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`Case PGR2017-00015 of
`U.S. Patent No. 9,527,612
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`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`TELEBRANDS CORP.,
`Petitioner,
`v.
`TINNUS ENTERPRISES, LLC,
`Patent Owner.
`
`_____________________________
`
`Case No. PGR2017-00015
`Patent 9,527,612 B2
`_____________________________
`
`
`
`
`
`PATENT OWNER’S APPLICATION FOR
`ATTORNEYS’ FEES PURSUANT TO
`THE EQUAL ACCESS TO JUSTICE ACT, 5 U.S.C. § 504
`
`
`
`
`
`
`
`TABLE OF CONTENTS
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`Page
`INTRODUCTION ....................................................................................... 1
`SUMMARY OF THE PROCEEDING ........................................................ 5
`ARGUMENT ............................................................................................... 8
`I.
`The Equal Access to Justice Act ....................................................... 8
`II. Tinnus Is A Prevailing Party ............................................................ 9
`III. Tinnus Is Eligible For EAJA Fees In The PTAB Proceeding ....... 10
`IV. The PGR Proceeding Is An “Adversary Adjudication” For
`Which EAJA Fees Are Available .................................................... 11
`A.
`The PGR is an Adversarial Proceeding ................................. 11
`B.
`The Federal Circuit’s Decision in Saint Regis Mohawk
`Tribe v. Mylan Pharmaceuticals, Inc. Supports Tinnus
`EAJA Application ................................................................... 14
`The Board’s Prior Analysis Was Erroneous ......................... 17
`C.
`D. The Cases Cited by the Board are Distinguishable ............. 21
`The PTO’s Position Was Not Substantially Justified ................... 26
`V.
`VI. An Award of Fees and Costs Would Not Be Unjust ...................... 32
`VII. The EAJA Application is Timely Filed ........................................... 34
`VIII. Itemized Evidence Supporting The Fee And Cost Request .......... 36
`IX. Conclusion ....................................................................................... 39
`EXHIBITS
`
`CERTIFICATE OF SERVICE
`
`
`
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`Case PGR2017-00015 of
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`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`A.Q.C. ex rel. Castillo v. United States,
`656 F.3d 135 (2d Cir. 2011) ................................................................. 35
`Ardestani v. INS,
`502 U.S. 129 (1991) .............................................................................. 11
`Aziz v. Attorney Gen. of U.S.,
`No. 13-CV-3021, 2013 WL 4039373 (E.D.N.Y. Aug. 7, 2013) ............ 35
`Belden Inc. v. Berk-Tek LLC,
`805 F.3d 1064 (Fed. Cir. 2015) ............................................................ 12
`Buckhannon Board & Care Home, Inc. v.
`West Virginia Department of Health & Human Resources,
`532 U.S. 598 (2001) ................................................................................ 9
`Community Heating & Plumbing Co. v. Garrett,
`2 F.3d 1143 (Fed. Cir. 1993) ................................................................ 36
`Davis v. Nicholson,
`475 F.3d 1360 (Fed. Cir. 2007) .............................................................. 9
`Dell Inc. v. Acceleron, LLC,
`818 F.3d 1293 (Fed. Cir. 2016) ............................................................ 11
`Ellis v. United States,
`711 F.2d 1571 (Fed. Cir. 1983) ............................................................ 32
`Ethicon Endo-Surgery, Inc. v. Covidien LP,
`812 F.3d 1023 (Fed. Cir. 2016) ............................................................ 12
`Handron v. Secretary Health & Human Services,
`677 F.3d 144 (3d Cir. 2012) ....................................................... 9, 21, 22
`
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`
`
`Hewitt v. Helms,
`482 U.S. 755 (1987) ................................................................................ 9
`Impresa Construzioni Geom. Domenico Garufi v. United States,
`531 F.3d 1367 (Fed. Cir. 2008) ...................................................... 34, 36
`In re NuVasive, Inc.,
`841 F.3d 966 (Fed. Cir. 2016) .............................................................. 11
`In re Perry,
`882 F.2d 534 (1st Cir. 1989) .......................................................... 24, 25
`Intellectual Ventures II LLC v. Ericsson Inc.,
`Nos. 2016-1739 et al. (Fed. Cir. May 8, 2017) .................................... 12
`Irwin v. Department of Veterans Affairs,
`498 U.S. 89 (1990) ................................................................................ 35
`James v. U.S. Department of Housing & Urban Development,
`783 F.2d 997 (11th Cir. 1986) .............................................................. 34
`Levernier Constr., Inc. v. United States,
`947 F.2d 497 (Fed. Cir. 1991) .............................................................. 38
`Naporano Iron & Metal Co. v. United States,
`825 F.2d 403 (Fed. Cir. 1987) .............................................................. 36
`Patrick v. Shinseki,
`668 F.3d 1325 (Fed. Cir. 2011) ............................................................ 33
`Oil States Energy Services, LLC v. Greene’s Energy Group, LLC,
`138 S. Ct. 1365 (2018) .......................................................................... 20
`Pierce v. Underwood,
`487 U.S. 552 (1988) .............................................................................. 38
`Pollgreen v. Morris,
`911 F.2d 527 (11th Cir. 1990) .................................................. 22, 23, 24
`PPG Indus. v. Celanese Polymer Specialties Co.,
`840 F.2d 1565 (Fed. Cir. 1988) ............................................................ 37
`
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`
`RAMCOR Servs. Group, Inc. v. United States,
`185 F.3d 1286 (Fed. Cir. 1999) ........................................................ 9, 26
`Rein v. USPTO,
`553 F.3d 353 (4th Cir. 2009) ................................................................ 28
`SAS Institute, Inc. v. Iancu,
`138 S. Ct. 1348 (2018) .......................................................................... 21
`SAS Institute, Inc. v. ComplementSoft, LLC,
`825 F.3d 1341 (Fed. Cir. 2016) ............................................................ 11
`Scarborough v. Principi,
`541 U.S. 401 (2004) ........................................................................ 33, 35
`Spencer v. NLRB,
`712 F.2d 539 (D.C. Cir. 1983) .............................................................. 19
`Telebrands Corp. v. Tinnus Enterprises, LLC,
`PGR2016-00030 (P.T.A.B. 2018) .................................................. passim
`Townsend v. Commissioner of Social Security,
`415 F.3d 578 (6th Cir. 2005) ................................................................ 38
`United States v. Kwai Fun Wong,
`135 S. Ct. 1625 (2015) .......................................................................... 35
`Ward v. U.S. Postal Service,
`672 F.3d 1294 (Fed. Cir. 2012) (per curiam) ........................................ 9
`Western Electric Co., Inc. v. Piezo Technology, Inc.,
`860 F.2d 428, 432-33 (Fed. Cir. 1988) ................................................. 28
`Statutes
`5 U.S.C. § 504 .................................................................................... passim
`5 U.S.C. § 504(a)(1) ......................................................................... 8, 11, 32
`5 U.S.C. § 504(a)(2) ................................................................................... 34
`5 U.S.C. § 504(b)(1)(A) ........................................................................ 37, 38
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`5 U.S.C. § 504(b)(1)(B) .............................................................................. 10
`5 U.S.C. § 504(b)(1)(C) .......................................................................... 8, 11
`35 U.S.C. § 314(a) ..................................................................................... 12
`35 U.S.C. § 324(a) ..................................................................................... 12
`35 U.S.C. § 318 ......................................................................................... 13
`Leahy-Smith America Invents Act,
`Pub. L. No. 112-29, 125 Stat. 284 (2011) ..................................... passim
`Rules
`37 C.F.R. § 42.4(a) .................................................................................... 12
`37 C.F.R. § 90.3(a) .................................................................................... 34
`Other Authorities
`Brief for the United States as Amicus Curiae in
`Support of Appellees and Intervenor,
`Regents of the University of Minnesota v. LSI Corp.,
`No. 2018-1559, Dkt. No. 80. .................................................... 14, 15, 16
`Carl Cheng, Important Rights and the Private Attorney General
`Doctrine, 73 Cal. L. Rev. 1929 (1985) ................................................. 19
`H.R. Rep. No. 96-1418 (1980),
`reprinted in 1980 U.S.C.C.A.N. 4984 ................................................ 4, 9
`U.S. Court of Appeals for the Ninth Circuit,
`Statutory Maximum Rates Under the
`Equal Access to Justice Act ................................................................. 38
`
`
`
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`
`
`INTRODUCTION
`In 2011, Congress enacted the Leahy-Smith America Invents Act,
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`Pub. L. No. 112-29, 125 Stat. 284 (2011) (“AIA”), with the apparent intent
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`to provide an efficient alternative to district court litigation of patents.
`
`Congress thought that the post-grant invalidity proceedings, such as
`
`inter partes review and post-grant review, would benefit patent owners
`
`and wrongfully-accused infringers alike. The reality, in contrast, has
`
`been far different than what Congress expected.1
`
`Since the AIA, innovative patent owners have experienced the often
`
`abusive and repetitive nature of AIA proceedings. Unabashed infringers
`
`look to exploit the procedural and structural flaws of the AIA process in
`
`order to invalidate patents covering innovative technologies and wildly
`
`successful inventions. Patent owners and innovators face serial
`
`challenges to their intellectual property, even after they have prevailed
`
`in district court.
`
`
`1 See, e.g., Paul R. Michel, Reviving and Repairing the American Patent
`System, 27 Fed. Cir. B.J. 263 (2017-2018) (describing suggested
`improvements to the patent system, including AIA reviews).
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`Because of this, inventors and innovators are now saddled with the
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`“PTAB tax.” This PTAB tax is the added cost a patent owner must bear
`
`when trying to stop infringers from stealing his or her invention. Any
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`patent owner must expect that the infringer will challenge—or threaten
`
`to challenge—the patent in an AIA proceeding. Even with valid patents,
`
`defending against this ancillary challenge to the patent becomes a
`
`substantial expense that overwhelms all but the largest entities.
`
`Additionally, the PTAB tax includes loss of revenue attributable to
`
`the lack of meaningful injunctive relief. Not too long ago, a patent owner
`
`could expect meaningful relief from a federal district court, which could
`
`issue a preliminary injunction or a permanent injunction to stop the
`
`infringer. Now, with AIA reviews lurking in the background of every
`
`lawsuit to stop infringers, district courts are less inclined to issue
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`injunctions and force infringers to stop their unauthorized activity. This
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`results in competitive harm to patent owners, inventors, and investors.
`
`Josh Malone is one example of an inventor who has been
`
`significantly harmed by the AIA proceedings and the PTAB tax. Mr.
`
`Malone invented Bunch O Balloons, an innovative product which allows
`
`someone to fill 100 water balloons in under a minute. No other product
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`like it existed on the market, and it became an instant success. The
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`product went on to become the biggest selling summer toy in the United
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`States in 2015, and won the Australian Toy Association’s “Toy of the Year
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`2015” award and America’s 2016 “Active/Outdoor Toy of the Year”
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`award.2 For his innovation, the PTO awarded Mr. Malone U.S. Patent
`
`No. 9,527,612 (“the ’612 patent”), along with other patents.3
`
`Too often, with great success comes envy, and soon Mr. Malone and
`
`his company (Tinnus Enterprises LLC) experienced the darker side of
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`competition—companies who co-opted his intellectual property without
`
`authorization. One company was Telebrands—the patent challenger in
`
`this proceeding—which produced knock-off versions of Mr. Malone’s
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`patented Bunch O Balloons. Tinnus sued Telebrands, and Telebrands
`
`responded by asking the Director of the PTO to revoke the patents
`
`through AIA proceedings.
`
`
`2 See Ex. 2001 at 2-3.; Ex. 2010. Unless otherwise indicated, citations to
`Papers and Exhibits are to documents in the record for PGR2017-00015.
`3 Mr. Malone has six granted patents directed to his invention: U.S.
`Patent Nos. 9,533,779 (“the ’779 patent”), 9,527,612 (“the ’612 patent”),
`9,682,789 (“the ’789 patent”), 9,315,282 (“the ’282 patent”), 9,242,749
`(“the ’749 patent”), and 9,051,066 (“the ’066 patent”).
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`Although Tinnus and Mr. Malone have largely prevailed, the PTO’s
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`decision to institute PGR proceedings has caused them significant
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`expense. Because of the Director’s decision to institute PGR proceedings,
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`Tinnus has experienced substantial attorneys’ fees and costs. These fees
`
`and costs were necessary to convince the PTO what it should have known
`
`from the outset—that Mr. Malone’s patents are valid and Telebrands’
`
`requests to the Director should have been denied.
`
`In view of the Director’s erroneous decision to institute a PGR
`
`proceeding against Tinnus’s ’612 patent, Tinnus seeks an award of
`
`attorneys’ fees and expenses under the Equal Access to Justice Act, 5
`
`U.S.C. § 504 (“EAJA”). An award of EAJA fees is intended to allow “those
`
`injured by the government to receive complete compensation for their
`
`injuries, including litigation expense.” H.R. Rep. No. 1418, 96th Cong., 2d
`
`Sess. 10 (1980), reprinted in 1980 U.S.C.C.A.N. 4984-4989.
`
`Tinnus prevailed in the AIA proceeding involving the ’612 patent.
`
`See Telebrands Corp. v. Tinnus Enters., LLC, PGR2017-00015, Paper
`
`No. 47 (P.T.A.B. Oct. 10, 2018). Tinnus satisfies all requirements for
`
`recovering attorneys’ fees and costs under EAJA. The reasonable
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`attorneys’ fees for this litigation are calculated as $284,333.12 (including
`
`attorney and paralegal fees).
`
`SUMMARY OF THE PROCEEDING
`The Director’s institution decision and the Board’s final written
`
`decision, along with the other submissions, provide a detailed exposition
`
`of the relevant factual and procedural history of the PGR proceeding. See
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`Telebrands Corp. v. Tinnus Enters., LLC, PGR2017-00015, Paper No. 47
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`(P.T.A.B. Oct. 10, 2018) (Board’s final written decision); id., Paper No. 16
`
`(P.T.A.B. Oct. 11, 2017) (Director’s institution decision).
`
`In addition to the present proceeding, Tinnus has had to defend
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`against multiple validity challenges to its patents. Specifically,
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`Telebrands has filed all of the following AIA proceedings against Tinnus’s
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`patents: Case Nos. PGR2017-00015; PGR2017-00051; PGR2017-000; No.
`
`PGR2017-00052; No. PGR2017-00040; No. PGR2016-00031; No.
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`PGR2016-00030; No. PGR2015-00018.
`
`The district court proceedings include:
`
`• Tinnus Enterprises, LLC et al v. Telebrands Corporation et al.,
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`6:15- cv-00551 (E.D. Tex. filed Jun. 9, 2015);
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`• Tinnus Enterprises, LLC, et al. v. Telebrands Corp., 6:16-cv-
`
`00033- RWS-JDL (E.D. Tex. filed Jan. 26, 2016);
`
`• Tinnus Enterprises, LLC, et al. v. Wal-Mart Stores, Inc., 6:16-cv-
`
`00034-RWS-JDL (E.D. Tex. filed Jan. 26, 2016);
`
`• Tinnus Enterprises, LLC v. Telebrands Corp., 6:17- cv-00170
`
`(E.D. Tex. filed Mar. 20, 2017);
`
`• Tinnus Enterprises, LLC v. Telebrands Corp., 6:17-cv- 00199-
`
`RWS-JDL (E.D. Tex. filed Apr. 3, 2017);
`
`• Tinnus Enterprises, LLC v. Wal-Mart Stores, Inc. d/b/a Wal-Mart
`
`et al, 6:17-cv-00361 (E.D. Tex. filed Jun. 6, 2017);
`
`• Telebrands Corporation et al. v. ZURU Ltd., No. 2:17-cv-04522
`
`(D. N.J. filed June 20, 2017);
`
`• Tinnus Enterprises, LLC v. Toys "R" US-Delaware, Inc., No. 6:17-
`
`cv- 00642 (E.D. Tex. filed Nov. 9, 2017);
`
`• In re: Telebrands Corp., No. 16-106 (Fed. Cir.);
`
`• Tinnus Enterprises, LLC v. Telebrands Corp., No. 16-1410
`
`(Fed. Cir.);
`
`• Tinnus Enterprises, LLC v. Telebrands Corp., No. 17-1175
`
`(Fed. Cir.);
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`• Tinnus Enterprises, LLC v. Telebrands Corp., No. 17-1726 (Fed.
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`Cir.);
`
`• Tinnus Enterprises, LLC v. Telebrands Corp., No. 17-1760
`
`(Fed. Cir.);
`
`• Tinnus Enterprises, LLC v. Telebrands Corp., No. 17-1811
`
`(Fed. Cir.);
`
`• In re: Tinnus Enterprises, LLC, No. 17-121 (Fed. Cir.);
`
`• Tinnus Enterprises, LLC v. Telebrands Corporation, No. 17-2194
`
`(Fed. Cir.);
`
`• Tinnus Enterprises, LLC v. Telebrands Corp., No. 18-1280
`
`(Fed. Cir.);
`
`• Telebrands Corp. v. Tinnus Enterprises, LLC, No. 18-1681
`
`(Fed. Cir.); and
`
`• In re: Telebrands Corporation, No. 18-140 (Fed. Cir.).
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`
`ARGUMENT
`The Equal Access to Justice Act
`The Equal Access to Justice Act (“EAJA”) provides, in pertinent
`
`I.
`
`part, that:
`
`(1) An agency that conducts an adversary adjudication shall
`award, to a prevailing party other than the United States, fees
`and other expenses incurred by that party in connection with
`that proceeding, unless the adjudicative officer of the agency
`finds that the position of the agency was substantially
`justified or that special circumstances make an award unjust.
`Whether or not the position of the agency was substantially
`justified shall be determined on
`the basis of
`the
`administrative record, as a whole, which is made in the
`adversary adjudication for which fees and other expenses are
`sought.
`5 U.S.C. § 504(a)(1).
`
`An award of fees requires that: (1) the claimant be a “prevailing
`
`party”; (2) the Government’s position was not “substantially justified”; (3)
`
`no “special circumstances make an award unjust”; and (4) any fee
`
`application be submitted to the agency within thirty days of final
`
`disposition in the proceeding and be supported by an itemized statement.
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`Id. § 504(a)(1)-(2). Furthermore, the proceeding must be an adversary
`
`adjudication. Id. § 504(b)(1)(C).
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`“The EAJA was passed, in large part, to allow individuals and small
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`businesses to fight back against unjustified government action, without
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`fear that the high cost of doing so would make victory ultimately more
`
`expensive than acquiescence.” Handron v. Sec’y Health & Human Servs.,
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`677 F.3d 144, 145 (3d Cir. 2012) (citing H.R. Rep. No. 96-1418, at 5-6
`
`(1980), reprinted in 1980 U.S.C.C.A.N. 4984)
`
`II. Tinnus Is A Prevailing Party
`A party in a proceeding prevails if the party receives “at least some
`
`relief on the merits of his claim.” Buckhannon Bd. & Care Home, Inc. v.
`
`W. Va. Dep’t of Health & Human Resources, 532 U.S. 598, 603-04 (2001)
`
`(quoting Hewitt v. Helms, 482 U.S. 755, 760 (1987)); Ward v. U.S. Postal
`
`Serv., 672 F.3d 1294, 1300 (Fed. Cir. 2012) (per curiam). “The EAJA
`
`applicant has the burden of proving he is a prevailing party.” Davis v.
`
`Nicholson, 475 F.3d 1360, 1366 (Fed. Cir. 2007). “Once a prevailing party
`
`satisfies the EAJA requirements . . . the burden shifts to the Government
`
`to show that its litigating position was ‘substantially justified.’”
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`RAMCOR Servs. Group, Inc. v. United States, 185 F.3d 1286, 1288 (Fed.
`
`Cir. 1999).
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`Here, there can be no reasonable dispute that Tinnus is the
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`prevailing party. The Board’s final written decision ordered that “claim 1
`
`of the ‘749 Patent has not been proven unpatentable.” Final Written
`
`Decision at 66. The Board’s final written decision thus overturns the
`
`Director’s decision to institute the PGR that was instituted on claim 1
`
`only. Thus, Tinnus prevailed on every claim on which the Director
`
`instituted the PGR.
`
`III. Tinnus Is Eligible For EAJA Fees In The PTAB Proceeding
`Tinnus is a limited liability company organized under the laws of
`
`Texas. Tinnus satisfies the financial and employee-based limitations on
`
`which entities can be awarded EAJA fees. See 5 U.S.C. § 504(b)(1)(B)
`
`(“the net worth of which did not exceed $7,000,000 at the time the
`
`adversary adjudication was initiated, and which had not more than 500
`
`employees at the time the adversary adjudication was initiated”).
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`Specifically, the net worth of Tinnus did not exceed $7,000,000 at the
`
`time the adversary adjudication was initiated.” Additionally, Tinnus did
`
`not have more than 500 employees at the time the adversary adjudication
`
`was initiated. A declaration of Josh Malone, principal at Tinnus and
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`inventor of the patent at issue, is included as Exhibit A and attests to the
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`aforementioned facts supporting Tinnus’s eligibility for EAJA fees under
`
`the statute.
`
`IV. The PGR Proceeding Is An “Adversary Adjudication” For Which
`EAJA Fees Are Available
`A. The PGR is an Adversarial Proceeding
`Tinnus submits that the PGR proceeding is one which makes EAJA
`
`fees available for the prevailing party. EAJA fees are available for “an
`
`adversary adjudication.”
`
` 5 U.S.C. § 504(a)(1).
`
` An “adversary
`
`adjudication” is defined, in relevant part, as “an adjudication under
`
`section 554 of this title in which the position of the United States is
`
`represented by counsel or otherwise.” Id. § 504(b)(1)(C); see also
`
`Ardestani v. INS, 502 U.S. 129 (1991).
`
`As a first point, the Federal Circuit has held that contested
`
`proceedings under the AIA are formal adjudications subject to the
`
`provisions of the Administrative Procedure Act. See, e.g., SAS Institute,
`
`Inc. v. ComplementSoft, LLC, 825 F.3d 1341, 1351 (Fed. Cir. 2016) (“IPR
`
`proceedings are formal administrative adjudications subject to the
`
`procedural requirements of the Administrative Procedure Act (‘APA’).”),
`
`rev’d on other grounds, 138 S. Ct. 1348 (2018); Dell Inc. v. Acceleron,
`
`LLC, 818 F.3d 1293, 1298 (Fed. Cir. 2016); In re NuVasive, Inc., 841 F.3d
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`966, 970 (Fed. Cir. 2016); Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064,
`
`1080 (Fed. Cir. 2015) (applying the requirements of 5 U.S.C. § 554 to the
`
`“formal adjudication” of the IPR); Intellectual Ventures II LLC v.
`
`Ericsson Inc., Nos. 2016-1739 et al. (Fed. Cir. May 8, 2017) (“As formal
`
`administrative adjudications, IPRs are subject to the Administrative
`
`Procedure Act (‘APA’).”). Thus, under controlling precedent, AIA
`
`contested proceedings, including IPRs and PGRs, are “an adjudication
`
`under section 554,” as required by 5 U.S.C. § 504(a)(1).
`
`Second, the position of the United States vis-à-vis the federal
`
`agency “is represented by counsel or otherwise” from the outset of the
`
`proceeding. The AIA gives the PTO Director the authority to determine
`
`whether a post-grant AIA proceeding should be initiated, and the
`
`Director has delegated this authority to the employees of the PTO. 35
`
`U.S.C. §§ 314(a), 324(a); 37 C.F.R. § 42.4(a) (stating that the “Board
`
`institutes the trial on behalf of the Director”); cf. Ethicon Endo-Surgery,
`
`Inc. v. Covidien LP, 812 F.3d 1023, 1026 (Fed. Cir. 2016) (holding that
`
`“neither the statute nor the Constitution precludes the same panel of the
`
`Board that made the decision to institute inter partes review from
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`making the final determination”).
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`Case PGR2017-00015 of
`U.S. Patent No. 9,527,612
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`In contrast, the AIA specifically grants the Board the power to
`
`decide the ultimate question of patent validity. See 35 U.S.C. § 318
`
`(requiring that “the Patent Trial and Appeal Board shall issue a final
`
`written decision with respect to the patentability of any patent claim
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`challenged by the petitioner”). Thus, there is a clear textual demarcation
`
`in the AIA between the authority and role of the Director and the
`
`authority and role of the Board.
`
`Under this bifurcated system, the agency’s position is advanced at
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`the institution decision, because the institution decision is the Director’s
`
`official position. Under current regulations, the Director is “represented”
`
`as “otherwise” because the Director’s delegates advance the position that
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`one or more claims of the challenged patent are not patentable. The
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`patent owner is then forced to dispute the Director’s position that the
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`claims are not patentable.
`
`When the proceeding is instituted per the Director’s decision and
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`rationale, the position of the agency is also represented “otherwise.” The
`
`interest of the Director is represented by the petitioner seeking to
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`challenge the patent. The petitioner, in essence, fills in for the PTO
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`Director and works to support the rationale the Director adopted in the
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`institution decision. In contrast, as required by 35 U.S.C. § 328, the
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`Board weighs the competing arguments of those advanced by (1) the
`
`Director in the institution decision, (2) the petitioner seeking to validate
`
`the Director’s institution decision, and (3) the patent owner seeking to
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`prove that the Director’s and petitioner’s rationale was wrong.
`
`In short, Congress’s chosen structure of the AIA proceedings fall
`
`within the requirements of 5 U.S.C. § 504. The post-grant AIA
`
`proceedings are adversary adjudications that fall under 5 U.S.C. § 554
`
`and the position of the United States is represented by “counsel or
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`otherwise.”
`
`B. The Federal Circuit’s Decision in Saint Regis Mohawk Tribe
`v. Mylan Pharmaceuticals, Inc. Supports Tinnus EAJA
`Application
`That a PGR proceeding is an adjudicatory proceeding for purposes
`
`of EAJA is also supported, in part, by the argument of the United States
`
`in its amicus brief in Regents of the University of Minnesota v. LSI Corp.,
`
`No. 2018-1559 (Fed. Cir. filed Aug. 6, 2018).
`
`There, the United States filed an amicus brief in which the United
`
`States argued that, at its base, the AIA post-grant proceedings are an
`
`agency action:
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`- 14 -
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`Congress’s decision to vest the institution decision exclusively
`in the Director’s discretion makes clear that inter partes
`review is, at bottom, “an act by the agency [to] reconsider[] its
`own grant of a public franchise.” Saint Regis Mohawk Tribe, -
`-- F.3d ---- , 2018 WL 3484448, at *3; accord Oil States Energy
`Serv., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365,
`1373 (2018) (“Inter partes review involves . . . reconsideration
`of the Government’s decision to grant a public franchise.”).
`That understanding accords with the history of the Patent
`Act. Congress has for decades permitted the Director of the
`USPTO to institute proceedings to reexamine patents
`previously granted by the agency. 35 U.S.C. § 301 et seq. (ex
`parte reexamination); 35 U.S.C. § 311 et seq. (2006) (inter
`partes reexamination). As relevant here, inter partes review
`differs from prior reexamination schemes principally in the
`degree to which it relies on the knowledge and incentive of
`interested members of the public to bring examination errors
`to the agency’s attention, and to establish the existence of
`those errors to the agency’s satisfaction. But in providing for
`greater third-party participation in inter partes review,
`Congress did not change the “basic purposes” of the
`proceeding, “namely, to reexamine an earlier agency
`decision.” Cuozzo, 136 S. Ct. at 2144; accord Saint Regis
`Mohawk Tribe, --- F.3d ----, 2018 WL 3484448, at *4
`(explaining that inter partes reexamination and inter partes
`review share the same “basic purposes” (quoting Cuozzo, 136
`S. Ct. at 2144)).
`Brief for the United States as Amicus Curiae in Support of Appellees and
`
`Intervenor, at 7-8, Univ. of Minn., No. 2018-1559, Dkt. No. 80.
`
`The United States emphasized that an AIA post-grant review is “an
`
`act by the agency to reconsider its own grant of a public franchise.” Thus,
`
`unlike traditional patent litigation between private parties, the
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`government, through the Director, takes a position and agrees with the
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`petitioner that the challenged patent should be reviewed by the Board.
`
`In that same case, the United States went further and emphasized
`
`that the decision to institute review leading to invalidation of a patent is
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`controlled by the Director, not the private parties:
`
`The University incorrectly states that the Supreme Court in
`SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348, 1352, 1355
`(2018), “rejected the notion that an [inter partes review] is
`directed or controlled by the [US]PTO or the Board.” See Br.
`24. This Court rejected the same argument in Saint Regis
`Mohawk Tribe, --- F.3d ----, 2018 WL 3484448, at *3. In SAS
`Institute, the Supreme Court held that the AIA does not
`authorize the Director to institute review on a claim-by-claim
`basis; rather, the Director must make a “binary choice” on the
`petition presented to the agency—“either institute review or
`don’t.” 138 S. Ct. at 1355. The Court nonetheless made clear
`that the choice “whether to institute review” is within the
`Director’s exclusive discretion. Id. at 1356 (citing § 314(a)).
`And as the Supreme Court stressed in its decision issued on
`the same day in Oil States Energy Services, LLC v. Greene’s
`Energy Group, LLC, 138 S. Ct. 1365, 1378 n.5 (2018),
`although inter partes review is triggered by a private party’s
`petition, “inter partes review is not initiated by private
`parties in the way that a common-law cause of action is”
`because “the decision to institute review is made by the
`Director and committed to his unreviewable discretion.”
`Brief for the United States as Amicus Curiae in Support of Appellees and
`
`Intervenor, at 10 n.2, Univ. of Minn., No. 2018-1559, Dkt. No. 80.
`
`- 16 -
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`The Government’s analysis highlights why, in the end, the
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`Director’s position is ultimately the position that is advanced during the
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`PGR proceeding. If the Director disagreed with the arguments and
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`evidence presented by the petitioner, the Director could—and should—
`
`exercise his discretion and deny review or should actively participate in
`
`the proceeding. Otherwise, the subsequent arguments presented by the
`
`petitioner must be assumed to be consistent with the Director’s position.
`
`C. The Board’s Prior Analysis Was Erroneous
`A panel of the Board previously ruled that a PGR proceeding is not
`
`an adversarial proceeding for purposes of the EAJA statue. See
`
`PGR2017-00030, Paper No. 110. Tinnus respectfully submits that the
`
`Board’s prior decision was incorrect and responds to the Board’s
`
`arguments presented therein.
`
`The Board stated that “this proceeding is an adversarial proceeding
`
`between two private entities.” PGR2016-00030, Paper No. 110, at 4. This
`
`statement overlooks the statutory requirement that the Director decide
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`that the patent should be reviewed by the Board in order to determine
`
`whether the patent is valid. See 35 U.S.C. § 324. The Board’s statement
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`also overlooks the Government’s analysis in the University of Minnesota
`
`v. LSI case, supra.
`
`The Board stated that “[t]he only role played by the United States
`
`in this proceeding, if any, was by the Board, as employees of a federal
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`agency, in an adjudicative role.” PGR2016-00030, Paper No. 110, at 5.
`
`Again, this overlooks the statutory structure of the review process and
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`the distinct roles envisioned for the Director and the Board, with the
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`Director deciding whether to allow the challenge based on the Petitioner’s
`
`argum
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