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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2019

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0827%3A15. Public record. Not legal advice.