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

“Supreme Court, U.S.

; No. 16-712

AND ; ae OCT 30 2017

4 las oF 1 CLERK

Supreme Court of the United

OIL STATES ENERGY SERVICES, LLC,

Petitioner,

Vv.

GREENE’S ENERGY GROUP, LLC, et al.,

Respondents.

On Wait or CERTIORARI TO THE UNITED STATES

Court oF APPEALS FOR THE FEDERAL CIRCUIT

BRIEF OF THE INTERNET ASSOCIATION,

SOFTWARE & INFORMATION INDUSTRY

ASSOCIATION, NATIONAL ASSOCIATION OF

REALTORS®, ASSOCIATION OF GLOBAL

AUTOMAKERS, INC., COMPUTER &

COMMUNICATIONS INDUSTRY ASSOCIATION

AND SAS INSTITUTE INC. AS AMICI CURIAE

SUPPORTING RESPONDENTS

Joun F. Durry

JAMES W. DABNEY Counsel of Record

RICHARD M. KorHL HucHes Husrarp & Reep LLP

EMMA L. BARATTA 1775 I Street, N.W., Suite 600

Of Counsel Washington, DC 20006

HuGues Hupsarp & Reep LLP (202) 721-4600

One Battery Park Plaza john.duffy@hugheshubbard.com

New York, New York 10004

(212) 837 6000

October 30, 2017

276689 —

a Livery oF Coomermae

TABLE OF CONTENTS

Page

pe Be Ning * gy | rr ner ee il

ivpy 2 gig) | ei Eo 8). 0 ery l

SUMMARY OF ARGUMENT ......... fire a Mena a Penal is 3

PU a das arent uat ira suapeierboanpenseeeens 4

I. PATENTS ARE PUBLIC RIGHTS

CONSTITUTIONALLY SUBJECT TO

EXECUTIVE DETERMINATION ...................00008. 4

A. Patents are Special Privileges Designed by

Statute to Serve a Public Purpose and

Conferred by Executive Action. .....................065 5

B. Comparing Patents to Rights in Land

Undermines Rather Than Advances

PONE © FI soc cree sccvsvcsseecsercossesscecees: 9

C. Patent Validity Was Not the “Subject of a

NE BG Ei Oe Fe is rccvvcsccsescnscscsscsescesese 12

ll. INTER PARTES REVIEW REINS IN,

RATHER THAN AGGRANDIZES,

eS Fe BOP We le vseccisnisprensaccsssosessscosaperonneess 18

A. Neither Modern Administrative Law Nor

Historical Practice Justified the Pre-

Existing Status Quo of Asymmetrically

Constrained Executive Power. ...................065 19

B. Inter Partes Review Imposes Constraints

on the Executive Branch To Equalize the

Legal Constraints on Issuing and Denying

Rg TI ARS NG SS IT (5 GARE BABS Re Seer 24

IIl.THE CONSTITUTION DOES NOT REQUIRE

JURIES TO REVIEW THE VALIDITY OF

ET PUEDE ED cp nkiccocvicacsraiesasninianspsssenncudonsies 28

CRIT Siccdctictredsccipsisisnsisosnoscicussivattseunasbiseonse 29

TABLE OF AUTHORITIES

Case Page(s)

Allentown Mack Sales & Serv., Inc. v.

NLRB,

522 U.S. 359 (1998) (Scalia, J.).........ccccseesereseeees 19

American Hoist & Derrick Co. v. Sowa &

Sons, Inc.,

oe PP BX ee | 15

Blonder-Tongue Laboratories, Inc. v.

University of Illinois Foundation,

Be ee I EE ED cacaicsecnsevcsodewvsistinenscse 4,6, 13, 14

Bloomer v. McQuewan,

se do cvancanendevatnandantaasteneoutebammeeniits 5

Boesche v. Udall,

ooo oc scant etaapaiaiansomnianennenti 10

Burlington Truck Lines, Inc. v. United

States,

ee care e ccinanniainiibendanbngroaneeneten 20

Burns v. Equitable Assocs.,

265 S.E.2d 737 (Va. 1980)............ sacecaieadomaramaaoueel 10

Cantrell v. Wallick,

Be i I ic ans cvaseatsedessbusionsenesanereanis 22

Cleveland v. United States,

Be ee I cdc desaccenncensednsdconoapiciemeneneres ao

Coffin v. Ogden,

Re ee ED cies svicinsisctcrenscsensenensassiiiverevenetes 22

TABLE OF AUTHORITIES

Cont'd

Case Page(s)

Cox v. United States,

I a 4, 28

Crowell v. Benson,

i eceetuebaseaia 14

Ethyl Corp. v. Browner,

ar ce ee Cs Ge RIED eccicccicctcctcccccetccseccuss 26

FCC v. Fox Television Stations, Inc.,

i a nihapensnieneseths 26

Ford Motor Co. v. NLRB,

ic ts manncncinenensbvnisonniasibnnnceniaoun 26

Graham v. John Deere Co.,

FL Ee ed Serene er S. 6, 17, 31

Hazel-Atlas Glass Co. v. Hartford-

Empire Co.,

SES USB. SES C1GEA) .....00ccerec00s..- Sr aa 13

Johnson v. Towsley,

REE RSE ESSE 28, 29

Judulang v. Holder,

RRA REI NEESER Re anon se 19

Kingsland v. Dorsey,

Oc conenapeenionensiaeminueien 13

Microsoft Corp. v. 141 Limited

Partnership,

II occa sesiescceonviracorsnamponrnon 15, 20

iv

TABLE OF AUTHORITIES

Cont’d

Case Page(s)

Morgan v. Daniels,

I rn i oo al 7 15, 22

Motor Vehicle Mfrs. Ass’n v. State Farm

Mut. Auto. Ins. Co.,

i Se... 19, 20, 27

Murray’s Lessee v. Hoboken Land &

Improvement Co.,

Se I, SI idcvctiensinsiniinsissiertnimchpakeaniebamhnen passim

Myers v. Bethlehem Shipbuilding Corp.,

ns ee eo necinaancammmoiatss 24

Neuman v. Travelers Indemnity Co.,

Se Sg I IE, CID erinicescdnacenccnceseictesionasoans 10

Precision Instrument Mfg. Co. v.

Automotive Maintenance Machine

Co.,

Se ERIE. crrenscnninnineiaeneminatepanieeohenie 6

Pregis Corp. v. Kappos,

700 F.3d 1348 (Fed. Cir. 2012).....................-. 20, 25

Radio Corp. of America v. Radio

Engineering Laboratories, Inc.,

SE EE ID iis cracackcintnecareinsenmiseaciionsinbsoman 15, 22

Reiter v. Cooper,

507 U.S. 258 (1993) (Scalia, J.)..................004. 16, 17

Ricci v. Chicago Mercantile Exchange,

Ne pitcennetisentcsctnihisennetinicdivnascionteaes 16

Vv

TABLE OF AUTHORITIES

Cont’d

Case Page(s)

Sackett v. EPA,

Be ESS aah ee ee anata erect 25

SEC v. Chenery Corp.,

Ee, EERIE Sat er eG. Care RNR 20

Seymour v. Osborne,

BE iii vas Ctenidinstediddcondsscedenstioaaianiies 5

SKF USA Inc. v. United States,

254 F. 3d 1022 (Fed. Cir. 2001)...................... 26, 27

Smelting Co. v. Kemp,

Ee I iii c i oinciensonenciicenmushalanastuns 28

St. Mary’s Honor Center v. Hicks,

ns I 2s ccrernssieenadioeeatiemeaiis 21

Stern v. Marshall

I eat aenininclncnrennpmeenabese 14

Teva Pharm. USA, Inc. v. Sandoz, Inc.,

A caine 6

Texas & Pacific Railway Co. v. Abilene

Cotton Oil Co.,

SE I i. iucomnuinscensmeenseseasinisone 16

Texas Dept. of Community Affairs v.

Burdine,

Ie I ois sicicciancedoinnodemmnaniedcaisantonninas 21

In re Van Os,

844 F.3d 1359 (Fed. Cir. 2017).................20.-r00s0000 20

vi

TABLE OF AUTHORITIES

Cont’d

Case Page(s)

Walker Process Equipment, Inc. v. Food

Machinery & Chemical Corp.,

IG, UN INI said scree ciisnsncctdicennSicesinnetenniin 6

Wellness Int] Network v. Sharif,

es is I sis oarevicssccningrsadereincincenn 18

Constitutional Provisions

pes MP OG TIE Sediccencneceavccsennceces 3, 5, 14, 23, 25, 26

BF is Gy MIEN, WB cies sensiscceessispesenenianasvn 3, 4, 28

Statutes and Rules

A I cs cciccgutincnsighenesmenantohcmeisiuiciunapealscns 19

BN rit ccncrntieceescninsscdnnecnioweitiisnsseinieicnvervinnuesicetit 10

Be ee te isesiciorcstciinsisins icbichometaiiinsiotienentaniniautaiinaios 8

eR ER eh. teeta eS Ue 7, 10

I TERI ets SP II si ccapccrshnaniscincn os cecinesmendanenstasaeneis oneuns 24

BO Ce TS casicsnsnvoccavciarnscchucummackenpacinsdvensiian 3, 8, 9, 10

SN Te Maia ccncosstderaaciennichctnichencacencniibansaeelsceniuooienaiitds 20

Be Oe I cdc saccenuennssissusnediasnsenstaousinns 24, 27

Be SE a OI aheinsccccsanceniimiveckaisipnacogtunisnsbaamnicanaoes 26

Act of April 10, 1790, 1 Stat. 109 ................ ‘. 7, i: 2

1783 Patent Act, 1 Stat. 318 ............................... 21, 22

vil

TABLE OF AUTHORITIES

Cont'd

Case Page(s)

re re ee, I, ae chseunveddesochaen 22

Pub. L. No. 96-517, § 2, 94 Stat. 3015,

I a oeapaendnlenssancenenoaibaaa 7

Treatises and Periodical Materials

1 WILLIAM BLACKSTONE, COMMENTARIES

ON THE LAWS OF ENGLAND (1765)...................2.000- 17

3 WILLIAM BLACKSTONE, COMMENTARIES

ON THE LAWS OF ENGLAND (1768).......................4- 17

John F. Duffy, Jury Review of

Administrative Action, 22 WM. &

ig FR A E+ aan 28

2 JOHN LOCKE, TWO TREATISES OF

I ng, asanentecoewnnnnen 17

F. W. MAITLAND, EQUITY ALSO THE

FORMS OF ACTION AT COMMON LAW

Caleb Nelson, Adjudication in the

Political Branches, 107 COLUM. L.

A, SEE AL La CAR nD ‘conan 6

JAMES SCHOULER, A TREATISE ON THE LAW

OF PERSONAL PROPERTY 45 (1873).................000000 10

S.A. de Smith, The Prerogative Writs, 11

SEED Cae SOUP E HIME DN scecscactcencveccsscsesccosesesese: 17

INTEREST OF AMICI CURIAE

Amicus Internet Association! represents over

40 of the world’s leading internet companies.” Its

mission is to foster innovation, promote economic

growth, and empower people through the free and

open internet. As the voice of the world’s leading

internet companies, its job is to ensure that all

stakeholders understand the benefits the internet

brings to our economy. As leading technology

companies and innovators that both apply for patents

and are also frequently the subjects of patent

litigation, the members of the Internet Association

are vitally interested in the proper functioning of the

patent system.

Amicus Software & Information Industry

Association (“SIIA”) is the principal trade association

for the software and digital information industries.

SILA’s membership includes more than 700 software

companies, search engine providers, data and

analytics firms, information service companies, and

digital publishers that serve nearly every segment of

society, including business, education, government,

healthcare, and consumers. As applicants for patents

and also the subjects of patent infringement

litigation, SILA members are also interested in the

proper functioning of the patent system.

The Computer and Communications Industry

Association (“CCIA”) represents more than 30

| The parties have consented to the filing of this brief, and

copies of their consent are on file with the Clerk’s Office.

Pursuant to Rule 37.6, no counsel for a party authored

this brief in whole or in part, and no counsel or party

made a monetary contribution intended to fund the

preparation or submission of the brief. No person or entity,

other than the Amici, their members, and their counsel,

made a monetary contribution to the preparation or

submission of this brief.

2 Membership of the Association is listed at

btips://internctasseciat iop.vrg/gur-mem bers/,

companies of all sizes providing high technology

products and services, including computer hardware

and software, electronic commerce,

telecommunications, and Internet products and

services—companies that collectively generate more

than $465 billion in annual revenues. CCIA members

participate in the patent system both as patentees

and as defendants against patent litigation, and

many CCIA members have filed petitions seeking to

have patents reviewed through the inter partes

review process.

The Association of Global Automakers is a

nonprofit trade association whose members include

the U.S. manufacturing and distribution subsidiaries

of 12 international motor vehicle manufacturers. One

part of the association’s mission is to foster an open

and competitive automotive marketplace in the

United States that accommodates and encourages

technological innovation in the automotive industry.

Global Automakers is thus interested in supporting a

well-functioning patent system in the United States.

The National Association of ,REALTORS®

(“NAR”) is the country’s largest trade association

with over one million members. NAR’s membership is

composed of residential and commercial brokers,

salespeople, property managers, appraisers,

counselors, and others engaged in all aspects of the

real estate industry. NAR’s constituents also include

approximately 1100 local associations of

R TORS® and 52. state associations of

REALTORS®, as well as some 800 multiple listing

services owned and operated by one or more local

REALTOR® associations. NAR is the leader in

developing standards for efficient, effective, and

ethical real estate business practices. Real estate

professionals are increasingly using technology,

including patented software, in their practice and

thus have interests both in protecting the patents

they acquire and use and in defending against claims

that they are using valid patents of others without

authority to do so.

SAS Institute Inc. is a leading software and

data analytics company that applies for patents and

is also uently involved in patent litigation,

including litigation currently pending before this

Court, SAS Institute Inc. v. Matal, No. 16-969. SAS is

therefore interested in the proper functioning of the

patent system.

SUMMARY OF ARGUMENT

No decision by this Court has ever held

unconstitutional a system of adjudication by an

Executive Branch agency on the grounds that the

system violates Article LI or the Seventh

Amendment. This case should not be the first.

Patents are a type of public franchise that

Congress has_ subjected to Executive Branch

determination since the founding of the Republic. So

deep is the tradition of executive determination in

this field that this Court has accurately described the

Patent Office as having “the primary responsibility”

for distinguishing between patentable and

unpatentable claims. Graham v. John Deere Co., 383

U.S. 1, 18 (1966).

Petitioner and its amici draw inapt

comparisons between patent rights and fee simple

grants in physical land, but even if patent me

could be analogized to land, the most appropriate

analogy would be to leases in public lands, which are

subject to administrative revocation. Like leases,

patent rights are limited in time, subject to periodic

payments to maintain the rights, revert to the public

upon expiration, and have the attributes of personal

property. Indeed, Petitioner and its amici rely on the

statement in 35 U.S.C. § 261 conferring on patents

the “attributes of personal property,” but if anything,

that statute undermines Petitioner’s case because it

strengthens the analogy between patents and leases.

Petitioner also wrongly claims that patent

invalidity was the “subject of a suit” at common law

or in equity. As the leading treatise writer on the

early American patent system confirms, the subject

matter of an infringement suit was not patent

validity but only the infringement complained of.

Patent invalidity was merely a defense, and for

nearly two centuries prior to this Court’s ruling in

Blonder-Tongue Laboratories, Inc. v. University of

Illinois Foundation, 402 U.S. 313 (1971), the success

of one defendant on such a defense was not a

conclusive ruling of patent invalidity. Patent validity

was then, and still is, a matter of public rights that,

like other similar issues assigned to administrative

agencies through this Court’s primary jurisdiction

precedents, may arise in private litigation but may

also be constitutionally adjudicated by Executive

Branch agencies.

Petitioner also wrongly claims that the inter

partes review process aggrandizes administrative

power. Quite the contrary. The advent of inter partes

review means that, at least for patents subject to

such review, PTO decisions to grant rights are now

being subjected to conventional checks against

arbitrary executive action—specifically, the checks of

(i) requiring the agency to engage in reasoned

decisionmaking and (ii) imposing judicial review to

enforce that requirement.

Finally, the Seventh Amendment does not

require juries to review the validity of PTO patent

grants. This Court correctly ruled in Cox v. United

States, 332 U.S. 442 (1947), that constitutional jury

trial rights do not include the right to have a jury

pass on the validity of an administrative order. The

— system should not have a special exemption

that generally applicable principle of

constitutional law.

ARGUMENT

I. PATENTS ARE PUBLIC RIGHTS

CONSTITUTIONALLY SUBJECT TO

EXECUTIVE DETERMINATION

This Court’s precedent has long maintained

that Congress may constitutionally give the

Executive Branch the power to make determinations

9 (6.

concerning “public rights,” “which are susceptible of

judicial determination, but which congress may or

may not bring within the cognizance of the courts of

the United States.” Murray's Lessee v. Hoboken Land

& Improvement Co., 59 U.S. 272, 284 (1856). Patents

are one species of public rights the granting of which

Congress may constitutionally assign—and has

always assigned—to the Executive Branch. Indeed,

as this Court has noted, “the primary responsibility”

for distinguishing between patentable and

unpatentable claims (ie, “for sifting out

unpatentable material”) “lies in the Patent Office.”

Graham v. John Deere Co., 383 U.S. 1, 18 (1966).

The Petitioner’s brief devotes substantial effort

to demonstrating that patent validity issues were

adjudicated in courts at the time of the Founding. See

Pet. Br. 18-19, 22-27 & 50-58. Such cians.

however, does nothing to prove that on/y courts can

decide patent validity. Matters involving public rights

are always “susceptible” to judicial determination.

Murray’s Lessee, 59 U.S. at 284.

To prevail on the argument that patent

validity cannot be adjudicated outside of an Article

III court, the Petitioner needs to show that patent

validity issues were understood to be _ subject

exclusively to judicial determination. Such a showing

is impossible not only because of the long tradition of

having the Executive Branch shoulder the primary

responsibility in sifting out the unpatentable from

the patentable, but also because patents are

quintessential examples of public rights conferred by

the government.

A. Patents are Special Privileges Designed by

Statute to Serve a Public Purpose and

Conferred by Executive Action.

As this Court’s precedents confirm, patents are

properly classified as “public franchises,” Seymour’ v.

Osborne, 78 U.S. 516, 533 (1870); see also Bloomer v.

McQuewan, 55 U.S. 539, 549 (1853) (describing the

patent as granting a “franchise”), or equivalently, as

‘special privilege[s]” that “serve the public purpose of

promoting the ‘Progress of Science and useful Arts.”

Precision lastrument Mfg. Co. v. Auto. Maint. Mach.

Co., 324 U.S. 806, 816 (1945). Consistent with that

classification, this Court has repeatedly stated that

“[a] patent by its very nature is affected with a public

interest.” /d.3 Thus, as Justice Thomas recently

recognized, patents are not “core’ private rights” but

are instead “privileges’ or ‘franchises,’ ‘which public

authorities ha[ve] created purely for reasons of public

policy and which ha[ve] no counterpart in the

Lockean state of nature.” Teva Pharm. USA, Inc. v.

Sandoz. Inc., 135 S.Ct. 831, 848 n.2 (2015) (Thomas,

J., dissenting) (quoting Caleb Nelson, Adjudication in

the Political Branches, 107 COLUM. L. REV. 559, 566—

67 (2007)).

Because patents are not core private rights and

must satisfy statutory criteria designed to ensure the

advancement of the relevant public policy, the

Executive Branch has been continuously involved in

adjudicating the legitimacy of claims to patents since

the founding era. The first Congress enacted the

Patent Act of 1790, which conferred on the Executive

Branch the power to grant patents by concurrence of

any two of three specified executive department

heads—the Secretary of State, the Secretary of War

and the Attorney General. See Act of April 10, 1790,

§ 1, 1 Stat. 109, 109-10. The 1790 statute required

applicants to recite that they had invented something

new and useful and required the three department

heads to determine whether the asserted invention

was “sufficiently useful and important” to merit the

grant of a patent. Jd. § 1, at 110.

Under the 1790 Act, the Executive Branch’s

decision to award a patent carried some weight,

albeit a modest one. tion 6 of the Act provided

8 See also Blonder-Tongue Labs., Inc. v. Univ. of Il.

Found., 402 U.S. 313, 343 (1971) (quoting Precision

Instrument, 324 U.S. at 816); Walker Process Equip., Inc.

v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965)

(same).

that, in infringement litigation, a granted patent was

_ facie evidence” that the patentee was the

“first and true inventor” of the invention disclosed in

the patent and that the invention was “truly

specified” within the patent document. Jd. § 6, 1 Stat.

at 111. The weight given to the Executive Branch’s

determinations in grantin patents was

counterbalanced by two grants of power to the courts.

Section 5 authorized a special proceeding to allow

complainants to seek judicia) “repeal” of issued

patents, jd. §5, at 111, and §6 authorized the

defendants in infringement Litigation to plead and

prove “the general issue” of patent invalidity as a

defense, id. § 6, at 111.

Thus, the earliest patent statute demonstrates

that patent validity issues fit the conception of public

rights perfectly. Patent validity issues arise initially

between the government and others—specifically

between the government as grantor and inventors as

grantees. See Cleveland v. United States, 531 U.S.

12, 23-24 (2000) (noting that “the Federal

Government’s interest in an unissued patent...

surely implicates the Government’s role as

sovereign”). Furthermore, they do not require judicial

determination, as they are typically determined first

by the Executive Branch, and yet they “are

susceptible of” judicial determination, as the grants of

judicial authority in the first patent act demonstrate.

Murray’s Lessee, 59 U.S. at 284.

Other structural features of the modern patent

law confirm that the rights are public rights,

including (i) the statutory requirement for patentees

to pay maintenance fees, and (ii) the statutory

declaration that patents shall have the “attributes of

personal property.”

1. Statutory Maintenance Fees. Patentees have

been required to pay the PTO maintenance fees for

more than a third of a century. See Pub. L. No. 96-

517, §2, 94 Stat. 3015, 3017 (1980) (amending 35

U.S.C. § 41(c) to require patentees to pay to the PTO

maintenance fees at intervals of 3%, 7% and 11%

years after the granting of the patent). Both the

substance and the process of such maintenance fees

show the public rights nature of patents.

Substantively, these fees are payments to the

ublic for the privilege of keeping patent rights. The

ees are not structured as a tax, for nonpayment does

not result in legal process to collect the fee. Rather,

patent rights simply “expire” if the fee goes unpaid.

See 35 U.S.C. §41(b)(2). The administrative

procedure for fee collection also shows the continuing

involvement of the Executive Branch agency. By law,

patentees have a six-month window to pay the fee,

id., but if the payment is late, the PTO Director

“may accept a late payment if the delay is

“unintentional.” Jd. § 41(c)(1). Thus, the statutory

provisions governing maintenance fees show that,

even after a patent has issued, the agency retains

discretiona powers uiring adjudication (to

determine the intention behind a late payment), and

the outcome of such an adjudication can bets patent

rights in force or terminate them.

2. Section 261. Petitioner repeatedly cites the

first sentence of § 261 of the Patent Act, which states

that, “[s]ubject to the provisions of this title, patents

shall have the attributes of personal property.” 35

U.S.C. § 261. Petitioner argues that this section

demonstrates patents to be “quintessential private

property rights,” Pet. Br. 27, but the exact language

of the statute does not support that statement.

Patents are afforded only the “attributes” of

personal property—a statutory statement that would

be unnecessary if, as Petitioner argues, patents were

“quintessential private property.” Thus, this Court

has relied on the first sentence of § 261 merely to

demonstrate that patent rights are alienable—a far

more modest import than the broad meaning read

into the section by the Petitioner. See Cleveland, 531

U.S. at 23 (citing the statute to support the

proposition that “a patent holder may sell her

patent”).

Furthermore, in quoting the first sentence of

§ 261, Petitioner truncates the prefatory clause

whan to the provisions of this title.” Compare 35

S.C. § 261 (first words of the section), with Pet. Br.

27 (omitting these words). Petitioner’s omission of

those words is understandable because such a

prefatory caveat undermines the Petitioner's

sweeping construction of the remainder of the

sentence. Yet ignoring statutory words does not make

them go away.

The correct interpretation of § 261’s first

sentence fully supports the traditional view

articulated recently by Justice Thomas. Patents are

indeed “franchises” or “privileges,” and thus this

statute is necessary to confirm that this particular

franchise or privilege is alienable (not all privileges or

franchises are).

The prefatory clause of the sentence also alerts

the reader that the statutory sentence should not be

construed to undermine any other “provisions of this

title.” Yet that is precisely how Petitioner would use

the statute; the Petitioner is citing § 261 to

undermine the inter partes review provisions set

forth elsewhere in title 35 of the U.S. Code. That

reading is backwards. If other provisions of the

Patent Act are inconsistent with § 261’s declaration

that patents have the attributes of personal property,

then § 261’s declaration must yield.

B. Comparing Patents to Rights in Land

Undermines Rather Than Advances

Petitioner's Arguments.

Petitioner and many of its amici attempt to

anelogize patents to rights in land, see Pet. Br. 29,

and several of Petitioner’s amici expressly rely on

cases holding administrative revocation to be

unavailable for land patents. See PhRMA Br. 17-18;

Pacific Legal Foundation Br. 33. Yet any analogy to

land rights undermines the Petitioner's Teal

argument for at least three reasons.

10

First, if federal patents on inventions were to

be analogized to property rights in land, the best

analogy would be to federal leases of public lands,

which can be administratively cancelled. See Boesche

v. Udall, 373 U.S. 472 (1963).

Leases are, of course, property rights, and they

are more closely analogous to federal patent rights

because they are classified as persona/ propert

rights under the common law. See Burns v. Equitab e

Assocs., 265 S.E.2d 737, 743 (Va. 1980); Neuman v.

Travelers Indem. Co., 319 A.2d 522, 525 (Md. 1974); 1

JAMES SCHOULER, A TREATISE ON THE LAW OF

PERSONAL PROPERTY 45 (1873) (relying on Coke and

Blackstone for the proposition that interests in land

enjoyed for “limited and definite” times are “subject

to the rules which relate to personal property”). Thus,

although Petitioner and its amici repeatedly cite 35

U.S.C. §261 to demonstrate that patents are

property (with some amici even omitting the word

“personal” in quoting the statute, see 27 Law

Professors Br. 3), the statutory reference to “personal

property” actually undermines the Petitioner’s case.

Federal leases of public lands are also like

federal patent rights in that the granted rights are

limited in time, with the interest reverting to the

public at the conclusion of the term. Moreover, as

previously mentioned, federal patent rights are

subject to administrative maintenance fee payments,

see 35 U.S.C. §41(b), (©), which can easily be

analogized to rents due on a lease.

As this Court explained in Boesche, supra, the

law permitting administrative cancellation of federal

leases has never varied. See 373 U.S. at 482-83

noting that, ever since the enactment of the Mineral

easing Act in 1920, the Secretary in charge of the

program exercised administrative cancellation and

“Congress has never interfered with its exercise”).

The lease cancellation in Boesche itself was based on

administrative determination that the lease had been

“defective” from the beginning, and the Court

expressly ruled that “[mJatters of this nature do not

11

warrant initial submission to the judicial process.” /d.

at 484. The Court also noted, in reasoning fully

applicable to this case, that the “magnitude and

complexity” of the program made it “hkely that a

serious detrimental effect... [would] be _ the

consequence of a shift from the [agency] to the courts

of the power to cancel such defective [grants].” /d.

The modern patent system is merely tiling that

wisdom in highly analogous circumstances.

A second reason that an analogy between

patent rights and land rights is unhelpful to the

Petitioner is that federal land patents convey rights

under state law. Once the federal government issues

a patent conveying fee simple title in land, the

property rights in the land are state property rights

that must fit within each state’s general legal system

governing real property. Simply put, each state has a

strong interest in having a uniform law of property

applicable to all land and land titles. No similar

consideration applies to patents on inventions, which

are entirely federal rights and do not need to conform

to the pre-existing titling and property systems in

each state.

A third and final reason that a land analogy

does not advance Petitioner’s case is that, even if

patents could be perfectly analogized to fee simple

rights in land, this Court’s foundational case on

public rights, Murray’s Lessee, actually did involve a

parcel of land (as Petitioner acknowledges, Br. 30)

that was seized via administrative action.

In Murray’s Lessee, the owner of the private

parcel of land was also a collector of customs for the

Treasury Department. An administrative audit

showed more than a million-dollar shortfall in the

customs collector’s account. To cover the shortfall (at

least in part), the Treasury Department seized and

sold the collector's land. Even though that case

involved private land, the case was held to involve

public rights because the issues adjudicated within

the Executive Branch—specifically, “auditing of [the

land owner’s] account [as a collector of customs], and

12

the ascertainment of its balance,” 59 U.S. at 275—fell

within the special competence of the agency.

The current case is, if anything, a stronger

case for applying the public rights doctrine because

the very existence of patent rights (whether

considered property or not) is contingent upon the

accuracy and legality of the PTO’s original decision in

allowing the patent. Here, the agency is merely

Sabra its own prior decision on public rights

issues of patentability, and it is performing that

review merely as a step toward submitting its

conclusions to judicial review.

C. Patent Validity Was Not the “Subject of a

Suit” at Law or in Equity.

Murray's Lessee stated that Congress could

not “withdraw from judicial cognizance any matter

which, from its nature, is the subject of a suit at the

common law, or in equity, or admiralty.” 59 U.S. at

284 (emphasis added). In patent law, the sudject of a

suit at law or in equity was, and still is, a claim of

right to relief for patent infringement.

If brought at law, the subject of a patent

infringement suit was, and still is, the patentee’s

claim of right to damages from the infringer. See F.

W. MAITLAND, EQUITY ALSO THE FORMS OF ACTION AT

COMMON LAW 16 (1909) (noting that, classically, “the

judgment for damages had been characteristic of the

court of law”). If brought in equity, the subject of an

infringement suit was, and still is, the patentee’s

claim of right to some form of equitable relief. such as

an injunction, against the infringer. /d. (noting that,

classically, “the injunction had been characteristic of

the Court of Chancery”). Such claims between the

individual parties to the infringement Jitigation were,

and still are, the “subjects” ot inane suits at

law and in equity. An inter partes review is not

similar because it has as its object merely an

administrative reconsideration of the agency’s

previous action in granting patent rights.

13

re of an asserted patent claim was, and

still is, merel y an issue that an alleged infringer can

raise as a defense to a suit for alleged infringement.

Murray’s Lessee does not forbid Congress from

creating a new administrative proceeding

adjudicating some issues that might previously have

been adjudicated in suits at common law or in equity.

Indeed, it is not uncommon for the same issues

to arise in different types of proceedings. For

example, the issue whether patentees and their

attorneys have committed misconduct in applying for

patent rights may be raised, in certain instances, as

an unclean hands defense to a suit for patent

infringement. See Hazel-Atlas Glass Co. v. Hartford-

Empire Co., 322 U.S. 238 (1944) (holding that a

patentee was entitled to no relief in a patent

infringement suit due to fraud committed before the

a Yet the very same misconduct issues may

also be adjudicated by the PTO in determining

whether any administrative sanctions should be

imposed. See Kingsland v. Dorsey, 338 U.S. 318

(1949) (affirming the Patent Office’s power to bar an

attorney from practicing before the agency due to the

very same misconduct that was adjudicated in the

Hazel-Atlas litigation).

Petitioner asserts, without any support, that

all issues “adjudicated” within suits at law or in

equity cannot be determined by an administrative

agency. Pet. Br. 23. Yet even the awkward

phraseology used in Petitioner's brief shows the error

in the argument. Petitioner claims that, historically,

“la] patent-invalidity case” could begin by being “filed

as an infringement action.” Pet. Br. 23. The label

“natent-invalidity case” has no historic roots in

federal case law, and with good reason.

In the late eighteenth and early nineteenth

centuries, judgments rendered in civil actions for

alleged patent infringement did not conclusively

aan whether an asserted patent claim was valid.

More than a century would pass before Blonder-

Tongue Laboratories, Inc. v. University of Illinois

14

Foundation, 402 U.S. 313 (1971), overruled prior

precedent and formulated the doctrine of nonmutual

collateral estoppel to allow subsequent patent

infringement defendants to benefit from an earlier

holding of patent invalidity.

Before Blonder-Tongue, the law was quite

different, as the leading patent treatise writer in the

early nineteenth century explains:

The success of the defendant, in an

action for an infringement, on the

ground of the invalidity of the patent,

does not prevent the plaintiff from

instituting another suit against any

other person for an infringement of his

patent. A judgment is conclusive only

between the parties to it, and upon the

subject matter of the suit, that is, the

infringement complained of.

WILLARD PHILLIPS, THE LAW OF PATENTS FOR

INVENTIONS 448 (1837) (emphasis added). The

Phillips treatise accurately describes what is the

“subject matter” of a patent infringement suit and

provides the theoretical reason why it was not

possible in that era to assert, as the Petitioner in this

case wrongly asserts, that patent invalidity was the

subject of an infringement suit.

More recent separation-of-powers decisions by

this Court confirm that Murray's Lessee does not

mean that any issue adjudicated in an action at law

or equity must forever remain adjudicated by courts.

In Stern v. Marshall, this Court pe meme the category

of matters that cannot be assigned to non-article III

adjudicators as “matters ‘of private right, that is, of

the liability of one individual to another under the

law as defined.” 564 U.S. 462, 489 (2011) (quoting

Crowell v. Benson, 285 U.S. 22, 50, 51 (1932)). That

rule prevents infringement claims from being

reassigned to a non-Article II] tribunal because such

claims are matters of private right between the

parties to the litigation. The patent validity issue

involves not the “liability of one individual to

15

another” but instead the public privileges of the

patentee against the world.

Indeed, if Murray’s Lessee were read to forbid

congressional reassignment of issues from the courts

to an administrative agency, patent law’s

presumption of validity would itself be

constitutionally troubling. At the time of the

Founding and during at least the first half century

thereafter, both British and American courts

adjudicated patent validity de novo. The presumption

of validity, formulated initially in mid- and late-

nineteenth century court decisions and codified in

1952, reallocated authority on patent validity issues

from the courts to the administrative agency.

As this Court noted in Microsoft Corp. v. i4i

Limited Partnership, the presumption derived from

“the basic proposition that a government agency such

as the [PTO] was presumed to do its job.” 564 U.S.

91, 97 (2011) (quoting Am. Hoist & Derrick Co. v.

Sowa & Sons, Inc., 725 F.2d 1350, 1359 (Fed. Cir.

1984)). The earlier, foundational case of Morgan v.

Daniels, 153 U.S. 120 (1894), was even more clear in

justifying the presumption of validity as being based

on judicial willingness—indeed eagerness—to shift

decisional responsibility for patent validity issues

from the courts to the Patent Office. The Morgan

Court described patent validity as having been

“settled by a special tribunal, entrusted with full

power in the premises” and went so far as to say that

“St might be well argued, were it not for the terms of

this statute, that the decision of the Patent Office

was a finality upon every matter of fact.” /d. at 124;

see also Radio Corp. of Am. v. Radio Eng’g Labs., Inc.,

293 U.S. 1, 910 (1934) (relying on Morgan and

extending the presumption of validity to apply even

where parties to the litigation in court were not

represented before the agency).

The constitutionality of shifting discrete public

rights issues from private litigation to administrative

decision is also demonstrated by the entire line of this

Court’s cases fashioning the primary jurisdiction

16

doctrine. That doctrine is “specifically applicable to

claims properly cognizable in court that contain some

issue within the special competence of an

administrative agency” and requires (typically) that

courts “stay|| further [judicial] proceedings so as to

give the parties reasonable opportunity to seek an

administrative ruling.” Heiter v. Cooper, 507 U.S.

258, 268 (1993) (Scalia, J.).4

The very first case in which this Court

recognized such a doctrine— Texas & Pacific Railway

Co. Vv. < sades Cotton Oil Co., 204 U.S. 426 (1907)—

was a common law action in state court by a shipper

to recover damages against a railroad that had

allegedly charged unreasonably high rates. See id. at

436 (expressly noting that the shipper had a valid

common law cause of action). Still, this Court held

that, in light of the federal Interstate Commerce

Commission’s primary power to regulate, and to

determine the reasonableness of, the interstate rail

rates, the common law cause of action could not

proceed until the rate unreasonableness issue was

presented to, and decided by, the administrative

agency. See id. at 448 (requiring the plaintiff to

invoke the power of the Commission prior to

proceeding with any common law action).

The century-old primary jurisdiction doctrine

shows not only the legality of allocating to

administrative determination some issues previously

cognizable in court but also the limits of the practice.

Reallocation can occur for issues “within the special

competence of an administrative agency,” — 507

U.S. at 268, or, equivalently, for issues ically

lying at the heart of an administrative nl s task

. that Congress has placed within the jurisdiction

of the fagency],” Ricer v. Chicago Mercantile FExch.,

‘ A similar process is typically followed where defendants

in infringement litigation seek inter partes review, with

district courts staying any infringement litigation while

the agency rules on the patent validity issues presented in

the inter partes review.

17

409 U.S. 289, 305 (1973). Patent validity issues

plainly fall into that category because, beginning with

the first patent act, the Executive Branch has long

held “primary responsibility” for applying the

statutory patentability standards to claims for patent

rights. Graham, 383 U.S. at 18.

Finally, Petitioner relies on the writ of scire

facias to show that patent validity issues were

adjudicated in courts during the early Republic. Yet

the public — nature of validity issues is

confirmed by the very fact that scire facias was the

device for litigating validity issues outside of

infringement suits.

Scire facias was a “prerogative writ,” and the

very reason that such writs “came to be called

‘prerogative’ [is] because they were conceived as being

intimately connected with the rights of the Crown.” S.

A. de Smith, The Prerogative Writs, 11 pre met

L.J. 40, 41 (1951). 5 Indeed, scire facias was origin

viewed as a writ so “peculiar to the King ele

that “the Attorney-General’s fiat had first to be

granted” before subjects could bring the writ. /d. The

5 Similarly, Blackstone discusses the power to repeal

patents through scire facias in his treatise chapter devoted

to “redressing those injuries to which the crown itself is a

party” and “which then are usually remedied by peculiar

forms of process, appropriated to the royal prerogative.” 3

WILLIAM BLACKSTONE, COMMENTARIES ON THE LAWS OF

ENGLAND 264 (1768); see also id. at 261 (discussing the

use of scire facias to repeal patents and noting that the

writ must be brought by the king or, if the patent was

“injurious to a subject,” the king would allow the subject

“to use his royal name for repealing the patent in a scire

facias’); 1 WILLIAM BLACKSTONE, COMMENTARIES ON THE

LAWS OF ENGLAND 244 (1765) (defining “prerogative [as]

consisting (as Mr. Locke has well defined it) in the

discretionary power of acting for the public good”) (citing 2

JOHN LOCKE, TWO TREATISES OF GOVERNMENT § 166

(1690)).

18

applicability of the scire facias writ to patent validity

issues shows that such issues were emphatically not

“subject of a suit at the common law, or in equity, or

admiralty” within the meaning of Murra y's Lessee.

Il. INTER PARTES REVIEW REINS IN, RATHER

THAN AGGRANDIZES, EXECUTIVE POWER.

As Petitioner correctly notes, one key goal of

separation-of-powers doctrine 1 is to prevent Congress

from unconstitutionally grandiz[ing] ... one

branch at the expense of £ other.” Pet. Br. 47

(quoting Wellness Int'l Network v. Sharif, 135 S. Ct.

1932, 1944 (2015)). From this valid premise,

Petitioner incorrectly argues that inter partes review

is “aggrandizing” the Executive at the expense of the

Judiciary. Pet. Br. 47. Yet the inter partes review

process—which includes (i) an administrative

component in which the PTO must confront

arguments against patent validity, and (ii) judicial

review in the Federal Circuit—checks rather than

aggrandizes executive power. The advent of inter

partes review means that, at least for patents subject

to the inter partes process, PTO decisions to grant

rights are now being subject to conventional checks

against arbitrary executive actions—specifically,

requiring the agency to engage in reasoned

decisionmaking and imposing judicial review to

enforce that requirement.

By contrast, patents not subjected to inter

partes review represent greater executive wer

because, under pre-existing Federal ircuit

precedent, federe! courts are forbidden from

reviewing the reasons why the PTO granted a patent

and are constrained to AP gy substantial legal weight

to a patent even agency had no reasoned

decisionmaking to Pai the grant. That pre-existing

status quo was especially bad, from a standpoint of

patent policy, because the checks on executive power

were asymmetric: PTO decisions to deny patents

were subject to all of the standard administrative law

doctrines that empower courts to check arbitrary and

19

capricious agency action; PTO decisions to grant

patents were not.

Far from an unconstitutional expansion of

executive power, the new system of inter partes

review followed by judicial review imposes new

restraints on the agency and expands judicial power

to check arbitrary, capricious and otherwise unlawful

executive actions in issuing patents. Indeed, the

party seeking greater executive power in this

litigation is the Petitioner, for Petitioner seeks a

result where PTO never has to confront contrary

arguments against its decisions to grant patent rights

and is never subject to judicial review of its reasoning

in issuing patents.

A. Neither Modern Administrative Law Nor

Historical Practice Justified the Pre-

Existing Status Quo of Asymmetrically

Constrained Executive Power.

In every other field of administrative law, a

process such as inter partes review would be utterly

unremarkable. Under long-established principles of

administrative law, agencies are required to have a

reasoned basis for their decisions, and the courts are

expressly authorized to review those decisions and to

vacate any action not based of such “reasoned

decisionmaking.” See Allentown Mack Sales & Serv.,

Inc. v. NLRB, 522 U.S. 359, 374 (1998) (Scalia, J.)

(interpreting the requirements of the arbitrary and

capricious test of 5 U.S.C. § 706(2)(A)); Judulang v.

Holder, 565 U.S. 42, 53 (2011) (Kagan, J.) (same);

Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto.

Ins. Co., 463 U.S. 29, 52 (1983) (reversing agency

decision where the agency’s explanation of its

decision was “not sufficient to enable th[e] Court to

conclude that the [decision] was the product of

reasoned decisionmaking”).

Reasoned decisionmaking requires, among

other things, that the agency “must examine the

relevant data,” State Farm, 463 U.S. at 43, consider

all “important aspect[s] of the problem,” id, and

ultimately draw a “rational connection between the

20

facts found and the choice made,” id. (quoting

Burlington Truck Lines, Inc. v. United States, 371

U.S. 156, 168 (1962)). Importantly, the agency's

decision must be evaluated on the reasons given by

the agency itself in the administrative process; the

reviewing court cannot ge a reasoned basis for

the agency’s action that the agency itself has not

given.” /d. (citing SEC v. Chenerv Corp., 332 US.

194, 196 (1947)).

Under Federal Circuit precedent, however, the

requirement of reasoned decisionmaking applies

asymmetrically to the decisions that the PTO makes

on patent applications. If the PTO denies the

application, the agency must have a_ reasoned

analysis to justify its action, and judicial review is

available to enforce the requirement. See Jn re Van

Os, 844 F.3d 1359, 1361-62 (Fed. Cir. 2017)

(requiring the PTO to _ provide “reasoned

decisionmaking” and “explicit and clear reasoning”

and vacating the agency's denial of patent rights for

failing to comply with those requirements). By

contrast, agency decisions to grant patent rights are

never subject to judicial “review of the reasons for

allowance of [patent] claims” because, the Federal

Circuit has held, “actions under the [Administrative

Procedure Act] seeking review of the PTO’s reasons

for deciding to issue a patent” are “impliedly

precluded” by the Patent Act. Pregis Corp. v. Kappos,

700 F.3d 1348, 1358-59 (Fed. Cir. 2012) (emphasis in

original; internal quotations omitted).

Prior to the advent of inter partes review (or

its predecessor, inter partes reexamination), the

asymmetry in the availability of review meant that

courts were constrained to afford the patent grant

substantia] deference even if the agency had not

reasoned through the evidence. In short, arbitr

and — executive decisionmaking was sstill

entitled to substantial weight in court under the

statutory presumption of validity. See 35 U.S.C.

§ 282; see also 147, 564 U.S. at 108-09 (rejecting a

standard under which the weight given to a patent

would “rise and fall with the facts of each case”).

21

While infringement defendants could still bring

challenges to a patent’s validity as a defense to an

infringement action, they mre need to overcome a

“clear and convincing” burden of proof. Such a

remedy provides only a weak check on arbitrary

executive action because, as this Court has

recognized, “[tlo await litigation [to sift out

unpatentable claims] is—for all practical purposes——

to debilitate the patent system.” Graham, 383 U.S. at

18.

While the pre-existing status quo was radically

out of step with modern sieidabentive law, it was

also not justified by historical practice at the time of

the Founding. The first patent statute permitted

Executive Branch officers to examine patent

applications, but the weight given to the executive

decision was minimal. Section 6 of the 1790 Patent

Act provided that, in infringement litigation, a

granted patent was only “prima facie evidence” of

patent validity. Such weight is modest given the

blackletter rule that prima facie evidence shifts only

a production burden to the other party, and even that

burden vanishes if the other party introduces

evidence to meet its production burden.®

The second patent statute—the 1793 Patent

Act, 1 Stat. 318—eliminated Executive Branch

examination of patent applications and returned to

the British system of merely registering patents, with

no executive determination as to the validity of the

patent. Not surprisingly, the 1793 Patent Act did not

expressly give issued patents prima facie weight, or

any other kind of weight, in litigation.

While the 1793 Act was in force (1793—1836),

courts varied even as to whether the patentee had the

burden to prove validity or the defendant had to show

invalidity. See PHILLIPS, supra, 405—08 (citing circuit

court authority by Justice Story that patents issued

6 See Tex. Dept. of Cmty. Affairs v. Burdine, 450 U.S. 248,

254-55 (1981); St. Mary’s Honor Ctr. v. Hicks, 509 US.

502, 506—07 (1993).

22

under the 1793 Act were still prima facie evidence of

validity; circuit court authority by Justice

Washington suggesting the contrary; and English

precedent from Lord Justice Buller holding that the

patentee must prove validity without any

presumption). Yet whatever the precise rule, the

evidentiary weight given to the patent was “not a

matter of great practical importance” because, even

with the patent receiving any weight as prima facie

evidence, “the slight prima facie evidence requisite

may doubtless easily be obtained in support of any

patent for which any possible pretense could be made

out.” Jd. at 406.

The 1836 Patent Act, 5 Stat. 117, reinstituted

administrative examination in the U.S. patent

system, but unlike the short-lived examination

system authorized under the 1790 Act, examination

duties were not conferred on busy, high ranking

Cabinet officials. Rather, Congress authorized a

Commissioner of Patents to “make or cause to be

made, an examination” of each patent application, id.

§7, 5 Stat. at 119, and authorized the hiring of

examining clerks so that the Commissioner would not

have to do all the work himself, id. § 2, 5 Stat. at 118.

After the creation of a professional examining

corps under the 1836 Act, federal courts began

imposing heightened burdens on parties challenging

issued patents, beginning in cases where the

challenger was presenting oral testimony in an

attempt to prove some other inventor had succeeded

in inventing first. See Coffin v. Ogden, 85 US 120,

124 (1874) (holding in such a case that “every

reasonable doubt should be resolved against” the

challenger because a he law requires not conjecture,

but certainty”). In subsequent decades, the imposition

of the heightened standard of proof on challengers

was expressly based on the existence of the “grant of

the letters patent,” Cantrell v. Wallick, 117 U.S. 689,

695 (1886); theoretically justified as an implication of

the Patent Office’s statutory authority as a “special

tribunal, entrusted with full power in the premises,”

Morgan, 153 U.S. at 124; generalized to all

23

challenges, Radio Corp. of Am., 293 U.S. at 9-10; and

finally codified in 1952.

During that period of time—from 1836 to

1952—decisional power over patent validity was

shifted from the courts to the Patent Office, as

Congress authorized (and appropriated funds for) a

rofessional staff of examiners in the Executive

ranch and as this Court created doctrines

constricting the authority of courts to invalidate

patents except in clear cases. That shift in power is

not constitutionally troubling because, as discussed

in part I of this brief, patent rights are public rights

that Congress can authorize the Executive Branch to

adjudicate.

The difficulty, from the perspective of good

patent administration, was not the shift in power to

the Executive Branch, but the asymmetric set of

constraints on the Patent Office’s decisions that

developed in the twentieth century. Patent

applications are evaluated by patent examiners, who

form the core of the Office’s professional technical

staff. If an examiner rejects an application, the

disappointed applicant has the right to an

administrative appeal to a Board within the Office

and, thereafter the right to seek review in court. If

the examiner recommends issuing the application,

the examiner’s decision is typically final and the

patent issues. Patent der als are thus subject to the

constraints of modern administrative law; patent

grants are not similarly constrained.

The predictable result of such unbalanced

constraints has been a flood of bad »atents, which is a

sign (contrary to Petitioner's a.gument) of excessive

Executive Branch power to issue patents and too

little judicial power to check those excesses. Indeed,

the backw nature of Petitioner’s reliance on

Article III in this case can be seen merely by looking

to the end goal Petitioner seeks: Petitioner wants to

keep a status quo where it and other patentees have

the right to sue on the basis of an Executive Branch

grant of rights, which is not required to be based on

24

reasoned decisionmaking and which the courts

cannot invalidate except in clear and convincing

cases. In reality, the Petitioner in this case is the

champion of aggrandized executive power.

B. Jnter Partes Review Imposes Constraints

on the Executive Branch To Equalize the

_ Constraints on Issuing and Denying

atents.

The new system—which provides’ an

administrative process, see 35 U.S.C. § 311 et seq.,

coupled with full rights to judicial review for all

yee ties to the extent they find the agency’s reasoning

awed, see 35 US.C. §141(c)}—~is not an

aggrandizement of administrative power, but a

modest step toward imposing greater checks on

aberrant and wunreasoned executive actions in

granting patents. Under this new system, parties

challenging patents now have an opportunity to seek

direct judicial review of the reasoning underlying the

Executive Branch’s patenting decisions, but that new

avenue for judicial] review is open only if the parties

first present their evidence and arguments to the

Executive Branch through the inter partes review

process.

The inter partes review component of that

system follows the pattern generally established in

other areas of administrative law: The administrative

proceeding serves the traditiona] function of allowing

the agency to correct its own errors prior to scrutiny

by the courts. Permitting such administrative error

correction is so much the norm in other areas that

this Court has generally required parties to exhaust

such administrative remedics under “the long-settled

rule of judicial administration that no one is entitled

to judicial relief for a supposed or threatened injury

until] the prescribed administrative remedy has been

exhausted.” Mfvers v. Bethlehem Shipbuilding Corp..

303 U.S. 41, 50-51 (1938).

Because that “long-settled rule” prefers

administrative action as a prerequisite to judicial

relief, the Petitioner's claim in this case must be that

25

some special constitutional rule, applicable solely in

patent law, disables the administrative agency from

fixing its own mistakes prior to judicial review. The

text, structure, and history of the Constitution

provide no basis for such an exceptional rule, and no

recedent of this Court requires such an unusual rule

or patent cases. Indeed, it is completely backwards

to suggest that inter partes review threatens the

Article LII prerogatives of the judiciary where that

administrative process merely serves as a

prerequisite to a new judicial check on executive

actions in awarding patent rights.

Another perspective also demonstrates the

truth that the whole of the inter partes review

process—including both the administrative process

and subsequent judicial review--is merely a

constitutional mechanism for constraining rather

than aggrandizing Executive Branch power. Congress

could have authorized all PTO actions issuing patents

to be subject to judicial review under the

Administrative Procedure Act (APA). In other words,

it would be constitutional for Congress to overrule

legislatively the Federal Circuit's decision in Pregis

Corp. v. Kappos, 700 F.3d 1348 (Fed. Cir. 2012),

which held that the Patent Act impliedly precludes

judicial! review of PTO patent grants.’ Such a

legislative extension of APA review would be an

’ This brief takes no position on whether Pregis Corp. v.

Kappos is correctly decided. Certain decisions of this

Court, most recently Sackett v. EPA, 132 S. Ct. 1367

(2012), suggest that the doctrine of “implied preclusion” of

judicial review may be narrower than the Pregis court

assumed. If, however, Pregis is wrongly decided and PTO

grants of patent rights are subject to judicial review, then

the analysis in the text would already be the law, and

administrative processes constitutionally identical to inter

partes review could be triggered if the PTO merely sought

voluntary remands in cases where the PTO Director

determined that grants of patent rights were not likely to

zurvive judicial review.

26

additional judicial check on executive power and

could not be viewed as a threat to Article III.

In such a system (which is nothing more than

standard administrative law in every other field),

what could the agency do if the PTO Director

determined that the party challenging the agency’s

action in granting a patent was reasonably likely to

prevail with respect to at least one of the claims in

the issued patent? In other words, what could the

agency do prior if the agency had a belief similar to,

or even identical to, the standard set forth in 35

U S.C § 314(a) for instituting inter partes review?

Clear administrative law provides the answer:

The agency could seek a voluntary remand for further

administrative proceedings, and under the uniform

precedents of this Court and the lower courts, such

an agency request would be granted. See Ford Motor

Co. v. NLRB, 305 U.S. 364, 374 (1939) (affirming the

practice of a reviewing court — an agency's

request for a remand so that the agency “may take

further action in accordance with the applicable

law”); FCC v. Fox Television Stations, Inc., 556 U.S.

502, 511 (2009) (noting that, where the agency “had

not previously given the broadcasters an op ortunity

to respond to” certain aspects of the agency’s action,

the agency “requested and obtained from the Court of

Appeals a voluntary remand so that the parties could

air their objections”); Hthy/ Corp. v. Browner, 989

F.2d 522, 524 (D.C. Cir. 1993) (holding that an

agency’s motion for a remand should be “commonly

grantied|” “to allow agencies to cure their own

mistakes rather than wasting the courts’ and the

parties’ resources reviewing a record that both sides

acknowledge to be incorrect or incomplete”); SAF

USA Inc. v. United States, 254 F. 3d 1022, 1028-30

(Fed. Cir. 2001) (citing numerous cases concerning

voluntary remands to agencies and holding that

lower court erred in failing to grant the government’s

motion to remand a case for further administrative

consideration).

27

One of the permissible grounds for an agency

to obtain such a voluntary remand is that, even

“without confessing error,” the agency wants “to

reconsider its previous position” because it has

“doubts about the correctness of its decision.” SKF.

254 F.3d at 1029. On remand, no principle of

constitutional law or administrative law would forbid

the agency from allowing interested parties,

including both the patentee and any parties opposed

to the issuance of patent rights, to present competing

arguments at the administrative level. Indeed,

modern administrative law might require the agency

to consider arguments both in favor and against the

relevant agency action because otherwise a reviewing

court might well have to vacate the agency’s action

for “fallin to consider an important aspect of the

problem.” State Farm, 463 U.S. at 43.

The inter partes review process in 35 U.S.C.

§§ 311-319 is thus constitutionally no different than

a hypothetical legal system where (i) the PTO’s

actions in issuing patents are subject to judicial

review under typical APA standards aed is plainly

a constraint on age , action); and (ii) the PTO is

permitted a remand if it determines that additional

administrative procedures are needed prior to judicial

review because one or more of the claims in the

challenged patent are reasonably likely to fail judicial

review.

It is true, of course, that such a hypothetical

legal system is different from the system authorized

by the inter partes review statute, 35 U.S.C. §§ 311—

319. But the key difference is found not in cases

where a patent has been subjected to the inter partes

review process, but in cases where the PTO has

denied review. That latter category of cases

represents the best example of aggrandized Executive

Branch power. Cases such as the present one—where

a patent grant has been subjected to administrative

review as a precursor to judicial review—represent

nothing more than executive action being subjected to

ordinary administrative law doctrines that are

designed to constrain executive action.

28

fil. THE CONSTITUTION DOES NOT REQUIRE

JURIES TO REVIEW THE VALID OF

ISSUED PATENTS.

This Court has previously held that “the

constitutional right to jury trial does not include the

right to have a jury pass on the validity of an

administrative order.” Cox v. United States, 332 U.S.

442, 453 (1947) (Reed, J., for a plurality of four

Justices); id. at 455 (Douglas, J., joined by Black, J.,

dissenting) (“join[ing] in the opinion of the Court” to

the extent that it rules that the validity of the

administrative order “is properly one of law for the

Court”). This Court should adhere to that

longstanding rule in this case and reject the

Petitioner’s plea for a special rule that decisions to

grant patent rights—in contrast to all other

administrative decisions in the Executive Branch—

must constitutionally be reviewed only by juries.

Traditionally, in providing court review of

executive actions, Congress has provided judicia/

review—i.e., review by judges—not jury review. See

John F. Duffy, Jury Review of Administrative Action,

22 Wm. & Mary Bill Rts. J. 281 (2013) (noting that

jury review of administration action has always been

the exception not the rule in administrative law).

Thus, Petitioner’s Seventh Amendment claim seeks

to impose as a constitutional requirement a form of

review so rare as to be almost unknown anywhere

else in present or past federal law.

The degree to which such a special rule would

do violence to constitutional law can be seen by

considering this Court’s precedents concerning

federal land patents. In that context, the Court has

held that juries are prohibited from reviewing the

validity of the federal patent grants, see Smelting Co.

v. Kemp, 104 U.S. 636, 647 (1881), and that the

executive grant can be challenged on/y in a court of

equity (where a jury is constitutionally unavailable),

see Johnson v. Tawsley, 80 U.S. 72, 83-84 (1871).

Even though the executive grant of a land

patent is “conclusive” as to “legal title” (and thus not

29

subject to review by a jury in an action at law), this

Court in Johnson v. Towsley recognized that “there

has always existed in the courts me equity the power

to ae into and correct mistakes, injustice,

and wro oben . executive action.” /d. at 84. Through

that traditional power—and not through juries—

“patents and other important instruments issuing

from the crown, or other executive branch of the

government, have been corrected or declared void, or

other relief granted.” /d. The Court in JoAnson

perceived “[n]o reason” to create “an exception to this

principle” for executive decisions granting land

patents. /d.

Similarly, there is no reason that patents on

inventions should be subject to some newly minted

special exception to longstanding principles

governing review of executive decisions. Based on

history, public policy, and its own precedents, this

Court should reaffirm that the validity of an

administrative decision granting a public right is

reviewable without a jury, and thus there is no

constitutional right to a jury in adjudicating patent

validity.

CONCLUSION

The decision of the Court of Appeals should be

affirmed.

Respectfully submitted,

John F. Duffy

Counsel of Record

James W. Dabney Hughes Hubbard & Reed LLP

Richard M. Koehl 17751 Street, N.W

Emma L. Baratta Washington, DC 20006-2401

(202) 721-4600

of Counsel

Attorneys for Amici Curiae