`
`
`
`
`
`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.
`
`ON WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
`
`BRIEF FOR APPLE INC. AS AMICUS CURIAE
`IN SUPPORT OF RESPONDENTS
`
`
`
`JAMES R. BATCHELDER
`ROPES & GRAY LLP
`1900 University Avenue
`Palo Alto, CA 94303
`
`SAMUEL BRENNER
`ROPES & GRAY LLP
`Prudential Tower
`800 Boylston Street
`Boston, MA 02199
`
`
`
`
`
`DOUGLAS HALLWARD-DRIEMEIER
`Counsel of Record
`SCOTT MCKEOWN
`MATTHEW RIZZOLO
`JONATHAN FERENCE-BURKE
`ROPES & GRAY LLP
`2099 Pennsylvania Avenue, NW
`Washington, DC 20006
`(202) 508-4600
`Douglas.Hallward-Driemeier
`@ropesgray.com
`
`
`
`
`
`
`
`
`I
`
`TABLE OF CONTENTS
`
`Page
`
`Interest of amicus curiae ................................................... 1
`Summary of argument ....................................................... 3
`Argument:
`I.
`IPR benefits the patent system because the
`PTAB can reassess previous determinations of
`patentability ............................................................... 4
`A. Recognizing the limitations inherent in
`the patent examination process,
`Congress enacted the AIA to allow the
`PTO to review its own decisions .................... 5
`B. By enacting the AIA, Congress allowed
`the PTO to address critical clarifications
`in patent law regarding the patentability
`of claims.............................................................. 7
`C. Precedent and common sense support
`the PTAB’s robust intra-agency review
`of the initial examination decisions made
`by PTO examiners in an ex parte process .... 9
`D. The structure and process Congress
`designed for the PTAB in the AIA make
`well-informed and correct outcomes
`likely ................................................................. 11
`II. The AIA benefits litigants and the patent
`litigation system ...................................................... 17
`A. Adjudication of patentability before the
`PTAB saves litigants substantial time
`and money and conserves judicial
`resources .......................................................... 17
`
`
`
`(I)
`
`
`
`
`Table of Contents—Continued
`
`II
`
`Page
`
`2.
`
`1. SightSound Technologies, LLC v.
`Apple, Inc. ............................................ 21
`Jongerius Panoramic
`Technologies, LLC v. Apple, Inc. ...... 22
`3. Global Touch Solutions, LLC v.
`Apple Inc. ............................................. 24
`B. Even where the litigation is not resolved
`by proceedings before the PTAB, the IPR
`process will often focus the parties’
`disputes and conserve judicial resources .... 25
`C. The PTAB’s transparent procedures
`create indirect benefits for the PTO that
`improve the patent system ........................... 27
`Conclusion .......................................................................... 28
`
`
`
`
`
`III
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`
`
`Cases:
`
`Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347
`(2014) ......................................................................... 9
`Apple, Inc. v. Aylus Networks, Inc., No.
`IPR2014-01565, 2015 WL 1870710 (P.T.A.B.
`Apr. 22, 2015) ......................................................... 25
`Apple, Inc. v. Aylus Networks, Inc., No.
`IPR2014-01566, 2015 WL 1870711 (P.T.A.B.
`Apr. 23, 2015) ......................................................... 25
`Aylus Networks, Inc. v. Apple Inc., 856 F.3d
`1353 (Fed. Cir. 2017) ............................................. 26
`Bilski v. Kappos, 561 U.S. 593 (2010) ......................... 9
`Carroll v. President & Comm’rs of Princess
`Anne, 393 U.S. 175 (1968) ....................................... 6
`Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct.
`2131 (2016) .............................................................. 13
`EmeraChem Holdings, LLC v. Volkswagen
`Grp. of Am., Inc., 859 F.3d 1341 (Fed. Cir.
`2017) ......................................................................... 15
`Executive Benefits Ins. Agency v. Arkison,
`134 S. Ct. 2165 (2014) ............................................ 16
`Google Inc. v. Jongerius Panoramic Techs.,
`LLC, No. IPR2013-00191, 2014 WL 4059861
`(P.T.A.B. Aug. 12, 2014) ....................................... 23
`Homeland Housewares, LLC v. Whirlpool
`Corp., 865 F.3d 1372 (Fed Cir. 2017) .................. 14
`Kaley v. United States, 134 S. Ct. 1090 (2014) .......... 6
`
`
`
`
`
`
`
`
`
`Cases—Continued:
`
`IV
`
`Page(s)
`
`KSR Int’l Co. v. Teleflex, Inc., 550 U.S. 398
`(2007) ......................................................................... 8
`Lear, Inc. v. Adkins, 395 U.S. 653 (1969) ................... 8
`McKart v. United States, 395 U.S. 185 (1969) ......... 10
`Mercoid Corp. v. Mid-Continent Inv. Co., 320
`U.S. 661 (1944).......................................................... 8
`Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91
`(2011) ......................................................................... 8
`In re Nuvasive, Inc., 842 F.3d 1376 (Fed Cir.
`2016) ......................................................................... 14
`Phillips v. AWH Corp., 415 F.3d 1303 (Fed.
`Cir. 2005) (en banc), cert. denied, 546 U.S.
`1170 (2008) .............................................................. 13
`Pregis Corp. v. Kappos, 700 F.3d 1348 (Fed.
`Cir. 2012) ................................................................. 10
`SightSound Techs., LLC v. Apple, Inc.,
`809 F.3d 1307 (Fed. Cir. 2015), cert. denied,
`137 S. Ct. 813 (2017) .............................................. 22
`Ultratec, Inc. v. CaptionCall, LLC, 872 F.3d
`1267 (Fed. Cir. 2017) ............................................. 15
`Unwired Planet, LLC v. Google Inc., 841 F.3d
`995 (Fed. Cir. 2016) ............................................... 14
`Woodford v. Ngo, 548 U.S. 81 (2006) ............... 3, 10, 17
`
`Constitution, statutes and regulations:
`
`U.S. Const. Art. I, § 8.................................................... 8
`Act of Dec. 12, 1980, Pub. L. No. 96-517, 94
`Stat. 3015 (35 U.S.C. Ch. 30)
`35 U.S.C. 301 et seq. ................................................. 5
`
`
`
`
`
`
`
`
`Statutes and regulations—Continued:
`
`V
`
`Page(s)
`
`35 U.S.C. 303(a) ........................................................ 7
`35 U.S.C. 311(b) ..................................................... 13
`35 U.S.C. 314(a) ...................................................... 13
`35 U.S.C. 314(b) ..................................................... 18
`35 U.S.C. 316(a) ...................................................... 12
`35 U.S.C. 316(a)(11) ......................................... 12, 18
`35 U.S.C. 316(e) ...................................................... 13
`35 U.S.C. 319 ............................................................ 6
`35 U.S.C. 321 ............................................................ 6
`35 U.S.C. 325(d) ..................................................... 12
`Leahy-Smith America Invents Act
`§ 18(a), Pub. L. 112-29, 125 Stat.
`284, 329-331 .................................................... passim
`35 U.S.C. 6(a) ................................................................ 12
`35 U.S.C. 101 .................................................................. 8
`35 U.S.C. 102 .......................................................... 13, 23
`35 U.S.C. 103 ................................................ 8, 13, 21, 23
`35 U.S.C. 122(e) .............................................................. 5
`35 U.S.C. 282 ................................................................ 13
`37 C.F.R.:
`Section 1.520 ............................................................. 7
`Section 42.1 et seq. ............................................. 7, 12
`Section 42.53 ........................................................... 12
`Section 42.61-42.65 ................................................ 12
`Section 42.73(d)(3) ................................................. 28
`Section 42.100(b) .................................................... 13
`Section 42.100(c) .............................................. 12, 18
`
`
`
`
`
`
`
`
`Miscellaneous:
`
`VI
`
`157 Cong. Rec. 3412 (2011) ........................................... 9
`John R. Allison et al., Understanding the
`Realities of Modern Patent Litigation, 92
`Texas L. Rev. 1769 (2014) .................................... 16
`American Intellectual Prop. Law Ass’n, Report
`of the Economic Survey (June 2017)................... 18
`Elliot C. Cook et al., Federal Circuit PTAB
`Appeal Statistics, AIA Blog (Sept. 22,
`2017), https://www.finnegan.com/en/
`insights/blogs/america-invents-act/federal-
`circuit-ptab-appeal-statistics-august-1-
`2017-copy.html ................................................. 11, 12
`Docket Report, Success Rates on Requests to
`Stay Pending IPR, CBM, or PGR through
`2016 (Feb 16, 2017), http://docketreport.
`blogspot.com/2017/02/success-rates-on-
`requests-to-stay.html ............................................ 19
`Eldora Ellison & Jacob Rothenberg, A Survey
`of Patent Owner Estoppel at USPTO (Sept.
`26, 2017) ............................................................. 27, 28
`H.R. Rep. No. 98, 112th Cong., 1st Sess. Pt. 1
`(2011) ................................................................. 6, 7, 8
`Sam Jaffna et al., How PTAB proceedings are
`driving district court settlements,
`Intellectual Asset Management
`(March/April 2016), https://www.scribd.
`com/doc I/314743001/IAM76-PTAB-impact-
`v6#download&from _embed ................................ 20
`
`
`
`
`
`
`
`
`
`
`
`Miscellaneous—Continued:
`
`VII
`
`Page(s)
`
`Josh Landau, Inter Partes Review: Five Years,
`Over $2 Billion Saved, Patent Progress
`(Sept. 14, 2017), https://www.patent
`progress.org/2017/09 /14/inter-partes-
`review-saves-over-2-billion/ ................................. 19
`Jason Rantanen:
`The Federal Circuit and Appeals from the
`Patent Office, Patently-O (Dec. 4, 2016),
`https://patentlyo.com/patent/
`2016/12/federal-circuit-appeals.html ............. 15
`Federal Circuit Now Receiving More
`Appeals Arising from the PTO than the
`District Courts, Patently-O (Mar. 2,
`2016), https://patentlyo.com/patent
`/2016/03/receiving-appeals-district.html ...... 16
`Pedram Sameni, Patlex Chart 25: Apple
`Remains Number One IPR Petitioner in
`2016 Despite the Drop in Litigation,
`Patexia (Jan. 25, 2017), https://www.
`patexia.com/feed/weekly-chart-25-apple-
`remains-number-one-ipr-petitioner-in-2016-
`despite-the-drop-in-litigation-20170124 ......... 2, 17
`PTO:
`Dep’t of Commerce, The Manual of Patent
`Examining Procedure (9th ed. 2015) ............. 8
`PTAB Brochure, https://www.uspto.gov/
`sites/default/files/documents/ptab_broch
`ure_v2_4_10_14.pdf/ ........................................ 11
`
`
`
`
`
`
`
`
`
`
`Miscellaneous—Continued:
`
`VIII
`
`Page
`
`Patent Trial and Appeal Board Statistics
`(Mar. 31, 2017), https://www. uspto.gov/
`sites/default/files/documents/AIA%20Sta
`tistics_March2017.pdf ..................................... 19
`RPX Corp., 2015 Report: NPE Litigation,
`Patent Marketplace, and NPE Cost,
`https://www.rpxcorp.com/wp-
`content/uploads/sit es/2/2016/07/RPX-2015-
`Report-072616.FinalZ.pdf .................................... 18
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`In the Supreme Court of the United States
`
`NO. 16-712
`OIL STATES ENERGY SERVICES, LLC, PETITIONER
`v.
`GREENE’S ENERGY GROUP, LLC, ET AL.
`
`ON WRIT OF CERTIORARI
`TO THE UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
`
`BRIEF FOR APPLE INC. AS AMICUS CURIAE
`IN SUPPORT OF RESPONDENTS
`
`
`INTEREST OF AMICUS CURIAE1
`Amicus Apple Inc. (Apple) is a Cupertino, Califor-
`nia-based corporation established in 1977. Apple de-
`signs, manufactures, and markets mobile communication
`and media devices, personal computers, and portable
`digital music players, and it also sells related products
`and services. Its well-known consumer products include
`the iPhone, iPad, iPod, Mac, Apple Watch, and Apple
`TV. Apple offers operating systems for those products
`
`
`1 All parties have consented to the filing of this amicus curiae brief
`through blanket consent letters filed with the Clerk. No counsel for
`any party authored this brief in whole or in part, and no person or
`entity other than amicus curiae or its counsel made a monetary con-
`tribution intended to fund the preparation or submission of this
`brief.
`
`
`
`(1)
`
`
`
`2
`
`
`as well as related services, such as iCloud (a cloud stor-
`age service that allows users to store media and access
`them on different devices) and Apple Pay (a payment
`service that allows users to make contactless payment in
`stores using a mobile device).
`Apple’s business relies on the innovative skills and
`technical competence of its personnel. As a result, Apple
`holds rights to patents relating to various aspects of its
`products and services, and it regularly files patent appli-
`cations in the United States, as well as around the world,
`to protect the innovations that arise from its research,
`development, and design. Apple has faced a significant
`number of patent claims asserted against it and has like-
`wise initiated infringement actions in United States
`courts, the U.S. International Trade Commission, and
`foreign jurisdictions.
`Apple also has had extensive experience with the
`U.S. Patent and Trademark Office (PTO), including
`through initial patent prosecution as well as the various
`forms of post-issuance proceedings that have existed
`over the years since Apple’s founding. As described in
`more detail infra, Apple has relevant experience with
`the American Invents Act (AIA) and the post-issuance
`proceedings it created, including inter partes review
`(IPR). Indeed, through 2016, Apple had filed the most
`IPR petitions of any petitioner, with its 267 petitions
`comprising almost 5% of all petitions filed since 2012.
`Pedram Sameni, Patlex Chart 25: Apple Remains Num-
`ber One IPR Petitioner in 2016 Despite the Drop in Lit-
`igation, Patexia
`(Jan. 25, 2017), https://www.pa-
`texia.com/feed/weekly-chart-25-apple-remains-number-
`one-ipr-petitioner-in-2016-despite-the-drop-in-litiga-
`tion-20170124. Many of those IPR petitions were related
`
`
`
`
`
`
`
`3
`
`
`to patent infringement litigation in which Apple was a
`defendant and, in a number of those matters, expensive,
`unpredictable, and lengthy patent infringement litiga-
`tion in district court was averted by efficient adjudica-
`tion of the patentability of the patent claims by the Pa-
`tent Trial and Appeal Board (PTAB). As a company that
`holds a substantial patent portfolio and often faces in-
`fringement suits, a sampling of Apple’s experience with
`IPRs illustrates IPR’s salutary effects for the patent
`system.
`
`SUMMARY OF THE ARGUMENT
`By establishing IPR in the AIA, Congress created
`an administrative review mechanism within the patent-
`issuing agency for determining whether a patent was
`correctly issued in the first place. This choice allows the
`PTO—specifically, the PTAB—to review the agency’s
`own decisions under the standards employed in the ini-
`tial review of the patent’s claims and, where appropri-
`ate, to correct those decisions, subject to thorough judi-
`cial review in the Federal Circuit. Indeed, Congress’s
`decision to allow for what is effectively intra-agency ap-
`pellate review of the initial patent examination is wholly
`consistent with longstanding principles of administra-
`tive law, such as administrative exhaustion, which helps
`“promote efficiency” by allowing agency proceedings to
`serve as a “quick[] and economic[]” alternative to federal
`court litigation. Woodford v. Ngo, 548 U.S. 81, 89 (2006).
`In particular, where decisions from this Court make
`clear that the PTO has been applying the wrong stand-
`ard for patentability, the AIA allows the same agency to
`correct such mistakes without the need for expensive,
`resource-intensive, and time-consuming litigation. Do-
`ing so is both sensible and efficient.
`
`
`
`
`
`
`
`
`
`4
`
`Apple is a frequent litigant in patent disputes and
`has extensive firsthand experience with the positive ef-
`fects of Congress’s enactment of IPR (and analogous
`other post-grant proceedings). For example, in several
`cases, Apple has received a ruling on patentability from
`the PTAB in an efficient and focused administrative re-
`view proceeding, reducing, or even eliminating the need
`for litigation. The specific experiences with the PTAB
`discussed infra are mere examples, and they represent
`more generally how litigants are realizing the benefits
`that Congress intended the AIA to bestow—saving
`time, increasing predictability and transparency, and re-
`ducing litigation costs.
`ARGUMENT
`I. IPR BENEFITS THE PATENT SYSTEM BECAUSE
`THE
`PTAB CAN REASSESS
`PREVIOUS
`DETERMINATIONS OF PATENTABILITY
`The core benefit of IPR for the patent system is the
`placement of authority for remedying certain errors in
`the issuance of patents with the very agency that issued
`the patent in the first place, the PTO. For instance, the
`PTO can reassess patents where developments in the
`law have made clear that the patent claims are unpatent-
`able and should never have been issued in the first place.
`Permitting the PTO to correct its own errors in light of
`subsequent clarifications in the law allows for an effi-
`cient course-correction that improves the quality of indi-
`vidual patents and benefits the patent system generally.
`
`
`
`
`
`
`
`
`
`
`5
`
`A. Recognizing The Limitations Inherent In
`The Patent Examination Process, Congress
`Enacted The AIA To Allow The PTO To
`Review Its Own Decisions
`The PTO conducts initial patent examination ex
`parte, and the decision whether to grant a patent gener-
`ally is made by one or more of the PTO’s patent examin-
`ers. The rigor and quality of the initial decision to issue
`a patent depends primarily on the applicant and exam-
`iner, since the role of third parties is tightly circum-
`scribed: they may not participate as stakeholders or ad-
`vocates in the review process, and their role is limited to
`“submit[ting] for consideration and inclusion in the rec-
`ord of a patent application” pieces of prior art. 35 U.S.C.
`122(e). As one example of the limitations inherent in this
`process, relevant prior art that should render claims un-
`patentable may never come to the attention of the exam-
`iner. See, e.g., PTAB Bar Ass’n Amicus Br. 10-14. The
`examiner may also make the initial patentability deter-
`mination applying a legal standard deemed incorrect in
`judicial decisions interpreting the bounds of patentabil-
`ity. Due to the absence of an adverse party, a decision
`to grant a patent is initially made without the benefit of
`a third-party viewpoint and without any administrative
`appellate review or Article III review. The PTO has au-
`thority to reexamine the grant of a patent in ex parte
`reexamination, but there as well the review of patenta-
`bility is conducted ex parte and the third-party peti-
`tioner has no meaningful right to participate. 35 U.S.C.
`301 et seq.
`Through the AIA, Congress created a post-issu-
`ance, adversarial administrative review process that is a
`natural corollary to the ex parte patent issuance process.
`
`
`
`
`
`
`
`6
`
`
`Recognizing the constraints inherent in the patent issu-
`ance process and the ex parte reexamination process,
`Congress designed IPRs as a way for the PTO to review
`and correct its own mistakes when the agency had issued
`a patent erroneously. Seeing “a growing sense that
`questionable patents [were] too easily obtained and
`[were] too difficult to challenge,” Congress responded by
`enacting “a more efficient and streamlined patent sys-
`tem that [would] improve patent quality and limit unnec-
`essary and counterproductive litigation costs.” H.R.
`Rep. No. 98, 112th Cong., 1st Sess. Pt. 1, at 39-40 (2011).
`This Court has frequently recognized the benefits of a
`process informed by participation of a motivated, oppos-
`ing party in producing the best-informed determinations
`of issues: “the adversarial process leads to better, more
`accurate decisionmaking.” Kaley v. United States, 134
`S. Ct. 1090, 1103 (2014). Indeed, “[t]he value of a judicial
`proceeding * * * is substantially diluted where the pro-
`cess is ex parte” because the “fundamental instrument
`for judicial judgment” is “an adversary proceeding in
`which both parties may participate.” Carroll v. Presi-
`dent & Comm’rs of Princess Anne, 393 U.S. 175, 183
`(1968). IPR and its analogues, covered business method
`patent review (CBM) and post-grant review (PGR), em-
`ploy the benefits of adversity of interests in a tightly cir-
`cumscribed proceeding to focus the PTO on any as-yet-
`unconsidered issues, such as prior art of which the pa-
`tent examiner was not aware or inconsistent positions
`taken by a patent applicant.2 The PTO can then review
`
`2 There are slight differences in which patents are eligible for
`IPR, CBM, or PGR and in which grounds of patentability the PTAB
`may review. Compare 35 U.S.C. 319 (IPR), 35 U.S.C. 321 (PGR),
`and Leahy-Smith America Invents Act § 18(a), Pub. L. 112-29, 125
`
`
`
`
`
`
`
`7
`
`
`its own initial decision to issue a patent, employing the
`same standards that governed the initial examination.
`The AIA thus represents both (1) Congress’s
`acknowledgement that many patents had been issued for
`claims that were not patentable, including claims that
`were revealed as unpatentable by later judicial clarifica-
`tions, see pp. 7-9 infra, and (2) Congress’s determination
`to address that problem through creation of an efficient
`and reliable administrative appeal process by which the
`PTO could review its decisions and, when necessary, cor-
`rect them.3
`B. By Enacting The AIA, Congress Allowed
`The PTO To Address Critical Clarifications
`In Patent Law Regarding The Patentability
`Of Claims
`The AIA expressly responded to several watershed
`decisions of this Court that clarified the legal standards
`for patentability. By creating mechanisms through
`which the PTO can revisit patents for claims that, in
`light of those clarifications of patentability standards,
`should not have been approved, Congress sought “to im-
`prove patent quality and restore confidence” in the the
`patent system. H.R. Rep. No. 98, 112th Cong., 1st Sess.
`
`
`Stat. 284, 329-331 (CBM). All three types of review are conducted
`by the PTAB according to substantively identical procedures. See
`37 C.F.R. 42.1 et seq.
`
`3 Notably, the Director of the PTO may initiate reexamination
`“[o]n his own initiative, and any time.” 35 U.S.C. 303(a); 37 C.F.R.
`1.520. This mechanism further reflects the importance of the PTO’s
`ability to correct its mistakes in order to ensure public confidence in
`the patent system.
`
`
`
`
`
`
`
`
`8
`
`
`Pt. 1, at 48; id. at 39 (citing, among others, Bilski v. Kap-
`pos, 561 U.S. 593 (2010) (patentability of abstract ideas
`under 35 U.S.C. 101) and KSR Int’l Co. v. Teleflex, Inc.,
`550 U.S. 398 (2007) (obviousness under 35 U.S.C. 103)).
`Enhancing patent quality by conforming patents to this
`Court’s clarifications in the law is consistent with the
`fundamental goal of the patent system: for Congress “to
`promote the Progress of Science and useful Arts,” U.S.
`Const. Art. I, § 8, which supersedes a patentee’s interest
`in a specific patent mistakenly issued under an errone-
`ous standard, Mercoid Corp. v. Mid-Continent Inv. Co.,
`320 U.S. 661, 665 (1944); see Lear, Inc. v. Adkins, 395
`U.S. 653, 670-671 (1969) (noting “the important public in-
`terest in permitting full and free competition in the use
`of ideas which are in reality a part of the public domain”).
`The establishment of IPRs allowed the PTO to im-
`plement quickly and efficiently important clarifications
`in the law regarding obviousness and anticipation. If a
`patent’s claims are obvious or anticipated, the claims are
`invalid, and “the patent never should have issued in the
`first place.” Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S.
`91, 96 (2011). “[T]he Court’s decisions have moved in the
`direction of improving patent quality and making the de-
`termination of patent validity more efficient,” and the
`PTAB helps carry out those goals. H.R. Rep. No. 98,
`112th Cong., 1st Sess. Pt. 1, at 39. The Manual of Patent
`Examining Procedure (MPEP) has been revised to in-
`corporate decisions like KSR as relevant to patentability
`determinations, confirming that the PTO has extended
`the Court’s guidance to the initial patent examination.
`E.g., PTO, Dep’t of Commerce, MPEP § 2141 (9th ed.
`2015) (containing extensively revised examination
`guidelines for obviousness “in view of” KSR).
`
`
`
`
`
`
`
`
`
`9
`
` Congress also reasonably determined that the
`PTAB should help to implement this Court’s decisions
`regarding patentable subject matter by canceling pa-
`tents that, in light of these decisions, were unpatentable
`for claiming abstract ideas.4 Subsequent decisions, such
`as Alice Corp. v. CLS Bank International, 134 S. Ct.
`2347 (2014), confirm that Congress was correct in seeing
`a need to implement new processes by which the PTO
`could address these significant developments by identi-
`fying patents that were wrongly issued under earlier, er-
`roneous standards.
`C. Precedent And Common Sense Support The
`PTAB’s Robust Intra-Agency Review Of The
`Initial Examination Decisions Made By PTO
`Examiners In An Ex Parte Process
`Core principles of administrative law support Con-
`gress’s decision to allow an agency to review the acts of
`first-line agency decision-makers and, when necessary,
`remedy their errors. For example, the requirement that
`parties exhaust administrative remedies prior to seek-
`ing judicial review reflects this Court’s recognition of
`the benefits of internal agency review. “[N]otions of ad-
`ministrative autonomy require that the agency be given
`
`4 The remedial focus of the AIA is exemplified in Congress’s
`tailored treatment of business-method patents. Congress recog-
`nized that the PTO had issued a “large number of business-method
`patents, many or possibly all of which [were] no longer valid.” 157
`Cong. Rec. 3412, 3420 (2011) (manager’s summary). The very con-
`cept of the transitional CBM program, which will sunset on Septem-
`ber 16, 2020, is consistent with recognizing the primary role of the
`PTO in applying this Court’s precedent in the first instance—as, for
`example, in correcting what Bilski clarified to be erroneously issued
`patents.
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`10
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`a chance to discover and correct its own errors.” McKart
`v. United States, 395 U.S. 185, 195 (1969). Indeed, the
`Court has recognized that judicial review “may be hin-
`dered” if the agency is not permitted “to make a factual
`record, or to exercise its discretion or apply its exper-
`tise.” Ibid. Put simply, “exhaustion promotes effi-
`ciency.” Woodford v. Ngo, 548 U.S. 81, 89 (2006).
`Permitting the PTO to review for and correct its
`own mistakes is all the more justified in light of the ex
`parte nature of the original patent examination process.
`Because there is no third-party participant opposing the
`applicant in the proceeding, there is no opportunity to
`seek immediate appellate review within the agency of
`the examiner’s decision to issue a patent. Moreover,
`once the patent is issued, an interested third party has
`no right to seek judicial review of the examiner’s admin-
`istrative determination: Under a long line of unbroken
`Federal Circuit precedent generated through a variety
`of creative attempts to establish jurisdiction, “a poten-
`tial infringer cannot sue the PTO under the APA to at-
`tack the validity of an issued patent” because “[t]he com-
`prehensive legislative scheme of the Patent Act pre-
`cludes judicial review of the reasoning of PTO decisions
`to issue patents after examination.” Pregis Corp. v.
`Kappos, 700 F.3d 1348, 1357 (2012) (internal quotation
`marks and alterations omitted).
`Finally, allowing the PTO to revisit its prior deci-
`sions through a more targeted proceeding with adverse
`participants makes eminent practical sense. Rather
`than requiring potentially costly infringement litigation
`in order to determine a patent’s validity, the IPR pro-
`cess puts the patent back in the hands of the PTO for a
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`11
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`focused, time-limited second look, by a panel of adminis-
`trative appellate judges, subject to Article III judicial
`review. This arrangement is a reasoned and justified ap-
`proach to the problems inherent in the ex parte patent
`system that both this Court and Congress recognized.
`D. The Structure And Process Congress
`Designed For The PTAB In The AIA Make
`Well-Informed And Correct Outcomes Likely
`The wisdom of Congress’s choice to vest review of
`patent examiners’ patentability determinations in a
`panel of administrative PTAB judges is borne out by the
`process’s tendency to produce well-reasoned and correct
`decisions. This tendency is confirmed by the fact that
`roughly 75% of PTAB rulings were affirmed by the Fed-
`eral Circuit outright, with no remand whatsoever as of
`September 1, 2017. Elliot C. Cook et al., Federal Circuit
`PTAB Appeal Statistics, AIA Blog (Sept. 22, 2017) (Sta-
`tistics), https://www.finnegan.com/en/insights/blogs/am
`erica-invents-act/federal-circuit-ptab-appeal-statistics-
`august-1-2017-copy.html.
`PTAB judges, like their counterparts in administra-
`tive judicial positions in other agencies, must be quali-
`fied and specialized, and the process over which they
`preside is robust and designed to produce quality results
`in which the patent system can be confident. PTAB
`judges must have as “basic qualifications” “[m]any years
`of experience in the practice of patent law” and
`“[d]egree(s)/work experience in science or engineering,”
`and the agency prefers that they have experience with
`“electrical engineering, software, [or] data processing”
`patents. PTO, PTAB Brochure, https://www.uspto.gov/
`sites/default/files/documents/ptab_brochure_v2_4_10_
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`14.pdf/; see also 35 U.S.C. 6(a) (requiring that PTAB
`judges be “persons of competent legal knowledge and
`scientific ability”). These judges benefit in IPRs from
`the inter partes process established in the AIA, receiv-
`ing extensive briefing and oral arguments at which they
`can press advocates on both sides to answer difficult
`questions. See 37 C.F.R. 42.1 et seq. (setting forth rules
`for trial practice and procedure before the PTAB); see
`also 35 U.S.C. 316(a). Importantly, PTAB judges can re-
`ceive new evidence and hear testimony that bears on the
`question of patentability. 37 C.F.R. 42.53, 42.61-42.65.
`And, when multiple post-grant reviews are taking place
`at once, the PTO can coordinate them to ensure efficient
`and consistent proceedings. 35 U.S.C. 325(d). This pro-
`cess allows for a fully informed and searching second
`look at whether a patent’s claims should have been
`granted as an initial matter, all subject to important lim-
`its, such as a time limit of a maximum of one year (or an
`additional six months on good cause) for the IPR to run
`its course after institution. 35 U.S.C. 316(a)(11), 37
`C.F.R. 42.100(c). Statistics to date suggest that the
`PTAB is generally reaching the correct result in cases it
`considers; through September 1, 2017, the Federal Cir-
`cuit affirmed the PTAB’s decisions in their entirety
`74.07% of the time and reversed decisions in their en-
`tirety just 11.11% of the time. Statistics, supra. The
`specific numbers for IPRs are nearly the same, with the
`Federal Circuit affirming completely in 74.07% of ap-
`peals and reversing or vacating completely in just
`11.57%. Ibid.
`Crucially, and in contrast to proceedings before fed-
`eral district courts, Congress designed IPRs in the well-
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`established mold of intra-agency administrative re-
`views. The PTAB reviews the same question as the ini-
`tial examiner—whether the PTO should “cancel as un-
`patentable 1 or more claims of a patent only on a ground
`that could be raised under [35 U.S.C.] 102 or [35 U.S.C.]
`103,” 35 U.S.C. 311(b)—without deference to the initial
`examiner’s decision to issue the patent, beyond the ini-
`tial threshold requirement that a petitioner show “a rea-
`sonable likelihood” of success challenging at least one
`challenged claim, 35 U.S.C. 314(a). The burden on the
`challenger is simply that of “proving a proposition of un-
`patentability by a preponderance of the evidence.” 35
`U.S.C. 316(e). Moreover,
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