`
`Nos. 19-1434, 19-1452, 19-1458
`
`In the Supreme Court of the United States
`____________
`United States of America,
`
`v.
`Arthrex, Inc., et al.,
`
`Petitioner,
`
`Respondents.
`
`____________
`On Writ of Certiorari to the United States Court
`of Appeals for the Federal Circuit
`____________
`BRIEF AMICUS CURIAE OF TIVO
`CORPORATION IN SUPPORT OF
`RESPONDENT ARTHREX
`____________
`
`MICHAEL E. JOFFRE
` Counsel of Record
`JASON D. EISENBERG
`WILLIAM H. MILLIKEN
`STERNE, KESSLER, GOLDSTEIN & FOX, PLLC
`1100 New York Avenue, N.W.
`Washington, D.C. 20005
`(202) 772-8856
`mjoffre@sternekessler.com
`Counsel for Amicus Curiae TiVo Corporation
`December 30, 2020
`
`(Additional Captions Listed on Inside Cover)
`
`
`
`
`
`____________
`
`Smith & Nephew, Inc., et al.,
`Petitioners,
`
`v.
`
`Arthrex, Inc., et al.,
`
`____________
`
`Arthrex, Inc.,
`
`Respondents.
`
`Petitioner,
`
`v.
`Smith & Nephew, Inc., et al.,
`Respondents.
`
`____________
`
`
`
`
`
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`TABLE OF AUTHORITIES ..................................... iii
`INTEREST OF AMICUS CURIAE ........................... 1
`INTRODUCTION AND SUMMARY OF
`ARGUMENT ......................................................... 3
`ARGUMENT .............................................................. 6
`I. The inter partes review regime has failed to
`provide a satisfactory forum for adjudicating
`patent rights. ........................................................ 6
`A. Patent infringers frequently abuse the inter
`partes review process to conduct multiple
`attacks on the validity of patents, thereby
`depriving patent owners of quiet title over
`their inventions. .............................................. 6
`B. The Board’s extraordinarily high claim-
`cancellation rates confirm that the inter
`partes review process is not a neutral
`alternative to adjudication of patent rights in
`federal court. .................................................. 13
`1. Contrary to the suggestion of several
`amici, the Board’s claim-cancellation rates
`are much higher than those of district
`courts. ....................................................... 13
`2. The high affirmance rate of Board
`decisions reflects the forgiving standard of
`review on appeal—not necessarily accuracy
`on the part of the Board. .......................... 15
`
`
`
`
`
`
`
`ii
`
`II. The Federal Circuit’s removal of administrative
`patent judges’ tenure protections exacerbates the
`problems inherent in the inter partes review
`regime. ................................................................. 17
`A. The court of appeals’ remedy undermines the
`independence of administrative patent judges,
`contravening longstanding principles of
`administrative adjudication. ......................... 18
`B. Subjecting administrative patent judges to at-
`will removal magnifies problematic structural
`biases already present in the inter partes
`review process. ............................................... 20
`III.The task of remedying the Appointments Clause
`violation properly belongs with Congress, not the
`courts. .................................................................. 26
`CONCLUSION ......................................................... 27
`
`
`
`
`
`
`
`
`
`iii
`
`TABLE OF AUTHORITIES
`
` Page(s)
`
`Cases
`
`Aetna Life Ins. Co. v. Lavoie,
`475 U.S. 813 (1986) ........................................... 21
`
`Brown v. Vance,
`637 F.2d 272 (5th Cir. 1981) ....................... 24, 25
`
`Butz v. Economou,
`438 U.S. 478 (1978) ........................................... 19
`
`Cain v. White,
`937 F.3d 446 (5th Cir. 2019) ............................. 21
`
`Certain Digital Video Receivers and
`Related Hardware and Software
`Components, Initial Determination,
`Inv. No. 337-TA-1103
`(U.S.I.T.C. June 27, 2019) .................................. 7
`
`Chrimar Sys., Inc. v. ALE USA Inc.,
`785 F. App’x 854 (Fed. Cir. 2019) ..................... 11
`
`Comcast Cable Commc’ns, LLC v. Rovi
`Guides, Inc.,
`No. IPR2019-00231, Paper 44
`(P.T.A.B. May 8, 2020) ........................................ 8
`
`
`
`
`
`iv
`
`Comcast Cable Commc’ns, LLC v. Rovi
`Guides, Inc.,
`No. IPR2019-00239, Paper 50
`(P.T.A.B. June 30, 2020) ..................................... 8
`
`Cuozzo Speed Techs., LLC v. Lee,
`136 S. Ct. 2131 (2016) ....................................... 14
`
`Dickinson v. Zurko,
`527 U.S. 150 (1999) ........................................... 15
`
`ePlus, Inc. v. Lawson Software, Inc.,
`760 F.3d 1350 (Fed. Cir. 2014) ................... 10, 11
`
`ePlus, Inc. v. Lawson Software, Inc.,
`790 F.3d 1307 (Fed. Cir. 2015) ......................... 12
`
`Ethicon Endo-Surgery v. Covidien LP,
`812 F.3d 1023 (Fed. Cir. 2016) ......................... 23
`
`Free Enter. Fund v. Pub. Co. Accounting
`Oversight Bd.,
`561 U.S. 477 (2010) ........................................... 19
`
`Fresenius USA, Inc. v. Baxter Int’l, Inc.,
`721 F.3d 1330 (Fed. Cir. 2013) ................... 10, 11
`
`Fresenius USA, Inc. v. Baxter Int’l, Inc.,
`733 F.3d 1369 (Fed. Cir. 2013) ......................... 12
`
`Henkel Corp. v. Procter & Gamble Co.,
`560 F.3d 1286 (Fed. Cir. 2009) ......................... 15
`
`Hologic, Inc. v. Minerva Surgical, Inc.,
`957 F.3d 1256 (Fed. Cir. 2020) ......................... 11
`
`
`
`
`
`v
`
`Merck & Cie v. Gnosis S.P.A.,
`820 F.3d 432 (Fed. Cir. 2016) ........................... 16
`
`Ramspeck v. Fed. Trial Exam’rs
`Conference,
`345 U.S. 128 (1953) ............................... 18, 19, 20
`
`Rates Tech., Inc. v. Mediatrix Telecom, Inc.,
`688 F.3d 742 (Fed. Cir. 2012) ........................... 17
`
`SHFL Entm’t, Inc. v. DigiDeal Corp.,
`729 F. App’x 931 (Fed. Cir. 2018) ..................... 11
`
`Sung v. McGrath,
`339 U.S. 33 (1950) ............................................. 19
`
`Target Training Int’l, Ltd. v. Extended Disc
`N. Am., Inc.,
`645 F. App’x 1018 (Fed. Cir. 2016) ................... 11
`
`Tumey v. Ohio,
`273 U.S. 510 (1927) ........................................... 25
`
`Statutes
`
`5 U.S.C. § 7521 ................................................. 18, 19
`
`5 U.S.C. § 7521(a) ................................................... 18
`
`
`
`
`
`vi
`
`Other Authorities
`
`Brian Matsui, No Argument, No Opinion—
`a Quick Look at Unargued Rule 36
`Decisions During the Pandemic (Dec. 11,
`2020), available at
`https://www.jdsupra.com/legalnews/no-
`argument-no-opinion-a-quick-look-at-
`40840/ ................................................................ 16
`
`Chad M. Oldfather, Writing, Cognition, and
`the Nature of Judicial Functions,
`96 GEO. L.J. 1283 (2008) ................................... 17
`
`Clark A. Jablon, Is the Sky Falling in the
`US Patent Industry? (May/June 2020),
`available at
`https://onlinelibrary.wiley.com/doi/epdf/1
`0.1002 /msid.111 ................................................. 3
`
`H.R. Rep. No. 112-98, pt. 1 (2011) ........................... 8
`
`John R. Allison et al., Understanding the
`Realities of Modern Patent Litigation,
`92 TEX. L. REV. 1769 (2014) .............................. 14
`
`Josh Malone, Assessing PTAB Invalidity
`Rates, available at
`https://usinventor.org/assessing-ptab-
`invalidity-rates/ (Oct. 22, 2020) ....................... 14
`
`
`
`
`
`vii
`
`Matteo Sabatini, PTAB Challenges and
`Innovation: A Probabilistic Approach,
`SSRN 3668216 (2020), available at
`https://papers.ssrn.com/
`sol3/papers.cfm?abstract_id=3668216 ............... 9
`
`Paul Gugliuzza, (In)valid Patents,
`92 NOTRE DAME L. REV. 271 (2016) .................. 12
`
`Paul Hayes & Gene Quinn, A Note to
`SCOTUS on Arthrex, Judicial
`Independence, Ethics and Expanded
`Panels at the PTAB, IP Watchdog (Aug.
`4, 2020) ................................................................ 3
`
`Rebecca Lindhorst, Because I Said So: The
`Federal Circuit, the PTAB, and the
`Problem with Rule 36 Affirmances, 69
`CASE W. RES. L. REV. 247 (2018) ...................... 16
`
`Restatement (Second) of Judgments § 13. ............ 12
`
`
`
`
`
`
`
`1
`
`INTEREST OF AMICUS CURIAE 1
`
`TiVo Corporation is a global leader in making
`entertainment content easy for consumers to find,
`watch, and enjoy. TiVo produces and distributes
`products that allow users to discover what to watch,
`delivering a personalized selection of shows from
`hundreds of live TV channels and digital content
`providers (including Netflix, Hulu, and YouTube,
`among others). TiVo’s products use machine learning
`to give consumers content recommendations across
`online video, television programming, movies, and
`music entertainment in a unified experience.
`TiVo’s products and innovations are protected by
`thousands of patents that cover many aspects of
`TiVo’s proprietary technology, including content
`discovery, digital video recording (DVR), multi-screen
`viewing, mobile
`device
`video
`experiences,
`entertainment personalization, voice
`interaction,
`data analytics, and more. These innovations and the
`products that practice them have been enormously
`expensive to develop. TiVo’s business thus depends on
`a strong and stable U.S. patent system. Without the
`promise of effective and reliable patent rights, TiVo
`could not make the investments necessary to continue
`developing its path-breaking innovations.
`
`
`1 All parties have consented to the filing of this brief. No
`counsel for a party authored any part of this brief, and no such
`counsel or party made a monetary contribution intended to fund
`the preparation or submission of this brief. No person other than
`amicus curiae, its members, or its counsel made a monetary
`contribution to the brief’s preparation or submission.
`
`
`
`
`2
`
`The Federal Circuit correctly concluded that the
`inter partes review regime created by Congress was
`unconstitutional. But the remedy adopted by the
`court of appeals—the severance and invalidation of
`administrative patent judges’ tenure protections—
`has not fixed the system’s problems. On the contrary,
`it has merely magnified serious flaws that already
`infect the inter partes review process. This regime has
`weakened patent protection and reduced incentives to
`innovate in the United States, to the detriment of
`companies like TiVo and the consumers of its
`products. TiVo submits this amicus brief to describe
`some of the problems with the inter partes review
`system and to explain why the Federal Circuit’s
`misguided remedy has made those problems worse.
`
`
`
`
`
`
`
`3
`
`INTRODUCTION AND
`SUMMARY OF ARGUMENT
`
`the
`concern
`presented
`questions
`The
`constitutionality of the Patent Trial and Appeal
`Board. The Board hears and decides, among other
`proceedings, inter partes reviews—an adversarial
`system of post-grant patent review that Congress
`established in 2012 as part of the America Invents
`Act. Under the inter partes review regime, the
`administrative patent judges who comprise the Board
`render final decisions concerning the validity of
`issued patents. Those decisions are not reviewable by
`any higher
`executive-branch
`official. Thus,
`administrative
`patent
`judges—without
`any
`substantive oversight by anyone else in the executive
`branch—can and do invalidate patents, thereby
`depriving patent owners of vested and valuable
`property rights. The establishment of the inter partes
`review system, moreover, has led to a significant
`increase in the invalidation rate of issued patents.2 In
`short, administrative patent judges wield significant
`power, and it is therefore critical to the stability and
`reliability of
`the U.S. patent
`system
`that
`
`
`2 See, e.g., Clark A. Jablon, Is the Sky Falling in the US
`Patent Industry?, informationdisplay.org (May/June 2020), at
`38, Fig. 12, available at https://onlinelibrary.wiley.com/doi/epdf/
`10.1002/msid.1116. Or, as two commentators colorfully put it,
`“[t]he PTAB has presided over a swath of IP destruction that
`spans more than a generation of innovation.” Paul Hayes & Gene
`Quinn, A Note to SCOTUS on Arthrex, Judicial Independence,
`Ethics and Expanded Panels at the PTAB, IP Watchdog (Aug. 4,
`2020).
`
`
`
`
`
`4
`
`administrative patent judges—and the inter partes
`review
`system as a whole—operate within
`constitutional bounds.
`that
`The court of appeals correctly held
`administrative patent judges’ “last word” capacity
`with respect to patent invalidation renders them
`principal officers who, under the Appointments
`Clause of the Constitution, must be appointed by the
`President with the advice and consent of the Senate.
`Because administrative patent judges are not so
`appointed, the court of appeals correctly found that
`the inter partes review regime established by
`Congress was unconstitutional.
`In attempting to remedy the constitutional
`problem that Congress created, however, the court of
`appeals went astray. The
`court
`invalidated
`administrative patent judges’ tenure protections,
`thereby subjecting them to at-will removal by the
`Secretary of Commerce. This, the court of appeals
`reasoned, rendered administrative patent judges
`inferior officers who may validly be appointed by a
`“Head of Department.”
`As Arthrex explains, the effect of the court of
`appeals’ remedy—subjecting administrative patent
`judges to removal for any reason or no reason at all—
`is demonstrably inconsistent with congressional
`intent. Arthrex Br. 47–56. Even worse, this
`illegitimate severance does not actually fix the
`constitutional problem: even if removable at will,
`administrative patent
`judges remain principal
`officers because they retain the ability to cancel
`previously issued patent claims without review by
`
`
`
`
`
`5
`
`any principal executive officer. See id. at 19–35, 45–
`47.
`On a more practical level, the Federal Circuit’s
`remedy has exacerbated the problems in an already
`flawed regime. Inter partes reviews have proven a
`deeply unsatisfactory process for the adjudication of
`patent rights. They provide patent infringers with an
`opportunity to harass patent owners with repeated
`inter partes review petitions, including in cases where
`the validity of the patent has already been upheld in
`another forum, such as a district court or the
`International Trade Commission. And the infringers
`are all too willing to take advantage of the
`opportunity,
`particularly
`given
`that
`claim-
`cancellation rates
`in
`inter partes reviews are
`considerably higher than those in other fora. TiVo’s
`own experience bears this out: time after time, TiVo
`has successfully defended the validity of its patents in
`the International Trade Commission, only to later
`have the patents invalidated at the hands of the
`Patent Trial and Appeal Board.
`The Federal Circuit’s removal of the Board
`members’ tenure protections only magnifies these
`flaws. For decades—at least since the passage of the
`Administrative Procedure Act—it has been a
`fundamental principle of administrative adjudication
`that agency adjudicators should enjoy protections
`from removal so they can function as independent and
`impartial deciders. The court of appeals disregarded
`that principle and created a significant risk of
`additional unfairness when
`it removed
`those
`protections from administrative patent judges. This
`outcome is particularly problematic given that the
`
`
`
`
`6
`
`system already contains inherent structural biases in
`favor of petitioners and against patent owners. Now
`that administrative patent judges are subject to in
`terrorem supervision, those structural problems come
`into even starker relief.
`TiVo submits this brief to request that this Court
`set aside the court of appeals’ misguided remedy and
`leave the task of repairing the broken inter partes
`review system where it belongs: with Congress.
`
`ARGUMENT
`
`I.
`
`The inter partes review regime has failed to
`provide a satisfactory forum for adjudicating
`patent rights.
`A.
`
`Patent infringers frequently abuse the
`inter partes review process to conduct
`multiple attacks on the validity of
`patents, thereby depriving patent
`owners of quiet title over their
`inventions.
`
`1. TiVo’s experience presents a particularly
`striking example of the abusive purposes for which
`the inter partes review regime can be employed.
`TiVo’s (and its subsidiaries’) patents have been the
`subject of well over one hundred inter partes review
`petitions since November 2016. Thirty-seven patents
`have been challenged—an average of 3.35 petitions
`per patent. In total, only about 5% of the challenged
`claims have survived. Many of these claims had been
`previously upheld against validity challenges by the
`
`
`
`
`
`7
`
`International Trade Commission—a body made up of
`properly appointed principal officers.
`In effect, inter partes reviews have allowed TiVo’s
`competitors to violate its patent rights and then, after
`having been adjudged guilty of that conduct in one
`adjudicatory forum (for example, the ITC), obtain a
`second bite at the apple via one or more inter partes
`review petitions. Even worse, after the
`first
`proceeding has exposed flaws in the infringer’s
`invalidity arguments, the infringer can use those
`proceedings as a roadmap to attempt to fix those flaws
`in the subsequent inter partes review. In effect, the
`first proceeding functions as a practice run for the
`infringer to test out its invalidity case and assess the
`weaknesses in it so it may avoid those weaknesses
`when it challenges the patent before the Board.
`To take one illustrative example, Rovi, a TiVo
`subsidiary, asserted U.S. Patent Nos. 9,369,741 and
`7,779,011 (among other patents) against Comcast
`Cable Communications in Certain Digital Video
`Receivers and Related Hardware and Software
`Components, Inv. No. 337-TA-1103 (U.S.I.T.C.). In
`the course of that proceeding, Comcast tried and
`failed to show that the claims of the ’741 patent were
`invalid in light of a prior-art reference called Sie. See
`Initial Determination on Violation of Section 337 and
`Recommended Determination on Remedy and Bond
`(Public) at 257–60 (June 27, 2019). Comcast also tried
`and failed to show that the claims of the ’011 patent
`were invalid as obvious over two prior-art references
`called Gross and Smith. See id. at 101–13. While the
`ITC
`investigation was ongoing, Comcast
`filed
`multiple inter partes reviews against the ’741 and
`
`
`
`
`8
`
`’011 patents. Using the Commission proceedings as a
`roadmap, Comcast ultimately
`succeeded
`in
`convincing the Board to invalidate those two patents
`based on the very same prior art that the ITC had
`already considered. Specifically, the PTAB concluded
`that the ’741 patent was obvious over Sie, see
`Comcast Cable Commc’ns, LLC v. Rovi Guides, Inc.,
`No. IPR2019-00231, Paper 44 (P.T.A.B. May 8, 2020),
`and that the ’011 patent was obvious over Gross and
`Smith, see Comcast Cable Commc’ns, LLC v. Rovi
`Guides, Inc., No. IPR2019-00239, Paper 50 (P.T.A.B.
`June 30, 2020).3
`This is not how the system is supposed to work.
`Patent owners should be entitled to some measure of
`repose. They should not be subjected to repeated
`attacks on the validity of their patents throughout
`their twenty-year term. The perpetual cloud of
`uncertainty that results from this system undermines
`the presumption of validity and harms incentives to
`innovate. It also flatly contradicts the original intent
`of the drafters of the AIA, who made clear that the
`new post-grant proceedings established by that
`statute were “not to be used as tools for harassment
`or a means to prevent market entry through repeated
`litigation and administrative attacks on the validity
`of a patent.” H.R. Rep. No. 112-98, pt. 1, at 48 (2011).
`2. TiVo, unfortunately, is not an outlier with
`regard to its experience with the inter partes review
`system. According to TiVo’s research, for patents that
`
`
`3 Rovi’s appeals of those decisions are currently pending
`before the Federal Circuit.
`
`
`
`
`
`9
`
`have survived a validity challenge in district court or
`the ITC and are also challenged before the Board, the
`Board institutes inter partes review at a rate of 58%
`and cancels claims upon which review was instituted
`at a rate of 63%.4 These numbers are only marginally
`lower than the corresponding rates for all challenged
`patents, which are 66% and 75%, respectively.5 In
`other words, patents that have survived an expensive
`validity challenge in district court or the ITC are
`almost as likely to be reviewed—and ultimately
`invalidated—by the Board as a patent that was never
`the subject of litigation. It is little wonder that
`accused infringers use inter partes reviews to gain a
`second bite at the invalidity apple.6
`3. This potential for abuse is further compounded
`by the Federal Circuit’s unworkable approach to
`preclusion in circumstances in which the same patent
`
`
`4 Patents with district-court or ITC determinations of non-
`invalidity were identified through a Docket Navigator search.
`PTAB outcomes for these patents were sourced from counsel’s
`compilation of PTAB proceedings and outcomes covering 2012–
`2020.
`5 This data likewise comes from counsel’s compilation of
`PTAB proceedings and outcomes covering 2012–2020.
`6 A separate but related problem arises when patent
`infringers file multiple petitions against a single patent at the
`same time (so-called “parallel petitions”). A recent analysis
`found that virtually any patent can be invalidated if enough
`parallel petitions are filed, regardless of the individual strength
`of each challenge viewed separately. See Matteo Sabatini, PTAB
`Challenges and Innovation: A Probabilistic Approach, SSRN
`https://papers.ssrn.com/
`(2020), available at
`3668216
`sol3/papers.cfm?abstract_id=3668216.
`
`
`
`
`10
`
`is challenged both in a district-court case and before
`the Board.
`Under the so-called Fresenius doctrine, if the same
`patent is at issue in both a district-court infringement
`case and a post-grant review proceeding, a finding of
`invalidity in the post-grant review proceeding will
`retroactively nullify any infringement and validity
`determinations by the district court if any part of the
`district-court proceeding remains ongoing when a
`finding of
`invalidity
`in the post-grant review
`proceeding is affirmed by an Article III court. See
`generally Fresenius USA, Inc. v. Baxter Int’l, Inc., 721
`F.3d 1330 (Fed. Cir. 2013).
`For example, in ePlus, Inc. v. Lawson Software,
`Inc., 760 F.3d 1350 (Fed. Cir. 2014), a district court
`issued an injunction after finding that Lawson had
`infringed five claims of ePlus’s patent. See id. at 1352.
`On appeal, the Federal Circuit affirmed the
`infringement verdict as to one claim (claim 26), found
`the other four claims either not infringed or invalid,
`and remanded to the district court to make any
`necessary modifications to the injunction. See id. On
`remand, the court modified the injunction to apply
`only to claim 26 and found Lawson in civil contempt
`for violating the injunction. Id. While the appeal from
`that finding was pending (and after the contemptible
`conduct occurred), the Federal Circuit in a separate
`case affirmed the Board’s finding that claim 26 was
`invalid. See id. Based on the latter judgment, the
`court of appeals vacated both the district court’s
`injunction and its contempt order. Id. The court of
`appeals also set aside the penalties imposed on
`Lawson for violating the injunction during the four
`
`
`
`
`11
`
`years it was in place before the Board’s cancellation
`of claim 26 was affirmed. See id. In short, a district-
`court
`judgment of
`infringement and validity—
`affirmed by the Federal Circuit—and subsequent
`findings of contempt were retroactively undone by an
`entirely separate administrative proceeding involving
`the patent.
`Unfortunately, ePlus is not an outlier. The Federal
`Circuit has applied Fresenius to, for example, vacate
`an already-affirmed infringement judgment (which
`provided a patentee with an ongoing royalty) based on
`a subsequent Board finding that the claims at issue
`were invalid. See Chrimar Sys., Inc. v. ALE USA Inc.,
`785 F. App’x 854, 856 (Fed. Cir. 2019); see also, e.g.,
`Hologic, Inc. v. Minerva Surgical, Inc., 957 F.3d 1256,
`1266 (Fed. Cir. 2020) (holding that, under Fresenius,
`an accused infringer may circumvent the assignor
`estoppel doctrine by challenging the patent in an inter
`partes review instead of in district court, and
`acknowledging the “unfairness” of this result); SHFL
`Entm’t, Inc. v. DigiDeal Corp., 729 F. App’x 931, 934
`(Fed. Cir. 2018) (applying Fresenius’s holding that
`“when a claim is cancelled, the patentee loses any
`cause of action based on that claim, and any pending
`litigation in which the claims are asserted becomes
`moot”) (quoting Fresenius, 721 F.3d at 1340); Target
`Training Int’l, Ltd. v. Extended Disc N. Am., Inc., 645
`F. App’x 1018, 1023 (Fed. Cir. 2016) (same).
`Several judges on the Federal Circuit have harshly
`criticized the Fresenius doctrine. This approach to
`preclusion, these judges have noted, “is at odds with
`all of the regional circuits,” which apply a “uniform
`rule . . . that a final judgment is final as to its subject
`
`
`
`
`12
`
`matter, even if other items remain for consideration
`or for remand.” ePlus, Inc. v. Lawson Software, Inc.,
`790 F.3d 1307, 1311 (Fed. Cir. 2015) (Newman, J.,
`joined by O’Malley and Wallach, JJ., dissenting from
`denial of rehearing en banc); see also id. (“There is no
`support in precedent for nullifying judicial rulings of
`infringement and injunction, retroactively, based on a
`subsequent decision of the Patent and Trademark
`Office.”).7
`Whatever one thinks of the Fresenius principle as
`a matter of doctrine, the rule indisputably creates the
`potential for parties adjudged of infringement in
`district court to undo that judgment via inter partes
`reviews. In effect, the rule permits the administrative
`patent judges to overrule the final judgments of
`Article III courts. See Fresenius USA, Inc. v. Baxter
`Int’l, Inc., 733 F.3d 1369, 1372 (Fed. Cir. 2013)
`(O’Malley, J., dissenting from denial of rehearing en
`banc) (Fresenius principle “goes a long way toward
`rendering district courts meaningless
`in
`the
`resolution of patent infringement disputes.”). And it
`“encourages defendants to scrap and fight to keep
`underlying litigation pending in the hope that they
`will fare better with the PTO and then be able to
`unravel the district court judgment against them.”
`ePlus, 790 F.3d at 1314 (Moore, J., joined by O’Malley,
`Reyna, and Wallach, JJ., dissenting from denial of
`rehearing en banc); see also Paul Gugliuzza, (In)valid
`Patents, 92 NOTRE DAME L. REV. 271, 308 (2016)
`
`
`7 Cf. Restatement (Second) of Judgments § 13, cmt. e (“A
`judgment may be final in a res judicata sense as to a part of an
`action although the litigation continues as to the rest.”).
`
`
`
`
`13
`
`(Fresenius principle “encourages wasteful procedural
`maneuvering” and “allows an adjudged infringer a
`second chance at proving
`invalidity”). It thus
`compounds the problems with the inter partes review
`regime identified above.
`
`B.
`
`The Board’s extraordinarily high claim-
`cancellation rates confirm that the inter
`partes review process is not a neutral
`alternative to adjudication of patent
`rights in federal court.
`
`1.
`
`Contrary to the suggestion of
`several amici, the Board’s claim-
`cancellation rates are much
`higher than those of district
`courts.
`
`Some amici supporting the United States and
`Smith & Nephew suggest that inter partes review is
`a neutral alternative to district court as a forum for
`litigating patentability because the Board invalidates
`claims at approximately the same rate as district
`courts. See, e.g., Br. of Cross-Industry Groups as
`Amicus Curiae in Support of Pet’rs at 6. But the
`premise of that argument is simply incorrect: the
`Board invalidates patent claims at a far higher rate
`than district courts do.
`Approximately 80% of all final written decisions
`result in the invalidation of at least some challenged
`claims, and over 60% result in the invalidation of all
`challenged claims. See https://www.uspto.gov/sites/
`default/files/documents/Trial_Statistics_20200630_.p
`df (slide 11). A recent analysis found that “84% of
`
`
`
`
`14
`
`patents that have been fully reviewed by the PTAB”
`have at least some claims invalidated. See Josh
`Malone, Assessing PTAB Invalidity Rates at 4,
`available at https://usinventor.org/assessing-ptab-
`invalidity-rates/ (Oct. 22, 2020). (The discrepancy
`between this figure and the 80% figure in the PTO
`statistics arises from the fact that some patents are
`the subject of multiple final written decisions.)
`Contrast these figures with outcomes in district
`courts, which confirm the validity of patents well over
`60% of the time.8 The takeaway is clear: the Board is
`a far less patent-friendly forum than Article III
`courts. (This is unsurprising given the differing
`standard of review in the two types of proceedings.
`Patent challengers in district court must prove
`invalidity by clear and convincing evidence, whereas
`challengers in inter partes reviews need only prove
`their case by a preponderance of the evidence. See
`Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131,
`2144 (2016).) Thus, not only do inter partes reviews
`give patent infringers whose validity challenges have
`been unsuccessful in other fora a second bite at the
`invalidity apple; they give those infringers a second
`
`
`
`8 A 2014 law review article estimated that district courts
`confirm the validity of patents at a rate exceeding 60%. See John
`R. Allison et al., Understanding the Realities of Modern Patent
`Litigation, 92 TEX. L. REV. 1769, 1785 (2014). According to
`figures obtained from Docket Navigator regarding validity
`determinations at summary judgment and trial from 2014 to
`2020, district
`courts have
`confirmed patent validity
`approximately 63% of the time since 2014.
`
`
`
`
`15
`
`bite that is significantly more likely to succeed than
`the first.
`
`2.
`
`The high affirmance rate of
`Board decisions reflects the
`forgiving standard of review on
`appeal—not necessarily accuracy
`on the part of the Board.
`
`Various amici also point to the Federal Circuit’s
`high affirmance rate of Board decisions as evidence
`“that the Board is reaching appropriate decisions in
`post-grant review proceedings.” Br. of High Tech
`Inventors Alliance as Amicus Curiae in Support of
`Pet’rs at 17; see also, e.g., Br. of Amici Curiae
`Acushnet & Cleveland Golf in Support of Pet’rs at 14–
`18. This argument misunderstands the permissive
`standard of review that the Federal Circuit applies
`when reviewing Board decisions.
`Most patentability disputes turn on questions of
`fact: what the prior art discloses, whether a skilled
`artisan would have been motivated to combine
`different pieces of prior art to arrive at the claimed
`invention, etc. The Board’s factual determinations are
`reviewed for “substantial evidence,” meaning that the
`reviewing court asks “whether a reasonable mind
`might accept a particular evidentiary record as
`adequate to support a conclusion.” Dickinson v.
`Zurko, 527 U.S. 150, 162 (1999). In other words, when
`the Federal Circuit confronts appeals from inter
`partes review proceedings, it is asking not whether
`the Board’s conclusion was right, but instead whether
`it is supportable. See, e.g., Henkel Corp. v. Procter &
`Gamble Co., 560 F.3d 1286, 1290 (Fed. Cir. 2009)
`
`
`
`
`16
`
`(“The interpretation of the critical portion of the
`Metzger-Groom Report is a very close call, and can
`reasonably go either way. But our inquiry in this case
`is not how we would interpret this statement in the
`Metzger-Groom Report were we to do so in the first
`instance. Rather, our task is to determine whether
`the Board’s interpretation is supported by substantial
`evidence.”).9
`Even worse, the Federal Circuit does not even
`issue a written opinion in many appeals from Board
`decisions. Since the passage of the America Invents
`Act, the court of appeals has summarily affirmed
`approximately half of the appeals taken from Board
`decisions. See Rebecca Lindhorst, Because I Said So:
`The Federal Circuit, the PTAB, and the Problem with
`Rule 36 Affirmances, 69 CASE W. RES. L. REV. 247, 252
`(2018).10 Thus, in most cases in which the Federal
`Circuit concludes that the Board’s conclusions are
`supported by substantial evidence, it simply says so,
`
`
`9 As several Federal Circuit judges have observed, this
`permissive standard of review “makes little sense in th
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