Opposition Brief — Oil States Energy Servs., LLC v. Greene's Energy Grp., LLC, 138 S. Ct. 350 (2017) (No. 16-712)

No. 16-712

IN THE

Supreme Court of the Gnited States

OIL STATES ENERGY SERVICES, LLC,

Petitioner,

Vv.

GREENE'S ENERGY GROUP, LLC,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

BRIEF IN OPPOSITION

GEORGE E. QUILLIN

Counsel of Record

JOHN J. FELDHAUS

BRADLEY D. ROUSH

FOLEY & LARDNER LLP

3000 K Street, NW

Suite 600

Washington, DC 20007

(202) 672-5300

gquillin@foley.com

Counsel for Respondent

January 30, 2017

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D. C, 20002

QUESTIONS PRESENTED

In the Leahy-Smith America Invents Act, Pub. L.

No. 112-29, 125 Stat. 284 (“AIA”), Congress created

inter partes review, an adversarial administrative

proceeding in which the U.S. Patent and Trademark

Office may reconsider the patentability of the claims

in an issued patent. See 35 U.S.C. 311 et seg. The

questions presented are:

1. Whether inter partes review violates Article III or

the Seventh Amendment by authorizing an Executive

Branch agency, rather than a court or jury, to invali-

date a previously issued patent.

2. Whether the PTO’s rules governing motions to

amend and its interpretations of such rules are per-

missible under Chevron, U.S.A., Inc. v. Natural Res.

Def. Council, Inc., 467 U.S. 837 (1984) and its progeny.

3. Whether the PTO’s interpretation of “second

lockdown mechanism” was reasonable in light of the

claims and specification.

(1)

ii

RULE 29.6 STATEMENT

Greene’s Energy Group, LLC (“Respondent”) is an

independent, privately held company. Greene’s Energy

Group, LLC has no parent corporation. No publicly

held company owns 10% or more of Greene’s Energy

Group, LLC’s stock.

TABLE OF CONTENTS

QUESTIONS PRESENTED ..............222.00cesccceeeees

ee ee ISD ecasescicviceccesvesonesssciveeeens

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

IIE iesiciccstmerecticiecunniccniesersecsescuness

REASONS FOR DENYING THE WRIT ............

I. INTER PARTES REVIEW VIOLATES

IT.

NEITHER THE SEVENTH AMEND-

MENT NOR ARTICLE III.....................04.

A. The Seventh Amendment is Only

Implicated if the Issue Must be

Adjudicated by an Article III Court....

B. Because Patents are a Quintessential

“Public Right,” Inter Partes Review

Does Not Violate Article ITT ................

C. There is No Dispute Among Lower

PETITIONER RAISES NO REASON

WHY THIS COURT SHOULD REVIEW

THE PTO’S DENIAL OF THE MOTION

A. By Not Raising Several of its Argu-

ments Before the Federal Circuit,

Petitioner Failed to Preserve Its Right

to Challenge the Denial of the Motion

12

15

iv

TABLE OF CONTENTS—Continued

. This Court Should Decline Review

Because Petitioner Does Not Apply

the Chevron Analysis .....................000+5 16

. The PTO’s Order Requiring Petitioner

to “Explain” How the Specification Sup-

ports the Proposed Amended Claims

is Not a Plainly Erroneous Interpreta-

tion of 37 C.F.R. § 42.121(b)(1) ........... 18

. Petitioner’s “Sua Sponte” Argument is

Wrong in Its Interpretation of Both

I i tarecdeccacenscccsesncesensese 20

1. Because the Burden of Proof Lies

with the Patentee in Amending

the Claims, the PTO Can Raise

Issues Sua Sponte .............0.000ce00000 20

2. The PTO Did Not Act Sua Sponte... 21

. The PTO’s Rules Placing the Burden

of Persuasion on Patentees to Prove

That Proposed Amended Claims are

Patentable is a Reasonable Interpre-

ics btvenenthese cuss sxtssicascnces 22

1. The AIA’s Express Grant of Rule-

making Authority for Motions to

Amend Includes the Authority to

Assign Burdens of Proof for Such

Be iiccnccisnicsceneninsdevnissaxeicniseiense 22

2. Statutory Text and Structure Con-

firm the Reasonableness of the

PTO’s Interpretation................:04:. 24

Vv

TABLE OF CONTENTS—Continued

Page

3. Established Practices Governing

Burdens of Proof Confirm the

Reasonableness of the PTO’s Inter-

SITIO ia dan ciisessacsanmeptentiaasntuatataies 27

4. Petitioner Cannot Show that Plac-

ing the Burden on the Patent

Challenger Comports With Con-

gressional Intent......................02+0. 28

F. Petitioner’s Arguments Concerning

the Use of the “Broadest Reasonable

Interpretation Standard” Should be

Rejected Out-of-Hand...................-..26.. 29

lil. THE PTO’S DECISION FOLLOWED

THE TRADITIONAL PRINCIPLES OF

CLAIM CONSTRUCTION IN REJECT-

ING PETITIONER’S PROPOSED CON-

SPE SEE TEIUY scciesecascncovsnasonnsscninen-coidimnine 30

CEE IOT cstsenssievussisintecncaicnannnnen 33

vi

TABLE OF AUTHORITIES

CASES Page(s)

Arnold P’ship v. Dudas,

362 F.3d 1338 (Fed. Cir. 2004)................. 17

Atlas Roofing Co. v..Occupational

Safety & Health Comm’n,

I - ccccccnccoseseteicseeutsioss 4,5

Auer v. Robbins,

EE 17, 19

Bicon, Inc. v. Straumann Co.,

441 F.3d 945 (Fed. Cir. 2006)................... 31

Bilski v. Kappos,

a scenmennsoonasees g

Chevron, U.S.A., Inc. v. Natural Res.

Def. Council, Inc.,

no sas scnecscosesobenccentes passim

City of Arlington v. F.C.C..,

RE is SE CE Pacncccssnessccssescessossesses: 22

Commonwealth v. Miller,

SS SE TE, SID cccecsncccsscccecescccesessess 23

Cooper v. Lee,

86 F. Supp. 3d 480 (E.D. Va. 2015), affd

summarily, No. 15-1483 (Fed. Cir. Jan.

14, 2016), cert. denied, 137 S. Ct. 291

Crown Die & Tool Co. v.

Nye Tool & Mach. Works,

ET 9

Cuozzo Speed Techs., LLC v. Lee,

SE ie HE CIID cc cccccssnsvesenccacseccsovens passim

vii

TABLE OF AUTHORITIES—Continued

Page(s)

Curtis v. Loether,

ee eee eR reicciritincetetarsctincsncabisnesen 5

Decker v. Nw. Envtl. Def. Ctr.,

Be Chey Se atntteseniesinssconsenseeosen 17, 20

Deere & Co. v. Bush Hog, LLC,

703 F.3d 1349 (Fed. Cir. 2012)................. 32

Dir. Office of Workers’ Comp. Programs,

Dep’t of Labor v. Greenwich Collieries,

ee A Roe 27

Feltner v. Columbia Pictures Television,

Inc., 523 U.S. 340 (1998)..................0..0024 5

Florida Dep’t of Revenue v. Piccadilly

Cafeterias, Inc.,

554 U.S. 33 (2008)............. ssiakeusaainaasiabaaaii 24

Gayler v. Wilder,

51 U.S. (10 How.) 477 (1861).................... 9

Graham v. John Deere Co. of Kansas City,

SE eel Ue WI csiscictcdencrinsesinatcendedinbamenbieese i)

Granfinanciera, S.A. v. Nordberg,

SE ickadtinietniitinsiedennnasensentse passim

Greene’s Energy, LLC v. Oil States

Energy Servs., LLC,

IPR2014-00216, Paper No. 18 (PTAB

I TE eiiGiceansdeceninctinstpapsdunanssndanane 19, 21

Henderson v. Shinseki,

en, TE IEEE Pisanincicsinicconnessssnnnapesiionnens 24

vill

TABLE OF AUTHORITIES—Continued

Page(s)

Idle Free Sys., Inc. v. Bergstrom, Inc.,

2013 WL 5947697 (PTAB June 11, 2013) 23

In re Technology Licensing Corp.,

423 F.3d 1286 (Fed. Cir. 2005),

cert. denied, 547 U.S. 1178 (2006)............ 11

Joy Techs., Inc. v. Manbeck,

959 F.2d 226 (Fed. Cir. 1992),

cert. denied, 506 U.S. 829 (1992).............. 10, 13

Kappos v. Hyatt,

pS A 7

Kubota v. Shibuya,

999 F.2d 517 (Fed. Cir. 1993)................... 27

MasterImage 3D, Inc. v. RealD Inc.,

IPR2015—00040, 2015 WL 4383224

SN, SP icccxtcintopeiecrtewesenscnosen 23

MCM Portfolio LLC v.

Hewlett-Packard Co.,

812 F.3d 1284 (Fed. Cir. 2015),

cert. denied, 137 S. Ct. 292 (Oct. 11,

es SI setistsececdnincsetnconiepnovcnnsen passim

Microsoft Corp. v. Proxyconn, Inc.,

789 F.3d 1292 (Fed. Cir. 2015)................. 20

Mowry v. Whitney,

81 U.S. (14 Wall.) 434 (1872)............... 6,10, 11

Murray’s Lessee v. Hoboken Land &

Improvement Co.,

59 U.S. (18 How.) 272 (1855).................... 6

ix

TABLE OF AUTHORITIES—Continued

Page(s)

National Cable and Telecomm. Ass’n v.

Gulf Power Co..,

gE ERT a one 25

Nike, Inc. v. Adidas AG,

812 F.3d 1326 (Fed. Cir. 2016)........... 24, 28, 29

Patlex Corp. v. Mossinghoff,

758 F.2d 594 (Fed. Cir. 1985)............. 10, 12, 13

Pernell v. Southall Realty,

I ashlee. 4,5

PPC Broadband, Inc. v. Corning Optical

Comme’ns RF, LLC,

815 F.3d 747 (Fed. Cir. 2016)................... 30, 31

Schaffer ex Rel. Schaffer v. Weast,

cer sraceunitiianbiicmngscieas 29

Sears, Roebuck & Co. v. Stiffel Co..,

RS TIS PETRIE 7,9

Selma, Rome & Dalton

R. Co. v. United States,

Se a i cece caiticenicibineidnnbiinnhesbiee 29

Stern v. Marshall,

564 U.S. 462, 131 S. Ct. 2594 (2011)... 6, 7, 8, 10

Thomas v. Union Carbide

Agric. Prods. Co.,

I ae 7,8

Tull v. United States,

481 U.S. 412 (1987).............. sidaaiielacatasledabient 4

TABLE OF AUTHORITIES—Continued

Page(s)

United States v. American Bell Telephone

Sg ee Fs SED GID encccccsecctsiscvereenisies 11, 12

United States v. Mead Corp.,

Se a: BP GE Ph ecivasnccsccscascocnensssensecens 17

United States v. Real Prop. In Section 9,

Town 29 North, Range 1 of Charlton, W.

Twp. Otsego Cnty., Michigan,

241 F.3d 796 (6th Cir. 2001).............0.0..... 23

Virtue v. Creamery Package Mfg. Co.,

Be EE itnvatnicacenetniaiceinceonardtiaasinenien 15

Wheaton v. Peters,

33 U.S. (8 Pet.) 591 (1834)..................e000e 10

FOREIGN CASES

Rex v. Arkwright,

fe fle 53 |) & 8] : eee 11

CONSTITUTION

5 EERIE setae nee Se Yee 7

SERRA ASE rere ta passim

Pile NG MINNIS WIN cciniiccstecteentiaccdeusescnsiiied passim

STATUTES AND REGULATIONS

| 8 SRS Re A PS eee ene ater et one 27

Oe UE site cece danlic acahileennegieaninetenens 17

Be ee Ot ES orednitictnssieahsnltinicabannensriecainibianiin 1

Oe ne Ee ect OER A 13, 15

xl

TABLE OF AUTHORITIES—Continued

Page(s)

I aa 13

I ie catia ceed ia de ateetin ed anal 10

Re RM ASR i Pe le 10

a i 10

a ae 7,10

Sa a 12

BN ST A eRe Bs Se 12

NN II radii ccnance nuda siabeabadinemeeds 12

RI I nh es ee passim

I I ile da ail ak naccbuceedavadaanianen 25, 26

I see passim

i Me I iicdstinedccianvinudiinadniteoacnnupoulabimnssies 29

Act of Dec. 12, 1980, Pub. L. No. 96-517,

a ss ceeammimepipesnens 12

Optional Inter Partes Reexamination

Procedure Act of 1999, Pub. L. No. 106-

113, Tit. [V, Subtit. F, 113 Stat. 1501A-

567 to -572, 35 U.S.C. § 311 et seg.

Ge iiididctindbivianscsinbeesienansosetevaneesesoveecivres 12

Pub. L. No. 109-54 (2005),

§ 1005(e)(2)(A)(i) ...... vendiesnneanadedecsoetinesasieons 23

ey Oe IE Siniteninsvecesnnsondyostensiuaveconetensemens 23, 27

PG Gee ty WE EEE. fo crvecssvnicssacenviscsmniaveonen 18, 19, 23

xii

TABLE OF AUTHORITIES—Continued

FOREIGN STATUTES Page(s)

Statute of Monopolies, 1623, 21 & 22 Jac,

c. 3, § VI (Eng.), reprinted in 4 Statutes

of the Realm 1213 (1963).................:::c000e 10

RULES

SSG ERs Ut iictascccnososnenahovecbeencinianbgiectaunenens 2, 34

OTHER AUTHORITIES

157 Cong. Rec. S5374-76 (daily ed. Sept. 7,

FE cincitionsskbsieethosacabincenserentepinateneeninrereses 14

C. Mueller & L. Kirkpatrick, Evidence

EB pikmin. tonsnsnyetcnnsrsevareceisbnbeniegsens 27

Mark A. Lemley, Why Do Juries Decide If

Patents Are Valid?, 99 VA. L. REV. 1673

SRE RRSP ee ee Ranma Sem 6, 10, 11

STANDARD OF PROOF, Black’s Law

Dictionary (8th ed. 2004)............2:..c00eeeee 22

1 Thomas Walter Williams, An Abridgment

of Cases Argued «nd Determined in

Courts of Law, During the Reign of His

Present Majesty, King George The Third

sedate, ccctialahcaccncislakin icieeulnemeniseaiadel 11

U.S. Patent and Trademark Office,

Standing Order 7 208.5.1 (Mar. 8, 2011),

I Bt I ccsasccnaidiniahicnsssdedmapsnbingeaabanstiin 28

U.S. Patent and Trademark Office, Manual

of Patent Examining Procedure (MPEP).

Ninth Edition, Revision 07.2015 (Last

Revised November 2015).............0.......0606 27

OPINIONS BELOW

The order denying panel rehearing and rehearing

en banc (App., 37-38) is unreported. The panel order

disposing of the case without opinion (App., 1-2) is

unreported and available at 639 F. App’x 639 (Fed.

Cir. May 4, 2016). The opinion and order of the Patent

Trial and Appeal Board (App., 3-36) is unreported and

available at 2015 WL 2089371 (PTAB May 1, 2015).

JURISDICTION

The judgment of the Court of Appeals for the Federal

Circuit was entered on May 4, 2016. The Federal

Circuit denied Petitioner’s request for rehearing en

banc on July 26, 2016. On October 14, 2016, Chief

Justice Roberts extended the time to file a petition for

a writ of certiorari to and including November 23,

2016. The jurisdiction of this Court is invoked under

28 U.S.C. § 1254(1).

STATEMENT

First, in arguing that inter partes review is uncon-

stitutional, Petitioner attempts to overturn settled

case law finding patents to be mere “public rights.”

In doing so, Petitioner rehashes the petition for

writ of certiorari filed in MCM Portfolio LLC v.

Hewlett-Packard Co., docket No. 15-1330, which was

denied Oct. 11, 2015. Petitioner offers no meaningful

explanation why its case is any different from that of

the petitioner in MCM Portfolio.

Second, Petitioner’s argument that the denial of its

motion to amend violates the APA raises issues not

presented to the Federal Circuit, and does not apply

the proper analysis. While Petitioner offers a litany of

arguments that the PTO’s rules governing motions to

amend claims during inter partes review violate the

2

Administrative Procedure Act (“APA”), most of these

arguments were never presented to the Federal

Circuit (this Court should decline to review them as a

matter of first impression) and Petitioner never

attempts to apply the Chevron analysis. Chevron,

U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S.

837 (1984). Moreover, under the Chevron analysis, the

PTO’s rules are reasonable and its interpretation of

them is not plainly erroneous.

Third, Petitioner attempts to save its own patent by

pressing its incorrect interpretation of the PTO’s final

written decision. Petitioner argues that “it is unclear

if traditional principles of claim construction . . . apply

under a patent’s broadest reasonable interpretation.”

Pet. at 4. Petitioner is wrong; the Federal Circuit

has been clear that they do apply. Instead, what

Petitioner steadfastly refuses to concede is that when

claim construction principles are properly applied, as

the PTO did, its proposed claim constructions are

untenable.

REASONS FOR DENYING THE WRIT

The Court of Appeals for the Federal Circuit’s

affirmance of the PTO’s decision under Federal Circuit

Rule 36 is appropriate as it was entered without an

error of law.

l. INTER PARTES REVIEW VIOLATES

NEITHER THE SEVENTH AMENDMENT

NOR ARTICLE ITI

The Federal Circuit’s opinion in MCM Portfolio LLC

v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015),

cert. denied, 137 S. Ct. 292,’ correctly held that neither

' In offering an explanation why the per curiam affirmance of

the PTO’s decision does not preclude this Court’s review,

3

Article III nor the Seventh Amendment bars the PTO

from conducting inter partes review of patents that

the PTO has issued. That holding does not conflict

with any decision of this Court or any other court of

appeals. Further review is not warranted.

A. The Seventh Amendment is Only Impli-

cated if the Issue Must be Adjudicated

by an Article III Court

While Petitioner first argues that inter partes review

violates the Seventh Amendment before reaching the

Article II] issue, this gets the inquiry backward. Rather,

if an administrative adjudicative scheme comports

with Article III, the Seventh Amendment “poses no

independent bar.” Granfinanciera, S.A. v. Nordberg,

492 U.S. 33, 54 (1989). In other words, only where

Article III compels Congress to assign adjudication of

particular claims to federal courts, or where Congress

chooses to do so, does the Seventh Amendment guar-

antee the parties “a right to a jury trial whenever the

cause of action is legal in nature.” Jd. at 53.

The Seventh Amendment provides in pertinent part

that “[iJjn Suits at common law, where the value in

controversy shall exceed twenty dollars, the right of

trial by jury shall be preserved.” U.S. CONST. amend.

VII. The Seventh Amendment guarantees the right to

a jury trial only of those claims that are adjudicated in

Article III courts. Thus, “if the action must be tried

under the auspices of an Article III court, then the

Seventh Amendment affords the parties a right to a

Petitioner asserts that “the lack of a published opinion is no

barrier to review given that the Federal Circuit has already

issued a published opinion in MCM Portfolio thoroughly discuss-

ing the issue.” This explanation highlights why this petition for

writ of certiorari, like the one in MCM Portfolio, should be denied.

4

jury trial whenever the cause of action is legal in

nature.” Granfinanciera, 492 U.S. at 53. In contrast,

if Congress has permissibly assigned “the adjudication

of a statutory cause of action to a non-Article III

tribunal, then the Seventh Amendment poses no inde-

pendent bar to the adjudication of that action by a

nonjury factfinder.” Jd. at 53-54; see id. at 55 n.10

(“Congress may decline to provide jury trials” where

the action involves “statutory rights that are integral

parts of a public regulatory scheme and whose adju-

dication Congress has assigned to an administrative

agency”); Tull v. United States, 481 U.S. 412, 418 n.4

(1987) (“[T]he Seventh Amendment is not applicable

to administrative proceedings”); Atlas Roofing Co. v.

Occupational Safety & Health Comm’n, 430 U.S. 442,

455 (1977) (“[Wlhen Congress creates new statutory

‘public rights,’ it may assign their adjudication to

an administrative agency with which a jury trial

would be incompatible, without violating the Seventh

Amendment []”); Pernell v. Southall Realty, 416 U.S.

363, 383 (1974).

This Court’s decision in Perneil, illustrates that

principle. Pernell involved a Seventh Amendment

challenge to a statute that established a cause of

action for parties to recover certain real property

through a judicial proceeding. This Court held that

the Seventh Amendment entitled the parties to a jury

trial because the statute “encompasses rights and

remedies which were enforced, at common law,

through trial by jury.” Jd. at 381. The Court recog-

nized, however, that “the Seventh Amendment would

not be a bar to” entrusting those same disputes “to an

administrative agency” rather than a court. Jd. at 383.

Only because “Congress ha[d] not seen fit to do so,”

but rather had provided that the disputes would “be

brought as ordinary civil actions,” was Congress

5

required to “preserve to parties their right to a jury

trial.” Jd.; see Atlas Roofing, 430 U.S. at 455 (the

Seventh Amendment does not prevent Congress “from

committing some new types of litigation to administra-

tive agencies with special competence in the relevant

field {] even if the Seventh Amendment would have

required a jury where the adjudication of those rights

is assigned instead to a federal court of law”).

The decisions on which Petitioner relies (Pet. at 12-

19) are inapposite. For example, Granfinanciera held

that Article III barred Congress from assigning cer-

tain fraudulent-conveyance claims to non-Article III

bankruptcy courts. 492 U.S. at 55. Because the

Constitution required those claims to be adjudicated

in Article III courts, and because the claims were legal

in nature, the jury-trial right applied. Id. at 48-49.

Curtis v. Loether, 415 U.S. 189 (1974), involved a cause

of action that Congress had assigned to “the ordinary

courts of law” rather than to an administrative

tribunal. Jd. at 194. Because that cause of action

assigned to the courts was “an action to enforce

‘legal rights’ within the meaning of [the Court’s]

Seventh Amendment decisions,” the jury-trial right

applied. Jd. at 195; accord Feltner v. Columbia Pictures

Television, Inc., 523 U.S. 340, 342 (1998) (holding

that when Congress assigned copyright cases to courts

rather than to an agency, the Seventh Amendment

provided “a right to a jury determination of the amount

of statutory damages”). None of those decisions sug-

gest that the Seventh Amendment prevents Congress

from assigning disputes involving public rights to

administrative agencies for adjudication without a

jury.

Inter partes review would not violate the Seventh

Amendment even if, as Petitioner suggests (Pet. at 11),

6

the application of the jury trial right to patent claims

depends solely on whether the claims at issue were

historically tried before juries. Inter partes review pro-

vides no right to monetary damages, but affords only

the equitable relief of cancellation of a patent. Claims

for annulment or cancellation of a patent—as distinct

from claims of patent infringement—were traditionally

brought before courts of equity, not resolved by juries.

See Mowry v. Whitney, 81 U.S. (14 Wall.) 434, 440

(1872) (explaining, prior to the existence of adminis-

trative avenues for patent reconsideration, that “the

appropriate tribunal for the annulling of a grant or

patent from the government” is “the chancery jurisdic-

tion and its mode of proceeding”); Mark A. Lemley,

Why Do Juries Decide If Patents Are Valid?, 99 Va. L.

Rev. 1673, 1684 (2013) (“[I]In England in the eight-

eenth century, only chancery courts had the power to

revoke a patent upon request of a private citizen.”).

Accordingly, common law history reinforces that the

Seventh Amendment does not require such claims to

be tried before juries.

B. Because Patents are a Quintessential

“Public Right,” Inter Partes Review

Does Not Violate Article ITI

Article III provides that the “judicial Power of the

United States, shall be vested in one supreme Court,

and in such inferior Courts as the Congress may from

time to time ordain and establish.” U.S. Const. Art. ITI,

§ 1. “[I]n general,” this provision prevents Congress

from withdrawing from Article III courts any matter

involving the exercise of judicial power. Stern v.

Marshall, 564 U.S. 462, 484 (2011). However, one

exception to this general rule is that Congress may

designate “public rights” for adjudication in non-

Article III tribunals. See, e.g., Murray’s Lessee v.

7

Hoboken Land & Improvement Co., 59 U.S. (18 How.)

272, 284 (1855); Thomas v. Union Carbide Agric.

Prods. Co., 473 U.S. 568, 587 (1985).

Most critically, “what makes a right ‘public’ rather

than private is that the right is integrally related

to particular federal government action.” Stern, 564

U.S. at 490-491. Where Congress has acted “for a

valid legislative purpose pursuant to its constitutional

powers under Article I,” it may delegate even a “seem-

ingly private right” to non-Article III courts if the

right “is so closely integrated into a public regulatory

scheme as to be a matter appropriate for agency

resolution.” Granfinanciera, 492 U.S. at 54 (citation

omitted). The federal government need not be a party

to the agency adjudication. A dispute between private

parties may implicate public rights if “the claim at

issue derives from a federal regulatory scheme,” or

if “resolution of the claim by an expert government

agency is deemed essential to a limited regulatory

objective within the agency’s authority.” Stern, 564

U.S. at 490.

Patents are quintessential public rights. Pursuant

to its constitutional authority to “promote the Progress

of Science and useful Arts” by establishing a patent

system, U.S. Const. Art. I, § 8, Cl. 8, Congress created

the PTO—an agency with “special expertise in evalu-

ating patent applications.” Kappos v. Hyatt, 132 S. Ct.

1690, 1700 (2012). It directed that agency to issue a

patent if “it appears that the applicant is entitled to a

patent” under standards set by federal law, 35 U.S.C.

§ 131. Patents accordingly confer rights that “exist

only by virtue of statute.” Sears, Roebuck & Co. v.

Stiffel Co., 376 U.S. 225, 229 n.5 (1964).

The inter partes review procedure is the sort of

mechanism that Congress may permissibly create to

8

administer a public-right scheme. The PTO is respon-

sible in the first instance for allocating patent rights

in accordance with federal law. Procedures for review-

ing patents to ensure that they were properly issued

are “closely integrated” into the “public regulatory

scheme” of patent issuance, and therefore are “a matter

appropriate for agency resolution.” Granfinanciera,

492 U.S. at 54 (citation omitted). The “basic purpose[]”

of inter partes review is simply “to reexamine an earlier

agency decision” to grant a patent right. Cuozzo Speed

Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016). A

procedure that gives the expert agency charged with

allocating patent rights “a second look at an earlier

administrative grant of a patent,” id., is “integrally

related” to the public-right scheme of patent issuance,

Stern, 564 U.S. at 49.

In MCM Portfolio, the Federal Circuit correctly

recognized these principles, explaining that the patent

right “derives from an extensive federal regulatory

scheme,” and that Congress “saw powerful reasons to

utilize the expertise of the PTO for an important public

purpose - to correct the agency’s own errors in issuing

patents in the first place.” 812 F.3d at 1290. The court

observed that “patent rights are public rights” whose

validity is “susceptible to review by an administrative

agency” Jd. at 1293. The court concluded that the

“teachings of the Supreme Court in Thomas, Schor,

and Stern compel the conclusion that assigning review

of patent validity to the PTO is consistent with Article

Ill.” Id. at 1291.

Petitioner primarily argues that patent rights may

be adjudicated only in Article III courts because “/a]

patent has been recognized for centuries as a private

property right, so patent infringement cases do not

rely on congressional grace for an Article III court.”

9

Pet. at 18. That is incorrect. Unlike private property

rights, patent rights “exist only by virtue of statute,”

Sears, 376 U.S. at 229 n.5 (citation omitted). “The

[patent] monopoly did not exist at common law, and

the rights, therefore, which may be exercised under it

cannot be regulated by the rules of the common law.”

Gayler v. Wilder, 51 U.S. (10 How.) 477, 494 (1851).

Accordingly, the patent monopoly “is created by the act

of Congress; and no rights can be acquired in it unless

authorized by statute, and in the manner the statute

prescribes.” Id.; see Crown Die & Tool Co. v. Nye Tool

& Mach. Works, 261 U.S. 24, 36 (1923) (in issuing a

patent, “[t]he government is not granting the common

law right to make, use and vend” an invention, but

rather is granting the statutory right to exclude others

from the invention).

English practice was the same. Patents in England

were administered pursuant to the Statute of Monopo-

lies, a law enacted in 1623 in response “to abuses

whereby the Crown would issue letters patent, ‘granting

monopolies to court favorites in goods or businesses

which had long before been enjoyed by the public.”

Bilski v. Kappos, 561 U.S. 593, 627 (2010) (quoting

Graham v. John Deere Co. of Kansas City, 383 U.S. 1,

5 (1966)). The Statute of Monopolies “generally pro-

hibited the Crown from granting” monopoly rights, but

“permitted grants of exclusive rights to the ‘working or

making of any manner of new Manufactures.” /d.

(quoting 1623, 21 & 22 Jac, c. 3, § VI (Eng.), reprinted

in 4 Statutes of the Realm 1213 (1963)).

Even if Article III limited agency adjudication of

statutory actions that are related to those that were

traditionally tried in courts of law, Article III would

pose no impediment to inter partes review because

actions seeking annulment or cancellation of patents—

10

in contrast to infringement actions—were decided by

courts of equity. See Mowry, 81 U.S. (14 Wall.) at 440;

Lemley, 99 VA. L. REV. at 1684.

This Court’s decision in Stern does not suggest

otherwise. Stern addressed a claim that arose “under

state common law,” which was not a public right

because “Congress has nothing to do with it.” 546 U.S.

at 493. Indeed, Stern reinforced the same “public

rights” concept that drove the Patlex and Joy decisions.

See Patlex Corp. v. Mossinghoff, 758 F.2d 594, 604

(Fed. Cir. 1985); Joy Techs., Inc. v. Manbeck, 959 F.2d

226, 228 (Fed. Cir. 1992). In Stern, this Court con-

firmed two circumstances in which agencies may

adjudicate “public rights” claims between two private

parties: (1) where the claim derives from a federal

regulatory scheme, and (2) where resolution of the

claim by an expert governmental agency is deemed

essential to a limited regulatory objective within the

agency's authority. Jd. at 490.

Inter partes reviews, like reexaminations, fit squarely

within both circumstances. First, patent rights exist

only by virtue of a federal statutory scheme. See, e.g.,

Wheaton v. Peters, 33 U.S. (8 Pet.) 591, 657-58 (1834)

(rejecting the notion that an inventor enjoys any

common-law property right to a patent monopoly).

Pursuant to 35 U.S.C. § 131, the PTO grants patents

based on the standards in federal statutes, such as 35

U.S.C. §§ 101 (patent eligibility), 102 (novelty), and

103 (non-obviousness). Second, patent validity falls

within the technical expertise of the PTO, the same

agency that examines patent applications in the first

place. And post-grant proceedings, such as inter

partes review, are essential to the limited regulatory

objective within the PTO’s authority: to ensure that

11

only proper patents are issued and to correct mistakes

made in wrongly issuing patents.

That conclusion does not change even if, as Peti-

tioner urges (Pet. at 12-13), inter partes review is

compared to the English writ of scire facias, by which

a party could ask a court to revoke a patent that had

been “issued without authority” and that should be

repealed “for the good of the public and right and

justice.” Mowry, 81 U.S. at 440. The Federal Circuit

has found that analogy inapt, holding that a “proceed-

ing on a writ of scire facias [i]s not analogous to a suit

for a declaration of invalidity, but [i]s more akin to an

action for inequitable conduct.” In re Technology

Licensing Corp., 423 F.3d 1286, 1290 (Fed. Cir. 2005).

Even if scire facias provided a useful analogy to inter

partes review, however, “(t]he scire facias to repeal a

patent was brought in chancery” rather than in law.

Mowry, 81 U.S. at 440. Although subsidiary questions

of fact in scire facias actions were sometimes delegated

to juries, the ultimate question whether a patent had

been improperly issued “stated no fact which could be

tried by a jury.” Lemley, 99 Va. L. Rev. at 1688

(quoting Rex v. Arkwright, (1785) 1 CPC 53 (K.B.) 61,

reported in 1 Thomas Walter Williams, An Abridgment

of Cases Argued and Determined in Courts of Law,

During the Reign of His Present Majesty, King George

The Third 93 (1798)).

Petitioner also suggests (Pet. at 19) that this Court’s

decision in United States v. American Bell Telephone

Co., 128 U.S. 315, 364 (1888), holds that patent rights

must be adjudicated in Article III courts. However,

American Bell held only that the Patent Act in its

then-current form provided no basis for cancelling an

original patent based on the rejection of a later reissue

application. See American Bell, 128 U.S. at 364

12

(Patent Act in its then-current form did not authorize

the Executive Branch to cancel a previously issued

patent). American Bell merely reflects the fact that,

in the 19th century, Congress had not authorized the

Patent Office or any other administrative body to

reconsider the validity of previously issued patents.

C. There is No Dispute Among Lower

Courts

While some of the procedures of inter partes review

are new, the purpose of inter partes review—correcting

PTO errors in issued patents—is not new. Congress

first gave the PTO such authority in 1980, when it

created ex parte reexaminations. See Act of Dec. 12,

1980, Pub. L. No. 96-517, § 1, 94 Stat. 3015. That

statute allows the PTO, upon a request by a third-

party petitioner or by the patentee itself, to review

claims of an issued patent to reconsider whether

those claims should have been granted. See 35 U.S.C.

§§ 302, 303(a). A third-party petitioner does not

participate in an ex parte reexamination proceeding

after the initial request. See id. § 305. In 1999,

Congress expanded reexaminations to offer an inter

partes procedure, so that petitioners could participate

throughout the process. See Optional Inter Partes

Reexamination Procedure Act of 1999, Pub. L. No. 106-

113, Tit. TV, Subtit. F, 113 Stat. 1501A-567 to -572 (35

U.S.C. § 311 et seg. (2000)). Inter partes review

replaced the latter procedure.

No judicial decision casts any doubt on either form

of reexamination. To the contrary, in 1985, the Federal

Circuit held that ex parte reexaminations did not run

afoul of either Article ITI or the Seventh Amendment.

Patlex, 758 F.2d at 604. The Federal Circuit observed

that the reexamination statute was enacted to correct

errors made by the government in issuing patents that

13

should never have been granted. Jd. The Federal

Circuit recognized that, even though patent validity is

often litigated in disputes involving private parties,

the threshold question of validity turns on whether the

PTO properly granted the patent—an issue concern-

ing public rights, not private rights. Jd.

In 1992, the Federal Circuit again upheld the consti-

tutionality of the reexamination statute. Joy, 959 F.2d

at 228. The Federal Circuit considered this Court’s

post-Patlex decision in Granfinanciera, S.A. v. Nordberg,

492 U.S. 33 (1989), which involved the right to jury

trial under the Seventh Amendment for a bankruptcy

trustee’s claim for recovering a fraudulent conveyance.

The Federal Circuit held that Granfinanciera had

affirmed the basic underpinnings of Patlex—cases

involving public rights, including patent validity, can

be adjudicated by administrative agencies without

implicating the Seventh Amendment. 959 F.2d at 228.

The patentee in Joy Technologies asked this Court

to review essentially the same questions Petitioner

advances today. This Court denied certiorari. 506

US. 829 (1992).

In 2011, Congress replaced inter partes reexamina-

tion and authorized the PTO to review issued patents

in inter partes review, as well as other post-grant

administrative proceedings. Leahy-Smith America

Invents Act (AIA), Pub. L. No. 112-29, § 6(a), 125 Stat.

299-304 (35 U.S.C. § 311 et seq.); see also id. §§ 6(d),

18, 125 Stat. 305-11, 329-31. As this Court recently

noted, inter partes review carries out the same purpose

as reexaminations: “to reexamine an earlier agency

decision.” Cuozzo, 136 S. Ct. at 2144. Inter partes

review therefore are no less proper an exercise of

administrative authority—both involve public rights—

and congressional sponsors explained inter partes

14

review’s constitutionality by reference to those earlier

procedures. See 157 Cong. Rec. S5374-76 (daily ed.

Sept. 7, 2011) etter from Hon. Michael W. McConnell,

submitted by Sen. Kyl); see also Cooper v. Lee, 86 F.

Supp. 3d 480, 488 (E.D. Va. 2015) (summarizing simi-

larities between reexaminations and IPRs for the

purpose of constitutional analysis), affd summarily,

No. 15-1483 (Fed. Cir. Jan. 14, 2016), cert. denied, 137

S. Ct. 291 (2016).

For constitutional purposes, therefore, inter partes

review presents no new issue. Although Petitioner argues

that “inter partes review is qualitatively different than

a reexamination proceeding” (Pet. 17-18, n.6.), Peti-

tioner never explains how this “qualitative[] differen[ce]”

makes inter partes review uniquely unconstitutional

in its view. Rather, Petitioner’s argument—taken to

its logical conclusion—would deprive the PTO of

any power to reexamine an issued patent without the

patentee’s consent, not even on the PTO’s own initia-

tive in a proceeding to which only the government and

the patentee are parties. Petitioner's argument fails

for the same reason that objections to reexamination

failed: patent validity involves public rights, and the

PTO can review patent validity without violating

Article III or the Seventh Amendment once Congress

confers the necessary statutory authority, as it has

here.

In short, the Federal Circuit has repeatedly and

correctly rejected the argument that the Constitution

prohibits the PTO from correcting its own error in

issuing a patent that fails the statutory requirements.

15

Il. PETITIONER RAISES NO REASON WHY

THIS COURT SHOULD REVIEW THE

PTO’S? DENIAL OF THE MOTION TO

AMEND

A. By Not Raising Several of its Argu-

ments Before the Federal Circuit,

Petitioner Failed to Preserve Its Right

to Challenge the Denial of the Motion to

Amend

Petitioner is improperly asking this Court to review

issues that were not raised before the Federal Circuit.

While it did challenge the PTO’s finding that it failed

to provide adequate written description support for

the proposed amended claims, Petitioner’s Federal

Circuit briefing does not raise any other issue with the

denial of the motion to amend that is also raised in its

petition. Nowhere in its Federal Circuit appeal brief

or request for rehearing does Petitioner challenge the

PTO’s decision on the grounds that: the PTO “sua

sponte refused the proposed amendments because .. .

they were not adequately explained and included unde-

fined terms” (Pet. at 22); the PTO’s rule that the

patentee bears the burden of persuasion in demon-

strating the patentability of the proposed amended

claims is an incorrect interpretation of 35 U.S.C.

§ 316(e) (id. at 22-23); or the “broadest reasonable

interpretation” standard is not the proper claim

construction standard for a motion to amend (id. at 24-

25). Because these issues were not raised to the

Federal Circuit, this Court should decline to review

them now. See Virtue v. Creamery Package Mfg. Co.,

2 Inter partes reviews are conducted by the Patent Trial and

Appeal Board, which is an adjudicatory tribunal of the PTO.

35 U.S.C. § 6.

16

227 U.S. 8, 38-39 (1913) (refusing to consider argu-

ments not raised before the circuit court).

Indeed, because new issues should not be reviewed

by this Court, Petitioner has waived its right to

challenge the denial of the motion to amend. The

PTO’s decision provided two independent grounds why

the motion to amend should be denied: (1) Petitioner

failed to provide adequate written description support

for the proposed amended claims (App., 33-34) and

(2) Petitioner failed to articulate definitions for two

terms, “setting tool” and “wellhead assembly” (App.,

35-36). In other words, Petitioner failed to preserve its

challenge to the second of these grounds, i.e., none of

the issues raised in its petition that were also raised

in its Federal Circuit briefing could justify overturning

the PTO’s finding that the motion to amend should be

denied because Petitioner failed to articulate defini-

tions for certain claim terms. Therefore, for this

reason alone, this Court should decline to review

Petitioner’s challenge to the PTO’s rules governing the

motion to amend process.

B. This Court Should Decline Review

Because Petitioner Does Not Apply the

Chevron Analysis

When a statute expressly grants an agency rule-

making authority, and does not “unambiguously

direct” the agency to adopt a particular rule, the agency

may “enact rules that are reasonable in light of the

text, nature, and purpose of the statute.” Cuozzo, 136

S. Ct. at 2142. Regulations issued by the PTO under

a statutory grant of rulemaking authority are entitled

to Chevron deference unless they are based on an

unreasonable construction of the statute.

17

The PTO’s interpretation of its own regulations is

“controlling unless plainly erroneous or inconsistent

with the regulation.” Auer v. Robbins, 519 U.S. 452,

461 (1997) (internal quotation marks omitted). Under

the APA, courts “hold unlawful and set aside agency

action .. . found to be ... . arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance

with law.” 5 U.S.C. § 706(2); Arnold P’ship v. Dudas,

362 F.3d 1338, 1340 (Fed. Cir. 2004). In other words,

“[wlhen an agency interprets its own regulation, the

Court, as a general rule, defers to it “unless that

interpretation is ‘plainly erroneous or inconsistent

with the regulation.” Decker v. Nw. Envtl. Def. Ctr.,

133 S. Ct. 1326, 1337 (2013) (quoting Aver, 519 U.S.,

at 461).

The PTO properly exercised its authority to imple-

ment the inter partes review statute and provide a

framework for the agencys administration of the

amendment process. Under Chevron, an agency’s

interpretation of a statute is entitled to deference

where Congress has delegated authority to the agency

to interpret the statute and the agency acts through

formal administrative procedures. 467 U.S. at 844-46;

United States v. Mead Corp., 533 U.S. 218, 226-27

(2001) (Chevron applies “when it appears that Con-

gress delegated authority to the agency generally to

make rules carrying the force of law”). That is, the

application of Chevron deference turns on Congress’s

intent—manifested in this case by an affirmative

grant of authority that is particular to motions to

amend.

There is no question that Congress delegated

authority to the PTO to make rules carrying the force

of law in administering the inter partes review statute.

See Cuozzo, 136 S. Ct. at 2142 (in applying the

18

Chevron analysis to the AIA, noting that “the statute

allows the Patent Office to issue rules governing inter

partes review”) (citation omitted). Petitioner fails to

even mention this precedent, but instead argues that

its own interpretation of the rules should apply. It

then compounds this error by trying to show that its

reading of the statute and regulations is correct,

instead of showing that the agency’s interpretation is

unreasonable or plainly erroneous. As shown below,

the PTO’s interpretation of the statute and regulations

is entitled to Chevron deference.

C. The PTO’s Order Requiring Petitioner to

“Explain” How the Specification Supports

the Proposed Amended Claims is Not a

Plainly Erroneous Interpretation of 37

C.F.R. § 42.121(b)(1)

Petitioner argues that requiring the patentee to

explain how the specification provides written support

for proposed amendment claims violates the APA

because the PTO went beyond the regulations. Pet.

at 21. Prior to submitting its motion to amend,

on August 15, 2014, the PTO ordered Petitioner to

explain how the specification of the U.S. Patent

6,179,053 (the “053 patent”) supports the proposed

amended claims:

Pursuant to 37 C.F.R. § 42.121(b)(1), Patent

Owner must set forth the support in the

original disclosure of the patent for each

proposed substitute claim, i.e., Patent Owner

must identify clearly the written description

support in the disclosure corresponding to the

earliest date upon which Patent Owner seeks

to rely.

19

Merely indicating where each claim limita-

tion individually is described in the original

disclosure may be insufficient to demonstrate

support for the claimed subject matter as a

whole. . . . [IJf the claim language does not

appear in the same words in the original

disclosure, a mere citation to the original

disclosure, without any explanation as to why

a person of ordinary skill in the art would

have recognized that the inventor possessed

the claimed subject matter as a whole, may be

inadequate.

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

IPR2014-00216, Paper No. 18 at 4 (PTAB Aug. 15,

2014). Despite this order, Petitioner's motion to

amend only includes a chart that provides cites—with

absolutely no explanation—for the portions of the

written description that it alleges support its proposed

amended claims. App., 33-34. Unsurprisingly, the

PTO found that Petitioner did “not satisfly] its burden

of showing written description support for the

proposed substitute claims.” Id. at 34.

Petitioner argues that the PTO’s interpretation of

37 C.F.R. § 42.121(b)\(1) violates the APA because it

purportedly “goles] outside of the regulation.” Pet. at

21. However, in doing so, Petitioner offers no

explanation why the PTO’s order and subsequent

decision is “plainly erroneous or inconsistent with the

regulation.” See Auer, 519 U.S. at 461. Indeed, the

PTO’s interpretation appears to be the type of agency

interpretation that is routinely upheld. See id. (“A

rule requiring the Secretary to construe his own

regulations narrowly would make little sense, since he

is free to write the regulations as broadly as he wishes,

subject only to the limits imposed by the statute.”);

20

Decker, 133 S. Ct. at 1337 (“The EPA’s interpretation

is a permissible one. Taken together, the regulation’s

references to ‘facilities,’ ‘establishments,’ ‘manufactur-

ing,’ ‘processing,’ and an ‘industrial plant’ leave open

the rational interpretation that the regulation extends

only to traditional industrial buildings such as facto-

ries and associated sites, as well as other relatively

fixed facilities.”).

D. Petitioner’s “Sua Sponte” Argument is

Wrong in Its Interpretation of Both the

Law and Facts

1. Because the Burden of Proof Lies

with the Patentee in Amending the

Claims, the PTO Can Raise Issues

Sua Sponte

As discussed infra, because a patentee properly

bears the burden of persuasion in demonstrating the

patentability of a proposed amended claim, the PTO

currently only makes a determination of whether or

not the patentee has met that burden when deciding

the motion to amend. However, given the PTO’s broad

authority to set procedures for inter partes review, and

with its tribunal presiding over a litigation-like

proceeding, the PTO could adopt rules allowing the

PTO to sua sponte raise a proposition of unpatentabil-

ity regarding an amended claim in order to further

inter partes review’s goal of keeping patents “within

their legitimate scope.” Cuozzo, 136 S. Ct. at 2144; see

also Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292,

1307-08 (Fed. Cir. 2015) (describing the need for

scrutiny of “substitute claims” that a “petitioner may

choose not to challenge”).

21

2. The PTO Did Not Act Sua Sponte

First, as discussed infra, Petitioner was put on

notice by the PTO’s August 15, 2014 order that “[mJerely

indicating where each claim limitation individually is

described in the original disclosure may be insufficient

to demonstrate support for the claimed subject matter

as a whole.” Greene’s Energy, IPR2014-00216, Paper

No. 18 at 4. Thus, Petitioner cannot fairly argue

that “there was no chance to explain [the written

description support] to the Board because of its sua

sponte action.” Pet. at 22.

Second, Petitioner was informed multiple times that

it needed to provide constructions for certain terms.

The PTO’s August 15, 2014 order further specifies

that “Patent Owner should . . . come forward with

technical facts and reasoning about those feature(s) or

limitation(s), including the construction of new claim

terms ....” Greene’s Energy, IPR2014-00216, Paper

No. 18 at 3. As Respondent’s opposition explained, in

detail, Petitioner’s motion to amend failed to provide a

construction for “setting tool,” a term that has no

specific meaning in the art. See App., 35. Meanwhile,

it is reply brief in support of its motion to amend,

Petitioner responded to Respondent’s opposition merely

by arguing that no construction was necessary because

the claim language itself plainly sets out “the defining

characteristics of the ‘setting tool.” Jd. Accordingly,

contrary to the petition, Petitioner did have a chance

to provic.e constructions for the terms the PTO found

lacked a definition, it simply chose not to.

22

E. The PTO’s Rules Placing the Burden

of Persuasion on Patentees to Prove

That Proposed Amended Claims are

Patentable is a Reasonable Interpreta-

tion of the AIA

1. The AIA’s Express Grant of Rule-

making Authority for Motions to

Amend Includes the Authority to

Assign Burdens of Proof for Such

Motions

Congress gave the PTO general authority to set

standards and procedures implementing § 316(d),

without further qualification or restriction. See 35

U.S.C. § 316(a)(9) (directing the PTO to “set[] forth

standards and procedures for allowing the patentee to

move to amend the patent under subsection (d)”).

Section 316(a)(9) thus authorizes the PTO to establish

not only the procedures, but also the relevant stand-

ards, for motions to amend. The PTO’s designation of

a burden of proof for motions to amend is plainly

within the scope of § 316(a)(9)’s authorization to set

standards and procedures for motions to amend. See

City of Arlington v. F.C.C., 133 8. Ct. 1863, 1871 (2013)

(under Chevron, “the question in every case, is simply,

whether the statutory text forecloses the agency’s

assertion of authority, or not”).

Assigning the burden of proof in a proceeding falls

under the auspices of setting forth a “standard or

procedure” for that proceeding. A “standard of proof”

is one of a number of common legal “standards”—it is

“(tlhe degree or level of proof demanded in a specific

case.” STANDARD OF PROOF, Black’s Law Dictionary

1441 (8th ed. 2004). Courts and statutes thus consist-

ently identify a law or regulation that defines the

burden of proof in a proceeding as a subspecies of the

23

“standards or procedures” governing that proceeding.

See, e.g., United States v. Real Prop. In Section 9, Town

29 North, Range I of Charlton, W. Twp. Otsego

Cnty., Michigan, 241 F.3d 796, 798 (6th Cir. 2001)

(describing legislation that “significantly alter[e]d the

standards and procedures applicable to civil forfeiture

proceedings” by “changling] and rais[ing] the govern-

ment’s burden of proof”); Pub. L. No. 109-54 (2005),

§ 1005(e)(2)(A)(i) (limiting judicial review to the ques-

tion “whether the status determination of the [agency]

was consistent with the standards and procedures

specified by the Secretary .. . including the require-

ment that the conclusion of the Tribunal be supported

by a preponderance of the evidence”); Commonwealth

v. Miller, 585 Pa. 144, 148 (Pa. 2005) (“[clonsistent

with” the “need[] to develop standards and proce-

dures,” the lower court “held that the burden of proof

in such cases was on the petitioner”).

The PTO designated the burden of proof for motions

to amend through regulation, the issuance of an

informative decision, and subsequently in a preceden-

tial decision. See Idle Free Sys., Inc. v. Bergstrom, Inc.,

2013 WL 5947697 at *4 (PTAB June 11, 2013);

MasterImage 3D, Inc. v. RealD Inc., [PR2015—00040,

2015 WL 4383224 (PTAB July 15, 2015) (preceden-

tial), slip op. at 4. These decisions applied a rule

governing who bears the burden of proof in all motions

(§ 42.20) to a particular motion (a motion to amend

under § 42.121), and represent the agency’s authorita-

tive construction of § 316(d) reached through a formal

regulatory and adjudicative process. This construction

is entitled to Chevron deference.

24

2. Statutory Text and Structure Con-

firm the Reasonableness of the PTO’s

Interpretation

Section 316(d) is titled “Amendment of the Patent.”

It authorizes a motion to amend and additional mo-

tions, and requires that a substitute claim not broaden

the original claim’s scope or add new matter. See 35

U.S.C. § 316(d). Section 316(a)(9) authorizes regula-

tions implementing § 316(d), and further requires that

information presented by the patentee in support of a

substitute claim be included in the file history of the

patent. See 35 U.S.C. § 316(a\(9). As the Federal

Circuit has noted, § 316(a)(9) grants the PTO “the

specific authority to establish the standards and

procedures” for motions to amend. Nike, Inc. v. Adidas

AG, 812 F.3d 1326, 1333 (Fed. Cir. 2016) (emphasis in

original).

These two sections are the only sections of Chapter

35 that contain rules and limits that are expressly

applied to the amendment process. This structure

suggests that when Congress intended to apply a

particular rule or limit to motions to amend, it said so

in §§ 316(a)(9) and (d). It also suggests that other,

generally stated requirements of the AIA that are not

included in the “motions to amend” section of Chapter

35 or its implementing authority do not apply to

motions to amend. See Henderson v. Shinseki, 562

U.S. 428, 439-40 (2011) (noting that the placement of

a statutory provision outside the section expressly

directed to a subject suggests that the provision is not

within the scope of that subject); see also Florida Dep’t

of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33,

47 (2008).

Section 316(e), by contrast, makes no reference to

claim amendments or to § 316(d). It is only § 316(a)(9),

25

rather than § 316(e), that is expressly directed to

motions to amend. The amendment-specific and com-

prehensive nature of §§ 316(a}9) and (d) further

confirms that those sections, rather than § 316(e),

govern motions to amend. See National Cable and

Telecomm. Ass’n v. Gulf Power Co., 534 U.S. 327, 335

(2002) (“specific statutory language should control

more general language when there is a _ conflict

between the two”). Section 316(e)’s general nature,

and its placement outside the subsections expressly

directed to motions to amend, suggest that § 316(e) is

not directed to motions to amend—and that the

burden of proof is instead among those matters that

the AIA left to the PTO’s broad authority to establish

“standards and procedures” for motions to amend.

Even if § 316(e) were deemed to at least presump-

tively apply in all phases of an inter partes review, it

still would not apply where it has been affirmatively

displaced. Thus, even a presumptively universal

§ 316(e) would not govern the institution phase of an

inter partes review because § 314(a) assigns a differ-

ent, lower burden to the petitioner during that part of

the proceeding. And so, too, § 316(a)(9). That section

does not mandate a particular type of burden of proof,

but rather leaves it to the PTO to determine the

appropriate standards and procedures for motions to

amend. And again, Petitioner does not even attempt

to fashion a colorable argument that setting a burden

of proof for a proceeding constitutes anything other

than setting a “standard” for that proceeding.

Conversely, if § 316(e) were intended to govern

motions to amend, it would make little sense for

§ 316(aX9) to authorize the PTO to establish “standards

and procedures” for such motions—because § 316(e)

would then largely dictate those standards and

26

procedures. If § 316(e) applies to substitute claims,

the amendment process must consist of the following

steps: (1) the patentee bears the burden of showing

that the proposed amendments are non-broadening

and have written support; (2) if this burden is met, the

PTO must bring the amended claims into the proceed-

ing “as a matter of course;” (3) the petitioner may then

challenge the proposed amended claims per § 316(e);

(4) if the petitioner declines to challenge the new

claims, is no longer participating in the proceeding, or

fails to bear its burden of proving that the proposed

claims are unpatentable, the amended claims must be

published in a certificate “as a matter of course;” and

(5) if the PTO independently assesses the claims’

patentability, the patentee must be afforded notice

and an opportunity to respond.

If this is so, however, then there remains little role

for § 316(a)(9)’s broad authorization for the PTO to set

standards and procedures for substitute claims. In

other places where § 316(a) grants general regulatory

authority, but Congress wanted to prescribe some of

the relevant standards or procedures, either the text

of § 316(a) or the provision that § 316(a) implements

spells out those restrictions. See, e.g., § 316(a)(5)

(authorizing standards and procedures for discovery,

while limiting discovery to depositions and what is

“necessary in the interest of justice”); § 316(a)(2)

(authorizing standards for institution “under section

314(a),” which requires a “reasonable likelihood”

merits showing). Unlike those provisions, for claim

amendments, Congress gave the PTO general author-

ity to set standards and procedures implementing

§ 316(d), without further qualification or restriction.

This sweeping authorization cannot be reconciled with

the notion that Congress understood § 316(e) to already

dictate the standards and procedures for claim

27

amendments. Petitioner’s interpretation of § 316(e)

substantially invades the authority that Congress

expressly granted to the PTO in § 316(a\9).

3. Established Practices Governing

Burdens of Proof Confirm the

Reasonableness of the PTO'’s

Interpretation

As is typical in court and administrative proceed-

ings, for all motions, “[tlhe moving party has the

burden of proof to establish that is entitled to the

requested relief.” 37 C.F.R. § 42.20(c); see also

C. Mueller & L. Kirkpatrick, Evidence § 3.1, p. 104 (3d

ed. 2003) (“Perhaps the broadest and most accepted

idea is that the person who seeks court action should

justify the request/[.]”). Placement of the burden on the

patentee is also consistent with 5 U.S.C. § 556(d),

under which in an adjudicatory proceeding under

the APA the proponent of an order (here, an order that

a patent be amended) has the burden of proof unless

a statute provides otherwise. See Dir. Office of

Workers’ Comp. Programs, Dep’t of Labor v. Greenwich

Collieries, 512 U.S. 267, 276 (1994).

The PTO’s rule for inter partes review is also

consistent with long-standing interference practice,

where amendments to claims also are made by motion.

See MPEP § 2308.02. And the Federal Circuit has long

held that placing the burden of proof on the moving

party is permissible in the interference context. See,

e.g., Kubota v. Shibuya, 999 F.2d 517, 521 (Fed. Cir.

1993). Congress’s choice of the term “motion to

amend” in § 316(d), rather than simply an “amend-

ment,” was thus made against a backdrop of the

general rule that the proponent of a motion must

show entitlement to the relief sought, and also of

interference practice, where the party filing a motion

28

to amend is required to establish the patentability of

the claim. For example, the relevant Board of Patent

Appeals and Interferences*® Standing Orders when the

AIA was drafted and enacted provided that “if a claim

is added to overcome a patentability problem raised in

a motion, the motion to add the claim must explain

why the proposed claim would overcome the problem.”

SO 7 208.5.1 (Mar. 8, 2011), (Jan. 3, 2006). The

agency’s choice of allocating the burden in the same

way for similar motions in inter partes review is

therefore eminently reasonable.

4. Petitioner Cannot Show that

Placing the Burden on the Patent

Challenger Comports With Congres-

sional Intent

Section 316(e) does not require the PTO to use any

particular burden of proof for motions to amend. For

one thing, § 316(e) never mentions amended claims.

Instead, § 316(e) applies only to claims that are “[i]n

an inter partes review instituted under this chapter,”

making clear that the burden of proof is on the peti-

tioner to prove unpatentable those issued claims that

were actually challenged in the petition for review and

for which the PTO instituted review. See Nike, 812

F.3d at 1334. Therefore, § 316(e) speaks only to the

petitioner’s burden of proving the unpatentability of

existing claims; it does not specify who has the burden

of proving the patentability of new, never-before-

examined substitute claims.

Moreover, a motion to amend does not involve the

petitioner’s “proposition of unpatentability;” instead,

’ The Board of Patent Appeals and Interferences is the

predecessor to the Patent Trial and Appeal Board, which was

created by the AIA.

29

it involves the patentee’s proposition of the patentabil-

ity of the proffered claims. See Nike, 812 F.3d at 1334

(distinguishing the contexts of a petitioner proving

unpatentability of a patented claim and a patentee

proving patentability through a motion to amend).

Section 316(d)(1) provides that, where a claim is not

merely canceled, the patentee may “propose a reasona-

ble number of substitute claims” in “1 motion to amend

the patent.” And § 318(a) distinguishes between “a

patent claim challenged by the petitioner” and a “new

claim added under section 316(d)” via the PTO’s grant

of a motion to amend. Placing the burden of proving

such a proposition of patentability on the party filing

the motion is consistent with the “ordinary default

rule.” Schaffer ex Rel. Schaffer v. Weast, 546 U.S. 49,

56-58 (2005). Placing the burden on the patentee here

is all the more appropriate given that the patentee is

in the best position to understand how the prior art

relates to its proposed substitute claims. See Selma,

Rome & Dalton R. Co. v. United States, 139 U.S. 560,

568 (1891) (“[I]t has been established as a general rule

of evidence, that the burden of proof lies on the person

who wishes to support his case by a particular fact

which lies more peculiarly within his knowledge, or of

which he is more cognizant.”).

F. Petitioner’s Arguments Concerning the

Use of the “Broadest Reasonable

Interpretation Standard” Should be

Rejected Out-of-Hand

First, the applicability of the “broadest reasonable

interpretation” standard was already resolved in

Cuozzo, 186 S. Ct. at 2416. Second, as discussed

supra, Petitioner never raised this issue to the Federal

Circuit. Third, as discussed supra, Petitioner fails to

articulate why Chevron deference should not apply.

30

Ill. THE PTO’S DECISION FOLLOWED THE

TRADITIONAL PRINCIPLES OF CLAIM

CONSTRUCTION IN REJECTING PETI-

TIONER’S PROPOSED CONSTRUCTION

Petitioner argues that the PTO’s decision further

warrants review because it evidences the “confusion”

regarding the interaction of “traditional principles of

interpretation with the broadest reasonable inter-

pretation standard.” Pet. at 27. Petitioner’s argument

is that the PTO failed to follow Federal Circuit law in

rejecting its proposed construction for a single claim

term: “second lockdown mechanism.” More specifi-

cally, according to Petitioner, the PTO needs to adopt

its narrow construction of the term because the ’053

patent disparaged certain prior art devices. Jd. at

30-31. Further, Petitioner argues that the Federal

Circuit’s Rule 36 affirmance of the PTO’s decision

shows that the Federal Circuit is “confused” in its

interpretation of its own case law. Jd. at 27. This

argument fails because it ignores the thorough claim

construction analysis and rejection of Petitioner’s

claim construction arguments in the PTO’s decision.

In support of this argument, Petitioner relies on the

Federal Circuit’s decision in PPC Broadband, Inc. v.

Corning Optical Commc’ns RF, LLC, 815 F.3d 747

(Fed. Cir. 2016). However, PPC Broadband stands

for the unremarkable proposition that “the broadest

reasonable interpretation must be reasonable in light

of the claims and specification.” Jd. at 755. In that

case, the Federal Circuit vacated and remanded the

PTO’s decision in an inter partes review because the

PTO arrived at a particular construction by merely

“referencing the dictionaries cited by the parties and

simply selecting the broadest definition therein.” Jd.

at 752. The Federal Circuit concluded that this

31

approach was impermissible because “it fail[ed] to

account for how the claims themselves and the spec-

ification inform the ordinarily skilled artisan as to

precisely which ordinary definition the patentee was

using.” Id.

Meanwhile, in the present case, the PTO expressly

considered the specification and other claims in

rejecting Petitioner’s proposed constructions. Petitioner

proposed the following construction for “second lock-

down mechanism:” “a lockdown mechanism separate

from a setting tool which locks the mandrel in position

without hydraulic pressure.” App., 12.

First, the PTO rejected the notion that “second

lockdown mechanism” was limited to a mechanical

(i.e., non-hydraulic) apparatus. The PTO found such

an interpretation to be “untenable in light of the

manner in which the term is used in the claims of the

053 patent” because “[i]nterpreting ‘lockdown mecha-

nism’ to require a mechanical apparatus operating

without hydraulic pressure would render the use of

‘mechanical’ to describe the lockdown mechanism in

other claims superfluous” which violates the principle

that “claims are interpreted with an eye toward giving

effect to all terms in the claim” (one of the so-called

traditional principles of claim construction). App., 15

(citing Bicon, Inc. v. Straumann Co., 441 F.3d 945, 950

(Fed. Cir. 2006) (citations omitted)).

The PTO also found that such an interpretation was

inconsistent with how “lockdown mechanism” is used

in the specification because “the 053 patent describes

the use of a hydraulic mechanism as a second lock-

down mechanism.” /d. at 16. In doing so, the PTO

cited to particular passages of the ‘053 Patent.

For example, the PTO stated that “[als the 053 patent

explains, ‘the mandrel [ | is locked down in its

32

operative position by the hydraulic force [ ],”” and that

“(t]he embodiment described further includes an addi-

tional mechanical feature ‘to ensure that the mandrel

is secured in the operative position.” Id.

The PTO went on to reject the notion that the

“second lockdown mechanism” must be an apparatus

that is separate from the setting tool. The PTO noted

that “setting tool:” “does not occur in any claim of the

"053 patent,” “is not expressly defined in the ’053

patent” and “[tlo the extent any embodiment depicts

an unclaimed feature described as a ‘setting tool’

as separate from the second lockdown mechanism,

the claim language does not preclude that separate

element from being incorporated into the second lock-

down mechanism.” Jd. at 18. The PTO then concluded

that “[w]e decline to import limitations from a preferred

embodiment into the claim” (another traditional prin-

ciple of claim construction). Jd. (citing Deere & Co. v.

Bush Hog, LLC, 703 F.3d 1349, 1354 (Fed. Cir. 2012)).*

Therefore, the PTO did not reject Petitioner's

proposed construction without considering the speci-

fication, but rather issued a well-reasoned opinion

that shows how Petitioner’s proposed construction

violates the traditional principles of claim construc-

tion. Indeed, Petitioner points to no decision that

mandates the result it is seeking. Rather, Petitioner

appears unwilling to concede that traditional princi-

ples of claim construction mandate the rejection of its

proposed constructions.

* The PTO noted that Petitioner's “argument that ‘second

lockdown mechanism’ should be construed to be separate from

the ‘setting tool’ was rejected in the related district court

proceeding as ‘not helpful because it introduces the unnecessary

and ambiguous term ‘setting tool.” Jd. at 17, n.4.

33

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted,

GEORGE E. QUILLIN

Counsel of Record

JOHN J. FELDHAUS

BRADLEY D. ROUSH

FOLEY & LARDNER LLP

3000 K Street, NW

Suite 600

Washington, DC 20007

(202) 672-5300

gquillin@foley.com

Counsel for Respondent

January 30, 2017