No. 16-712
`
`In the
`Supreme Court of the United States
`
`OIL STATES ENERGY SERVICES, LLC,
`
`Petitioner,
`
`v.
`
`GREENE’S ENERGY GROUP, LLC, et al.,
`
`Respondents.
`
`On Writ Of CertiOrari tO the United StateS
`COUrt Of appealS fOr the federal CirCUit
`
`BRIEF OF AMICUS CURIAE ACT | the app
`aSSOCiatiOn in SUppOrt Of reSpOndentS
`
`BrIan ScarpellI
`Counsel of Record
`act | the app aSSocIatIon
`1401 K Street NW, Suite 501
`Washington, DC 20005
`(517) 507-1446
`bscarpelli@actonline.org
`
`Counsel for Amicus Curiae
`
`274890
`
`A
`
`(800) 274-3321 • (800) 359-6859
`
`
`
`In the
`Supreme Court of the United States
`
`OIL STATES ENERGY SERVICES, LLC,
`
`Petitioner,
`
`v.
`
`GREENE’S ENERGY GROUP, LLC, et al.,
`
`Respondents.
`
`On Writ Of CertiOrari tO the United StateS
`COUrt Of appealS fOr the federal CirCUit
`
`BRIEF OF AMICUS CURIAE ACT | the app
`aSSOCiatiOn in SUppOrt Of reSpOndentS
`
`BrIan ScarpellI
`Counsel of Record
`act | the app aSSocIatIon
`1401 K Street NW, Suite 501
`Washington, DC 20005
`(517) 507-1446
`bscarpelli@actonline.org
`
`Counsel for Amicus Curiae
`
`274890
`
`A
`
`(800) 274-3321 • (800) 359-6859
`
`
`
`i
`
`TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . i
`
`TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . iii
`
`INTEREST OF THE AMICUS CURIAE. . . . . . . . . . .1
`
`SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . .2
`
`ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
`
`I. GRANTING PETITIONER’S REQUEST
`WOULD FORCE THE COURT TO
`VIOLATE THE SEPA RATION OF
`POWERS BECAUSE PETITIONER
`IS REQUESTING THE COURT TO
`EX ECU TE RIGHTS V ESTED IN
`ARTICLE I OF THE CONSTITUTION . . . . . .6
`
`
`
`A. Petitioner’s Argument Relies on
`an Erroneous Assumption That
`the Nature of a Patent Right Is
`a Derivative of Article III of the
`U.S. Constitution and Not Article I . . . . . . .8
`
`
`
`i. Article I of the Constitution, On Its
`Face, Makes Clear that Congress
`Determines the Nature and Scope
`of a Patent Right. . . . . . . . . . . . . . . . . . . .9
`
`
`
`TABLE OF CONTENTS
`
`Page
`
`
`
`ii
`
`ii. The Court’s Own Precedent
`Endorses the Interpretation that
`Congress Determines the Nature of
`a Patent Right and Where It Can be
`Adjudicated. . . . . . . . . . . . . . . . . . . . . . .13
`
`
`
`II. DUE TO CONGRESS ENACTING THE
`AIA TO INCLUDE AN IPR, IT HAS
`MADE PETITIONER’S SEVENTH
`AMENDMENT CONSIDERATION IN
`THIS CASE IRRELEVANT . . . . . . . . . . . . . . .15
`
`
`
`III. PATENTS – AND PREDICTABILITY IN
`THE FUNCTIONING OF THE PATENT
`SYSTEM – ARE VITAL TO THE APP
`ECONOMY’S CONTINUED GROWTH . . . . .18
`
`
`
`IV. IPR PROVIDES SMALL BUSINESSES
`A C O S T- E F F IC I E N T WA Y T O
`DEFEND THEIR PATENTS AGAINST
`INFRINGEMENT CLAIMS . . . . . . . . . . . . . . .20
`
`
`
`A. Small Businesses Do Not Have the
`Resources to Fight Claims in Federal
`Court. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
`
`
`
`B. IPR Provides Small Businesses with a
`Cost-Efficient Forum to Defend Their
`Respective Patents . . . . . . . . . . . . . . . . . . . .23
`
`
`
`CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
`
`Table of Contents
`
`Page
`
`
`
`iii
`
`CASES
`
`Alice Corp. Pty. Ltd. v. CLS Bank Intern.,
`
`134 S. Ct. 2347 (2014). . . . . . . . . . . . . . . . . . . . . . . . . .19
`
`Continental Paper Bag Co. v.
`Eastern Paper Bag Co.,
`210 U.S. 405 (1908) . . . . . . . . . . . . . . . . . . . . . . . . .2, 7, 8
`
`
`
`Crowell v. Benson,
`
`285 U.S. 22 (1932). . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
`
`Crown Die & Tool Co. v.
`Nye Tool & Machine Works,
`261 U.S. 24 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . .2, 7, 8
`
`
`
`Cuozzo Speed Technologies, LLC v. Lee,
`
`136 S. Ct. 2131 (2016) . . . . . . . . . . . . . . . . . . . . . . . . . . .9
`
`Curtis v. Loether,
`
`415 U.S. 189 (1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
`
`Gayler v. Wilder,
`
`51 U.S. 477 (1850) . . . . . . . . . . . . . . . . . . . . . . . . . . .9, 13
`
`Granfinanciera, S.A. v. Nordberg,
`
`492 U.S. 33 (1989). . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
`
`Kappos v. Hyatt,
`
`566 U.S. 431 (2012). . . . . . . . . . . . . . . . . . . . . . . . . . . .14
`
`TABLE OF CITED AUTHORITIES
`
`Page
`
`
`
`iv
`
`Markman v. Westview Instruments, Inc.,
`
`52 F.3d 967 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . .18
`
`McClurg v. Kingsland,
`
`42 U.S. 202 (1843). . . . . . . . . . . . . . . . . . . . . . . . 7, 10, 13
`
`MCM Portfolio LLC v. Hewlett-Packard Co.,
`
`812 F.3d 1284 (Fed. Cir. 2015) . . . . . . . . . . . .13, 14, 20
`
`Murray’s Lessee v.
`Hoboken Land & Improvement Co.,
`59 U.S. 272 (1855). . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
`
`
`
`Northwest Airlines, Inc. v.
`Transp. Workers Union of Am.,
`451 U.S. 77 (1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 7
`
`
`
`Sears, Roebuck & Co. v. Stiffel Co.,
`
`376 U.S. 225 (1964). . . . . . . . . . . . . . . . . . . . . . . . .10, 13
`
`Stern v. Marshall,
`
`131 S. Ct. 2594, 2613 (2011) . . . . . . . . . . . . . . . . . . . . .14
`
`Stern v. Marshall,
`
`564 U.S. 462 (2011) . . . . . . . . . . . . . . . . . . . . . . . . . . .2, 6
`
`Thomas v. Union Carbide Agric. Prods. Co.,
`
`473 U.S. 568 (1985). . . . . . . . . . . . . . . . . . . . . . . . . . . .13
`
`U.S. v. Nixon,
`
`418 U.S. 683 (1974) . . . . . . . . . . . . . . . . . . . . . . . . . . .3, 7
`
`Cited Authorities
`
`Page
`
`
`
`v
`
`STATUTES AND OTHER AUTHORITIES
`
`U.S. Const. Amend. VII . . . . . . . . . . . . . . . . . . . . . . . .3, 16
`
`U.S. Const. Art. I § 8, Cl. 8 . . . . . . . . . . . . . . . . . . 9, 10, 17
`
`35 U.S.C. § 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
`
`35 U.S.C. § 103 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
`
`35 U.S.C. § 154(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
`
`35 U.S.C. § 154(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
`
`35 U.S.C. § 311 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 10, 17
`
`35 U.S.C. § 311(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
`
`ACT | The App Association, State of the
` App Economy 2017 (2016) . . . . . . . . . . . . . . . . . . . . . . .4
`
`AIPLA, Report of the Economic Survey (2015) . . . . . .22
`
`Brian Howard, 2017 Second Quarter Litigation
` Update, Lex Machina (Jul. 18, 2017) . . . . . . . . . . 19-20
`
`H.R. Rep. No. 112–98 . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
`
`Joel Thayer, To Innovate, We Must Repatriate,
` act | the app aSSocIatIon (Apr. 18, 2017) . . . . . . .21
`
`Cited Authorities
`
`Page
`
`
`
`vi
`
`Matt Cutler, 3 Years of IPR: A Look at the
` Stats, law360 (Oct. 9, 2015, 3:59 PM) . . . . . . . . . . . .24
`
`Michelle Lee, PTAB Update: Proposed Changes
`to Rules Governing PTAB Trial Proceeding,
` PTO Blog (Aug. 19, 2015) . . . . . . . . . . . . . . . . . . . . . .23
`
`Morgan Reed, Comments of ACT | The App
`Association to the National Telecommunications
`and Information Administration regarding
`The Benefits, Challenges, and Potential
`Roles for the Government in Fostering the
`Advancement of the Internet of Things,
` ACT | The App Association (June 2, 2016). . . . . . . .19
`
`PATENT ASSERTION ENTITY ACTIVITY: AN
` FTC STUDY, 2016 WL 6639228 . . . . . . . . . . . . . .5, 21
`
`Stephen Maebius, 2017 Mid-Year Statistics
`Point to Continued Rise in IPR Petitions,
` natIonal law revIew (Apr. 28, 2017). . . . . . . . . . . .23
`
`Sup. Ct. R. 37.6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
`
`Tristan Louis, How Much Do Average Apps
` Make?, Forbes (Aug. 10, 2013) . . . . . . . . . . . . . . . . . .22
`
`World of Intellectual Property Organization,
` WIPO Magazine, WIPO (2010) . . . . . . . . . . . . . . . . .22
`
`Cited Authorities
`
`Page
`
`
`
`1
`
`INTEREST OF THE AMICUS CURIAE1
`
`ACT | The App Association (App Association) is
`an international grassroots advocacy and education
`organization representing more than 5,000 small and
`medium sized software application developers and
`information technology firms. We are the only organization
`focused on the needs of small business innovators from
`around the world. The App Association advocates for
`an environment that inspires and rewards innovation,
`while providing resources to help its members leverage
`their intellectual assets to raise capital, create jobs, and
`continue to grow.
`
`In light of the critical role that the U.S. Patent and
`Trade Office’s (PTO’s) inter partes review (IPR) plays
`in the U.S. patent system, the App Association has a
`keen interest in the proper functioning of this system,
`and the IPR process specifically. Our members rely on
`their patents to grow their businesses and create new
`American jobs; however, they have faced, and continue to
`face, challenges to the validity of their patents. Without
`the use of the PTO’s IPR, federal court litigation is often
`extremely costly and unattainable by small businesses.
`
`1. Pursuant to Rule 37.6, amicus affirms that no counsel for
`a party authored this brief in whole or in part and that no person
`other than amicus and its counsel made a monetary contribution
`to its preparation or submission. Petitioner filed a blanket consent
`in this appeal on July 7, 2017, and respondent provided its consent
`to the filing of this brief via email dated August 11, 2017. Further,
`blanket consent was filed by respondent United States Patent and
`Trademark Office on August 30, 2017.
`
`
`
`2
`
`SUMMARY OF ARGUMENT
`
`Although Petitioner challenges the PTO’s authority
`to perform a post-grant review, its underlying argument
`attacks something far more fundamental. At the root of
`its claim, Petitioner is truly challenging the PTO’s very
`authority sanctioned by Congress and core functions
`by suggesting that Congress cannot set the temporal
`parameters of determining patentability. Thus, Petitioner
`takes issue with Congress’s ability to enact a statute
`containing an IPR process for patent rights. The issue in
`this case is simple: either Congress can delegate the issue
`of patentability determination to the PTO post-grant, or
`it cannot at all. Confusingly, Petitioner assumes, given
`the IPR’s adversarial nature, that the determination for
`patentability is an Article III exercise after the PTO
`grants a patent right. However, it has not produced any
`Constitutional provision providing Article III courts
`with such authority when there is an active IPR statute.
`Moreover, this Court has long recognized congressional
`authority to delegate that specific function in Article II
`fora for statutory rights. E.g., Stern v. Marshall, 564 U.S.
`462, 491 (2011).
`
`Congress alone determines the existence and the
`scope of a patent right. E.g., Crown Die & Tool Co. v. Nye
`Tool & Machine Works, 261 U.S. 24, 35 (1923) (recognizing
`that only Congress can expand or diminish scope of a
`patent); Continental Paper Bag Co. v. Eastern Paper Bag
`Co., 210 U.S. 405, 429-30 (1908) (deferring to congressional
`supremacy over federal courts to determine the scope and
`validity of patent rights). Once Congress legislates on a
`particular topic, federal courts are tasked to interpret and
`apply common law that does not conflict with their intent.
`
`
`
`3
`
`Northwest Airlines, Inc. v. Transp. Workers Union of
`Am., 451 U.S. 77, 95 n. 34 (1981) (holding “once Congress
`addresses a subject, even a subject previously governed
`by federal common law, the justification for lawmaking
`by the federal courts is greatly diminished. Thereafter,
`the task of the federal courts is to interpret and apply
`statutory law, not to create common law.”). In the instant
`proceeding, Congress has made clear that it intends to
`subject a recent patentee’s right to an IPR under the
`America Invests Act (AIA). As this Court is aware, it is
`bound by the authority vested to it by the U.S. Constitution
`and must not exceed that authority. U.S. v. Nixon, 418 U.S.
`683, 704 (1974) (holding “[this Court] must follow that the
`Court has authority to interpret claims with respect to
`powers alleged to derive from enumerated powers [within
`Article III of the Constitution].”). If the Court chooses to
`define a patent right as a private right—a Constitutional
`power that solely belongs to Congress—it will infringe on
`the separation of powers doctrine. This action would run
`contrary to clear congressional intent to give the PTO
`authority to execute a post-grant review of patentability;
`the Court should respect that delegation.
`
`Moreover, because Congress codified it in the AIA,
`the PTO’s IPR is not subject to a Seventh Amendment
`challenge. Petitioner relies on dubious reasoning and
`assumptions in asserting its claim. Due to Congress
`codifying the process by statute, the IPR is both consistent
`with Article III and the Seventh Amendment to the
`U.S. Constitution. Petitioner has not proffered a valid
`justification as to why the Seventh Amendment requires
`a jury trial for issues concerning patentability when
`Congress has explicitly given that right to the PTO.
`
`
`
`4
`
`In its relatively short existence, the software
`application (app) industry has served as the driving force
`in the rise of smartphones, tablets, and other internet-
`connected devices and markets. The burgeoning app
`economy has revolutionized the software industry,
`influencing every sector of the economy in every United
`States (U.S.) federal district. ACT | The App Association,
`State of the App Economy 2017 (2016), http://actonline.org/
`wp-content/uploads/App_Economy_Report_2017_Digital.
`pdf.
`
`Underlying the growth and ingenuity of this society-
`altering economy and its related benefits are intellectual
`property rights, particularly patents. Patents allow
`small business innovators to protect their intellectual
`investment in their innovative products, attract venture
`capital, maintain a competitive position in the marketplace,
`and level the playing field amongst established companies
`and competitors. In fact, small businesses produced 16
`times more patents per employee than large firms. An
`Analysis of Small Business Patents by Industry and Firm
`Size, http://archive.sba.gov/advo/research/rs335tot.pdf;
`Innovation in Small Businesses: Drivers of Change and
`Value Use www.sba.gov/sites/default/files/rs342tot_0.pdf.
`
`An IPR proceeding provides a specialized and more
`efficient process for patent claim dispute resolution.
`For small businesses, the IPR assists in reducing the
`high burdens associated with federal court litigation,
`enabling more vulnerable small businesses that do not
`have disposable income to engage in lengthy and costly
`federal court trial expenses to defend their patents. In
`the hyper-competitive app economy, our members face the
`reality that any time spent away from obtaining capital
`
`
`
`5
`
`for their business and developing their product could
`put them at an unrecoverable disadvantage, potentially
`spelling death for their venture. Conversely, time spent
`in patent litigation during a court proceeding that lasts
`years, or costs hundreds of thousands of dollars, is a time
`and opportunity cost they cannot bear. Even if the parties
`eventually settle the matter, the litigation process can
`last for many years. PATENT ASSERTION ENTITY
`ACTIVITY: AN FTC STUDY, 2016 WL 6639228, at *35
`(writing “two-thirds of settled Litigation [patent assertion
`entity (PAE)] cases were settled within a year whereas
`half of settled Portfolio PAE cases took more than two
`years to settle.”).
`
`The App Association’s members are not large
`companies; many are startups that have a small number
`of employees. Much of their day is spent developing a
`customer base, meeting hard deadlines, finding venture
`capitalists to help fund their businesses, and other
`necessary activities. In addition, our members rely on
`access to patents and are threatened by aggressive
`licensors, often Patent Assertion Entities (PAEs), who
`may bring them into costly court proceedings that force
`them to accept a license in a short timeframe. Some patent
`licensors rely on the fact that many startups do not have
`the resources to protect their interests and appropriately
`challenge the patentability of the claim(s) at issue, thus
`leaving them vulnerable to licensing arrangements
`that greatly benefit the licensor. Hence, IPRs serve
`as an efficient and effective process protecting small
`businesses like our members from the onerous financial
`and temporal burden associated with proceedings in
`front of Article III tribunals. They also serve the public
`interest by streamlining patent dispute resolutions that
`
`
`
`6
`
`would otherwise congest Article III courts more than
`they are already.
`
`ARGUMENT
`
`I. GR A N T I NG PET I T ION ER’ S R E QU E ST
`WOULD FORCE THE COURT TO VIOLATE
`THE SEPARATION OF POWERS BECAUSE
`PETITIONER IS REQUESTING THE COURT TO
`EXECUTE RIGHTS VESTED IN ARTICLE I OF
`THE CONSTITUTION
`
`Although Petitioner challenges the PTO’s authority
`to perform a post-grant review, its underlying argument
`attacks something far more fundamental. At the root of
`its claim, Petitioner is truly challenging the PTO’s very
`authority sanctioned by Congress and core functions
`by suggesting that Congress cannot set the temporal
`parameters of determining patentability. Thus, Petitioner
`takes issue with Congress’s ability to enact a statute
`containing an IPR process for patent rights. The issue in
`this case is simple: either Congress can delegate the issue
`of patentability determination to the PTO post-grant, or
`it cannot at all. Confusingly, Petitioner assumes, given
`the IPR’s adversarial nature, that the determination for
`patentability is an Article III exercise after the PTO
`grants a patent right. However, it has not produced any
`Constitutional provision providing Article III courts
`with such authority when there is an active IPR statute.
`Moreover, this Court has long recognized congressional
`authority to delegate that specific function in Article II
`fora for statutory rights. E.g., Stern v. Marshall, 564 U.S.
`462, 491 (2011).
`
`
`
`7
`
`Article I of the Constitution clearly gives Congress
`the authority to define a patent right and where it can
`be adjudicated. McClurg, 42 U.S. at 206 (holding “…
`the powers of Congress to legislate upon the subject of
`patens is plenary by the terms of the Constitution, and
`as there are no restraints on its exercise, there can be no
`limitation of their right to modify them at their pleasure,
`so that they do not take away the rights of property
`in existing patents.” [Emphasis added]). Additionally,
`Congress alone determines both the existence and the
`scope of a patent right. E.g., Crown Die & Tool Co. v. Nye
`Tool & Machine Works, 261 U.S. 24, 35 (1923) (recognizing
`that only Congress can expand or diminish scope of a
`patent); Continental Paper Bag Co. v. Eastern Paper Bag
`Co., 210 U.S. 405, 429-30 (1908) (deferring to Congress’s
`supremacy over federal courts to determine the scope and
`validity of patent rights). Once Congress has spoken on a
`particular topic, the task for federal courts is to interpret
`and apply common law that does not conflict with their
`intent. Northwest Airlines, Inc. v. Transp. Workers Union
`of Am., 451 U.S. 77, 95 n. 34 (1981) (holding “once Congress
`addresses a subject, even a subject previously governed
`by federal common law, the justification for lawmaking
`by the federal courts is greatly diminished. Thereafter,
`the task of the federal courts is to interpret and apply
`statutory law, not to create common law.”). In the instant
`proceeding, Congress is clear that it intends to subject a
`recent patentee’s right to an IPR under the AIA and the
`Court should follow through with Congress’s intention.
`
`This Court is bound by the authority vested in
`it by the U.S. Constitution and must not exceed that
`authority. U.S. v. Nixon, 418 U.S. 683, 704 (1974) (holding
`“[this Court] must follow that the Court has authority
`
`
`
`8
`
`to interpret claims with respect to powers alleged to
`derive from enumerated powers [within Article III of the
`Constitution].”). Therefore, it should interpret the relevant
`statute as Congress has written and not circumvent their
`intentions by redefining concepts that fall outside of its
`Constitutional purview (e.g., the nature of a patent right).
`If the Court chooses to define a patent right as a private
`right—a Constitutional power vested squarely with
`Congress—it will certainly infringe on the separation of
`powers doctrine because it would run contrary to clear
`congressional intention to delegate a post-grant review
`process (i.e., IPR) to the PTO.
`
`A. Petitioner’s Argument Relies on an Erroneous
`Assumption That the Nature of a Patent
`Right Is a Derivative of Article III of the U.S.
`Constitution and Not Article I
`
`Congress alone determines both the existence and
`the scope of a patent right at all stages. E.g., Crown Die
`& Tool Co., 261 U.S. at 35; Continental Paper Bag, 210
`U.S. at 429-30. In its brief, Petitioner bases its assertions
`on a flawed assumption when it contends that the PTO’s
`IPR process is unconstitutional and that an Article III
`court maintains an authority to circumvent congressional
`intent in this regard. Petitioner attempts to have the Court
`circumvent congressional intent and put it into a position
`where it exceeds its Constitutional purview, because it
`is clear from the perspective of the Constitution that
`Congress maintains that authority, and they intend to
`include an IPR process under section 311 of the AIA to
`be executed by the PTO.
`
`
`
`9
`
`In this case, Congress sanctioned the Patent Trial and
`Appeal Board (PTAB) within the PTO to engage in a post-
`grant review to determine patentability under sections
`102 or 103 of the AIA. 35 U.S.C. § 311 (2013). Section 102
`specifically demands that the “claimed invention” be novel.
`35 U.S.C. § 102 (2012); see Cuozzo Speed Technologies, LLC
`v. Lee, 136 S.Ct. 2131, 2149 (2016) (Alito, J., concurring in
`part dissenting in part). Where section 103 requires the
`claimed invention be “nonobvious.” 35 U.S.C. § 103 (2012);
`see Cuozzo Speed Technologies, 136 S.Ct. at 2149. These
`are the only two justifications the PTAB may invalidate
`a patent engaging in an IPR. § 311(b). However, the
`Constitution is clear; Congress may sanction the PTO
`to engage in a post-grant review to determine a patent’s
`validity and the Court should recognize and respect that
`intention.
`
`i. Article I of the Constitution, On Its Face,
`Makes Clear that Congress Determines
`the Nature and Scope of a Patent Right
`
`Under Article I of the Constitution, Congress may
`determine the nature of a patent right. U.S. Art. I § 8, Cl.
`8. Article I gives Congress the “power...to the progress
`of science and useful arts, by securing for limited times
`to authors and inventors the exclusive right to their
`respective writings and discoveries...” See id. Congress
`used this clause as its basis to enact the AIA. H. Rept.
`112-98. This clause also affords Congress the ability to
`determine the status of a right. See Gayler v. Wilder, 51
`U.S. 477, 494 (1850) (writing “[patent rights were] created
`by the act of Congress; and no right can be acquired
`in it unless authorized by statute, and in the manner
`the statute prescribes.”). Therefore, Congress has sole
`discretion as to how a patent right is defined.
`
`
`
`10
`
`Petitioner’s argument implicitly invokes Article III’s
`“cases and controversy” clause to advance its claim that
`patentability determination fits squarely in a court’s
`jurisdiction. However, its assessment is misguided,
`because the issue before the Court is whether the PTO can
`reexamine the patentability of a claim, which fits squarely
`under the PTO’s delegated authority under Article I.
`Thus, the PTO is well within its bounds because Congress
`delegated that authority to it. See 35 U.S.C. § 311; see also,
`McClurg, 42 U.S. at 206.
`
`Patent rights “exist only by virtue of statute.” Sears,
`Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 229 at n. 5
`(1964). By logical extension, Congress can determine the
`very nature of the right, and, given its enactment of the
`AIA providing for a post-grant review in an Article II
`forum, it is clear Congress intended patentability to be
`adjudicated at the PTO, which is their sole discretion.
`If the Court were to adopt a conclusion contrary to the
`one proffered here, then it will effectively run afoul to
`the separation of powers by placing itself in the position
`of Congress, because, in essence, it would be executing
`a power exclusive to Article I—defining the nature of a
`patent right.
`
`In Petitioner’s brief, the fact that patent rights are only
`recognized by statute is artfully left out of its argument.
`Nowhere in its argument does it even mention the fact that
`Congress can define a patent right. Instead, it wants the
`Article III courts to make such a determination, which,
`if adopted, would run afoul to the separation of powers.
`Petitioner’s argument merely relies on the assumption
`that Congress does not have this ability and uses this
`misguided assumption to promulgate baseless assertions
`
`
`
`11
`
`suggesting that Congress is “divest[ing] federal courts of
`judicial power.” Petitioner Brief at 35. When in all reality
`Congress has the sole discretion to define a patent right
`as either a public or private right, because it is a right
`of their own invention. Thus, it is clear of Congress’s
`intention to sanction the PTO’s IPR, which is well within
`their prerogative, not the Court’s.
`
`By claiming that a patentee assumes a private
`property right post-PTO grant, Petitioner’s argument
`seeks to bifurcate Constitutional responsibility between
`Congress and an Article III court by suggesting that
`Congress can only define the nature of a patent right
`before it is granted and the courts then have that domain
`post-grant. However, nowhere in its brief does it describe
`how, from the perspective of Constitutional authority,
`this transfer occurs. It is clear that the Petitioner is not
`contesting Congress’s authority to delegate a patent
`grant to the PTO initially, but it supplies the Court with
`very little justification as to why Congress’s authority is
`extinguished when it enacted section 311 of the AIA to
`have the PTO correct its mistake under an IPR. Therefore,
`Petitioner seems to believe that a patent, in its inherency,
`is a private right at every stage of its existence—a feature
`noticeably absent from both the Constitution and any
`statute enacted by Congress.
`
`Petitioner attempts to make a patent right tantamount
`to ownership of a physical property, such as a house or an
`acre of land. Petitioner believes that, because Congress
`provides patentees the right to exclude, they, therefore,
`must have intended this right to be a private right. Brief
`of Petitioner at 29; See 35 U.S.C. § 154(a)(1) (2017). Even
`following that logic, Petitioner has yet to demonstrate
`
`
`
`12
`
`a context other than patents where a person or entity’s
`private property’s right to exclude was subject to a
`government imposed timeline before it is to forfeit that
`property back over to the government. 35 U.S.C. § 154(a)
`(2) (mandating that a patentee has only 20 years to exclude
`others from using it).
`
`A patentee’s property right is more clearly akin
`to a broadcaster seeking to license spectrum from the
`Federal Communications Commission (FCC); where the
`FCC issues a broadcaster a license for a spectrum block
`with a set amount of time in which the broadcaster can
`use the set aside spectrum (including the right to exclude
`other from using it) with the understanding that the
`property must be given back to the FCC when the term
`of the license expires. In the event the FCC finds that the
`broadcaster exceeded the scope of her license before the
`license’s term ends, it allows the broadcaster to engage in
`an adversarial hearing in front of an administrative law
`judge within the FCC to fight the claim. Much like the
`FCC issuing a license for spectrum to a broadcaster, after
`a patent’s 20-year term expires, her patent right must be
`returned to the PTO for public use and, if the patentee’s
`patent is invalid or overbroad, then the PTO allows for the
`patentee to engage in adversarial hearing, i.e., an IPR,
`before making its determination. Given the Court has not
`found the FCC’s actions to be unconstitutional, it would be
`wholly inconsistent to find the PTO’s in this case.
`
`
`
`13
`
`ii. The Court’s Own Precedent Endorses the
`Interpretation that Congress Determines
`the Nature of a Patent Right and Where
`It Can be Adjudicated
`
`The Court has long held that Congress determines
`the nature of a patent right. Moreover, if it decides to the
`contrary, then it would directly conflict from all of its own
`precedent to the contrary spanning over a century that
`expressly recognizes that fact. See, McClurg v. Kingsland,
`42 U.S. 202, 206 (1843); Gayler, 51 U.S. at 494; Murray’s
`Lessee v. Hoboken Land & Improvement Co., 59 U.S. 272,
`284 (1855); Sears, 376 U.S. at 229; & Thomas v. Union
`Carbide Agric. Prods. Co., 473 U.S. 568, 587 (1985).
`Many lower courts have relied upon and agree with the
`Court’s interpretation and have already held the PTO’s
`IPR process as constitutional. E.g., MCM Portfolio LLC
`v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015).
`
`The Court recognizes that they play by Congress’s
`rules, and not the other way around when it comes to
`patent law. McClurg, 42 U.S. at 206. Moreover, if Congress
`sanctions the PTO’s ability to correct its own mistake, then
`it must recognize it. In the context of the novelty of patent
`claims, if there are not novel patents in the market and it
`cannot be corrected by the PTO; then, ultimately, we could
`have two identical claims for two different patents. Hence,
`this would adversely affect the patentee who filed that
`claim first to be able to use or license his/her patent if the
`second patentee’s right is recognized. See id. Moreover,
`if the PTO cannot execute an IPR to correct its mistake
`of granting a patent with an already encumbered claim,
`then, in effect, they would be infringing on the first filers’
`patent rights by not taking action. This situation is why,
`
`
`
`14
`
`in part, Congress created the IPR in the first place. Thus,
`Congress, exercising their “plenary” and “unrestrained”
`authority in this regard, created a statute to preserve
`existing rights of patent holders by keeping ones that are
`not novel out of the market. See id.
`
`As the Federal Circuit noted in remarking on similar
`arguments made by the plaintiffs in MCM Portfolio, it is
`a peculiar position to take. Mainly, because, if a party is
`not disputing that the PTO does not possess the authority
`to determine patentability initially, then, in essence, that
`party is asserting that the PTO is not allowed to correct
`its mistake, which is logically inconsistent. Petitioner does
`not seem to appreciate that a patent right “derives from an
`extensive federal regulatory scheme,” Stern v. Marshall,
`131 S.Ct. 2594, 2613 (2011), and is created by federal law.
`Congress created the PTO, “an executive agency with
`specific authority and expertise” in patent law, Kappos
`v. Hyatt, 566 U.S. 431 (2012), and saw powerful reasons
`to utilize the expertise of the “PTO for an important
`public purpose—to correct the agency’s own errors in
`issuing patents in the first place.” MCM Portfolio, 812
`F.3d at 1293. Thus, Congress created the patent right
`and delegated the discretion of its validity to an executive
`administrative agency, the PTO.
`
`The issue Petitioner brings here is whether the PTO,
`under its congressional delegation, properly granted the
`patent initially; a right “that can only be conferred by
`the government.” See Crowell v. Benson, 285 U.S. 22, 50
`(1932). Due to the fact that Congress defines the nature
`of a patent right, Supra. Sec. I.A.i.; it has the ability to
`delegate authority to the PTO to determine patentability,
`even in the context of post-grant review. Therefore,
`
`
`
`15
`
`Petitioner’s arguments rely on a premise that is neither
`based in fact nor in law, because nowhere in its brief does
`it give credence to the fact that patent rights are a creation
`of Congress. It merely proffers its premise that a post-
`grant patent right is somehow an Article III enumerated
`power without pointing to a particular provision in the
`U.S. Constitution.
`
`II. DUE TO CONGRESS ENACTING THE AIA TO
`INCLUDE AN IPR, IT HAS MADE PETITIONER’S
`SEVENTH AMENDMENT CONSIDERATION IN
`THIS CASE IRRELEVANT
`
`Because Congress codified it in the AIA, the PTO’s
`IPR is not subject to a Seventh Amendment challenge.
`
`“The exceptions to the charge were confined
`to these two points, which constitute the only
`subject for our consideration. Whether these
`exceptions are well taken or not, must depend
`on the law as it stood at the emanation of the
`patent, together with such changes as have
`been since made; for though they may be
`retrospective in their operation, that is not a
`sound objection to their validity; the powers of
`Congress to legislate upon the subject of patens
`is plenary by the terms of the Constitution, and
`as there are no restraints on its exercise, there
`can be no
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