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 BSA | THE SOFTWARE ALLIANCE
`AS AMICUS CURIAE
`IN SUPPORT OF RESPONDENTS
`
`ANDREW J. PINCUS
`Counsel of Record
`PAUL W. HUGHES
`MATTHEW A. WARING
`Mayer Brown LLP
`1999 K Street, NW
`Washington, DC 20006
`(202) 263-3000
`apincus@mayerbrown.com
`Counsel for Amicus Curiae
`
`
`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 BSA | THE SOFTWARE ALLIANCE
`AS AMICUS CURIAE
`IN SUPPORT OF RESPONDENTS
`
`ANDREW J. PINCUS
`Counsel of Record
`PAUL W. HUGHES
`MATTHEW A. WARING
`Mayer Brown LLP
`1999 K Street, NW
`Washington, DC 20006
`(202) 263-3000
`apincus@mayerbrown.com
`Counsel for Amicus Curiae
`
`
`
`i
`TABLE OF CONTENTS
`
`Page
`Table of Authorities.................................................... ii
`Interest of the Amicus Curiae.....................................1
`Introduction and Summary of Argument...................2
`Argument.....................................................................5
`I. Inter Partes Review Enables The PTO To
`Correct Its Own Errors And Cancel
`Wrongfully-Issued Patents That Otherwise
`Would Deter Innovation And Chill
`Competition............................................................5
`A. Patent quality is essential to
`innovation. ........................................................5
`B. Inter partes review weeds out
`wrongfully-granted patents..............................7
`1. The PTO faces a daunting task in
`assessing the validity of patent
`applications. ................................................7
`2. Post-grant administrative
`procedures—such as inter partes
`review—enable the PTO to correct
`erroneous patent grants..............................9
`II. The Seventh Amendment Does Not Render
`Inter Partes Review Unconstitutional. ...............14
`III.Patents May Be Canceled In
`Administrative Proceedings. ...............................18
`Conclusion .................................................................24
`
`
`
`ii
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`Aronson v. Quick Point Pencil Co.,
`440 U.S. 257 (1979)................................................5
`Atlas Roofing v. Occupational Safety
`& Health Rev. Comm’n,
`430 U.S. 442 (1977)..............................................18
`Bilski v. Kappos,
`561 U.S. 593 (2010)................................................6
`Block v. Hirsh,
`256 U.S. (1921).....................................................18
`Brown v. Duchesne,
`60 U.S. (19 How.) 183 (1856)...............................22
`Cox v. United States,
`332 U.S. 442 (1947)..............................................18
`Cuozzo Speed Techs., LLC v. Lee,
`136 S. Ct. 2131 (2016)................................7, 11, 17
`Feltner v. Columbia Pictures Television, Inc.,
`523 U.S. 340 (1998)..............................................14
`Graham v. John Deere Co.,
`383 U.S. 1 (1966)....................................................5
`Granfinanciera, S.A. v. Nordberg,
`492 U.S. 33 (1989)..........................................18, 19
`In re Hall,
`781 F.2d 897 (Fed. Cir. 1986) ................................8
`Hecht Co. v. Bowles,
`321 U.S. 321 (1944)..............................................17
`Horne v. Dep’t of Agric.,
`135 S. Ct. 2419 (2015)..........................................22
`
`
`
`iii
`
`TABLE OF AUTHORITIES—continued
`
`Page(s)
`
`Hunt v. Howe,
`12 F. Cas. 918 (C.C.D.D.C. 1855) ........................20
`James v. Campbell,
`104 U.S. 356 (1882)..............................................22
`Kimble v. Marvel Entm’t, LLC,
`135 S. Ct. 2401 (2015)............................................5
`In re Klopfenstein,
`380 F.3d 1345 (Fed. Cir. 2004) ..............................8
`KSR Int’l Co. v. Teleflex Inc,
`550 U.S. 398 (2007)..............................................13
`Markman v. Westview Instruments, Inc.,
`517 U.S. 370 (1996)..............................................14
`Massachusetts Inst. of Tech. v. AB Fortia,
`774 F.2d 1104 (Fed. Cir. 1985) ..............................8
`Mayo Collaborative Servs. v.
`Prometheus Labs., Inc.,
`566 U.S. 66 (2012)..................................................5
`McClurg v. Kingsland,
`42 U.S. (1 How.) 202 (1843).................................19
`Microsoft Corp. v. i4i Ltd. P’ship,
`564 U.S. 91 (2011)................................................13
`N. Pipeline Const. Co. v. Marathon Pipe Line Co.,
`458 U.S. 50 (1982)................................................21
`Pernell v. Southall Realty,
`416 U.S. 363 (1974)..............................................18
`
`
`
`iv
`
`TABLE OF AUTHORITIES—continued
`
`Page(s)
`
`Precision Instrument Mfg. Co. v.
`Automotive Maintenance Machinery Co.,
`324 U.S. 806 (1945)..............................................12
`Sears, Roebuck & Co. v. Stiffel Co.,
`376 U.S. 225 (1964)..............................................23
`Stern v. Marshall,
`564 U.S. 462 (2011)..................................19, 21, 23
`Thomas v. Union Carbide
`Agricultural Prods. Co.,
`473 U.S. 568 (1985)........................................21, 23
`Tull v. United States,
`481 U.S. 412 (1987)..............................................18
`United States v. Line Materials Co.,
`333 U.S. 287 (1948)..............................................23
`Constitutional Provisions, Statutes, and
`Regulations
`U.S. Const. art. I, § 8, cl. 8 ........................................19
`35 U.S.C.
`§ 2(a) .....................................................................20
`§ 101 .....................................................................19
`§ 102 .................................................................6, 19
`§ 103 .................................................................6, 19
`§ 154(a)(2).............................................................23
`§ 261 .....................................................................24
`§ 282(a) .................................................................13
`§ 302 .......................................................................9
`§ 304 .......................................................................9
`§ 311 ...............................................................16, 17
`§ 316(a) .................................................................12
`
`
`
`v
`
`TABLE OF AUTHORITIES—continued
`
`Page(s)
`
`§ 321 .....................................................................13
`35 U.S.C. § 135 (1952)...............................................20
`35 U.S.C. § 314(b)(3) (2000) ......................................10
`Act of Dec. 12, 1980, Pub. L. No. 96-517,
`§ 1, 94 Stat. 3015....................................................9
`Bankruptcy Act of 1841, Ch. 9, § 1, 5
`Stat. 440, 440-442 ................................................21
`Bankruptcy Act of 1867, Ch. 176, § 2, 14
`Stat. 517, 518 .......................................................21
`Patent Act of 1790, Ch. 7, § 1, 1 Stat.
`109, 110 ..................................................................2
`Patent Act of 1836, Ch. 357, § 8, 5 Stat.
`117, 120-121 (July 4, 1836)..................................20
`Patent Act of 1870, Ch. 230, § 42, 16
`Stat. 198, 204 (July 8, 1870)................................20
`37 C.F.R. §§ 42.1-42.80 .............................................12
`Other Authorities
`157 Cong. Rec. 2,707 (2011) ........................................6
`157 Cong. Rec. 2,843 (2011) ........................................8
`157 Cong. Rec. 3,401 (2011) ........................................9
`157 Cong. Rec. 13,024 (2011) ....................................12
`America Invents Act, Hearing before the
`Subcomm. on Intellectual Property,
`Competition and the Internet of the H.
`Judiciary Comm., 112th Cong. (2011) ................10
`
`
`
`vi
`
`TABLE OF AUTHORITIES—continued
`
`Page(s)
`
`American Intellectual Property Law Association
`2015 Report of the Economic Survey (2015) .........7
`Julie E. Cohen & Mark A. Lemley, Patent Scope
`& Innovation in the Software Industry, 89
`Cal. L. Rev. 1 (2001)...............................................8
`Homersham Cox, The British Commonwealth: or
`A Commentary on the Institutions and
`Principles of British Government (1854).............15
`D. Seaborne Davies, The Early History of the
`Patent Specification, 50 L.Q. Rev. 86 (1934).......15
`Joseph Farrell & Robert P. Merges, Incentives to
`Challenge and Defend Patents: Why Litigation
`Won’t Reliably Fix Patent Office Errors and
`Why Administrative Patent Review May Help,
`19 Berkeley Tech L.J. 943 (2004) ..........................7
`Fed. Trade Comm’n, To Promote Innovation: The
`Proper Balance of Competition and Patent
`Law and Policy (Oct. 2003) ....................................6
`H.R. Rep. No. 112-98 (2011)..................................7, 11
`E. Wyndham Hulme, Privy Council Law and
`Practice of Letters Patent for Invention from
`the Restoration to 1794,
`33 L.Q. Rev. 180 (1917)........................................16
`Mark A. Lemley, Why Do Juries Decide If
`Patents Are Valid?,
`99 Va. L. Rev. 1673 (2013)...................................16
`
`
`
`vii
`
`TABLE OF AUTHORITIES—continued
`
`Page(s)
`
`Stephen A. Merrill et al., Comm. on Intellectual
`Property Rights in the Knowledge-Based
`Economy, Nat’l Research Council, A Patent
`System for the 21st Century (2004)......................11
`Sharon Hamby O’Connor & Mary Sarah Bilder,
`Appeals to the Privy Council before American
`Independence: An Annotated Digital
`Catalogue, 104 L. Lib. J. 83 (2012)......................15
`Patent Quality Improvement: Post Grant
`Opposition: Hearing before the Subcomm. on
`the Courts, the Internet, and Intellectual
`Property of the H. Judiciary Comm., 108th
`Cong. (2004) .........................................................10
`S. Rep. No. 110-259 (2008)........................................11
`U.S. Patent & Trademark Office, Performance
`and Accountability Report, Fiscal Year 2016
`(Nov. 14, 2016) .......................................................3
`
`
`
`BRIEF OF BSA | THE SOFTWARE ALLIANCE
`AS AMICUS CURIAE IN SUPPORT OF
`RESPONDENTS
`
`INTEREST OF THE AMICUS CURIAE
`BSA | The Software Alliance is an association of
`the world’s leading software and hardware technolo-
`gy companies. On behalf of its members, BSA pro-
`motes policies that foster innovation, growth, and a
`competitive marketplace for commercial software
`and related technologies. Because patent policy is vi-
`tally important to promoting the innovation that has
`kept the United States at the forefront of software
`and hardware development, BSA members have a
`strong stake in the proper functioning of the U.S. pa-
`tent system.1
`BSA members are among the Nation’s leading
`technology companies, producing much of the hard-
`ware and software that power computer and tele-
`communication networks. Due to the complexity and
`commercial success of their products, these compa-
`nies are frequently the subject of patent infringe-
`ment claims.
`At the same time, by virtue of their inventions,
`BSA members hold tens of thousands of patents. Be-
`cause they are both innovators as well as substantial
`patent holders, BSA members have a particularly
`
`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 contribu-
`tion to its preparation or submission. The parties’ blanket con-
`sent letters to the filing of amicus briefs have been filed with
`the Clerk’s office.
`
`
`
`2
`
`acute interest in properly calibrated mechanisms for
`ensuring patent quality.
`The members of BSA include Adobe, ANSYS,
`Apple, Autodesk, Bentley Systems, CA Technologies,
`CNC/Mastercam, DataStax, DocuSign,
`IBM, Mi-
`crosoft, Oracle, salesforce.com, SAS Institute, Sie-
`mens
`PLM Software,
`Splunk,
`Symantec,
`TheMathWorks, TrendMicro, Trimble Solutions Cor-
`poration, and Workday.
`INTRODUCTION AND
`SUMMARY OF ARGUMENT
`Congress, in the very first Patent Act adopted in
`1790, recognized that applying the standards for de-
`termining whether a claimed invention is patentable
`was a specialized task requiring technical expertise.
`It therefore designated a Patent Board consisting of
`the Secretary of State (who at the time was the in-
`ventor Thomas Jefferson), the Secretary of War, and
`the Attorney General and delegated to that Board
`the responsibility for evaluating patent applications
`and issuing patents “if they shall deem the invention
`or discovery sufficiently useful and important.” Pa-
`tent Act of 1790, Ch. 7, § 1, 1 Stat. 109, 110.
`As fields of invention have multiplied and tech-
`nology has become more complex,
`considerably
`greater expertise is required to determine whether a
`claimed invention satisfies the statutory standards
`for issuing a patent. Thus, the function once per-
`formed by the Patent Board is now served by the Pa-
`tent and Trademark Office (PTO), which employs
`
`
`
`3
`
`some 8,000 patent examiners and issues more than
`300,000 patents each year.2
`The PTO possesses substantial technical exper-
`tise, but its process for determining whether a patent
`should issue is not perfect. The hundreds of thou-
`sands of patent applications that the PTO receives
`each year and the complexity of many of those appli-
`cations make it impossible for the Office to identify
`and review all of the relevant information bearing on
`the merits of each application.
`Congress—recognizing this problem, and the
`substantial harm to innovation and competition that
`result from wrongfully-issued patents—has therefore
`determined that it is necessary to create a backstop
`procedure to enable correction of errors in the initial
`examination process. It has established administra-
`tive procedures through which the PTO may revisit
`its decisions to issue a patent and cancel the patent’s
`claims if it finds that the patent, or some of its
`claims, should not have been granted.
`The PTO has long had this authority to adjudi-
`cate patent validity. As early as the nineteenth cen-
`tury, the PTO adjudicated interference proceedings
`between a new patent application and an already-
`granted patent (to determine patent priority). More
`recently, Congress created the ex parte reexamina-
`tion and inter partes reexamination procedures, both
`
`2 See U.S. Patent & Trademark Office, Performance and Ac-
`countability Report, Fiscal Year 2016 at 15 (Nov. 14, 2016),
`https://www.uspto.gov/sites/default/files/documents/USPTOFY1
`6PAR.pdf (PTO employed 8,351 patent examiners at the end of
`FY2016); id. at 181 (PTO issued 329,612 patents in FY2014,
`322,449 patents in FY2015, and 334,107 patents in FY2016).
`
`
`
`4
`
`of which allowed a third party to request reexamina-
`tion of an existing patent.
`Petitioner argues that inter partes review—the
`most recent effort by Congress to create an effective
`administrative process for canceling wrongfully-
`issued patents—must be invalidated because it can-
`cels patents without a jury trial or the involvement
`of an Article III court. Those arguments are merit-
`less: patents are undisputedly a form of property, but
`neither the Seventh Amendment nor Article III is a
`bar to cancellation of patents in administrative pro-
`ceedings such as inter partes review.
`The Seventh Amendment, this Court has repeat-
`edly held, does not apply to equitable claims, and an
`inter partes review proceeding—in which the only
`possible “relief” is modification or cancellation of pa-
`tent claims—is equitable in nature. In any event,
`where the Constitution permits adjudication by a
`non-Article III tribunal, the Seventh Amendment
`does not apply—and inter partes review does not vio-
`late Article III.
`This Court has held time and again that entitle-
`ments created by federal law can be adjudicated in
`administrative proceedings, rather than Article III
`courts. That well-established principle disposes of
`this case.
`Inter partes review—like the forms of post-grant
`administrative patent review that preceded it—
`serves a critically important role in the patent sys-
`tem. The complexity of modern technology and the
`limited resources available to the PTO make it im-
`possible for the PTO to screen out all unpatentable
`claims in its initial patent examinations. It is there-
`fore essential that the PTO have the opportunity to
`
`
`
`5
`
`I.
`
`the question of patentability post-grant.
`revisit
`Without inter partes review, more wrongfully-issued
`patents will remain in place, deterring innovation
`and creating a drag on the Nation’s economy. The
`decision below should accordingly be affirmed.
`ARGUMENT
`Inter Partes Review Enables The PTO To
`Correct Its Own Errors And Cancel Wrong-
`fully-Issued Patents That Otherwise Would
`Deter Innovation And Chill Competition.
`A. Patent quality is essential to innovation.
`This Court has explained that a patent is “a re-
`ward, an inducement, to bring forth new knowledge.”
`Graham v. John Deere Co., 383 U.S. 1, 9 (1966).
`“[T]he promise of exclusive rights provides monetary
`incentives that lead to creation, invention, and dis-
`covery. On the other hand, that very exclusivity can
`impede the flow of information that might permit,
`indeed spur, invention.” Mayo Collaborative Servs. v.
`Prometheus Labs., Inc., 566 U.S. 66, 92 (2012).
`The standards established by Congress for grant-
`ing a patent strike this balance “between fostering
`innovation and ensuring public access to discover-
`ies.” Kimble v. Marvel Entm’t, LLC, 135 S. Ct. 2401,
`2406-07
`(2015).
`“[T]he
`stringent
`requirements
`for patent protection seek to assure that ideas in the
`public domain remain there for the free use of the
`public.” Aronson v. Quick Point Pencil Co., 440 U.S.
`257, 262 (1979). And there is, accordingly, a “strong
`federal policy that only inventions which meet the
`rigorous requirements of patentability shall be with-
`drawn from the public domain.” Id. at 264. See also
`Graham, 383 U.S. at 19.
`
`
`
`6
`
`Those requirements, set forth in the Patent Act,
`include, for example, novelty (35 U.S.C. § 102) and
`nonobviousness (id. § 103). Patents that should not
`have been issued—those in which the invention
`claimed is obvious, not novel, or otherwise fails the
`statutory standards—damage the public interest in
`several ways.
`To begin with, such patents chill the develop-
`ment of new technologies. In fields where important
`technologies or methods can be monopolized by
`wrongfully issued patents, “patent examiners and
`courts could be flooded with claims that would put a
`chill on creative endeavor and dynamic change.”
`Bilski v. Kappos, 561 U.S. 593, 608 (2010); Fed.
`Trade Comm’n, To Promote Innovation: The Proper
`Balance of Competition and Patent Law and Policy,
`Executive Summary, at 5 (Oct. 2003) (“One firm’s
`questionable patent may lead its competitors to fore-
`go R&D in the area that the patent improperly co-
`vers.”).
`A competitor that does choose to enter the mar-
`ket, meanwhile, may be forced to agree to unneces-
`sary licenses, driving up its costs. Id., Ch. 5, at 2-3;
`157 Cong. Rec. 2,707 (2011) (remarks of Sen. Leahy)
`(“Patents of low quality and dubious validity” enable
`the strategic use of
`infringement
`litigation, or
`threats of such litigation, to “extort unreasonable li-
`censing fees from legitimate businesses,” producing
`“a drag on innovation.”).
`Competitors also may face patent infringement
`lawsuits from holders of wrongfully-issued patents—
`generating tremendous litigation and settlement
`costs. One survey of patent practitioners, for exam-
`ple, calculated that in cases where more than $25
`million was at stake, the median cost of litigation
`
`
`
`7
`
`was $5 million. American Intellectual Property Law
`Association 2015 Report of the Economic Survey 37-
`38 (2015).
`The costs inflicted by wrongfully-issued patents
`are ultimately borne by consumers. See Joseph Far-
`rell & Robert P. Merges, Incentives to Challenge and
`Defend Patents: Why Litigation Won’t Reliably Fix
`Patent Office Errors and Why Administrative Patent
`Review May Help, 19 Berkeley Tech L.J. 943, 946
`(2004) (“[A]n improper patent is typically an unwar-
`ranted burden on consumers and on other innova-
`tion.”).
`Such unjustified patents may delay or even pre-
`clude the development of new products for consum-
`ers. And because they deter would-be inventors from
`entering the marketplace, they chill competition—
`further increasing the prices that consumers pay.
`Congress itself recognized the need to “‘improve
`patent quality and restore confidence in the pre-
`sumption of validity that comes with issued pa-
`tents’”—which is precisely why it enacted the Ameri-
`ca Invents Act. Cuozzo Speed Techs., LLC v. Lee, 136
`S. Ct. 2131, 2139-40 (2016) (quoting H.R. Rep. No.
`112-98, at 45, 48 (2011)).
`B. Inter partes review weeds out wrongful-
`ly-granted patents.
`1. The PTO faces a daunting task in as-
`sessing the validity of patent applications.
`The PTO’s primary opportunity to prevent a
`wrongful patent grant is at the application stage,
`when it assesses whether an inventor has met the
`requirements for patentability. But the PTO is not
`perfect. It can and does make mistakes and issues
`
`
`
`8
`
`patents for inventions that, in fact, do not satisfy the
`statutory standards.
`For example, the PTO may fail to recognize that
`the claimed invention was anticipated by prior art or
`was otherwise obvious. Relevant prior art may be
`overlooked because it is difficult to find or available
`only from an obscure source. A patent can be invali-
`dated based on an unpublished doctoral thesis avail-
`able only in the library of Freiburg University. In re
`Hall, 781 F.2d 897, 899-900 (Fed. Cir. 1986). A paper
`orally presented in an open forum constituted a
`“printed publication” for purposes of prior art, even
`when a mere six copies were distributed. Massachu-
`setts Inst. of Tech. v. AB Fortia, 774 F.2d 1104, 1109
`(Fed. Cir. 1985). And a 14-slide lecture, orally pre-
`sented, and then displayed on poster boards for less
`than three days at an association meeting, was found
`to be prior art—even though the lecture was never
`disseminated nor indexed in a library. In re Klopfen-
`stein, 380 F.3d 1345, 1350-51 (Fed. Cir. 2004).
`Prior art may also be difficult to discover because
`inventions in some industries are not well cata-
`logued. For example, “most software inventions are
`not described in published journals,” a problem “the
`PTO itself ha[s] recognized” makes searching for pri-
`or art in the software realm difficult. Julie E. Cohen
`& Mark A. Lemley, Patent Scope & Innovation in the
`Software Industry, 89 Cal. L. Rev. 1, 13, 42 (2001).
`In short, “[i]t is unrealistic to believe a patent
`examiner would know all of the places to look for
`[relevant]
`information” at the examination stage,
`“and even if the examiner knew where to look, it is
`unlikely he or she would have the time to search all
`of these nooks and crannies.” 157 Cong. Rec. 2,843
`(2011) (remarks of Sen. Klobuchar). Resource limita-
`
`
`
`9
`
`tions also may prevent the PTO from identifying and
`examining all relevant art during patent prosecution.
`“Patent examiners are facing a difficult task” in
`weeding out low-quality patents “given the explosion
`in the number of applications and the increasing
`complexity of those applications.” 157 Cong. Rec.
`3,401 (2011) (remarks of Sen. Leahy).
`2. Post-grant administrative procedures—
`such as inter partes review—enable the
`PTO to correct erroneous patent grants.
`Recognizing the limitations of the PTO at the ini-
`tial examination stage, Congress has repeatedly
`sought to bolster the PTO’s ability to police patent
`quality by creating post-grant administrative pro-
`cesses in which the PTO can reassess the decisions
`made in initial patent examinations and cancel im-
`proper patent claims.
`First, in 1980, Congress authorized the PTO to
`conduct ex parte reexaminations. See Act of Dec. 12,
`1980, Pub. L. No. 96-517, § 1, 94 Stat. 3015. Under
`the 1980 law, “[a]ny person” may request reexamina-
`tion of the claims in a patent based on prior art. 35
`U.S.C. § 302. If the PTO’s Director determined that a
`request raises a substantial new question of patent-
`ability regarding one or more claims of the patent,
`the Director can order reexamination of the patent.
`Id. § 304. The patent owner is permitted to file a
`statement on the issue, and the requester of the
`reexamination is permitted to file a response. Ibid.
`Given the limited scope of participation by the
`third party requester—a single reply to the patent-
`ee’s statement on patentability—“potential challeng-
`ers have regarded ex parte reexamination as an in-
`sufficient mechanism” for challenging and reexamin-
`
`
`
`10
`
`ing issued patents. Patent Quality Improvement: Post
`Grant Opposition: Hearing before the Subcomm. on
`the Courts, the Internet, and Intellectual Property of
`the H. Judiciary Comm., 108th Cong. 5 (2004) (tes-
`timony of James A. Toupin, General Counsel, PTO)
`(“Patent Quality Hearing”).
`Congress, in 1999, created a second procedure,
`“inter partes reexamination,” which resembled ex
`parte reexamination but allowed third-party re-
`questers to participate to a greater extent in the pro-
`ceedings, by filing comments on a patentee’s re-
`sponse to an action of the PTO during the reexami-
`nation. See 35 U.S.C. § 314(b)(3) (2000).
`Inter partes reexamination did not prove to be
`any more attractive to third-party requesters than ex
`parte reexamination. Although it allowed greater
`participation by the third-party requester, a re-
`quester still lacked the ability to conduct discovery or
`cross-examine a patentee’s evidence, which deterred
`third parties from using the procedure. Patent Quali-
`ty Hearing at 9 (statement of James A. Toupin).
`Would-be requesters were also reluctant to initiate
`inter partes reexaminations because they would be
`bound by the result of the proceedings in subsequent
`litigation. Ibid.
`The consequence of these limitations, as the PTO
`repeatedly informed Congress, was that that the pro-
`cedure was being underutilized. See, e.g., America
`Invents Act, Hearing before the Subcomm. on Intellec-
`tual Property, Competition and the Internet of the H.
`Judiciary Comm., 112th Cong. 51-52 (2011) (testi-
`mony of David J. Kappos, Under Sec’y of Commerce
`for Intellectual Property & Dir., PTO) (agreeing that
`from 1999 through 2010, decisions were issued in
`221 inter partes reexaminations); Patent Quality
`
`
`
`11
`
`Hearing at 9 (statement by Toupin noting that in the
`five years preceding 2004, PTO had issued approxi-
`mately 900,000 patents and received only 46 re-
`quests for inter partes reexamination).
`Because ex parte reexamination and inter partes
`reexamination were rarely invoked, neither process
`improved patent quality. In 2004, for example, the
`National Academy of Sciences (NAS) concluded in a
`well-publicized report that “[t]here are several rea-
`sons to suspect that more issued patents are deviat-
`ing from . . . desirable standards of utility, novelty,
`and especially non-obviousness.” Stephen A. Merrill
`et al., Comm. on Intellectual Property Rights in the
`Knowledge-Based Economy, Nat’l Research Council,
`A Patent System for the 21st Century at 51 (2004).
`NAS called upon Congress to create a new post-grant
`review procedure that would allow third parties to
`participate to a greater extent, and to challenge pa-
`tentability on more grounds, than they could in exist-
`ing procedures. Id. at 96-97.
`Legislators agreed with the NAS’s assessment,
`concluding that reexamination “remains trouble-
`somely inefficient and ineffective” and that “[t]he
`time has come to eliminate the inter partes reexami-
`nation system and replace it with a new post-grant
`review system at the” PTO. S. Rep. 110-259, at 4
`(2008).
`In 2011, Congress replaced inter partes reexami-
`nation with inter partes review, citing “a growing
`sense that questionable patents are too easily ob-
`tained and are too difficult to challenge.” H.R. Rep.
`No. 112-98, at 39. Congress concluded that providing
`a more “efficient system for challenging patents that
`should not have been issued” would strengthen the
`patent system. Id. at 39-40, 45, 48. See also, e.g.,
`
`
`
`12
`
`Cuozzo Speed Techs., 136 S. Ct. at 2144 (observing
`that “inter partes review helps protect the public’s
`‘paramount interest in seeing that patent monopolies
`* * * are kept within their legitimate scope’”) (quot-
`ing Precision Instrument Mfg. Co. v. Automotive
`Maintenance Machinery Co., 324 U.S. 806, 816
`(1945)).
`During inter partes review, the petitioner for re-
`view and the patentee both participate fully in the
`proceeding before the PTO’s Patent Trial and Appeal
`Board. That proceeding can include discovery, affi-
`davits, briefing, and oral argument, as necessary.
`See 35 U.S.C. § 316(a); 37 C.F.R. §§ 42.1-42.80.
`These processes are an important means for de-
`tecting and invalidating patents that were wrongful-
`ly issued. They allow the PTO—the expert adminis-
`trative agency that makes patentability decisions in
`the first place—to bring its technical knowledge to
`bear and reexamine the decision to grant a patent in
`light of new evidence. By establishing a multi-party
`process,
`inter partes review also leverages the
`knowledge, expertise, and resources of industry par-
`ticipants. The benefits of involvement by third par-
`ties are particularly important given the increasing
`complexity of the technology that is often at issue.
`See 157 Cong. Rec. 13,024 (2011) (remarks of Sen.
`Klobuchar) (“[T]hird parties are often in the best po-
`sition to challenge a patent application. Without the
`benefit of this outside expertise, an examiner might
`grant a patent for technology that simply isn’t a true
`innovation.”).
`There is another extremely important reason
`why Congress empowered the PTO to correct an er-
`roneously-issued patent. In patent infringement liti-
`gation, a patent carries a presumption of validity,
`
`
`
`13
`
`which may be rebutted only if the party challenging
`the patent satisfies the “clear and convincing evi-
`dence” standard. 35 U.S.C. § 282(a); Microsoft Corp.
`v. i4i Ltd. P’ship, 564 U.S. 91, 95 (2011). The justifi-
`cation for that high evidentiary burden, is “that the
`PTO,
`in its expertise, has approved the [patent]
`claim.” KSR Int’l Co. v. Teleflex Inc, 550 U.S. 398,
`426 (2007).
`If the PTO could not cancel wrongfully-issued pa-
`tents, the clear and convincing evidence test would
`shield many of those patents from invalidation—
`because the evidence of invalidity, although strong,
`is not sufficient to overcome that burden. A proce-
`dure before the PTO addresses that concern and en-
`sures that the high evidentiary burden will not pro-
`tect erroneously-issued patents.
`Accepting petitioner’s argument and invalidating
`inter partes review would thus eliminate a critically
`important mechanism for cancelling wrongfully-
`issued patents, and thereby inflict harm on inventors
`and consumers alike.3
`Beyond that, petitioner’s arguments would effec-
`tively doom all PTO review processes for existing pa-
`tents, because petitioner offers no compelling reason
`to distinguish inter partes review from ex parte
`reexamination (or from post-grant review under 35
`U.S.C. § 321, another review process created by the
`America Invents Act). Petitioner argues in passing
`that ex parte reexamination is an “interactive pro-
`ceeding between the agency and the patent owner”
`
`3 There may be concerns about aspects of the PTO’s implemen-
`tation of inter partes review, but any such concerns have no
`bearing on the constitutional questions before the Court.
`
`
`
`14
`
`that lacks “all the trappings of litigation” (Pet. Br.
`50), but that distinction makes no difference. In both
`procedures, a non-Article III decision maker may
`cancel patent claims—a power that, according to pe-
`titioner, may be exercised solely by an Article III
`court. Id. at 20-27. See also U.S. Br. 24 (“At the end
`of both proceedings, however, the agency makes the
`same decision: whether a patent (or particular patent
`claims) should be cancelled.”). If petitioner prevails,
`therefore, ex parte reexamination and post-grant re-
`view are likely also to disappear—and with them any
`ability of the PTO to police the quality of patents af-
`ter they are granted.
`II. The Seventh Amendment Does Not Render
`Inter Partes Review Unconstitutional.
`Petitioner argues (Pet. Br. 50-58) that inter
`partes review violates patentees’ Seventh Amend-
`ment rights, but the Seventh Amendment has no ap-
`plication to inter partes review.
`The Seventh Amendment exists to “preserve the
`substance of the common-law right [to trial by jury]
`as it existed in 1791.” Markman v. Westview Instru-
`ments, Inc., 517 U.S. 370, 376 (1996). It therefore
`does not apply in cases in which “equitable rights
`alone [a]re recognized, and equitable remedies [a]re
`administered.” Feltner v. Columbia Pictures Televi-
`sion, Inc., 523 U.S. 340, 348 (1998). Multiple factors
`confirm that inter partes review is an equitable pro-
`ceeding outside the scope of the Seventh Amend-
`ment.
`First, in 1791, English law provided a means by
`which a non-judicial body could cancel patents.
`For many years prior to 1791, English patents
`contained “revocation” clauses, stating that “if on ex-
`
`
`
`15
`
`amination of the patent before the Privy Council,
`* * * the [patent] grant was certified to be inconven-
`ient or prejudicial to the re
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