Amicus Curiae Brief — Return Mail, Inc. v. U.S. Postal Serv., 139 S. Ct. 1237 (2019) (No. 17-1594)

No. 17-1594

IN THE

Supreme Court of the United States

RETURN MAIL, INC.,

Petitioner,

Vv.

UNITED STATES POSTAL SERVICE, ET AL.,

Respondents.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF OF AMICUS CURIAE

PROFESSOR TEJAS N. NARECHANIA

IN SUPPORT OF RESPONDENTS

DANE SHIKMAN SARAH BOYCE

Munger, Tolles & Counsel of Record

Olson LLP Munger, Tolles &

560 Mission Street Olson LLP

San Francisco, CA 94105 1155 F Street NW

(415) 512-4092 Washington, DC 20004

Dane.Shikman@mto.com (202) 220-1104

Sarah. Boyce@mto.com

TEJAS N. NARECHANIA

UC Berkeley School

of Law

January 16, 2019 Berkeley, CA 94720

i

TABLE OF CONTENTS

INTEREST OF AMICUS CURIAE................... 1

SUMMARY OF ARGUMENT ..........00.0.......-200+- 2

DEEFIOTS ccccerccesrsscsevsscacerssnessovonennenceonenesenios 4

I. The Executive Branch Has For Decades

Interpreted “Person” To Include The

Government And Has A Longstanding

Practice Of Pursuing Post-Issuance

Pe HN: cdaducisnteicinsscsctnninnniptadcecenees 5

Il. Allowing The Government To Pursue

Post-Issuance Patent Review Helps

Protect The Interests Of The Executive

RII ccctincaiiccitsictinscnpniinininniniaandiniatiiiieinns 8

A. Invalid patents often conflict with

the regulatory objectives of the

Executive Branch. ......................- 8

B. Post-issuance patent review helps

the Executive Branch resolve

these conflicts and vindicate the

public’s interests...................... 12

Ill. Permitting Agencies To Petition For

Post-Issuance Patent Review Poses No

Constitutional Concern........................ 17

CR EPEEIEG (rocereenscnsennnaeseninessansaccosnsenmomens 24

‘i

TABLE OF AUTHORITIES

Page(s)

FEDERAL CASES

Association for Molecular Pathology v.

Myriad Genetics, Inc.,

1b Gf) en 10

In re Cuozzo Speed Technologies, LLC,

793 F.3d 1268 (Fed. Cir. 2015)..................cc-eee00 22

Cuozzo Speed Technologies, LLC v. Lee,

196 S. Cé. B1B1 (BOIG) ............002.ccccccecererereeee passim

Dep’t of Treasury v. Fed. Labor

Relations Auth.,

BE TEE, GI CID cececcccccescscsseccscsccncczcccescsccesesnces 23

Golden v. United States,

te, Bee! |, || i]

IRIS Corp. v. Japan Airlines Corp.,

769 F.3d 1359 (Fed. Cir. 2014)...................ccce0000e 14

Knowles Electronics LLC v. Iancu,

886 F.3d 1369 (Fed. Cir. 2018).................-..--2..00 21

Lorillard v. Pons,

BN TE, BI CI ccc ccescccescsecevccnccocccsacsnnscesoscsosseete 7

MedImmune, Inc. v. Genentech, Inc.,

NGS BT. , eres 13

In re Morris,

127 F.3d 1048 (Fed. Cir. 1997).............c.0cccceeeeeeees 16

TABLE OF AUTHORITIES

(continued)

In re NuVasive, Inc.,

842 F.3d 1376 (Fed. Cir. 2016).................

Oil States Energy Services, LLC v.

Greene’s Energy Group, LLC,

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

Pereira v. Sessions,

138 S. Ct. 2106 (2018) .....................essesee0

Pfizer, Inc. v. Gov't of India,

Be ED vtncinnscncesnccciindsaneaneninonees

SAS Inst., Inc. v. Ilancu,

Be Oe Gree HU GID eccncenncesssnscnessanecnseses

SEC v. Fed. Labor Relations Auth..,

568 F.3d 990 (D.C. Cir. 2009) ..................

United States v. Cerecedo Hermanos y

Compania,

I GEE secinvcncvsncsinsenbeccessocssores

Victaulic Co. v. Iancu,

No. 2017-2424, 2018 WL 6264235

(Fed. Cir. Nov. 29, 2018) .....................-+++-

ADMINISTRATIVE ADJUDICATIONS

Dep’t of Justice v. IRIS Corp. Berhad,

Case No. IPR2016-497,

2016 WL 5105599

(PTAB July 25, 2016) .........ccescccsoeeseesseeees

iv

TABLE OF AUTHORITIES

(continued)

Page(s)

United States v. McGrath,

Appeal No. 2014-008255,

2014 Pat. App. LEXIS 8795

Ee 6

U.S. Dep’t of Homeland Security v.

Golden,

Case No. IPR2014-00714,

2015 Pat. App. LEXIS 13026

gt TE 8,9

In re U.S. Dep’t Of Navy, Kingsville

Naval Air Station,

ak Be BD rccccccscecsncecsscncccossnsctncssecne 23

U.S. Postal Service v. Return Mail, Inc.,

No. CBM2014-00116,

2015 Pat. App. LEXIS 12853

II 6, 7

Ex Parte Reexamination Application No.

90/008,470 (Aug. 2, 2010)... .cccccceccceeeeeeeeee 6, 16

CONSTITUTIONAL PROVISIONS

ene aneenon 3,17

FEDERAL STATUTES

v

TABLE OF AUTHORITIES

(continued)

Page(s)

EE ee Ea ae Sa ae Poe 21

I Ui IT in scents nn nsatclabetahanahisnaninititenantabeasiiniinminininden 5

Si eieannibbenianbiein 16, 18

IS ican inteh ett nicer caaeteleed 4

a en i caiecanenieeian 5

RR EE AR PE a I SORE 7

I cal 14, 20

I i eaneenllananall 4

in elie sbeliasimemmenalaes 10

Leahy-Smith America Invents Act, Pub.

L. No. 112-29, 125 Stat. 284 (2011)............. passim

FEDERAL REGULATIONS

57 Fed. Reg. 45,363

IES Shs: Se cncinssicceauninesnteisnecmensnsasceieins 11

AJCA Modifications to the Section 6011

Regulations,

71 Fed. Reg. 64,488

(proposed Nov. 2, 2006) .................cccceseeecceeeeeeeeees 11

Patented Transactions,

72 Fed. Reg. 54,615

rs TE, COD cecisscesitccticsncntsctinctncesiains 11

vi

TABLE OF AUTHORITIES

(continued)

80 Fed. Reg. 77,960

Nl a, SEIT escnsansccnconsecssesenmesssnecuteeneses

Exec. Order No. 13,829,

83 Fed. Reg. 17281

(April 12, 2018) .............cceccecceseseeseesoeseeens

LEGISLATIVE MATERIALS

157 Cong. Rec. H4425

(daily ed. June 22, 2011) .....................000

157 Cong. Rec. $1199

(daily ed. March 3, 2011).........................

H.R. Rep. No. 112-98, pt. 1 (2011)................

OTHER AUTHORITIES

Arti K. Rai, Patent Validity Across the

Executive Branch: Ex Ante

Foundations for Policy Development,

61 Duke L.J. 1237 (2012) ...............00c00000

Daniel A. Farber & Anne Joseph

O’Connell, Agencies as Adversaries,

105 Cal. L. Rev. 1375 (2017)..................

Health & Human Services, Gene Patents

and Licensing Practices and Their

Impact on Patient Access to Genetic

Tests (2010), available at

http://bit.ly/HHS-2010-Rpt............cc00000--.

vii

TABLE OF AUTHORITIES

(continued)

Jack Cathey et al., Tax Patents

Considered, J. Accountancy 40 (July

Manual of Patent Examining Procedure

(9th ed., 2018), available at

http://bit.ly/old-MPEP-2208 ....................0.0c.c0000. 5, 6

Manual of Patent Examining Procedure

(4th ed., 1981), available at

http://bit.ly/old-MPEP-2212 «000.0... ....ccccccccccceceeeeeee 6

Memorandum from David J. Barron,

Acting Assistant Att’y Gen., Office of

Legal Counsel, to Attorneys of the

Office, Re: Best Practices for OLC

Legal Advice and Written Opinions

GOUT TE, SOD wxseccersisishinguiemntunsintinninnieniieanaen 23

Michael J. Meurer, Controlling

Opportunistic and Anti-Competitive

Intellectual Property Litigation,

44 B.C. L. Rev. 509 (2003) ................cccccccceeeeeeeeeees 13

Order, Dep’t of Justice v. IRIS Corp.

Berhad,

Case No. IPR2016-497

(PTAB July 19, 2017) ECF No. 47....................... 14

Tejas N. Narechania, Patent Conflicts,

BES Gee. Bead. WED Gee ceccsscncnssssievnestesceneen 2, 8, 12

TABLE OF AUTHORITIES

(continued)

Page(s)

U.S. Dep’t of Homeland Security,

DHS /S&T/PIA-021 Cell All, May

26, 2016, https://www.dhs.gov/

publication/dhsstpia-021-cell-all .......... 0.000.000... 9

U.S. Patent & Trademark Office, U.S.

Patent Classification 705/36T,

http://it.ly/PTO-Tax-Patents .........000000 0. 10

U.S. Postal Service: A Sustainable Path

Forward, Report from the Task Force

on the United States Postal System

EEE EE 19

U.S. Reissue Patent No. RE43,990 ........000000000000000000. i]

INTEREST OF AMICUS CURIAE'

Amicus Tejas N. Narechania is a professor of

intellectual property law at the University of

California, Berkeley, School of Law.? Amicus has no

personal interest in the outcome of this case, but has

a professional and academic interest in seeing that the

law develops in accord with the dictates of the

Constitution and sound public policy.

' This brief is filed with the consent of all parties. Pursuant to

Supreme Court Rule 37.6, amicus curiae states that no counse!

for any party authored this brief in whole or in part, and no entity

or person, aside from amicus curiae and his counsel, made any

monetary contribution intended to fund the preparation or

submission of this brief.

? Amicus submits this brief in his individual capacity alone, and

his institutional affiliation is listed for identification purposes

only.

2

SUMMARY OF ARGUMENT

Through various review proceedings, the U.S.

Patent and Trademark Office (“Patent Office”) may

reconsider its decision to grant a patent application

and may rescind a patent that it concludes was

awarded erroneously. Such patents—ones that never

should have been granted—can have significant

obstructive effects on private enterprise and

government programs alike. The question presented

in this case asks whether federal agencies, like private

parties, can ask the Patent Office to review potentially

invalid patents.

The answer must be yes. For decades, the Patent

Office and other agencies have all understood the right

to request additional patent review to extend to

government entities. Indeed, many agencies have

acted on that understanding by filing their own

petitions to initiate post-issuance patent-review

proceedings.

This longstanding practice of the Executive Branch

is hardly surprising, given that potentially invalid

patents often conflict with a wide array of regulatory

objectives, including those related to border control,

emergency service, national security, public health,

and even tax collection. See generally Tejas N.

Narechania, Patent Conflicts, 103 Geo. L.J. 1483

(2015). Post-issuance patent review provides the

Executive Branch with a critical means of resolving

these conflicts and vindicating the public’s interests.

Though the Government generally can also protect

these interests through litigation, the patent-review

mechanisms set forth in the Leahy-Smith America

Invents Act (“AIA”), Pub. L. No. 112-29, 125 Stat. 284

(2011), are typically more efficient and more cost-

effective.

3

Moreover, though private actors can attack

potentially invalid patents through their own patent

challenges, forcing the Government to rely solely on

private actors to vindicate public interests can come at

a serious cost. Private parties may choose not to

challenge such patents for any number of reasons,

financial or otherwise. Accordingly, to ensure

regulatory compliance, the Executive Branch requires

the flexibility to take on the costs of challenging such

patents, rather than requiring regulated entities to

take up that mantle. In addition, government

agencies often possess expertise, if not the precise

prior art, that can help inform the Patent Office’s

“second look” at an application. Oil States Energy

Services, LLC v. Greene’s Energy Group, LLC, 138 S.

Ct. 1365, 1374 (2018). The Patent Office’s sister

agencies are thus especially well suited to add value to

these patent-review proceedings, and thereby help the

Patent Office discharge its own responsibilities to

accurately pass upon patent applications.

Contrary to the submission of other amici curiae,

reading the AIA to allow government agencies to

continue to petition for patent review does not

encroach upon the President’s Article II powers. See

Brief for the Cato Institute and Professor Gregory

Dolin as Amici Curiae in Support of Petitioner 6—13

(“Cato Inst. Br.”); cf. Brief for Amicus Curiae

Pharmaceutical Research and Manufacturers of

America in Support of Petitioner 13-15. Indeed, the

opposite is true: Agency petitions for patent review

strengthen the President’s ability to “take Care that

the Laws be faithfully executed” by providing a forum

that helps the Patent Office as well as other federal

agencies all carry out their respective statutory

missions. U.S. Const. art. II, § 3.

4

For all these reasons, this Court should hold that

the AIA permits government agencies to ask the

Patent Office to review and, if appropriate, rescind a

patent.

ARGUMENT

In § 18(a)(1B) of the AIA, the term “person”

encompasses the President and his agents (i.e.,

executive officials and executive agencies).*

As set forth in greater detail in the Government’s

brief, the meaning of the word “person,” when used in

a statute, depends on several factors. See Brief for the

Respondents 18-32. One such factor is the Executive

Branch’s historical understanding of the term. Pfizer,

Inc. v. Gov't of India, 434 U.S. 308, 313 (1978). Here,

that factor plainly counsels in favor of permitting

agency challenges to potentially invalid patents. The

Executive Branch has long interpreted the term

“person” to encompass government agencies when the

word is used in a statute that recognizes a right to

request reexamination of a patent.

This longstanding practice makes sense. Invalid

patents can conflict with an assortment of regulatory

goals, ranging from preventing terrorist attacks to

promoting public health. Patent-review proceedings

thus provide the Executive Branch with a valuable

means of vindicating the public’s interests, just as they

provide private parties with a valuable means of

vindicating their own commercial or financial

interests. Foreclosing the Government from

petitioning for patent review would thus impinge the

Executive Branch’s ability to regulate effectively and

* This argument also extends to analogous provisions in the AIA.

See 35 U.S.C. §§ 311, 321.

5

would needlessly encumber a wide range of agencies,

who would be forced to rely on private parties’

independent decisions to challenge potentially invalid

patents.

I. The Executive Branch Has For Decades

Interpreted “Person” To Include The

For decades, the Executive Branch has understood

the term “person” to encompass government agencies

when it appears in statutes closely analogous to and

preceding § 18(a)(1)(B). Prior to the AIA, several other

statutes established administrative processes that

allowed the Patent Office to reconsider its decision to

grant a patent application. See, e.g., Oil States Energy

Services, 138 S. Ct. at 1370-1371; Cuozzo Speed

Technologies, LLC v. Lee, 136 S. Ct. 2131, 2137 (2016).

These predecessor proceedings—ex parte

reexamination and inter partes reexamination—could

be sought by “lalny person at any time.” 35 U.S.C.

§ 302 (ex parte reexamination) (emphasis added); 35

U.S.C. § 311 (1999 ed.) (inter partes reexamination)

(emphasis added). But Congress declined to clarify

whether it intended the word “person” to include the

Government. In the face of this ambiguity, the

Executive Branch has_ consistently interpreted

“person” to encompass federal agencies.

Take the Patent Office’s own practice first. Since

at least 1981, the Patent Office’s procedural manual,

the Manual of Patent Examining Procedure (MPEP),

has explained that the term “person,” as used in these

earlier patent statutes, encompasses “governmental

entities.” See MPEP § 2212 (9th ed., 2018), available

at http://bit.ly/MPEP-2212 (ex parte reexamination);

6

MPEP § 2212 (4th ed., 1981), available at http://bit.ly/

old-MPEP-2212 (same); MPEP § 2293 (9th ed., 2018),

available at http://bit.ly/old-MPEP-2203 (inter partes

reexamination); see also Brief of New York

Intellectual Property Law Association as Amicus

Curiae in Support of Neither Party 34—35, 37-38.

Other federal agencies have also understood the

term “person,” as used in these statutes, to extend to

themselves: Since Congress established these

administrative mechanisms for reconsidering prior

patent grants, a range of agencies have filed requests

for reexamination. The Department of Justice, for

example, asked the Patent Office to reexamine a

patent that claimed, among other things, a “method

for neutralizing explosive devices.” United States v.

McGrath, Appeal No. 2014-008255, 2014 Pat. App.

LEXIS 8795, at *2 (PTAB Dec. 31, 2014). The Patent

Office agreed to do so, and it ultimately cancelled all

the patent’s claims, finding them obvious in light of

other patents owned by defense contractors. /d. at *9;

see 35 U.S.C. § 103 (claim must be non-obvious to be

patentable). Similarly, the U.S. Postal Service sought

reexamination of an earlier version of the patent at

issue in this case. In that proceeding, the Patent

Office agreed that it had erroneously granted Return

Mail’s application, and it cancelled the patent's

original claims—while allowing Return Mail to add

new, additional claims in the process. See Ex Parte

Reexamination Application No. 90/008,470 (Aug. 2,

2010);* see also U.S. Postal Service v. Return Mail,

* This decision is available through the Patent Office’s website, at

https:/portal.uspto.gov/pair/PublicPair. The proceeding can be

found by searching by its application number, 90/008,470. The

cited decision can be accessed under “Image File Wrapper” tab,

7

Inc., Case No. CBM2014-00116, 2015 Pat. App. LEXIS

12853, at *4 (PTAB Oct. 15, 2015) (describing the

patent’s procedural history); Brief for the Respondents

28-29.

Against the backdrop of this Executive Branch

practice, Congress enacted the AIA, using the same

language—“person”—as in the AIA’s predecessor

statutes. See § 18(a)(1), 125 Stat. at 329; see also 35

U.S.C. §311l(a); id. §321(a). Congress was

presumably aware of the Executive Branch’s

interpretation of the word “person” in these

predecessor statutes, see Lorillard v. Pons, 434 U.S.

575, 580 (1978) (presuming congressional awareness

of executive interpretations), and yet Congress chose

to use precisely the same term, making no attempt to

exclude federal agencies from the new provisions’

scope. This congressional re-enactment is a signal of

the Legislative Branch’s approval of the Executive

Branch’s existing practice of petitioning for patent

review.° See, e.g., United States v. Cerecedo Hermanos

y Compania, 209 U.S. 337, 339 (1908) (“[Rle-

enactment by Congress, without change, of a statute

which had previously received long-continued

executive construction, is an adoption by Congress of

such construction.”).

Not surprisingly, given Congress’s continued use of

“person” in the AIA, the Executive Branch’s practice of

asking the Patent Office to review potentially invalid

as the document titled “Reexam — Final Rejection,” and dated

August 2, 2010.

®* Indeed, Congress has not enacted, or even given serious

consideration to, any bill to push back against the Executive

Branch’s longstanding interpretation, whether before or after

passing the AIA.

8

patents has continued unabated since the AIA’s

enactment. The Department of Homeland Security

(“DHS”), for example, has petitioned the Patent Office

for inter partes review of a patent covering a system

for detecting explosive agents. Following

administrative proceedings, the Patent Office agreed

with DHS’s view that the challenged patent claims

were invalid. U.S. Dep’t of Homeland Security v.

Golden, Case No. IPR2014-00714, 2015 Pat. App.

LEXIS 13026, at *2—*3 (PTAB Oct. 1, 2015).

As this history demonstrates, ever since Congress

created administrative mechanisms for challenging

suspect patents, the Patent Office has welcomed the

participation of its sister agencies. This unbroken

Executive Branch practice counsels strongly in favor

of reading the word “person” in the AIA to include the

Government. See Pfizer, 434 U.S. at 313; Brief for the

Respondents 25-32.

tl. Allowing The Government To Pursue Post-

Issuance Patent Review Helps Protect The

Interests Of The Executive Branch.

A. Invalid patents often conflict with the

regulatory objectives of the Executive

Branch.

It is hardly surprising that the Executive Branch

has relied on patent-review mechanisms to challenge

suspect patents. Invalid patents can interfere with a

wide array of regulatory objectives. See, e.g.,

Narechania, supra, at 1541-42 (listing real-world

conflicts between regulatory objectives and

intellectual property rights, including potentially

invalid patents). In such a scenario, an agency may

understandably feel compelled to ask the Patent Office

to take a second look at the questionable and

problematic patent.

9

Take, for example, the Department of Homeland

Security. That Department is tasked with

“preventling| terrorist attacks within the United

States” and “reducling] the vulnerability of the United

States to terrorism.” 6 U.S.C. § 111. In service of that

mission, DHS instituted a research initiative called

“Cell All,” which sought to embed hazardous-materials

sensors in cell phones. U.S. Dep’t of Homeland

Security, DHS/S&T/PIA-021 Cell All, May 26, 2016,

https://www.dhs.gov/publication/dhsstpia-021-cell-all.

But that effort was met with a lawsuit accusing the

Government of infringing a patent whose specification

described sensors housed within “products” to

“prevent(| terrorist activity by monitoring” critical or

vulnerable sites. U.S. Reissue Patent No. RE43,990;

see also Golden v. United States, 137 Fed. Cl. 155

(2018). In response, DHS asked the Patent Office to

review the patent before the litigation proceeded. See

supra p. 8. The Patent Office agreed, and ultimately

cancelled each of the claims that the Department had

challenged. U.S. Dep’t of Homeland Security v.

Golden, Case No. IPR2014-00714, 2015 Pat. App.

LEXIS 13026, at *2—*3 (PTAB Oct. 1, 2015).

The Department of Health and Human Services

(“HHS”), too, has been plagued by wrongly granted

patents. In 2010, an HHS advisory committee

concluded that certain gene patents “poseld] serious

obstacles” to core facets of the Department’s mission.

Secretary's Advisory Comm. on Genetics, Health &

Society, Department of Health & Human Services,

Gene Patents and Licensing Practices and Their

Impact on Patient Access to Genetic Tests 89 (2010),

available at http://bit.ly/HHS-2010-Rpt; see also Arti

K. Rai, Patent Validity Across the Executive Branch:

Ex Ante Foundations for Policy Development, 61 Duke

L.J. 1237, 1258-1262 (2012). Specifically, the

10

committee said that the “substantial number of

patents claim[ing] gene molecules” was “hindering the

development” of genetic research and testing

techniques, inhibiting patient access to existing

genetic testing, and diminishing the quality of existing

testing. Secretary's Advisory Comm. on Genetics,

supra, at 3-4. Each of these consequences conflicts

with that Department’s statutory mandate to

“encourage, cooperate with, and render assistance

to...scientists in the conduct of... research,

investigations, experiments, demonstrations, and

studies relating to” human diseases. 42 U.S.C.

§ 241(a); see also id. § 280b (requiring the Secretary to

“conduct...research relating to the causes,

mechanisms, prevention, diagnosis, treatment of

injuries, and rehabilitation from injuries”); see also 80

Fed. Reg. 77,960 (Dec. 15, 2015) (the Department’s

function is to “promotle] effective health and human

services and .. . foster[{] sound, sustained advances in

the sciences underlying medicine [and] public

health.”). And this Court has since unanimously held

that many of these problematic patents were invalid

all along. See Association for Molecular Pathology v.

Myriad Genetics, Inc., 569 U.S. 576 (2013).

The IRS faced a considerable threat to its tax-

compliance goals when, in 2003, the Patent Office

began to grant patents claiming tax-reduction

strategies. U.S. Patent & Trademark Office, U.S.

Patent Classification 705/36T, http://bit.ly/PTO-Tax-

Patents (patent subclass named “Tax Strategies”).

Apparently unbeknownst to the Patent Office, many of

these strategies seemed to be based on the I[RS’s own

guidance, likely rendering them non-patentable as

obvious or anticipated. See 35 U.S.C. §§ 102, 103; Jack

Cathey et al., Tax Patents Considered, J. Accountancy

40, 40-41 (July 1, 2007) (noting that U.S. Patent No.

11

7,149,712 “covers a strategy .. . [that] was approved

by the IRS in 1989 in Letter Ruling 9009047 and

addressed favorably by the IRS in 1997 in Technical

Advice Memorandum 9825001”); 157 Cong. Rec. $1199

(daily ed. March 3, 2011) (noting a patent that

“resembles the facts and results” of an IRS ruling

predating the patent’s application date). After

grappling with tax strategy patents for three years,

the IRS in 2006 voiced its concerns, among them the

possibility that a patent can give a veneer of legality

to a tax strategy, and that some patents effectively

fenced off access to features of federal law. See

Patented Transactions, 72 Fed. Reg. 54,615, 54,615

(proposed Sept. 26, 2007); AJCA Modifications to the

Section 6011 Regulations, 71 Fed. Reg. 64,488, 64,490

(pre posed Nov. 2, 2006); see also 157 Cong. Rec. $1202

(daily ed. March 3, 2011) (statement of Sen.

Grassley).®

These examples are just a small sample. Similar

conflicts between a potentially invalid patent and an

agency’s regulatory objectives abound. The

Government has identified a patent that gives its

owner a monopoly over compliance with border control

statutes. See infra p. 14. The Environmental

Protection Agency likewise once concluded that,

because a relevant pollution-control technology used

for dry cleaners was patented, emissions control was

“not achievable” within the meaning of the Clean Air

Act. National Emission Standards for Hazardous Air

Pollutants for Source Categories: Perchloroethylene

Emissions from Dry Cleaning Facilities, 57 Fed. Reg.

®* Congress has since banned such tax strategy patents. See

Leahy-Smith America Invents Act, Pub. L. No. 112-29, § 14(a),

125 Stat. 284, 327 (2011). But that provision does not purport to

retroactively cancel already-issued tax strategy patents.

12

45,363, 45,363-69 (proposed Oct. 1, 1992). And

patents appear to be delaying compliance with

improvements to emergency 911 systems mandated by

the Federal Communications Commission.

Narechania, supra, at 1498-99.

Stated simply, a single potentially invalid patent

can, in a wide range of contexts, frustrate an agency’s

ability to carry out its statutory mandates and fulfill

its regulatory objectives as it sees fit.

B. Post-issuance patent review helps the

Executive Branch resolve these

conflicts and vindicate the public’s

interests.

Given the frequency of these collisions between

potentially invalid patents and agencies’ regulatory

mandates, the Executive Branch’s longstanding

practice of invoking the administrative mechanisms in

the AIA and its predecessor statutes is especially

significant. The AIA’s patent-review procedures

provide a critical avenue for the Executive Branch to

challenge such questionable patents and thus to

vindicate the public’s interests.

1. The Government can employ post-issuance

review proceedings to efficiently and inexpensively

challenge invalid patents that are interfering with an

agency’s congressional mandates.

To be sure, if this Court were to hold that the AIA

does not permit federal agencies to request post-

issuance review, the Executive Branch would not be

entirely without recourse. The Government can, for

instance, file a counterclaim of invalidity if a patentee

sues it for infringement. If, however, an agency

decides that a likely invalid patent is problematic

enough to justify an affirmative challenge, litigation

13

may not provide a viable solution. Compare, e.g.,

MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,

126-137 (2007) (clarifying the threshold showing

needed to satisfy Article III and pursue a claim for a

declaratory judgment of patent invalidity) with, e.g.,

Cuozzo, 136 S. Ct. at 2143-44 (petitioners in inter

partes review “may lack constitutional standing”).

And, in any event, for many of the same reasons that

Congress created post-issuance administrative

processes in the first place, those processes are often

preferable to litigation as a means of resolving

conflicts between potentially invalid patents and

governmental objectives: they are both more efficient

and more cost-effective. See, e.g., H.R. Rep. No. 112-

98, pt. 1, at 39-40 (2011) (the AIA’s administrative

procedures ouer an “efficient system for challenging

patents that should not have issued,” and are intended

to “limit unnecessary and counterproductive litigation

costs”); see also Brief for the Respondents 29-30.

2. Protecting the Executive Branch’s continued

right to petition for post-issuance patent review helps

the Government ensure regulatory compliance.

Because patents frequently conflict with regulatory

programs, regulated entities are often faced with a

costly choice: They must either bear the costs of

challenging (or else licensing) a potentially invalid

patent, or they must risk noncompliance with

regulatory requirements. See Michael J. Meurer,

Controlling Opportunistic and Anti-Competitive

Intellectual Property Litigation, 44 B.C. L. Rev. 509,

512-16 (2003) (explaining that putative patent

defendants often “settle opportunistic claims” to avoid

litigation costs, even where the patent “is unlikely to

be valid”).

14

Alternatively, regulators can facilitate compliance

by shouldering the costs of a challenge (and, if

unsuccessful, by paying a reasonable royalty for the

use of the patented technology).

Another example is illustrative: IRIS Corporation

holds a patent that covers electronic passport

technology. IRIS brought suit against Japan Airlines

alleging that, by complying with various U.S. border-

security laws requiring electronic passport

examination, Japan Airlines had infringed IRIS’s

patent. IRIS Corp. v. Japan Airlines Corp., 769 F.3d

1359, 1361 (Fed. Cir. 2014). In fact, IRIS’s patent

covered the only possible method of complying with

those federal security regulations. /d. at 1362. The

litigation thus put Japan Airlines to the choice set

forth above: It could bear the costs of challenging (or

licensing) IRIS’s patent, or it could risk noncompliance

with federal border-security laws.

The Government’s ability to petition for post-

issuance patent review gives regulated entities like

Japan Airlines a way out of that quandary, and

improves the odds of compliance with critical

regulations. The Government can decide to bear the

costs of challenging IRIS’s patent and ask the Patent

Office to take a second look at the prior art describing

machine-readable passports and related technologies. '

" Indeed, that is precisely what happened. The Department of

Justice filed a petition, and the Patent Office instituted review,

concluding that IRIS’s patent is “reasonabily| likelly|” to be

invalid. See 35 U.S.C. § 314(a); Dep’t of Justice v. IRIS Corp.

Berhad, Case No. IPR2016-497, 2016 WL 5105599 (PTAB July

25, 2016). The Patent Office later terminated the proceeding for

procedural reasons related to the relevant statute of limitations.

See Order, Dep’t of Justice v. IRIS Corp. Berhad, Case No.

IPR2016-497 (PTAB July 19, 2017) ECF No. 47.

15

In so doing, the Government can promote compliance

with key regulatory obligations.

In the case of tax strategy patents, see supra pp.

10-11, it seems especially suitable for the IRS to have

the power to shoulder the burden of challenging any

remaining tax strategy patents of suspect validity.

Indeed, that may be the only path to resolving any

conflicts between such patents and the IRS’s

objectives. The professional accounting community

believes itself to be unable to challenge the validity of

tax strategy patents without implicating their

confidentiality obligations to their clients. 157 Cong.

Rec. $1199 (“[Tlax professionals . . . may be unable, as

a practical matter, to challenge the validity of TSPs as

being obvious or lacking novelty, due to their

professional obligations of client confidentiality.”).

This constraint on accountants as patent challengers

would appear to apply regardless of venue—district

court litigation or Patent Office adjudication. But the

IRS faces no such constraint, and thus is uniquely

positioned to lead the charge against the likely invalid

patents frustrating its regulatory goals.

3. Agency participation in post-issuance review

also helps the Patent Office discharge its duty to

enforce the patent laws by setting aside invalid

patents and affirming valid ones. Agencies often

possess expertise—if not the precise prior art—that

can helpfully inform the Patent Office’s second look at

a patent. Agencies can marshal their considerable

technical and specialized knowledge to demonstrate

why an issued patent is not meaningfully distinct from

prior art, or to explain why the claimed invention is

obvious or not novel. Foreclosing the Government

from petitioning for review could thus deprive the

Patent Office of a resource invaluable to carrying out

16

its responsibility to accurately assess patent

applications. See Jn re Morris, 127 F.3d 1048, 1054

(Fed. Cir. 1997) (“It is the [Patent Office]’s duty to

assure that the statutory requirements for

patentability are met.”).

In the case of tax strategy patents, for example, the

IRS is almost certainly the party most likely to be

aware of any rulings or memoranda that could have

formed the basis of a patented tax strategy. At a

minimum, the seems comparatively more likely to

identify and explain such prior art than the Patent

Office acting alone.

The history of this case also helps prove the point.

As noted above, see supra pp. 6~-7, the Postal Service

earlier sought reexamination of a prior version of the

patent at issue in this case. Its request for

reexamination pointed to several Postal Service

publications as prior art that raised substantial

questions about the patentability of the original

application. See 35 U.S.C. §303. And the Patent

Office’s decision cited those Postal Service documents,

explaining that several aspects of the patent were

invalid because they claimed practices that were “well

known in the art as evidenced by the U.S. Postal

Service Publication “Postal Automated Redirection

System—The USPS Solution.” Ex Parte

Reexamination Application No. 90/008,470 (Aug. 2,

2010).

The IRS and the Postal Service are not unique.

Any agency can draw upon the depth and breadth of

its expertise to help inform the Patent Office’s post-

issuance decisionmaking process. Agency

participation can, accordingly, bolster the

effectiveness of the Executive Branch as a whole, not

only by helping the petitioning agency in carrying out

17

its own mission, but also by helping the Patent Office

discharge its own duty to issue valid patents and reject

invalid applications. See Cuozzo, 136 S. Ct. at 2140

(citing H.R. Rep., at 45, 48 (explaining that the AIA

seeks to “improve patent quality and restore

confidence in the presumption of validity that comes

with issued patents”) and 157 Cong. Rec. H4425 (daily

ed. June 22, 2011) (remarks of Rep. Goodlatte) (noting

that post-issuance patent review “screen|s| out bad

patents while bolstering valid ones”)).

Ill. Permitting Agencies To Petition For Post-

Issuance Patent Review Poses No

Constitutional Concern

For the foregoing reasons, the Government’s power

to petition for post-issuance patent review strengthens

the President's ability to “take Care that the Laws be

faithfully executed.” U.S. Const. art. II, § 3. By filing

a petition, the President’s subordinate agencies can

challenge—and perhaps invalidate—questionable and

problematic patents that are encumbering their

ability to enforce the law. Equally important, such

challenges help the Patent Office carry out its own

responsibility to accurately adjudge patent

applications. Consequently, any construction of

“person” that excludes the Government would

necessarily weaken the President’s ability, through

his agencies, to honor these Article II responsibilities.

Notwithstanding these advantages, amici curiae

have suggested that permitting agencies to petition for

post-issuance review raises constitutional concerns.

See Cato Inst. Br. at 7-11. According to the Cato

Institute and its partner amicus, reading “person” to

extend to executive agencies would “undermine the

President's control over the Executive Branch.” /d. at

6. Not so. The opposite is true.

18

As discussed above, the Executive Branch has a

long-established practice of participating in the Patent

Office’s post-issuance review proceedings. See supra

Part I. The Executive Branch has not adopted this

practice out of necessity. The Director of the Patent

Office is a political appointee who serves at the

pleasure of the President. See Oil States Energy

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

The President could thus presumably ask the Director

to consider whether a questionable patent—one that

conflicts with an important federal program— merits

reexamination. See 35 U.S.C. § 303(a) (the Director

may initiate reexamination sua sponte). But that is

not what the President has done. Instead, the

President has traditionally favored having executive

agencies petition the Patent Office for post-issuance

review when a potentially invalid patent is frustrating

their administrative priorities. In other words, the

Executive Branch’s’ longstanding practice of

petitioning for post-issuance patent review as

appropriate reflects the President’s decision regarding

the best way to ensure accuracy in patent awards and

to resolve conflicts between apparently invalid patents

and other regulatory programs. To end this practice,

as Petitioner requests, would be an undue restriction

on the President’s authority—not the other way

around.

Amici focus much of their attention on independent

agencies, whose patent-review petitions, in their view,

pose a special threat to Presidential control. But this

case itself illustrates the manner in which an

independent agency’s effort to cancel an invalid patent

can advance the President’s objectives, even if that

agency’s leadership has some protection from removal.

On April 12, 2018, the President issued an Executive

Order that sought to curb the “substantial and

19

inflexible costs” that have impaired the ability of the

Postal Service to “compete fairly in commercial

markets.” Exec. Order No. 13,829, § 1(a), (b), 83 Fed.

Reg. 17281 (April 12, 2018). The Executive Order

created a task force to evaluate the operations and

finances of the Postal Service, an independent agency.

Id. § (2a). That task force recommended that the

Postal Service “pursue new cost-cutting strategies

that will enable it to meet the changing realities of its

business model.” United States Postal Service: A

Sustainable Path Forward, Report from the Task

Force on the United States Postal System at 5 (Dec. 4,

2018). Petitioning for patent review is one such

strategy. Though the Postal Service filed its petition

before the President issued his Order, the agency’s

effort to invalidate a wrongly granted patent that is

raising its costs quite clearly aligns with—indeed,

advances—the express priorities of the President. But

had the Postal Service been barred from filing a

petition, the agency would have been forced to choose

between continuing its costly infringement defense

and licensing a patent that the agency (and now the

Patent Office) believes to be invalid. Both of those

outcomes are plainly antithetical to the policy set forth

in the President’s Executive Order. At least in the

context of this case, then, foreclosing independent

agencies from challenging dubious patents—as

opposed to allowing them to do so—would impose the

greater “limit| on] the President’s executive

authority.” Cato Inst. Br. at 7.

Moreover, even if the President disagreed with an

independent agency’s view of a particular patent’s

validity, the President retains control over the Patent

Office’s proceeding. As noted, the President can ask

the Director to take any official action permitted by

law—including, say, to deny a petition that fails to

20

show that a patent is “reasonablly| likelly|” to be

invalid. 35 U.S.C. §314(a). Hence, when an agency

petitions the Patent Office (and, thus, indirectly, the

President) to review a patent, the President, acting

through the Director, can simply decline to do so. That

decision to deny institution of review—a decision

committed to the unreviewable discretion of the

Director—would end the matter. See Cuozzo, 136 S.

Ct. at 2136. This arrangement cannot possibly impair

the President’s authority in any constitutionally

significant way, if at all.*

Nevertheless, amici argue that this Court should

construe “person” narrowly or else risk the

“constitutional oddity of a case pitting two agencies in

the Executive Branch against one another.” Cato Inst.

Br. 8-11 (quoting SEC v. Fed. Labor Relations Auth.,

568 F.3d 990, 996 (D.C. Cir. 2009) (Kavanaugh, J.,

concurring)). But amici’s fears of an “Executive

Branch at war with itself” are unfounded. Id. at9. As

a practical matter, construing the term “person” to

* Insofar as amici’s concerns arise from the fact that the President

lacks the authority to control whether an independent agency

petitions for patent review, amici’s real quarrel is with the very

nature of independent agencies. After all, an independent agency

is, by statutory design, an agency over which the President may

exercise only limited control. If, however, amici’s complaint is

instead that permitting agencies to petition for post-issuance

review deprives the President of a power he would otherwise

have, that concern falls flat for a different reason: the President,

as a general matter, cannot control what petitions are filed.

Regardless of the petitioners identity—private party or

independent agency—-the President may control the process

through his authority over the Patent Director, as described

above. Hence, allowing independent agencies to petition for

patent review does not derogate from the Presidunt’s ordinary

authority.

21

include the Government presents no real risk of

dividing the Executive Branch against itself. First, a

petitioning agency is not adverse to the Patent Office

when it participates in a post-issuance patent-review

proceeding. Rather, the agency is adverse to the

patentee, and the Patent Office simply serves as the

arbiter of the dispute. See SAS Inst., Inc. v. lancu, 138

S. Ct. 1348, 1355 (2018) (“Congress opted for a party-

directed, adversarial process.”). The Patent Office’s

Patent Trial and Appeal Board is thus analogous to

the Justice Department’s immigration courts, which

oversee adversarial proceedings between the

Department of Homeland Security and specific

individuals. Cf., e.g., Pereira v. Sessions, 138 S. Ct.

2105, 2112 (2018); id. at 2124 (Alito, J., dissenting)

(2018). This scenario, where one agency is a party in

another agency’s forum, does not implicate any

constitutional concerns.

Second, even accounting for the prospect of an

appeal from the Patent Office’s patent-review decision,

there is no real concern that the Patent Office would

find itself adverse to an _ independent-agency

petitioner. Indeed, as far as this amicus has been able

to determine, there has not been a single case where

the Patent Office has faced off against another agency

in federal court over a patent’s validity.

This makes sense. The Patent Office typically

intervenes to defend cancellation of a patent, generally

when the prevailing petitioner has declined to defend

the Patent Office’s decision on appeal. See 35 U.S.C.

§ 143 (permitting Patent Office to intervene on appeal

in the Federal Circuit); Knowles Electronics LLC v.

lancu, 886 F.3d 1369, 1378 (Fed. Cir. 2018); Victaulic

Co. v. lancu, No. 2017-2424, -2426, 2018 WL 6264235,

at *3 n.2 (Fed. Cir. Nov. 29, 2018); In re NuVasive, Inc..,

22

842 F.3d 1376, 1379 n.1 (Fed. Cir. 2016); In re Cuozzo

Speed Technologies, LLC, 793 F.3d 1268, 1272 & n.2

(Fed. Cir. 2015). Hence, where an agency has

successfully challenged a private patent, the Patent

Office and that petitioning agency would be aligned on

appeal. That is, even if the Patent Office were to

intervene to defend its cancellation decision in such a

case, there would be no intra-Executive clash.

And if, instead, the Patent Office instituted review

but ultimately affirmed the patent’s validity, there

would still be no constitutional conflict. As an initial

matter, the fact of an agency’s appeal cannot itself

present a constitutional problem: It is not uncommon

for agencies, even after consulting with each other, to

have different interpretations of federal law, nor is it

uncommon for one agency to appeal a decision of

another. E.g., Daniel A. Farber & Anne Joseph

O’Connell, Agencies as Adversaries, 105 Cal. L. Rev.

1375, 1404—05 (2017). No constitutional command

requires agencies to agree with one another all the

time. And to the extent amici’s complaint is that

“independent agencies can act contrary to [the

President’s} wishes with little repercussion,” Cato

Inst. Br. at 13, that is a complaint about the power of

independent agencies, not about the scope of post-

issuance patent review.

Moreover, any such appeal would remain, as it was

in the Patent Office, a dispute between the requesting

agency and the patent owner. That sort of appeal

presents no real risk of “pitting two agencies in the

Executive Branch against one another,” SEC, 568 F.3d

at 996 (Kavanaugh, J., concurring), because the

patentee has every incentive to defend its patent

against the agency’s continued challenge on appeal.

There is no need for the Patent Office to intervene in

23

such a case—and, as noted, as far as amicus is aware,

it never has.°

In short, there is virtually no scenario in which an

agency's petition for post-issuance patent review could

ultimately result in two arms of the Executive Branch

being adverse to one another."® And there is no reason

° And even in the highly unlikely event that the Patent Office

institutes review, but nevertheless finds the challenged patent to

be valid, and then also decides to intervene (alongside the patent

owner) to defend its decision against the appealing agency, amici

concede, as they must, that “this Court’s precedents permit [such]

suits.” Cato Inst. Br. at 11. Moreover, although amici seem to

imply that inter-agency conflicts are rare, “battles, between and

within agencies,” are nearly “constant” across the administrative

state. Farber & O'Connell, 105 Cal. L. Rev. at 1387-1407

(describing an array of similar examples from within the

Executive Branch); see also, e.g., In re U.S. Dep't Of Navy,

Kingsville Naval Air Station, 9 EAD. 19 (EPA 2000)

(administrative action brought by the Environmental Protection

Agency against the Department of the Navy, alleging that the

Navy violated regulations on lead-based paint hazards); Dep't of

Treasury v. Fed. Labor Relations Auth., 494 U.S. 922, 924 (1990)

(dispute between the IRS and the FLRA over whether the IRS

could he required to negotiate with union employees about the

grievance and arbitration provisions in their contracts);

Memorandum from David J. Barron, Acting Assistant Att’y Gen.,

Office of Legal Counsel, to Attorneys of the Office, Re: Best

Practices for OLC Legal Advice and Written Opinions 1-3 (July

16, 2010) (OLC resolves “interagency dispute(s|” by issuing

“controlling legal advice” through formal opinions).

‘© It is, however, possible for an agency to end up adverse to the

Patent Office when a private party petitions for post-issuance

review of a patent held by a government agency. If the Patent

Office cancels the agency’s patent and the agency appeals, then

the Patent Office may intervene to defend its decision—and the

agency and the Patent Office would thus be adverse to one

another. Thus, even a ruling for Petitioner—which would

preserve a private party’s ability to challenge an agency patent—

24

to impose a clear statement rule in response to an

entirely illusory constitutional threat. Cf. John F.

Manning, Clear Statement Rules and the Constitution,

110 Colum. L. Rev. 399, 399-405 (2010) (criticizing

some “constitutionally-inspired” clear statement rules

on the ground that they can ‘slight some

[constitutional] values relative to others.”).

Congress’s purpose in creating post-issuance

patent-review proceedings was to “protect the public’s

paramount interest in seeing that patent

monopolies are kept within their legitimate scope.”

Cuozzo, 136 S. Ct. at 2144 (alterations, citation, and

quotation marks omitted). Agency participation in

these proceedings helps the President take care that

the laws—the patent laws and the postal laws, among

others—are faithfully executed. This Court should not

construe “person” in a way that dilutes these purposes

in order to avoid an entirely hypothetical concern of

intra-Executive conflict over a patent’s validity.

CONCLUSION

This Court should affirm the Federal Circuit’s

judgment.

cannot foreclose entirely the “constitutional oddity” that amici

fear.

January 16, 2019

DANE SHIKMAN

Munger, Tolles &

Olson LLP

560 Mission Street

San Francisco, CA 94105

(415) 512-4092

Dane.Shikman@mto.com

Respectfully submitted,

SARAH BOYCE

Counsel of Record

Munger, Tolles &

Olson LLP

1155 F Street NW

Washington, DC 20004

(202) 220-1104

Sarah.Boyce@mto.com

TEJAS N. NARECHANIA

UC Berkeley School

of Law

Berkeley, CA 94720