, any member of the public can learn all about

the background, history and qualifications of each and

every high-ranking government official who was

properly nominated and confirmed under the Appointments Clause. This is precisely the category of information that inventors cannot learn about the APJs

who sit in judgment over their rights.

Nor can one just waltz into the agency and ask.

Amicus US Inventor has tried without success (e.g.,

through Freedom of Information Act requests). US Inventor cannot receive basic information about the approximately 250 currently-serving APJs. US Inventor

has likewise tried without success to receive financial

disclosures that such APJs must file with their

agency—disclosures much like those that federal

judges submit on a regular basis to the Administrative

Office of the U.S. Courts. APJ financial disclosures are

kept secret, whereas federal judicial disclosures are

made public.

This void of information has led directly to unjust

results at the agency, or at least to results that justify

a perception of agency capture and corporate selfdealing. Apple, Inc. is the most prolific PTAB

12

petitioner. In 2013, the Secretary of Commerce hired a

junior attorney as a new APJ whose job had, until then,

been to defend Apple against patent infringement assertions. Investigations ultimately revealed that this

attorney-turned-APJ now “proceeded to preside over

several dozen post grant challenges brought by Apple.

Not surprisingly, Apple did extraordinarily well in

those challenges [(a 96% kill rate)], leading [the investigative reporter] to conclude that having [this APJ] on

the panel for an Apple petition was a lethal cocktail for

patent owners.” https://www.ipwatchdog.com/2019/04/17/

story-ethics-optics-former-ptab-judge-matt-clementsnow-works-apple/id=108354/.

Could anyone really be surprised that, in 2019,

this APJ landed a job at Apple upon resigning his

judgeship? Id. Had the Appointments Clause governed

this APJ appointment, would he have gotten the job in

the first place? At minimum, nomination and confirmation would have allowed inventors adverse to Apple

who found this APJ assigned to their panels to have

sought timely recusal. More likely, transparency about

this APJ’s previous defense of Apple would have led the

USPTO to bar him from Apple panels entirely, to forestall public outcry. And perhaps if the Appointments

Clause had been applied, notions of professional honor

would have prevented this individual from even seeking a post-APJ revolving-door job at Apple.

*

*

*

13

The Appointments Clause violation before this

Court magnifies, exacerbates and inflames other structural defects of the PTAB that lead to a lack of confidence from the independent inventor community in its

“judicial independence.” If the PTAB were fair, unbiased and uniformly correct in its decisions, inventors

would embrace its use as an aid to resolving validity

disputes. But as it exists today, it appears to independent inventors as a group of biased bureaucrats who

make a living (and score bonus dollars) off of destroying the American dream. APJs seem unusually prone

to defend incumbent business interests, sometimes in

service of revolving-door job prospects. Requiring compliance with the Appointments Clause will be a necessary step toward restoring inventors’ faith in the

patent system. This will advance the cause of innovation, and help heal the wound in the economy that Congress imposed on the American people with the 2011

creation of PTAB invalidity trials.

With these concerns in mind, US Inventor turns to

its legal argument. US Inventor makes two main

points. First, this Court may correct the erroneous severance remedy imposed by the Federal Circuit. If their

decisions were deemed recommendatory in infringement proceedings instead of mandatory, APJs would

then qualify as “inferior” officers, retroactively curing

their unconstitutional appointments. Second, the two

precedents that the Federal Circuit cited as support for

concocting its “no-tenure” severance remedy do not

plausibly suggest that result.

---------------------------------♦---------------------------------

14

ARGUMENT

I.

Removing APJ Tenure Protection to Make

Their Jobs More Political Does Not Validly

Remedy the Appointments Clause Violation

In the decision under review, the court of appeals

correctly concluded that APJs are unconstitutionally

appointed. That decision nevertheless devised a remedy that is no remedy at all. The remedy does not require the re-appointment of a single APJ. The remedy

does not alter future appointments to require nomination by the President and confirmation by the Senate

(the required mode for principal officers). The remedy

does not change anything about the character of APJ

validity decisions that might downgrade APJ employment status from principal officer to that of inferior or

non-officer.

Instead, the Federal Circuit remedy simply declares abolition of APJ tenure protection. The panel

deemed that, for all future PTAB decisions, APJs are

inferior officers, thus making their decisions constitutionally sound from that day forward. The result of this

non-remedial “remedy” has been a wave of seemingly

meaningless remands. Hundreds of parties are now

forced to repeat proceedings before a new panel assembled from the same roster of APJs who were unconstitutionally appointed in the first place. Only now, APJs

have no protection from termination if their decisions

do not please their political bosses.

Two Federal Circuit Judges later commented on

the haste and carelessness of their colleagues’ remedy

15

analysis. They observed that “Arthrex disposed of

the [remedy] question in a few sentences,” without a

“fulsome severance analysis.” Arthrex, Inc. v. Smith &

Nephew, Inc., 953 F.3d 760, 787 (Fed. Cir. 2020)

(Hughes, J., and Wallach, J., dissenting from denial of

reh’g en banc). Converting APJs to at-will employees

conflicts with the goals and policy behind the Framers’

placement of the Appointments Clause into our Constitution. It throws to the political winds what should

be technological determinations. APJs who step

wrongly (i.e., rule contrary to a department head’s desired adjudication outcome) risk their jobs. Billions of

dollars of adjudicated outcomes are, because of the decision, more politically accountable to the President

and his appointees. This exacerbates the problem of a

tribunal whose outcomes have appeared biased and divorced from facts in the inventor community.

These are all patent validity adjudications, rendered under standards that are intrinsically subjective,

lending camouflage to a decision-maker motivated to

choose one outcome over another for reasons outside of

the record. Whether a patent claim is anticipated depends on interpretation of the scope of the claim, which

depends on findings about what a person of ordinary

skill in the art at the time of the invention would have

perceived. Whether a patent claim would have been obvious depends on weighing numerous factors, including the difference between the scope of the claim and

the level of ordinary skill in the art. The court of appeals’ remedy is incorrect because it makes determinations concerning technology more political, not less so.

16

Subjective elements within those determinations

make political motives for specific decisions at the adjudication phase nearly impossible to detect after the

fact.

Arthrex correctly describes in its merits brief why

this is so large a problem. Arthrex notes that the PTAB

model differs from the “traditional model” of Appointments Clause-compliant agency adjudication. Brief for

Arthrex, Inc. in No. 19-1434, at 51-52. “Under the traditional model, administrative judges issue initial decisions. Those decisions are then subject to transparent

review by accountable agency heads responsible for

their actions in accepting or rejecting a decision.” Id. at

51. Application of policy at the agency level should

never occur through “a skewing of evidentiary factfinding for policy reasons,” since this undermines the public’s confidence in “visibly independent determination

of the evidentiary facts” during initial adjudication. Id.

at 51-52; see also id. at 27-32.

Put another way, the “traditional model” of agency

adjudication does permit a political thumb on the

scale. But this occurs only through actions of a transparent and accountable agency head. The adjudication

itself should happen solely on the evidentiary record,

without the “skew” that happens when policy considerations distort fact finding.

17

Removing tenure protection encourages political

(not factual) decision-making by administrative

judges. As Judge Dyk observed (with concurrence from

three other Federal Circuit judges): “By eliminating Title 5 removal protections for APJs, the panel is performing major surgery to the statute that Congress

could not possibly have foreseen or intended.” Arthrex,

953 F.3d 769 (Dyk, J., dissenting from denial of reh’g

en banc). Making APJs politically accountable by dint

of removing their Title 5 tenure protection conflicts

with Congressional purpose concerning job security, as

first established in the 1946 Administrative Procedures Act for ALJs, and 1975 Patent Act amendments

for APJs. Id. at 769-71. Since 1975, despite numerous

modifications of the Patent Act both big and small,

Congress preserved APJ tenure protection for the precise reason that personnel who conduct adjudication

within Executive agencies should not be “mere tools of

the agency and subservient to the agency heads in

making their proposed findings of fact and recommendations.” Id. at 770. Judge Dyk (with three other

Judges) pointed out, without rebuttal from their fellow

Judges, that “ALJs in general and APJs in particular

have been afforded longstanding and continuous protection from removal” by Congress. Id. at 771. And they

additionally noted that after the Arthrex panel decision, Congress convened a subcommittee hearing at

which one Member stated that eliminating tenure protection was “inconsistent with the idea of creating an

adjudicatory body [capable of ] providing independent

impartial justice.” Id. at 772.

18

In short, the court of appeals remedy conflicts directly with the norms of “judicial independence” extolled in Justice Gorsuch’s Oil States dissent. And it

conflicts with the “traditional model” of constitutionally compliant agency adjudication. Making adjudicators more politically accountable diverts policy making

from where it belongs (in the agency head) to where it

easily evades detection (in the “impartial” adjudicators).

Nor can the tenure-removal remedy advance the

Appointments Clause policy of structuring the most

important governmental hires “to curb Executive

abuses of the appointment power” and “to assure a

higher quality of appointments.” Edmond v. United

States, 520 U.S. 651, 659 (1997). For instance, the Federal Circuit never explains how taking away job security for a class of federal employees can possibly curb,

as opposed to enable, abuse of Executive appointment

and removal power by political appointees. And the

panel decision never explains how emplacing a structure that promotes kowtowing to the President’s appointees, as opposed to independence from them, will

lead to higher quality personnel filling APJ jobs, or doing those jobs more accurately. The court of appeals’

remedy is facially irrational, in the context of an adjudicatory body whose job is to reach the right answer on

a single issue based only on the record before it, and in

the context of the policy behind the Appointments

Clause.

19

II. This Court Can Devise a Better-Targeted

Remedy

1. US Inventor submits that the correct remedy

is not that which the Federal Circuit chose. Either Arthrex is correct that severance is not appropriate and

Congress must take responsibility through legislation,

or the correct remedy is something else. Amicus asserts that the correct remedy is to sever the statute so

that patentability determinations continue as Congress intended, only with APJs downgraded to making

advisory patentability decisions—i.e., decisions that

are not binding or preclusive in other proceedings, such

as infringement actions. This would make APJs either

inferior or non-officers.

All that needs to happen under this alternative

remedy is severance of the part of the statute that

makes final written decisions on patentabilty binding.

Government employees who issue nonbinding decisions do not assert the type of “significant authority”

that the court of appeals held make them principal officers: they do not “render a final decision on behalf of

the United States.” See Edmond, 520 U.S. at 665. Consequently, making APJ decisions nonbinding would

validate the current mode of APJ hiring by the Secretary of Commerce.2 The statutory language that is ripe

2

In Lucia v. SEC, the dissent would have held that officer

status turns on whether final decisions of the relevant personnel

are “binding.” 138 S. Ct. 2044, 2065 (2018) (Sotomayor, J., dissenting, joined by Ginsburg, J.). The majority did not reach

whether this standard is correct, since the SEC ALJs exercised

the same duties that Special Tax Judges of the United States Tax

Court (STJs) did that made STJs officers in an earlier decision

20

for severance is simply eleven words within 35 U.S.C.

§§ 318(b) and 328(b) referring to a certificate “cancelling any claim of the patent finally determined to be

unpatentable.”

The Court should declare this remedy to be retroactive. Retroactivity of this remedy recognizes that the

constitutional flaw inhered at the time of appointment,

not continued employment, of such APJs. The court of

appeals’ current tenure-removal remedy does not do

anything to make an appointment retroactively valid.

The appointments of APJs by the Secretary of Commerce happened when and as they did, at a time when

tenure protections existed. No remedy that is only

forward-looking in effect can alter that fact. Thus the

panel’s particular forward-looking remedy suffers from

another major flaw: it cannot rationally be deemed to

have fixed an 8-year-long structural flaw in the agency.

By contrast, retroactively making APJ patentability

decisions advisory cures the Appointments Clause violation from inception.

(Freytag). Id. at 2051-52. Thus, while it may be an open question

whether making APJ decision-making nonbinding would downgrade APJs to nonofficers, nonbinding decision-making at least

downgrades them to “inferior officers.” APJ decisions would have

no effect without an Article III court accepting their recommendations, thus inserting the supervision of persons nominated by

the President and confirmed by the Senate (i.e., federal judges).

This would make APJ appointment by the Secretary of Commerce

valid.

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2. This Court’s severability precedents support

US Inventor’s proposed alternative remedy, but not the

court of appeals’.

Under Alaska Airlines, Inc. v. Brock, 480 U.S. 678

(1987), the standard for determining severability of an

unconstitutional provision is: “Unless it is evident that

the Legislature would not have enacted those provisions which are within its power, independently of that

which is not, the invalid part may be dropped if what

is left is fully operative as a law.” Id. at 684 (internal

quotation omitted). US Inventor’s alternative remedy

meets this standard.

First, under US Inventor’s remedy, “what is left is

fully operative as a law.” That is, there is nothing constitutionally wrong if APJ final written decisions were

advisory and not binding.

Second, it is not evident that Congress would have

rejected an APJ patentability trial system that, to exist,

left final written decisions advisory and nonbinding.

For example, a different agency already exists that adjudicates patent decisions for the Executive without

preclusive effect—the International Trade Commission (ITC). While ITC decisions on questions of infringement and validity may be found persuasive in

Article III trial courts, they are nonbinding and advisory beyond the role they play in directing Customs

and Border Protection agents to block certain imports

at the border. Hyosung TNS Inc. v. Int’l Trade Comm’n,

926 F.3d 1353, 1358 (Fed. Cir. 2019) (“[W]e have held

that the ITC’s determination of patent infringement

22

and validity do not have claim or issue preclusive effect

even if affirmed by our court.”) (citation omitted). Thus

the proposed fix matches an agency structure for patent review that Congress has already enacted.

On the other hand, it is plainly evident that Congress would not have enacted an APJ patentability

trial system that was more political than the one they

did enact, by virtue of having no tenure protections.

Within days of the court of appeals’ decision, the relevant Congressional subcommittee with authority over

intellectual property held a hearing at which voting

Members made statements critical of the Federal Circuit’s chosen remedy. See Arthrex, 953 F.3d at 771-72

(Dyk, J., dissenting from denial of reh’g en banc). Criticism was justified. Tenure protections are important

for anyone appointed to be a member of a quasi-judicial

tribunal. Independence is the hallmark of an adjudicative body. Severance of tenure protections “paradoxically imposes the looming prospect of removal without

cause on the arbiters of a process which Congress intended to help implement a ‘clearer, fairer, more transparent, and more objective’ patent system.” Arthrex,

953 F.3d at 788 (Hughes, J., dissenting from denial of

reh’g en banc) (quoting Statement of Sen. Kyl, 157

Cong. Rec. S5319 (daily ed. Sept. 6, 2011)).

US Inventor is aware of no federal administrative

agency adjudicative tribunal in which Congress enacted at-will employment for the tribunal members.

That is anathema to the interests of justice, and the

ideals of due process. And as explained above, downgrading APJs’ judicial independence only makes an

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already-suspect and already-biased agency judicial

system that much worse.

3. Some might argue that making APJ decisions

advisory would conflict with Congressional purpose

that PTAB trials serve as a faster and less expensive

alternative to district court validity litigation. This

concern is unfounded. In reality, a recommendatory

PTAB scheme would function very much like the magistrate judge system of reports and recommendations.

Our judicial system already embraces a tier of advance

decision-making by valuable adjuncts. Such nonbinding recommendations currently aid decision-making

by confirmed Article III trial judges. The magistrate

judge R&R system, in operation, speeds up final disposition of private disputes.

This will be no less true with the PTAB. In general,

PTAB outcomes (the functional equivalent of magistrate judge R&R’s) will be deemed persuasive among

the nation’s trial judges. If a patentee or PTAB petitioner receives an adverse advisory PTAB ruling, only

those who believe they can press a strong case of error

would, as a practical matter, ask a trial judge to permit

a different outcome. The risk of fee shifting under 35

U.S.C. § 285 would act as a check against nonmeritorious challenges. Just like now, in the majority of cases,

a recommendatory PTAB decision by itself would end

validity litigation, lifting a typical impediment to settlement. Put differently, to the extent that PTAB panels issue persuasive, high quality decisions, validity

litigation will effectively end in a related district court

case even if the decision itself is nonbinding. But

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conversely, if decisions are riddled with error, there will

be recourse. The victims of such bad judging may

choose to continue litigating in federal court, because

a bad recommendatory decision would get independent

judicial review after meaningful scrutiny.

The US Inventor proposed severance remedy

thereby advances Congressional purpose that PTAB

adjudications serve as a faster, less expensive alternative to full-scale district court validity trials.

III. The Panel Misread Constitutional Case

Law

The court of appeals’ tenure-removal remedy is

not only bad policy because it undermines the norm of

judicial independence—it is also bad law. Mistaken legal analyses led the Federal Circuit to adopt it.

The court of appeals’ tenure-removal remedy purports to follow two court decisions that applied a tenure-removal remedy to a constitutional violation (Free

Enterprise Fund and Intercollegiate). But the court of

appeals misapplied the first decision, while the second

decision is factually distinguishable. Thus, two prior

instances of courts imposing a similar remedy does not

make the remedy here correct.

The Federal Circuit looked first to Free Enterprise

Fund v. Public Company Accounting Oversight Board,

561 U.S. 477 (2010), as support for its tenure-removal

remedy. But the court missed a major distinction. This

Court in Free Enterprise Fund removed a for-cause

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termination layer between the PCAO Board and the

President (where originally there were two) to remedy

a Separation of Powers violation, not directly to remedy an Appointments Clause problem. All discussion of

transforming Board members into at-will employees

beholden to the Commission was to make the Board

more accountable to the President, and the President

more responsible for Board actions, thus ensuring a

“role for oversight by an elected President.” Id. at 499.

This ruling applied Separation of Powers principles

and goals to transform the Board into proper employees within the Executive branch. Id. at 499-502. By the

time discussion reached the Appointments Clause,

there was no need to consider whether the same judicial remedy would have cured an Appointments Clause

violation, if only the Appointments Clause were violated. Id. at 510. While it is true that the Court noted

that there was no Appointments Clause violation

“given” the previously-imposed Separation of Powers

remedy, id., this was coincidental, and without discussion of how the case might have resolved if the Court

considered solely how to remedy an Appointments

Clause violation.

The only other authority cited by the Federal Circuit to support the tenure removal remedy is Intercollegiate Broadcasting System, Inc. v. Copyright Royalty

Board, 684 F.3d 1332 (D.C. Cir. 2012). In that case, the

D.C. Circuit uncritically followed the Free Enterprise

Fund Separation of Powers model to implement a tenure-reduction remedy for a stand-alone Appointments

Clause violation. But in doing so, that court failed to

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recognize that different considerations may apply to

distinct types of constitutional violations, insofar as a

remedy should narrowly address the violation itself.

The Intercollegiate panel did not explain how a remedy

selected to ensure an oversight role for an elected President (the Separation of Powers concern discussed in

Free Enterprise Fund) might somehow redeem a mistaken governmental appointment of a principal officer

that, at some time in the past, wrongly skipped over

nomination by the President and confirmation by the

Senate. It defies logic to hold that removing tenure protections of an existing officer retroactively makes the

appointment of that officer subject to political accountability at the highest levels of the political branches

(the President and the Senate), or retroactively attracts the finest and most vetted talent to the job.

In addition, the D.C. Circuit in Intercollegiate did

not need to address a history or Congressional purpose

of Copyright Royalty Board members deciding disputes with the benefit of true judicial independence.

Nothing seems particularly shocking about political

creatures legislating the proper resolution of a copyright royalty rate dispute. By contrast, the ALJ/APJ

system evolved under norms of true judicial independence. Evidently, the judicial independence question

was not as urgent at the D.C. Circuit because of the

very different type of adjudications at issue in Intercollegiate.

In short, the reasoning of Intercollegiate is faulty

and its facts are distinguishable. Congressional purpose over how to structure the Copyright Royalty

27

Board is irrelevant to Congressional purpose over how

to structure the PTAB, which implicates a long history

(discussed above) of Congress demanding tenure protection and judicial independence for both ALJs and

APJs.

---------------------------------♦---------------------------------

CONCLUSION

The PTAB system, and its APJ hiring scheme,

raise concerns over access to justice, government

transparency, agency capture, structural bias against

inventors, and the ethics of revolving-door employment. Stakeholders in the patent system are entitled

to a government that, if it gives patent invalidation

authority to Executive Branch employees, at least requires such employees to be nominated by the President and confirmed by the Senate. That would have

made them properly-appointed principal officers, guaranteeing the highest quality personnel to do the job,

while simultaneously assuring political accountability

over their hiring at the highest levels of the political

branches.

The Arthrex court of appeals’ decision recognizes

the constitutional violation in how APJs are hired under the AIA. But that decision applied the wrong remedy. That remedy exacerbates the unusual PTAB

departure from the “traditional model” of agency adjudication, in which adjudicators are independent and

policy making occurs only through transparent and accountable agency head review. US Inventor therefore

28

requests that this Court determine the correct remedy,

which if not the remedy Arthrex advocates, is at least

retroactive conversion of APJ decisions into advisory

and nonbinding decisions. This would make APJs either inferior officers or non-officers, fixing faulty appointments retroactively.

Respectfully submitted,

ROBERT GREENSPOON

Counsel of Record

FLACHSBART & GREENSPOON, LLC

333 N. Michigan Avenue, Suite 2700

Chicago, Illinois 60601

(312) 551-9500

rpg@fg-law.com

Counsel for Amicus Curiae