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

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No. 16-712

IN THE OFFICE OF THE CLERK

Supreme Court of the United States

OIL STATES ENERGY SERVICES, LLC,

Petitioner,

GREENE’S ENERGY GROUP, LLC, ET AL.,

Respondents.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF OF PUBLIC KNOWLEDGE, THE

ELECTRONIC FRONTIER FOUNDATION, ENGINE

ADVOCACY, AND THE R STREET INSTITUTE AS

AMICI CURIAE IN SUPPORT OF RESPONDENTS

niles

VERA RANIERI CHARLES DUAN

ISLECTRONIC FRONTIER Counsel of Record

FOUNDATION PUBLIC KNOWLEDGE

815 Eddy Street 1818 N Street NW, Suite 410

San Francisco, CA 94109 Washington, DC 20036

(415) 436-9333 (202) 861-0020

vera@eff.org cduan@publicknowledge.org

Counsel for amici curiae

TABLE OF CONTENTS

pe Fe ig oo | Sree er

[NTs OF AMICGICURIAB ... wc et ws

NOTE ON HISTORICAL SOURCES ............

SUPE MP PAMRBUPEIEIG ER 0 06 0s bk ee ee oe

IEE <6 655 bs 6 Gs ie owe) pl ae tee ce

I. History Confirms Congress’s Authority to Serve the

Public Interest by Placing Conditions on the Patent

eile eb eee ew wn hme oe ke 6 8S

A. In 1789, Patents Were Discretionary, Ad Hoc

Privileges Granted to Advance Public Policies . .

B. The Framers Saw Patents as Government Is-

sued Monopolies, and Expected the Legislature

Se OI os bo be bce 6 ok 5 ele ses

C. Early Federal Patent Law Confirms Congress’s

Power to Limit the Patent Grant ..........

Il. dnter Partes Review Is a Classic Type of Adminis-

trative Scheme That Congress May Devise Under

MP 540 8 oe wes Wee 8s oem Ae oe ble ae

A. Congress Has a Long History of Statutorily Ad-

justing Patent Cancellation Procedures .... . .

B. Administration of Patent Law Is a Complex

Problem, Given Modern Invention Practices .. .

C. Like Many Agency Proceedings, Patent Cancel-

lation Targets a Generalized Public Harm... . .

D. Inter Partes Review Is Integral and Important

CONCLUSION

APPENDIX A: Patents Bill, H.R. 41, February 16,1790 . .

to the Modern Patent Regulatory Scheme

(7)

0 ee ee eee Sr a eC a oe ee ee a a a ee Coe Se aa eS

TABLE OF AUTHORITIES

CASES AND ADMINISTRATIVE DECISION

Aronson v. Quick Point Pencil Co.,

Ps Bs FR era ee 26

Atlas Roofing Co. v. Occupational Safety & Health Re-

view Commission,

Ga Uae Ga ned s «8 6 be ee Gee oes Pe 25, 30

Boulton v. Bull,

150 Ge, ew. GSE GLE. Bee) oie i ee 6 eae 15

Butterworth v. United States ex rel. Hoe,

LEO ROC. 6 6 0 v0 0 ee Oe eee 32

Edgeberry v. Stephens,

00 ing. Rep. 1168 (K.B. 1008) .. 1. ce cw 7,15

Evans v. Jordan,

8 F. Cas. 872 (C.C.D. Va. 1818) (No. 4,564) ........ 17

Federal Trade Commission v. Actavis, Inc.,

ss § oe ee oe ety 28

Gibbons v. Ogden,

SS te Oe eee.) 1 COR. sk owt ees oe eee 15

Graham v. John Deere Co.,

| i rrr re tr 15, 24

Hornblower v. Boulton,

103 ee, a. SG. BTU. kk ees on 15

Lear, Inc. v. Adkins,

is rr a ate 26

Loom Co. v. Higgins,

SOD Ch ee 3 6 6 6 + 00 4 4 Oe ee ee 20

McCormick Harvesting Machine Co. v. Aultman,

1D Ce Ger Cs 6 9. 08s he eo eee 21

(277)

McGaw v. Bryan,

16 F. Cas. 96 (S.D.N.Y. 1821) (No. 8,798). ......... 19

Microsoft Corp. v. i4i Ltd. Partnership,

ET 29

MPH Technology Investments, LLC, In re,

eer 27

MPH Technology Investments, LLC

v. Ricoh Americas Corp.,

re 28

Murray’s Lessee v. Hoboken Land & Improvement Co.,

Co ere 20, 32

Northern Pipeline Construction Co.

v. Marathon Pipe Line Co.,

es a alls yo ee 0 ee Oe Oe 17

Peck v. Collins,

REE 21

Pennock v. Dialogue,

n/a lets us ob» ee 6 6 8 8 15, 17

Shaw v. Cooper,

KR 15

Stern v. Marshall,

ET 5 5.6 wg h Gone 4-0 0.8 6 17, 20, 25, 28

Thomas v. Union Carbide Agricultural Products Co.,

rs ek ng oes tee 8 8 8 0 ec 25, 28

Turner v. Winter,

re 15

United States v. American Bell Telephone Co.,

a Se 20

United States v. Duell,

eee IIIS, o's a '6 0 064 © Ok OS e ae o6 oes 32

United States v. Singer Manufacturing Co.,

Se ISS <3 yc bk 6 6 0 bo bd 0 Oy Oe we oe 28

Wheaton v. Peters,

tS eer 17,19

Wilson v. Rousseau,

eee eee ee ee 15

CONSTITUTIONAL PROVISIONS

Re Sea ee er eee a 3, 5, 13, 20-21, 25

oo LR eee ere ee ee 4, 15-17

Gk 0: OE oe Sahel e 3-4, 19-20, 28

STATUTES

PN (rao aoa ORK Ge ee ke eee aa 30

vemos oie te ee gee Pe ee i ee 24

simmer, . JERE REREUEE Eee ee 26, 30

pie Ghits a) sk. bs Ok CO eTe ee ee ae 24

eect tg CNS te ae ee CTE Pe a LA EA 24

ns, 6s Sa aha Sa’ Ake eRe Leta ReoTa ee 31

ea og dir te: he'd aha ks eralecielewalln alae otedatere ate 22

ed oR eT PO re ee ew 22

ce, ae ny EA Pages al ee Pata ee A 82 22

— § 311 (2011) (repealed 2012)............. 22

ccm CAGE « 0.0 6 0 6 0.6 66 0S © eh esa 22, 31

ee SE 5-0. 0. 04 9-@ hte old ee OO ak oe ee 31

es Os Se ae 6 ee ew ae eee Lae ee 31

ee 6b "Aa ene ee ee haat el aa <a ee ee 22

Act for the Encouragement of Arts and Sciences,

ch. 1221, 4 Stat. S.C. 618 (1784), available at

https: / / hdl.handle.net / 2027 / hvd.32044010560332 ?

uriappend=%GBecq=G28 .. ww. ttt ets 11

Act for the Encouragement of Mr. George Timmons,

ch. 698, 3 Stat. S.C. 599 (1743), available at https://hdl.

handle.net/2027/mdp.35112104865698 ? urlappend=%

WE Sauce eh aceVe tes ee heave eye 12

Act of Mar. 19, 1787, ch. 57, 2 N.Y. Laws 472 (Weed Par-

sons & Co. 1886), available at https://hdl.handle.net/

2027/mdp.39015068627952?urlappend=%3Bseq=482 . . 12

Act of Mar. 27, 1798, ch. 55, 4 N.Y. Laws 215 (Weed Par-

sons & Co. 1887), available at https://hdl.handle.net/

2027/mdp.39015068627937?urlappend=%3Bseq=225 . . 12

America Invents Act, Pub. L. No. 112-29, 125 Stat. 284

EE alate ack a 0Oa he aa tae ere aca ar Oke eee ae 22

Bayh-Dole Act, Pub. L. No. 96-517, 94 Stat. 3015 (1980) . . 22

The Book of the General Laws for the People Within

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able at https://hdl.handle.net/2027/pst.000017915502?

urrappend=HameegeGGs 2 ww tt tes 7-8, 13

Patent Act of 1790 (1790 Act), ch. 7,1 Stat. 109 . . . 18-20, 22

(vt)

Patent Act of 1708, ch. 11,1 Stat.318 .........2.... 20

Patent Act of 1836 (1836 Act), ch. 357,5 Stat.117... . 20-21

Patent Act of 1870, ch. 230,16 Stat.198 ........... 21

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(viit)

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SD dtl aa we a Ee he Le ee Ce Ge a antares a

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(ix)

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a) ee ae ee ee ee eee

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reprinted in Appendix Ainfrap.la ..........

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Cohen & Stephen A. Merrill eds., 2003), available

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knowledge-based-economy .......-...+++-++5

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2/2b/William_Penn,_ The_Excellent_Priviledge_of_

Liberty_and_Property_(1897_reprint).pdf.......

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INTEREST OF AMICI CURIAE

Amici curiae’ are non-profit organizations that seek

to advance a balanced patent system that promotes the

public interest.

Public Knowledge is a non-profit organization that

is dedicated to preserving the openness of the Internet

and the public’s access to knowledge, promoting creativ-

ity through balanced intellectual property rights, and up-

holding and protecting the rights of consumers to use in-

novative technology lawfully. Public Knowledge advo-

cates on behalf of the public interest for a balanced patent

system, particularly with respect to new and emerging

technologies.

The Electronic Frontier Foundation is a non-profit

civil liberties organization that has worked for over 25

years to protect consumer interests, innovation, and free

expression in the digital world. EF and its more than

38,000 dues-paying members have a s‘rvng interest in

helping the courts ensure that intellectual property law

serves the public interest.

Engine Advocacy has worked with Congress, federal

agencies, and state and local governments to discuss pol-

icy issues, write legislation, and introduce the tech com-

munity to Washington insiders. Engine Advocacy con-

ducts research, organizes events, and spearheads cam-

paigns to educate elected officials, the entrepreneur com-

1Pursuant to Supreme Court Rule 37.3(a), all parties have pro-

vided blanket consent for the filing of briefs. Pursuant to Rule 37.6,

no counse] 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 amici, their members, or their counsel, made a monetary con-

tribution to the preparation or submission of this brief.

munity and the general public on issues vital to fostering

technological innovation.

The R Street Institute is a non-profit, non-partisan

public-policy research organization. R Street’s mission

is to engage in policy research and educational outreach

that promotes free markets, as well as limited yet effec-

tive government, including properly calibrated legal and

regulatory frameworks that support Internet economic

growth and individual liberty. R Street’s particular fo-

cus on Internet law and policy is one of offering research

and analysis that show the advantages of a more market-

oriented society and of more effective, more efficient laws

and regulations that protect freedom of expression and

privacy.

NOTE ON HISTORICAL SOURCES

For purposes of readability, spelling and capitaliza-

tion have been modernized in quotations from historical

sources, without notation.

SUMMARY OF ARGUMENT

Where Congress places conditions upon the patent

grant in furtherance of the public interest in individual

liberty, Congress acts at the apex of its powers under the

Constitution. Inter partes review is a legislative condi-

tion on the patent grant, designed for an innovative mod-

ern world, specifically crafted to dispose of erroneously

issued patents that burden the public. It is the traditional

place of Congress to make these balanced political judg-

ments, and Article III poses no barrier to Congress ex-

ecuting its Article | obligation to protect the public by

limiting patents.

To be as useful as possible to this Court, amici forgo

recapitulation of Article III doctrine in favor of detailed,

practical facts supporting the need for and permissibil-

ity of inter partes review. Those facts fall into two cat-

egories: historical evidence of the Framers’ intent, and

modern evidence of the complex, administrative nature

of the patent system today.

1. History confirms that Congress has the power

and mandate to impose conditions on the patent grant

that protect the public and individual liberties. Pre-

ratification practices in England, the colonies, and the

early states consistently treat patents as a privilege

granted as a matter of sovereign discretion, with the ob-

jective in granting patents being not merely to reward

inventors but also to induce economic productivity to the

benefit of the state and the public. And as matters of

sovereign discretion, the patents of England, the colonies,

and the states included conditions intended to advance

economic and public interests—including, in many cases,

conditions for automatic, non-judicial revocation.

The Framers considered these antecedent practices

when crafting the constitutional patent power. They

also accounted for their aversion to government-granted

exclusivities (“monopolies” in 18th-century parlance),

which could be easily abused by ambitious leaders. The

Patent Clause that emerged thus embodied in its text a

limitation—“to promote the progress of science and use-

ful arts”—intended at least to instruct Congress to issue

patents only with conditions protecting the public from

monopoly abuse. The early Congress took the Framers’

message to heart in enacting the first Patent Act, which

included provisions for discretion in the decision to grant,

and for revocation when that decision was mistaken.

History and original intent confirm that Congress

may construct checks and balances on patents such as in-

ter partes review, in order to protect the public from the

odious monopolies that the Framers abhorred. More im-

portantly, history reveals the danger of Article III inter-

ceding in matters of patent cancellation: To do so, this

Court would have to usurp from Congress a political de-

termination of the best procedures and mechanisms to

balance the interests of patent owners and the public.

2. The complexities of patent law—including patent

cancellation procedures—confirm Congress’s power and

ability to shape those procedures. Indeed, the patent

system resembles a classic administrative or regulatory

scheme of the kind this Court has repeatedly held legiti-

mate.

Patent law deals with highly technical fields of engi-

neering and science. Rapid scientific and technological

development have left the patent system struggling to

keep pace: The Patent Office is overwhelmed with patent

applications, and examiners have insufficient resources

to give each application the comprehensive review that

would prevent incorrect issuance of patents. Inter partes

review reflects a political choice—the latest in a long line

of choices since 1790—to allow patents to issue somewhat

under-examined, and then to correct errors post-issuance

through a defined administrative procedure. And like

other Article I proceedings, inter partes review places a

narrow domain of technologically-oriented questions be-

fore technologically-skilled adjudicators.

Patent cancellation also resembles permissible agency

proceedings in another, more important way: It is a pro-

ceeding designed to vindicate a generalized public harm.

An invalid patent is a regulatory tax on every American,

prohibiting all individuals from exercising liberties they

had prior to the wrongful patent. It is especially perti-

nent that inter partes review is arguably the sole effec-

tive avenue by which any member of the public may chal-

lenge a patent, and that the effect of cancellation inures

not just to the challenger but to the whole public.

A proceeding designed in the public interest, for the

public’s use, that works to the public’s benefit—that is a

public right. /nter partes review is constitutional, and the

judgment should be affirmed.

ARGUMENT

l. History CONFIRMS CONGRESS’S AUTHORITY

TO SERVE THE PUBLIC INTEREST BY PLACING

CONDITIONS ON THE PATENT GRANT

Congress has power to impose limitations on patents

in the service of public policy and individual liberty, based

on the historical state of patent law in three time frames:

leading up to, during, and immediately subsequent to the

ratification of the Constitution.

A. IN 1789, PATENTS WERE DISCRETIONARY,

AD Hoc PRIVILEGES GRANTED TO ADVANCE

PUBLIC POLICIES

Antecedents to United States patent law treated

patents as discretionary grants of privilege, which the

sovereign was free to constrain in furtherance of public

policy. Two antecedents are relevant: English patent

practice, and colonial and state patents in America.

1. Early English patents had little to do with inven-

tions; they were instead a tool of public policy. Litterae

patentes were simply a form of royal decree, which were

used for grants of “lands, honours, liberties, franchises, or

aught besides.” 2 William Blackstone, Commentaries on

the Laws of England *346 (1765); see Oren Bracha, Own-

ing Ideas: The Intellectual Origins of American Intellec-

tual Property, 1790-1909, at 16 (2016).

Letters patent relating to technology were drawn

to advance public economic interests, not to reward in-

vention. Early patents were granted to encourage im-

portation of foreign technology into the English realm—

Italian dredgers and German metallurgy, for example.

See Bruce W. Bugbee, Genesis of American Patent and

tory of the Patent System Under the Prerogative and

at Common Law, 12 L.Q. Rev. 141, 143-44 (1896) [here-

inafter Hulme, History], available online.2 Novelty was

no requirement; “if the invention is new in England, a

patent may be granted for it, even though the thing was

practiced beyond sea before.” Edgeberry v. Stephens, 90

Eng. Rep. 1162 (K.B. 1693); see Edward C. Walterscheid,

The Nature of the Intellectual Property Clause 46-52

(2002) [hereinafter Walterscheid, Nature].? As we under-

stand the word invention today, “patents for invention

were at first only a collateral issue.” Bracha, supra, at 20.

Where an invention was contrary to state economic in-

terests, a patent might be denied. In the early 18th cen-

tury, the Crown received substantial excise tax revenue

on salt, and denied at least three petitions for patents on

more efficient salt production on the grounds that they

would produce stronger salt and thereby “much prejudice

the revenue.” 4 Calendar of Treasury Papers, 1708-1714

120-21, 409, 557 (Joseph Redington ed., London, Long-

mans etc. 1879), available online; see Christine MacLeod,

Inventing the Industrial Revolution: The English Patent

System, 1660-1800, at 22-23 (1988).

The Statute of Monopolies confirms that patents were

a matter of royal grace. Enacted in 1624, the statute

revoked all outstanding patents and declared that no

patents should thenceforth issue, with an exception made

2Locations of authorities available online are shown in the Table

of Authorities.

3 As several commentators observe, the word invention derives

from the Latin invenio, “I come upon,” which naturally encompasses

importation of foreign ideas. Walterscheid, Nature, supra, at 316

n.109 (quoting I. Bernard Cohen, Science and the Founding Fathers

241 (1995)).

(among many others‘) for “making of any manner of new

manufactures within this Realm, to the true and first in-

ventor” (referring not just to modern-day “inventors” but

also to importers). 21 Jac. 1, c.3, § VI (1624) (Eng.), avail-

able online; see Bugbee, supra, at 30. And the Statute

of Monopolies continued to treat patents as tools of eco-

nomic policy: The statute prohibited invention patents

that would be “mischievous to the State, by raising prices

of commodities at home, or hurt of trade, or generally

inconvenient.” Statute of Monopolies § VI; see Oren

Bracha, The Commodification of Patents 1600-1836, 38

Loy. L.A. L. Rev. 177, 199 (2004) [hereinafter Bracha,

Commodification].

Even as late as the mid-1800s—well after the Con-

stitution was ratified—English treatises still confirmed

that the “grant of a patent is a matter of grace and

favour.” W.M. Hindmarch, A Treatise on the Law Rel-

ative to Patent Privileges for the Sole Use of Inventions

431 (London, V. & R. Stevens etc. 1846), available online.

And “there is not any clause or enactment, by which the

subject can demand them as a right.” Richard Godson, A

Practical Treatise on the Law of Patents for Inventions

and of Copyright 47 (London, Joseph Butterworth & Son

1823), available online; see Bracha, supra, at 23.°

‘Patents were also permitted on, for example, manufacture of or-

dinance, trading of seacoals on the river Tyne, and James Maxwell’s

exportation of calf skins. 21 Jac. 1, c.3,§§ X, XII & XIII (1624) (Eng.),

available online.

*While some have noted a disconnect between stated English

patent principles and actual practice, see Bracha, swpra, at 22-23,

this is less relevant to the present analysis. The Framers were not

patent lawyers, and their understanding of patents would have been

informed by the published laws and reports, not day-to-day practi-

tioner experience. And daily practice does not affect latent govern-

ment power, even if that power is rarely exercised.

Because patents were discretionary sovereign grants

to effect economic policy, they unsurprisingly included

numerous, often ad hoc, conditions on the grant. Most

common were working clauses, by which the patent

would be revoked automatically if the holder did not put

the invention into practice within a certain amount of

time. Hulme, History, supra, at 153; Bracha, supra, at

17. English patents also imposed such conditions as com-

pulsory licensing and limitations on sub-licensing. See

Hindmarch, supra, at 66, 71.

Most importantly, English patents consistently in-

cluded terms of revocation. Each patent from 1605

through at least 1901 contained a defeasance clause ren-

dering the patent “void to all intents and purposes” if “it

be made to appear to us,” namely the Crown or its Privy

Council, that the patent was wrongly granted. Comm. of

the Bd. of Trade, Working of the Patent Acts, 1901, Cd.

506, app. 4, at 162 (U.K.), available online (memorandum

of J.W. Gordon). The defeasance clause saved the pub-

lic “the trouble or cost of resisting the unlawful patent.”

Hindmarch, supra, at 431.

The royal prerogative to revoke patents was exer-

cised repeatedly prior to 1789. It was the basis for King

James’s 1603 blanket suspension of all Elizabethan patent

monopolies. See James I, Proclamation Against Monopo-

lies and Protections (May 7, 1603), in 4 John Strype, An-

nals of the Church and State 379, 380 (2d ed., London,

Edward Symon 1731), available online; Chris R. Kyle,

“But a New Button to an Old Coat”: The Enactment of the

Statute of Monopolies, 19 J. Legal Hist. 203, 205 (1998).

Thereafter, the Privy Council adjudicated patent revo-

cation actions, in parallel with common law courts. See

MacLeod, supra, at 19; Bracha, Commodification, supra,

at 189-91. In 1752 the Council relinquished jurisdiction

over infringement actions but retained revocation power,

and indeed redirected infringement cases to the common

law courts “under the threat of revocation.” See E. Wyn-

dham Hulme, Privy Council Law and Practice of Letters

Patent for Invention from the Restoration to 1794, Part

IT, 33 L.Q. Rev. 180, 194 (1917); MacLeod, supra, at 59-60.

Sovereign discretion, exercised to further economic

policy, was the theme of 1700s English patent practice.

The Crown’s prerogative to grant patents included a pre-

rogative to revoke them.

2. Early American law followed this English treat-

ment of patents as sovereign exercises of discretion, but

with one key change: Having no king, the colonies and

later, states, lodged the discretionary power over patents

with the legislature.

“As in England, colonial patents were ad hoc, discre-

tionary, and tailored privileges.” Bracha, supra, at 26.

Early American patents were granted on a variety of sub-

jects, such as a 21-year Massachusetts patent to a “free

company of adventurers” on trade with Native Ameri-

cans in 1644, 2 Records of the Governor and Company of

the Massachusetts Bay 60, 138-39 (Nathaniel B. Shurtleff

ed., Boston, William White 1853), available online.

Importation of new industry continued to be the

touchstone for patents. Connecticut advertised numer-

ous patents of importation, in 1691 for example calling

for those “experienced in the making of salt in any of

the usual ways of doing it in other parts of the world”

to set up a salt industry, on the incentive of “a patent to

be given for 10 years.” 4 Public Records of the Colony

of Connecticut 44 (1868), available online. See generally

Bugbee, supra, at 57-83. In 1788, the Pennsylvania So-

ciety for the Encouragement of Manufactures and Use-

ful Arts praised one Joseph Hague, who had smuggled an

English machine into the country, as “the ingenious arti-

san, who counterfeited the carding and spinning machine,

though not the original inventor (being only the intro-

ducer).” Doron 8. Ben-Atar, Trade Secrets: Intellectual

Piracy and the Origins of American Industrial Power 80

(2004) (quoting papers of Tench Coxe); see also Bracha,

supra, at 29. One who “counterfeited” deserved reward,

where the counterfeiting stimulated manufacturing.

The key change between English and early Ameri-

can patents was the locus of discretion. Rather than be-

ing royal decrees, “American patents consisted almost

entirely of private enactments of colonial legislatures in

behalf of individual inventors, and included varying pro-

visions and terms of effectiveness.” Bugbee, supra, at

57 (reviewing all such patents). Post-Revolution state

patents were simply “a continuation of the colonial prac-

tice of enacting private laws of varying provisions,” reem-

phasizing the legislative discretion component of early

patenting. Id. at 84; see Bracha, supra, at 28.°

Colonial legislatures used discretion over patents to

impose conditions in service of public policy. A working

clause is found in the first known American patent, is-

sued to Samuel Winslow for making salt but only if he

“shall, within the space of one year, set upon the said

work.” 1 Records of the Governor and Company of the

® A 1784 South Carolina statute declared a 14-year “exclusive priv-

ilege” to “inventors of useful machines.” Act for the Encouragement

of Arts and Sciences, ch. 1221, § IV, 4 Stat. S.C. 618, 620 (1784), avail-

able online. But that law “only operated as an invitation to inventors

to request the legislature for patents”; the state continued to issue

patents by private legislative acts. P.J. Federico, State Patents, 13 J.

Pat. Off. Soc’y 166, 167 (1931); see Bugbee, supra, at 93-95.

Massachusetts Bay, supra, at 331. South Carolina went

further, requiring the patent recipient to prove to “a com-

mittee of both Houses of Asseinbly” that his rice clean-

ing machine had been “brought to perfection,” or else the

patent “shall cease and be void.” Act for the Encourage-

ment of Mr. George Timmons, ch. 698, 3 Stat. S.C. 599

(1743), available online; see Bugbee, supra, at 79. That

enactment reflects the legislature’s power to revoke un-

satisfactory patents.

Legislative power to revoke patents was most appar-

ent in New York. The state first granted a patent on

steamboat operation to John Fitch, but later repealed

that patent in favor of Robert Livingston. See Act of

Mar. 27, 1798, ch. 55, 4 N.Y. Laws 215 (Weed Parsons

& Co. 1887), available online (repealing Act of Mar. 19,

1787, ch. 57, 2 N-Y. Laws 472 (Weed Parsons & Co. 1886),

available online). Notably, the basis for repeal was not

non-inventiveness, but rather economic policy. The leg-

islature found that Fitch had failed to start a steamboat

industry for ten years, so his patent “is justly forfeited.”

Id. See generally P.J. Federico, State Patents, 13 J. Pat.

Off. Soe’y 166, 172~73 (1931).”

Colonial and state patent practices in America reiter-

ate that patents were a privilege granted as a matter of

sovereign discretion, with the sovereign exercising wide

latitude in setting out the terms of the patent grant, in-

cluding possible revocation of that grant. Conditions im-

posed on patent grants have been treated from the very

beginning as a matter of political judgment and.public pol-

icy decision-making.

~ TAnother steamboat entrepreneur, James Rumsey, also sought

to have Fitch’s state patents repealed, failing in Pennsylvania but

apparently succeeding in Virginia. See Federico, supra, at 172.

B. THE FRAMERS SAW PATENTS AS GOVERN-

MENT ISSUED MONOPOLIES, AND EXPECTED

THE LEGISLATURE TO REGULATE THEM

Congress’s power to legislate checks on the patent

grant is within the original understanding of the Constitu-

tion. The Framers saw patents as state monopolies with

potential for abuse by an ambitious government. As a

result, the Article I patent power reflects the Framers’

skepticism of patent monopolies and their expectation

that Congress would seek to restrain them.

1. Tothe Framers, the term monopoly referred not

to market power concentration (as it does today), but

rather to a government grant of exclusivity to a pri-

vate entity. Sir Edward Coke,® author of the Statute

of Monopolies, defined monopoly as an “allowance by the

King .. . for the sole buying, selling, making, working,

or using of any thing, whereby any person or persons...

are sought to be restrained of any freedom, or liberty that

they had before, or hindered in their lawful trade.” 3 Ed-

ward Coke, Institutes of the Laws of England ch. 85, at

181 (1644), available online. They are a strong form of

a government-granted privilege—what today would be

called an entitlement.

The Framers understood monopolies to be one of the

most repulsive powers of government. George Mason

refused to sign the Constitution because, among other

things, under it “the congress may grant monopolies in

trade and commerce.” George Mason, Objections to the

®The proper style of the English jurist is Sir Edward Coke. The

misappellation “Lord Coke” is especially inapt here, because as spon-

sor of the Statute of Monopolies, Coke belonged not to the House of

Lords but to the House of Commons. See 2 Cuthbert William John-

son, The Life of Sir Edward Coke 91 (1835), available online.

Proposed Federal Constitution, 2 Am. Museum 534, 536

(1787), available online. And the baseline position of the

states was against monopolies: Massachusetts and Con-

necticut had statutes banning them,’ and William Penn

had decried them as “against the liberty and freedom of

the subject.””” Thus, during the ratification debate, sev-

eral states requested amendments to the effect “that the

congress do not grant monopolies.” F’.g., 2 U.S. Dep’t of

State, Documentary History of the Constitution of the

United States of America 198 (1894), available online.

See generally Tyler T. Ochoa & Mark Rose, The Anti-

Monopoly Origins of the Patent and Copyright Clause,

84 J. Pat. & Trademark Off. Soc’y 909, 927 (2002).

With regard to patents, the Framers “viewed these

limited-term grants as monopolies,” albeit tolerable ones.

See Walterscheid, Nature, supra, at 242. Madison and

Jefferson described “encouragements to . . . ingenious dis-

coveries” as “monopolies,” in debating their desirability.

Letter from James Madison to Thomas Jefferson (Oct. 17,

1788), in 1 Letters and Other Writings of James Madi-

son 421, 427 (1884) [hereinafter Madison Writings], avail-

able online; see Letter from Thomas Jefferson to James

Madison (July 31, 1788), in 7 The Writings of Thomas

Jefferson 93, 98 (1907) (hereinafter Jefferson Writings],

available online. See generally Walterscheid, Nature,

supra, at 6-8. And the words patent and monopoly are

°See The Colonial Laws of Massachusetts 36 (William H. Whit-

more ed., Rockwell & Churchill 1890) (1672), aruilable outline; The

Book of the Geveral Laws for the Peaple Withiu the Jurisdiction

of Connecticut 52 (1673), available online, See generally Bugbee,

supra, at 61, 69. Both notably excepted monopolies on “new inven-

tions that are profitable to the Country.”

William Penn, The Excellent Privilege of Liberty and Property

27 (J.B. Lippincott Co. 1897) (1687), available online.

interchangeably juxtaposed in contemporaneous English

cases, American cases, and American commentary."

Perhaps the sentiment among the Framers is best cap-

tured by Franklin’s recollection of having been offered a

Pennsylvania patent on an iron stove. He declined the

patent because “as we enjoy great advantages from the

inventions of others, we should be glad of an opportu-

nity to serve others by any invention of ours; and this we

should do freely and generously.” Autobiography of Ben-

jamin Franklin 274 (John Bigelow ed., J.B. Lippincott

& Co. 1868), available online. Franklin, Jefferson, and

Madison would have agreed that monopolies were gen-

erally odious, and to the extent that patent monopolies

should be granted, they ought to be tightly controlled.

2. Fear of improper monopolies led the Framers to

prescribe only a “limited patent monopoly under the Con-

stitution.” Graham v. John Deere Co., 383 U.S. 1, 7

(1966). The Patent Clause that emerged gives Congress

not a wholesale power to grant patents on inventions, but

rather a limited power to “promote the progress of sci-

ence and useful arts,” using patents as a means to achieve

that end. U.S. Const. art. I, § 8, cl. 8.

The Constitutional Convention delegates added the

“promote the progress” language as an explicit limitation

English cases—see Hornblower v. Boulton, 101 Eng. Rep. 1285,

1288-89 (K.B. 1799); Boulton v. Bull, 126 Eng. Rep. 651, 665 (C.P.

1795); Turner v. Winter, 99 Eng. Rep. 1274, 1276 (K.B. 1787);

Edgeberry, 90 Eng. Rep. 1162. American cases—see Gibbons v.

Ogden, 22 U.S. (9 Wheat.) 1, 229 (1824) Johnson, J., concurring);

Wilson v. Rousseau, 45 U.S. (4 How.) 646, 678, 681-83 (1846); Shaw v.

Cooper, 32 US. (7 Pet.) 292, 320 (1833); Pennock v. Dialogue, 27 U.S.

(2 Pet.) 1, 19, 23 (1829). Commentary—see Thomas G. Fessenden,

An Essay on the Law of Patents for New Inventions 186 (Boston, D.

Mallory & Co. 1810), available online.

on the power to grant patent monopolies. See Dotan Oliar,

Making Sense of the Intellectual Property Clause: Pro-

motion of Progress as a Limitation on Congress’s Intel-

lectual Property Power, 94 Geo. L.J. 1771 (2006). Madison

and Pinckney, both proponents of a strong central gov-

ernment,” proposed plenary patent powers with no such

limitation.’* See id. at 1789 tbl.1; id. at 1813-14. Other del-

egates, who tended to be more skeptical of central power,

amended the proposal to add the “promote the progress”

language (borrowed from other proposals of Madison and

Pinckney), thereby reducing the patent power to one con-

strained by an objective of promoting progress. See id. at

1814-16. The unique ends-means structure of the Patent

Clause thus embodies, in a way, the Framers’ vision for

limited federal government. See id. at 1816-18.

3. The opposing view of petitioner and its support-

ing amici, that patents are traditional common-law rights

rather than monopolies, lacks historical basis.

The Framers rejected any common law origin of

patent protection. See generally Walterscheid, Nature,

supra, at 201-38. Jefferson most starkly described “the

exclusive right to invention as given not of natural right,

but for the benefit of society.” Letter from Thomas Jeffer-

son to Isaac McPherson (Aug. 13, 1813) [hereinafter Jef-

ferson to McPherson], in 13 Jefferson Writings, supra, at

326, 335. Though Madison averred that copyrights were

'2Exemplary of their centralist views are James Madison, Vices

of the Political System of the United States (Apr. 1787), in 1 Madi-

son Writings, supra, at 320, 321, and Charles Pinckney, Address at

the Constitutional Convention: Observations on the Federal Consti-

tution (May 1787), in 1 Frank Moore, American Eloquence 362, 365

(N.Y., D. Appleton & Co. 1859), available online.

18 See 1 U.S. Dep’t of State, supra, at 131 (Convention journal, Aug.

18, 1781); 3 id. at 554-55 (Madison’s journal, same day).

“a right of common law,” he declined to say the same of

patents, only suggesting that they “seem[ed] with equal

reason” to merit a parallel exclusivity, in view of the “pub-

lic good.” The Federalist No. 43 (James Madison).

The idea of a common law property right in inventions

was so foreign that, in Wheaton v. Peters, it was not only

this Court that rejected any “right, at common law, to sell

the thing invented.” See 33 U.S. (8 Pet.) 591, 661 (1834).

Even the plaintiff’s counsel conceded: “There is at com-

mon law no property in them; there is not even a legal

right entitled to protection.” Jd. at 600 (abstract of argu-

ment); see also Pennock v. Dialogue, 27 U.S. (2 Pet.) 1, 14-

15 (1829) (invention gives rise only to “inchoate right”);

Evans v. Jordan, 8 F. Cas. 872, 873 (C.C.D. Va. 1813) (No.

4,564) (Marshall, Circuit J.) (same).

Actions such as patent cancellation are thus not “the

stuff of the traditional actions at common law tried by the

courts at Westminster in 1789,” Stern v. Marshall, 564

U.S. 462, 484 (2011) (quoting N. Pipeline Constr. Co. v.

Marathon Pipe Line Co., 458 U.S. 50, 90 (1982) (Rehn-

quist, J., concurring in judgment)), because patents are

not the stuff of the common law. Instead, to the Framers,

patents were monopolies, upon which Congress was to

place conditions in service of the public good.

C. EARLY FEDERAL PATENT LAW CONFIRMS

CONGRESS’S POWER TO LIMIT THE PATENT

GRANT

Under the Patent Clause, Congress has from the very

beginning limited the patent grant in furtherance of pub-

lic policy. This confirms an original understanding of

Congress’s power to serve the public interest through

conditions on patents.

The Patent Act of 1790 accommodated the Framers’

public interest concerns and fears of monopolies in sev-

eral ways. It made the patent grant optional (“shall and

may be lawful” to issue), with the decision to issue a

patent delegated to a Patent Board of three high-ranking

executive officials, “if they shall deem the invention or dis-

covery sufficiently useful and important.” Ch. 7, § 1, 1

Stat. 109, 110. “(The clear logic underlying the statute is

that of giving the board full discretionary power to weigh

public policies and decide whether the benefits offered

by a petitioner justified the grant of a patent.” Bracha,

supra, at 194.

The Board’s discretionary power is evident from

patent applicants’ arguments, largely devoted to the

“substantial social benefits” of their inventions. /d. at

196. It is also evident from the Board’s demands for de-

tail on the workings of inventions, so as to assess their

usefulness and importance. See Edward C. Walterscheid,

To Promote the Progress of Science and Useful Arts 174

(1998). Jefferson, a member of the Board from 1790 to

1793, would later remark that his job was “drawing a line

between the things which are worth to the public the em-

barrassment of an exclusive patent, and those which are

not”—again confirming the public policy dimension of the

patent grant decision. Jefferson to McPherson, supra, at

335; see also Bracha, supra, at 194.

The patent revocation provisions of the 1790 Act fur-

ther evinced Congress’s use of conditions on the patent

grant to protect the public. See § 5, 1 Stat. at 111. Drafts

of the provision observed a policy rationale, that wrongly

granted patents “may not only be prejudicial to individu-

als, but to the community.” Patents Bill, H.R. 41, First

Cong. § 4 (Feb. 16, 1790), reprinted in Appendix A infra

p. la. Judge William Van Ness wrote that the provision

serves “to protect the public against frauds and imposi-

tions” resulting from invalid patents. McGaw v. Bryan,

16 F. Cas. 96, 97 (S.D.N-Y. 1821) (No. 8,793)."

“No one can deny that when the legislature are about

to vest an exclusive right in an author or an inventor,

they have the power to prescribe the conditions on which

that right shall be enjoyed.” Wheaton, 33 U.S. (8 Pet.) at

663-64. The 1790 Act confirms what historical precedents

foretold and what the Framers intended: that patents are

not mere private rewards but rather instruments for ad-

vancing public policies. Congress has power to circum-

scribe those instruments, and inter partes review is an

exercise of that power. Petitioners’ challenge to inter

partes review thus does not merely run headlong into es-

tablished Article III doctrine; it collides with the very un-

derpinnings of the Framers’ design.

Il. INTER PARTES REVIEW Is A CLASSIC

TYPE OF ADMINISTRATIVE SCHEME THAT

CONGRESS MAY DEVISE UNDER ARTICLE I!

Inter partes review is the latest exercise of Congress's

power to condition the patent grant in service of the pub-

lic interest. Specifically, Congress made a political choice

that administrative cancellation was the best remedy for

those patents that were issued contrary to the “progress

of science and useful arts.”

Van Ness was describing a later statute, but its revocation pro-

vision was substantially identical. He goes on to explain why United

States patent law is unrelated to English scire facias practice; this

argument is expected to be discussed in other briefs. See id. at 101;

Christopher Beauchamp, Repealing Patents 29 (Brooklyn Law Sch.

Legal Studies, Res. Paper No. 534, Sept. 2017), available online.

A review of the nature and background of inter partes

review shows that the proceeding is the most quintessen-

tial sort of federal agency procedure that this Court has

approved under the Article III public rights doctrine.

Four observations are especially pertinent and discussed

below: Congress’s longstanding involvement in prescrib-

ing patent cancellation procedures, the complexity of the

modern patent system, the generalized public harm re-

sulting from invalid patents, and the integral nature of

inter partes review to the larger patent scheme.

A. CONGRESS HAS A LONG HISTORY OF STATU-

TORILY ADJUSTING PATENT CANCELLATION

PROCEDURES

Throughout history, Congress has adjusted the proce-

dures for patent cancellation, confirming that cancellation

procedure is squarely within Congress’s Article I domain.

Early patent statutes reject the notion that patent

cancellation is a matter of private rights. Those statutes

limited court actions to repeal a patent to one year or

three years from issuance of the patent. 1790 Act § 5,

1 Stat. at 111; Patent Act of 1798, ch. 11, § 10, 1 Stat.

318, 323. Indeed, the Patent Act of 1836 cut off all pri-

vate causes of action for patent cancellation entirely, as

this Court recognized on several occasions. Ch. 357, 5

Stat. 117; see United States v. Am. Bell Tel. Co., 128

U.S. 315, 372 (1888); Loom Co. v. Higgins, 105 U.S. 580,

589 (1882).'° Under the public rights doctrine “Congress

may set up the terms of adjudicating a suit when the suit

could not otherwise proceed at all,” Stern, 564 US. at

489 (describing Murray’s Lessee v. Hoboken Land & Im-

\8Courts could still declare patents void as part of an interference

proceeding between two patents. See 1836 Act § 16, 5 Stat. at 124.

provement Co., 59 U.S. (18 How.) 272, 284 (1855)); these

statutes show that, absent congressional action, a patent

cancellation suit could not otherwise proceed at all.

The 1836 Act also created the Patent Office, an Article

I agency in which patents would be examined—and even

eanceled. The statute authorized a proceeding called

“reissue,” where a patent owner could seek correction of

a defect in a patent by surrendering a patent to obtain a

new, corrected one. 1836 Act § 13, 5 Stat. at 122. Impor-

tantly, if the Patent Office found no allowable correction

to the patent, then no reissue patent would be granted,

and the original patent was “extinguished” and “cancelled

in law.” Peck v. Collins, 103 U.S. 660, 664 (1880).'®

Again on the assumption that it could alter patent can-

cellation proceedings at will, Congress in the Patent Act

of 1870 changed the reissue procedure such that failure

resulted in return of the original patent rather than can-

cellation. Ch. 230, § 53, 16 Stat. 198, 205-06; see also

Peck, 103 U.S. at 665 (discussing in dicta possible effects

of new statute). It is in this context that McCormick

Harvesting Machine Co. v. Aultman held that courts had

the sole power to invalidate patents—because Congress

had legislated it so. See 169 U.S. 606, 609 (1898). In-

deed, McCormick discussed Peck and recognized that

the changed result was the result of a changed statute,

not a constitutional tenet that would have rendered Peck

wrongly decided. See McCormick, 169 U.S. at 611.

The Patent Act of 1952 established the first explicit

administrative procedure for patent cancellation. Within

interference proceedings, in the course of determining se-

Reissue under the 1836 Act differs from inter partes review to-

day in many respects. But it shows that, from the very time the

Patent Office was created in statute, it held a power to cancel patents.

niority between two patents, “a final judgment adverse to

a patentee ... shall constitute cancellation of the claims

involved from the patent.” See ch. 950, § 135, 66 Stat. 792,

802. The House Report acknowledged that an adminis-

trative proceeding to cancel patents was “new,” but nev-

ertheless describes the change as a “minor revision in the

interference section.” Revision of Title 35, United States

Code, H.R. Rep. No. 82-1923, at 7 (1952).

Since 1952, Congress has enacted many forms of ad-

ministrative patent cancellation: third party—requested

ex parte reexamination, 35 U.S.C. § 302, Office-initiated

reexamination, § 303(a), and inter partes reexamination,

§ 311 (2011) (repealed 2012). The America Invents Act

added review of certain business method patents, Pub.

L. No. 112-29, sec. 18, 125 Stat. 284 (2011), post-grant re-

view, 35 U.S.C. § 321, and inter partes review at issue

here, § 311 (2016). These post-grant avenues for review-

ing patents are now longstanding fixtures of the patent

landscape Congress constructed."

The consistent theme across these two centuries,

from the 1790 Act to now, is that Congress has firmly held

the reins in directing patent cancellation procedure, and

iterated on various ways to do so over time. Congress

'TPatent applicants are not caught unawares by the possibility of

post-grant revocation. Every patent under Title 35 is granted “sub-

ject to the provisions of this title,” § 261, which have included at least

some form of post-grant challenge proceeding since ex parte reexam-

ination went into effect in 1981. See Bayh—Dole Act, Pub. L. No. 96-

517, sec. 8(h), 94 Stat. 3015, 3027 (1980). Theoretically some pre-1981

patents could be in force now or even issue in the future, but the num-

ber is vanishingly »mall: The Patent Office reports that there are ex-

actly five such applications still pending, at least some of which are

likely defective for prosecution laches. See /nrovation Act: Hearing

Before the H. Conem, on the Judiciury, 113th Cong. 233-84, 243-44

(2013) (Letter of Teresa Stanek Rea).

found it unsurprising to give the Patent Office authority

to cancel patents; the real surprise would be to learn that

this authority is unconstitutional.

B. ADMINISTRATION OF PATENT LAW IS A

COMPLEX PROBLEM, GIVEN MODERN

INVENTION PRACTICES

When Congress legislates on patent cancellation pro-

cedures, it does not do so against a simple backdrop of

common law; rather, it legislates in the face of a com-

plex, dynamically changing ecosystem of patents and in-

novation. A review of the modern patent system reveals

the specialized and complex nature of that system—and

the consequent similarity of patent procedures like inter

partes review to other technical agency proceedings.

Today, patents are sought at a remarkable rate. The

Patent Office has received over 600,000 patent applica-

tions per year, every year since 2013. See U.S. Patent &

Trademark Office, Performance and Accountability Re-

port 179 tbl.2 (2016), available online. The speed of in-

novation accounts in large part for this, but changes in

patent practices have also accelerated the filing rates.

For example, inventions today are covered often not

with one patent but with dozens or thousands, due to the

complexity of technology and legal strategies of creat-

ing “patent thickets.” See Stu Woolman et al., Hvidence

of Patent Thickets in Complex Biopharmaceutical Tech-

nologies, 53 IDEA 1, 7 (2013). The biologic drug Humira

reportedly is protected by more than 70 patents—even

though the lead composition-of-matter patent already has

expired. See Andrew Pollack, Makers of Humira and

Embrel Using Patents to Delay Generic Versions, N.Y.

Times, Jan. 16, 2017, at B1, available online.

Furthermore, one application can be refiled to obtain

multiple “continuation” patents using a procedure intro-

duced in 1952. See 35 U.S.C. § 120. This accounts for 28%

of the volume of applications before the Patent Office. See

Cecil D. Quillen, Jr. & Ogden H. Webster, Continuing

Patent Applications and Performance of the U.S. Patent

and Trademark Office, 11 Fed. Cir. B.J. 1, 7-8 (2001).

For each of these 600,000 patent applications, a patent

examiner must (among other tasks) determine whether

the described invention is new under 35 U.S.C. § 102 and

nonobvious under § 103. To do so, the examiner must

learn the workings of the invention under application,

search the universe of technical knowledge, reason sci-

entifically about the similarities between the application

and the prior art, and deliberate on the legal fiction of

the “person having ordinary skill in the art.” § 103; see

Graham, 383 U.S. at 17-18.

To perform all the scientific and legal analysis they

must do, examiners receive only about 17 to 31 hours per

application—a time frame so tight that the government

estimates that “about 70 percent of examiners have less

time than needed to complete a thorough examination.”

US. Gov’t Accountability Office, GAO-16-490, Patent Of-

fice Should Define Quality, Reassess Incentives, and Im-

prove Clarity 10, 25-26 (June 2016). They are also lim-

ited in the technical literature they may search, for le-

gal, practical, and cost reasons. See Beth Simone Noveck,

“Peer to Patent”: Collective Intelligence, Open Review,

and Patent Reform, 20 Harv. J.L. & Tech. 123, 135 (2006).

High turnover rates’® mean the examining corps does

\8This is largely because “the private sector offers substantially

higher salaries” than the Patent Office. Fed. Trade Comm’n, To Pro-

mote Innovation ch. 6, at 19 (2003), available online.

not maintain experience: Most examiners have a techni-

cal degree but not beyond a bachelor’s, and many exam-

iners leave the Office within five years. See U.S. Gov’t

Accountability Office, GAO-16-479, Patent Office Should

Strengthen Search Capabilities and Better Monitor Ex-

aminers’ Work 28-29 (June 2016). The Patent Office itself

is under constant pressure from the patent owner com-

munity to issue patents more quickly and more easily.'®

Patent examiners do a remarkable job under the circum-

stances,” but those circumstances are challenging.

This Court has approved Article I adjudication in the

context of “administering a complex regulatory scheme.”

Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568,

589 (1985); see Atlas Roofing Co. v. Occupational Safety

& Health Review Comm’n, 430 U.S. 442, 455 (1977); Stern,

564 U.S. at 490. Patents are exactly that sort of complex

regulatory scheme, because the nature of innovation to-

day renders the matter of issuing correct patents a prob-

lem of extraordinary difficulty—and a problem best left

to the judgment of the political branches.

C. LIKE MANY AGENCY PROCEEDINGS, PATENT

CANCELLATION TARGETS A GENERALIZED

PUBLIC HARM

Mistakenly granted patents impose substantial harm

upon the entire American public. /nter partes review is

targeted to relieve that public harm, confirming that the

proceeding is within Congress’s constitutional power to

19 A patent stakeholder survey in 2008 identified reduction of appli-

cation pendency as one of the top five recommendations. Patent Pub.

Advisory Comm., Annual Report 28 (2009).

20Counsel of record prosecuted patents for several years, and had

many positive experiences working with examiners.

limit the patent grant in service of the public, and indicat-

ing the public-right nature of the proceeding.

1. The conditions for patentability in §§ 102 and 103

“seek to assure that ideas in the public domain remain

there for the use of the public.” Aronson v. Quick Point

Pencil Co., 440 U.S. 257, 262 (1979). A patent wrongly

granted, then, prevents “the use of ideas which are in re-

ality a part of the public domain.” Lear, Inc. v. Adkins,

395 U.S. 653, 670 (1969). As a result, the public is “re-

strained” by the mistaken patent from “freedom, or lib-

erty that they had before.” 3 Coke, supra, at 181. Such a

patent is the very definition of an odious monopoly.

That monopoly injures everyone, in the form of in-

creased consumer costs, decreased consumer choice, and

loss of future innovations. Furthermore, “the existence

of bad patents calls into question the legitimacy of all

patents.” Megan M. La Belle, Patent Law as Public Law,

20 Geo. Mason L. Rev. 41, 55-56 (2012). Two examples

among many illustrate these harms.

Pharmaceutical patents granted on known drugs in-

jure not just the public pocketbook but also public health.

Generic drugs reportedly reduce the annual cost of treat-

ment by about $46 per person under age 65 and $78 for

those over; “broad generic substitution of outpatient pre-

scription drugs could save approximately $8.8 billion .. .

in the United States each year.” Jennifer S. Haas, Poten-

tial Savings from Substituting Generic Drugs for Brand-

Name Drugs, 142 Annals Internal Med. 891, 894 (2005).

An invalid patent that blocks generic entry thus denies

the public those benefits for no good reason.

A study on HIV treatments identified two drugs for

which the patents on the compounds were expired but

for which generics were unavailable due to “secondary

patenting” of minor variations and methods of manufac-

turing and treatment. Tahir Amin & Aaron 8. Kessel-

heim, Secondary Patentiny of Branded Pharmaccuticals,

31 Health Aff. 2286, 2288-89 (2012). The researchers

found 108 secondary patents that could potentially delay

generic entry by 12 years after the expiration of the base-

compound patents; they also found in the patents “signs

of quality concerns” that “may serve as a basis for chal-

lenging their validity.” Jd. at 2290-91. This is no out-

lier: A Federal Trade Commission study found that drug

patents were invalidated at least 28% of the time in litiga-

tion. Fed. Trade Comm'n, Generic Drug Entry ‘rior to

Patent Expiration 20 (July 2002).

Another example of public harm from invalid patents

comes from a firm, MPHJ, who held a patent on obvious

methods of using document scanners. See In re MPHJ

Tech. Invs., LLC, 159 F'T.C. 1004, 1006 (Mar. 13, 2015).

This patent on everyday technology enabled MPHJ to

scam large swaths of the public. The firm reportedly sent

over 16,000 letters to small businesses, demanding pay-

ment of $1,000 or $1,200 per employee. See id. at 1010-11.

Broad public nuisance was possible only because MPHJ’s

patent purported to take away a right to use technology

in the public domain.

2. Inter partes review accrues benefits to the entire

public, by undoing the damage caused by patents granted

in contravention of the public’s rights to use known ideas.

Since all members of the public are harmed when an im-

proper patent is granted, invalidation of that improper

patent “is the creation of a public good enjoyed by socicty

as a whole.” La Belle, szpra, at 61.*' The case of MPHJ

21The public-good nature of patent cancellation renders it distin-

guishable from patent infringement actions, in ways relevant to the

exemplifies this: Its invalid patents and associated scam

were finally put to rest through a successful inter partes

review challenge. See MPHJ Tech. Invs., LLC v. Ricoh

Americas Corp., 847 F.3d 1363 (Fed. Cir. 2017).

Cancellation of wrongly granted patents is at the

heart of the public interest because “the public interest

in granting patent monopolies exists only to the extent

that the public is given a novel and useful invention in con-

sideration for its grant.” Fed. Trade Comm’n v. Actavis,

Inc., 183 8. Ct. 2223, 2232 (2013) (quoting United States v.

Singer Mfg. Co., 374 U.S. 174, 199 (1963) (White, J., con-

curring)) (internal quotations omitted). Cancellation pro-

ceedings like inter partes review do not merely resolve

a private dispute between two litigants—they vindicate

the rights of the public.

D. INTER PARTES REVIEW Is INTEGRAL

AND IMPORTANT TO THE MODERN PATENT

REGULATORY SCHEME

Inter partes review does not conflict with Article III

because it “serves a public purpose as an integral part

of a program safeguarding the public,” specifically from

the substantial harms of wrongly granted patents noted

above. Union Carbide, 473 U.S. at 589. It safeguards

the public and the public domain for at least three rea-

sons: First, it provides a backstop to the problems with

pre-grant patent examination; second, it assigns scientific

and technological determinations to expert adjudicators

with advanced technical training; and third, it provides

public rights doctrine. See generally id. at 52-54. In particular, can-

cellation proceedings are effectively “complaints about government

conduct.” Jd. at 43; ef: Stern, 564 U.S. at 489 (public right is one “aris-

ing between the Government and persons subject to its authority”).

an avenue for members of the public to challenge patents

affecting them without needing to take the risk of infring-

ing first.

Although the facts below tend to show that inter

partes review is a preferable solution to the complex prob-

lem of invalid patents, the larger point is that finding the

best solution is a fact-intensive inquiry. Congress is best

suited “to judge the comparative force of these policy ar-

guments,” and that body’s choice to use “inter partes pro-

ceedings” to “account for concerns about ‘bad’ patents”

should not be second-guessed. Microsoft Corp. v. 141 Ltd.

P’ship, 564 U.S. 91, 113 (2011).

1. Given the difficulty of accurate patent examina-

tion discussed above, inter partes review is an effective

and efficient mechanism for avoiding the harms of erro-

neous patents. Broadly, Congress can choose between

two options for reducing problematic patents: stronger

pre-grant examination and post-grant revocation.

Post-grant revocation is an advantageous choice. Pre-

grant examination suffers from numerous accuracy prob-

lems, as noted above, which cannot easily be solved. See

Section II.B supra p. 23. Furthermore, bolstering ex-

amination can be economically wasteful, because most

patents are never enforced, and no value is gained from

any additional resources that are put to examining those

patents. See Mark A. Lemley, Rational Ignorance at the

Patent Office, 95 Nw. U. L. Rev. 1495, 1500-08 (2001).

Post-grant proceedings like inter partes review, by

contrast, encourage challenges to the “more ‘valuable’ or

technologically important patents,” as empirical research

shows. Stuart J.H. Graham et al., Patent Quality Control:

A Comparison of US. Patent Re-examinations and Eu-

ropean Patent Oppositions, in Patents in the Knowledge-

Based Economy 74, 114 (Wesley M. Cohen & Stephen

A. Merrill eds., 2003), available online. When a patent

becomes of especial concern (say, by being enforced or

asserted in cease-and-desist letters), interested private

parties can invest targeted resources to find, for exam-

ple, technical articles or other teachings that would have

prevented the patent from ever issuing in the first place,

but for the resource constraints on the Patent Office.

See Arti K. Rai, Allocating Power over Fact-Finding

in the Patent System, 19 Berkeley Tech. L.J. 907, 918

(2004).

This is not to say that the Patent Office should forgo ef-

forts to improve its pre-grant examination, of course; the

point is simply that inter partes review is a very reason-

able choice by Congress to address the complex problem

of administering a patent system.

2. Inter partes review also serves a public purpose

in the patent scheme by having matters of science and

technology decided by experts in science and technology.

Patent validity turns on comparing the described and

claimed invention to other patents, publications, scientific

articles, and teachings, to assess whether the invention is

identical to those prior-art teachings or is sufficiently sim-

ilar so as to be obvious. See 35 U.S.C. §§ 102-103. This is

a scientifically and technologically intensive inquiry, one

that demands specialized knowledge.

The administrative judges who preside over inter

partes review are statutorily required to be “persons of

competent legal knowledge and scientific ability.” § 6(a).

This Court has found no constitutional defect in “com-

mitting some new types of litigation to administrative

agencies with special competence in the relevant field.”

Atlas Roofing, 430 U.S. at 455. In adjudication of patents,

the quintessential government activity demanding spe-

cial competence, there is no constitutional defect in as-

signing that task to experts.

3. Inter partes review also fills an important gap in

the patent system because it is the sole avenue by which

the general public can challenge a patent.

Pre-grant patent examination is conducted ex parte.

Interested members of the public generally cannot help

the Patent Office find relevant prior art or explain defects

in a pending patent application, as “no protest or other

form of pre-issuance opposition” is permitted. 35 U.S.C.

§ 122(c).” Even ifthe most useful information relevant to

an application is easily accessible to third parties such as

competitors or scientists, patent prosecution still largely

involves only applicants and examiners, neither of whom

have a strong incentive to represent the public interest

in avoiding mistaken patent grants.

In contrast, inter partes review allows any interested

member of the public to request reconsideration of a

patent. § 311(a). If the Patent Office agrees that there is

a “reasonable likelihood” that the petitioner will be able

to show that at least one claim of the patent should not

have issued, § 314(a), the petitioner can participate in the

proceedings and oppose any arguments the patent owner

may make to the contrary, § 316(a)(10), (13). Inter partes

review, in contrast to pre-grant ex parte examination, en-

ables the sort of adversarial discovery and discourse that

is the paradigm for accuracy, fairness, and justice.

#2 4 member of the public may protest an application with the appli-

cant’s consent, or file a “preissuance submission” of prior art within a

limited time. See id. § 122(c), (e). Both procedures are considered to

be “of little practical use.” Lisa Larrimore Ouellette, Pierson, Peer

Review, and Patent Law, 69 Vand. L. Rev. 1825, 1841 (2016).

A helpful perspective on the views expressed in this

brief is found in United States v. Duell, 172 US. 576

(1899). Recognizing the types of rights identified in

Murray’s Lessee, this Court held matters of patent law to

be public rights. Duell, 172 U.S. at 589. It held so because

Congress had the power to “promote the progress of sci-

ence and useful arts,” and thus “to make all laws which

shall be necessary and proper for carrying that expressed

power into execution.” Jd. at 583; cf. Section I supra p. 6.

The Court further noted of the patent system that “two

interests are involved, that of the public . . . and that of

the patentee”; and that review of patents “requires the

intelligent judgment of a trained body of skilled officials.”

Duell, 172 U.S. at 586 (quoting Butterworth v. United

States ex rel. Hoe, 112 U.S. 50, 59 (1884)); cf. Section II.C

supra p. 25; Section II.D supra p. 28.

The broad policy concerns noted in Dwell and this

brief are important here, because this case is not just

about an idiosyncratic agency proceeding. It is about the

very character of patent law—whether it shall remain

as it was born and as the Framers intended, an instru-

ment for Congress to use to promote the public good; or

whether it shall become a matter of private right and

private entitlement, where patent owners may exert, in

Blackstone’s words, “sole and despotic dominion” over

ideas that in fact should belong to the public. For two

hundred and twenty-nine years, the United States patent

system has kept to the path of the public interest. That

should not change today.

CONCLUSION

For the foregoing reasons, the decision of the Court of

Appeals should be affirmed.

Respectfully submitted,

CHARLES DUAN

Counsel of Record

PUBLIC KNOWLEDGE

1818 N Street NW, Suite 410

Washington, DC 20036

(202) 861-0020

eduan@publicknowledge.org

VERA RANIERI

ELECTRONIC FRONTIER

FOUNDATION

815 Eddy Street

San Francisco, CA 94109

(415) 436-9333

vera@eff.org

Counsel for amici curiae

October 2017

APPENDIX A

PATENTS BILL, H.R. 41, FEBRUARY 16, 1790

This excerpt is taken from the bill as published in 6

Documentary History of the First Federal Congress of

the United States of America 1626-32 (Charlene Bangs

Bickford & Helen E. Veit eds., 1986). It is reprinted here

to improve public access, as this is the sole historical pri-

mary source cited in this brief that is not readily available

online.

SEC. 4....

And whereas, Notwithstanding the precautions in

this act contained, patents or grants of the sole and ex-

clusive right and privilege of making, constructing, us-

ing, employing, and vending to others, divers inventions

or discoveries, may be obtained surreptitiously, or upon

false suggestions, which may not only be prejudicial tc in-

dividuals, but to the community: Be it therefore further

enacted, That upon oath or affirmation made before the

judge of the said district court, that any patent, which

shall be issued in pursuance of this act, was obtained

surreptitiously by, or upon false suggestion, and motion

made to the said court, within one year after issuing the

said patent, but not afterwards, it shall and may be lawful

to, and for the judge of the said district court, if the mat-

ter alledged shall appear to him to be sufficient, to grant

a rule that the patentee or patentees, his, her, or their ex-

ecutors, administrators or assigns shew cause, why pro-

cess should not issue against him, her, or them, to repeal

such patents; and if sufficient cause shall not be shewn to

the contrary, the rule shall be made absolute; and there-

upon shall issue and be awarded and issued against the

said patentee or patentees, his, her, or their executors, ac-

ministrators, or assigns, process in the name of him, her,

or them, who shall complain thereof, and upon such writ,

the proceedings, and judgment. shall be such as to repeal

the patents; and if Lhe party at whose complaint the pro-

cess issued, shall have judgment given against him, he

shall pay all such costs as the defendant shall be pul. to

in defending the suit, to be taxed by the court, and re-

covered in such manner as costs expended by defendants

shall he recovered in due course of law.

Lives fetes) fa

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.