`
`In the Supreme Court of the United States
`____________
`United States of America,
`
`Petitioner,
`
`v.
`Image Processing Technologies LLC, et al.
`Respondents.
`
`____________
`On Petition for a Writ of Certiorari to
`United States Court of Appeals for the
`Federal Circuit
`____________
`MEMORANDUM IN RESPONSE FOR
`RESPONDENT ROVI GUIDES, INC.
`____________
`
`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 Respondent Rovi Guides, Inc.
`August 26, 2020
`
`
`
`
`
`i
`
`QUESTIONS PRESENTED
`
`The Appointments Clause requires principal
`“Officers of the United States” to be appointed by the
`President with the advice and consent of the Senate.
`The court of appeals held that administrative patent
`judges of the U.S. Patent and Trademark Office are
`principal officers because they issue final decisions
`on behalf of the agency that are not reviewable by
`any other Executive Branch officer and because they
`are
`removable
`from office only
`for
`cause.
`Accordingly, the court of appeals held, Congress’s
`decision to vest in the Secretary of Commerce the
`power to appoint those judges was unconstitutional.
`In an attempt to remedy this constitutional defect,
`the court of appeals severed and invalidated the
`removal protections applicable to administrative
`patent judges, thereby rendering them removable at
`will by the Secretary of Commerce.
`The questions presented in the Government’s
`petition for certiorari are:
`1. Whether the court of appeals correctly held
`that administrative patent judges are principal
`officers, where they issue final decisions on behalf of
`the Executive Branch and are removable only for
`cause.
`2. Whether the court of appeals permissibly
`considered Rovi’s Appointments Clause challenge,
`where Rovi raised the issue to the first tribunal with
`authority to adjudicate it.
`
`
`
`
`
`
`
`
`ii
`
`RULE 29.6 STATEMENT
`
`Respondent Rovi Guides, Inc. states that its
`parent corporations are Rovi Corporation, TiVo
`Corporation, and Xperi Holding Corporation.
`
`
`
`
`
`
`
`iii
`
`TABLE OF CONTENTS
`
`QUESTIONS PRESENTED ....................................... i
`RULE 29.6 STATEMENT .......................................... ii
`TABLE OF CONTENTS ........................................... iii
`TABLE OF AUTHORITIES ..................................... iv
`I. THE COURT SHOULD GRANT REVIEW
`IN ARTHREX AND HOLD THIS PETITION
`PENDING THE DISPOSITION OF THAT
`CASE. .................................................................... 3
`A. The constitutionality of APJ appointments
`and the propriety of the Federal Circuit’s
`severance remedy are important
`questions worthy of this Court’s review. ........ 3
`B. The Arthrex court correctly held that
`administrative patent judges are
`principal officers. ............................................. 5
`II. REVIEW OF THE FORFEITURE ISSUE
`IS NOT WARRANTED. ........................................ 8
`CONCLUSION ......................................................... 12
`
`
`
`
`
`
`
`iv
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Aaacon Auto Transp., Inc. v. Interstate
`Commerce Comm’n,
`792 F.2d 1156 (D.C. Cir. 1986) ............................. 7
`
`In re Alappat,
`33 F.3d 1526 (Fed. Cir. 1994) ............................... 7
`
`Arthrex, Inc. v. Smith & Nephew, Inc.,
`941 F.3d 1320 (Fed. Cir. 2019), reh’g denied,
`953 F.3d 760 (Fed. Cir. 2020) ................. 1, 2, 8, 12
`
`Belden Inc. v. Berk-Tek LLC,
`805 F.3d 1064 (Fed. Cir. 2015) ............................. 5
`
`BioDelivery Scis. Int’l, Inc. v. Aquestive
`Therapeutics, Inc.,
`898 F.3d 1205 (Fed. Cir. 2018) ........................... 10
`
`Butz v. Econcomou,
`438 U.S. 478 (1978) ............................................... 8
`
`Curtis Publ’g Co. v. Butts,
`388 U.S. 130 (1967) ............................................. 10
`
`Customedia Techs., LLC v. Dish Network Corp.,
`941 F.3d 1173 (Fed. Cir. 2019), pet. for cert.
`filed, No. 20-135 (Aug. 1, 2020) .................... 10, 12
`
`Edmond v. United States,
`520 U.S. 651 (1997) ............................................... 5
`
`
`
`
`
`v
`
`Freytag v. Commissioner,
`501 U.S. 868 (1991) ............................................... 9
`
`Joseph v. United States,
`135 S. Ct. 705 (2014) ................................ 9, 10, 11
`
`Maricopa Cty. v. Lopez-Valenzuela,
`135 S. Ct. 428 (2014) ............................................. 4
`
`McCarthy v. Madigan,
`503 U.S. 140 (1992) ............................................... 8
`
`Morgan v. United States,
`304 U.S. 1 (1938) ................................................... 7
`
`Sanofi-Aventis Deutschland GmbH
`v. Mylan Pharm., Inc.,
`791 F. App’x 916 (Fed. Cir. 2019),
`pet. for cert. filed,
`No. 19-1451 (June 26, 2020) ......................... 10, 12
`
`SAS Inst., Inc. v. Iancu,
`138 S. Ct. 1348 (2018) ......................................... 10
`
`Shalala v. Illinois Council on
`Long Term Care, Inc.,
`529 U.S. 1 (2000) ................................................... 8
`
`United States v. Vanorden,
`414 F.3d 1321 (11th Cir. 2005) ........................... 11
`
`
`
`
`
`vi
`
`U.S. Constitution
`
`U.S. Const. Art. II, sec. 2, cl. 2 ......................... passim
`
`Statutes
`
`Administrative Procedure Act
`
`5 U.S.C. § 556(b) ................................................... 6
`
`5 U.S.C. § 3105 ...................................................... 6
`
`5 U.S.C. § 7513(a) ................................................. 5
`
`5 U.S.C. § 7521 .................................................. 5, 6
`
`Other Authorities
`
`S. Rep. No. 752 (1945) ............................................ 7, 8
`
`
`
`
`
`
`
`
`
`1
`
`MEMORANDUM IN RESPONSE FOR
`RESPONDENT ROVI GUIDES, INC.
`In Arthrex, Inc. v. Smith & Nephew, Inc., 941
`F.3d 1320 (Fed. Cir. 2019), the Federal Circuit
`correctly held that administrative patent judges of
`the Patent Trial and Appeal Board are “principal
`officers” under the Appointments Clause, meaning
`that Congress’s decision to vest their appointment in
`the Secretary of Commerce was unconstitutional. In
`an attempt to remedy the constitutional violation,
`the court of appeals severed and invalidated “the
`portion of the Patent Act restricting removal” of
`administrative patent judges. Id. at 1325. This
`remedy, the court held, rendered the judges “inferior
`officers” who may validly be appointed by the
`Secretary of Commerce. Id. The full Federal Circuit
`denied rehearing en banc, see 953 F.3d 760 (Fed.
`Cir. 2020), and all parties to the Arthrex case have
`petitioned for certiorari. See No. 19-1434 (filed June
`25, 2020); No. 19-1452 (filed June 29, 2020); No. 19-
`1458 (filed June 30, 2020).
`for review of two
`Arthrex has petitioned
`questions: (i) whether the court of appeals’ severance
`remedy was proper and (ii) whether the court of
`appeals
`correctly held
`that
`elimination
`of
`administrative patent judges’ tenure protections was
`sufficient to render them inferior officers. The
`Government has also petitioned for review on two
`questions: (i) whether the court of appeals correctly
`held
`that administrative patent
`judges were
`principal officers and (ii) whether Arthrex forfeited
`its Appointments Clause challenge by raising it for
`the first time on appeal. The Government has
`
`
`
`
`2
`
`argued that the Court should grant certiorari on all
`questions
`presented—i.e.,
`the
`underlying
`constitutional question (Arthrex’s question (ii) and
`the Government’s question
`(i)); the severance
`question (Arthrex’s question (i)); and the forfeiture
`question (the Government’s question (ii)). See Mem.
`for the United States at 5, Nos. 19-1452, 19-1458, 19-
`1459 (July 22, 2020).
`Following the denial of rehearing en banc in
`Arthrex, the Federal Circuit vacated and remanded
`several pending cases—including this one—in which
`the appellant had raised an Appointments Clause
`challenge in its opening brief in the court of appeals.
`The Government then filed the instant omnibus
`petition for certiorari in these cases. The omnibus
`petition raises the same two questions presented in
`the Government’s Arthrex petition and requests that
`the Court hold the omnibus petition pending the
`disposition of the petitions for certiorari in Arthrex.
`See Pet. 26.
`For the reasons explained in Arthrex’s response
`the Government’s Arthrex petition and
`to
`summarized below, the court of appeals correctly
`held that administrative patent judges are “principal
`officers” who, under the Appointments Clause, must
`be appointed by the President with the advice and
`consent of the Senate. However, in view of the
`importance of the constitutional question (and the
`corresponding remedial question presented by
`Arthrex’s petition), Rovi agrees with Arthrex and the
`Government that the Court should grant certiorari
`on the constitutional question (the Government’s
`question (i)) in Arthrex and hold this petition
`
`
`
`
`3
`
`pending the Court’s disposition of Arthrex. Rovi does
`not, however, believe that review of the forfeiture
`question
`(the Government’s question
`(ii))
`is
`warranted.
`I.
`THE COURT SHOULD GRANT REVIEW IN
`ARTHREX AND HOLD THIS PETITION
`PENDING THE DISPOSITION OF THAT
`CASE.
`A.
`The constitutionality of APJ
`appointments and the propriety of the
`Federal Circuit’s severance remedy are
`important questions worthy of this
`Court’s review.
`Rovi agrees that the Court should grant review of
`both the underlying constitutional question and the
`severability question in Arthrex and hold the
`Government’s omnibus petition pending disposition
`of that case.1 The Federal Circuit’s holding that the
`administrative-patent-judge appointment scheme
`was unconstitutional is an important question that
`
`
`1 Rovi intends to file a cross-petition for certiorari
`concerning the severability question and the underlying
`constitutional question in due course. Rovi, like Arthrex,
`believes that the court of appeals correctly held that
`administrative patent judges are principal officers, but that the
`court’s severance remedy was flawed because (i) removing
`employment protections from administrative patent judges is
`inconsistent with congressional intent and (ii) even without
`employment protections, administrative patent judges remain
`principal officers because they render final decisions on
`patentability that are not subject to review by any principal
`executive officer.
`
`
`
`
`
`4
`
`merits certiorari. See Maricopa Cty. v. Lopez-
`Valenzuela, 135 S. Ct. 428, 428 (2014) (Thomas, J.,
`respecting denial of stay)
`(noting the “strong
`presumption in favor of granting writs of certiorari
`to review decisions of lower courts holding federal
`statutes unconstitutional”). The Federal Circuit’s
`remedial
`determination
`is
`likewise
`highly
`consequential, as it removes employment protections
`from a large and important category of federal
`officers and effects a significant change to a major
`piece of congressional legislation. And, as Arthrex
`explains, the Court should review both questions
`together:
`[i]t would not make sense to review the court
`of appeals’ constitutional ruling without also
`considering the proper remedy. Conversely,
`it would not make sense to consider the
`remedial question without also considering
`the underlying constitutional claim. The
`questions are closely
`intertwined: They
`involve not only common constitutional
`issues, but also common statutory issues
`concerning the Director’s inability to review
`APJ decisions and the scope and significance
`of APJ tenure protections.
`Mem. in Response for Respondent Arthrex, Inc. at
`12, Nos. 19-1434, 19-1452 (July 24, 2020) (“Arthrex
`Response”).
`
`
`
`
`
`5
`
`B.
`
`The Arthrex court correctly held that
`administrative patent judges are
`principal officers.
`
`As to the merits of the Government’s first
`question presented, the Federal Circuit correctly
`held that administrative patent judges are principal
`officers, for the reasons explained in Arthrex’s
`response. See Arthrex Response at 12–23.
`Specifically, administrative patent judges render
`final decisions with respect to patentability on behalf
`of the executive branch, and—at least prior to the
`Federal Circuit’s misguided severance remedy, see
`supra n.1—they were removable only for cause.
`Under
`this Court’s precedent,
`those
`factors
`demonstrate that administrative patent judges are
`principal officers. See Edmond v. United States, 520
`U.S. 651, 663–65 (1997) (noting that inferior officers
`must have their “work . . . directed and supervised at
`some level” by a principal officer). Rovi incorporates
`Arthrex’s arguments by reference here and offers
`here two additional observations that bear on the
`merits of the constitutional question.
`First, while Arthrex’s response states that
`administrative patent judges are removable only “for
`such cause as will promote the efficiency of the
`service,” Arthrex Response at 16 (quoting 5 U.S.C.
`§ 7513(a)), Rovi believes that the applicable removal
`protection is instead 5 U.S.C. § 7521, which governs
`removal of administrative law judges. Inter partes
`reviews are “formal adjudication[s],” see Belden Inc.
`v. Berk-Tek LLC, 805 F.3d 1064, 1080 (Fed. Cir.
`2015), which means they may be heard by either the
`
`
`
`
`
`6
`
`agency itself, members of the body comprising the
`agency, or an administrative law judge. See 5 U.S.C.
`§ 556(b). That, in turn, means that administrative
`patent judges must be administrative law judges
`(because they are not the agency itself nor members
`of
`the body
`comprising
`the agency). And
`administrative law judges must enjoy the removal
`protections outlined in 5 U.S.C. § 7521, which
`provides that such judges may be removed “only for
`good cause established and determined by the Merit
`Systems Protection Board on the record after
`opportunity for hearing before the Board.”
`The question of which removal protection applies
`has important implications for the severability
`question. Rovi will address those implications in its
`cross-petition for certiorari. For present purposes,
`however, it suffices to say that administrative patent
`judges
`indisputably enjoyed protection against
`removal prior to the Arthrex decision and that those
`removal protections weighed heavily in favor of
`principal-officer status.
`Second, the Government’s contention that the
`Director of the Patent and Trademark Office has
`substantial
`supervisory
`authority
`over
`administrative patent
`judges because he “may
`exclude a particular judge from one case, from a
`category of cases, or from all cases—effectively
`precluding the judge from deciding any Board cases,”
`is
`incorrect. The
`No. 19-1434, Gov’t Pet. 20,
`Administrative Procedure Act
`requires
`that
`“[a]dministrative law judges shall be assigned to
`cases in rotation so far as practicable.” 5 U.S.C.
`§ 3105. Section 3105 would prohibit the Director
`
`
`
`
`7
`
`from attempting to dictate the outcome of specific
`cases
`through strategic assignments
`(or non-
`assignments) of certain administrative patent judges
`to certain panels. See Aaacon Auto Transp., Inc. v.
`Interstate Commerce Comm’n, 792 F.2d 1156, 1163
`(D.C. Cir. 1986) (agency “cannot, of course, change
`ALJs if the intent or effect of its action is to interfere
`with the independence of the ALJ”).2
`The requirement for rotation of administration
`law judges exists for good reason: to “prevent[] an
`agency from disfavoring an examiner by rendering
`him inactive.” S. Rep. No. 752, at 29 (1945).
`
`2 The Patent and Trademark Office has previously claimed
`the authority to change the composition of a Board panel on
`rehearing (i.e., after an initial decision) in order to align the
`result with the Director’s policy preferences. The Federal
`Circuit has never squarely addressed whether such “panel
`stacking” is consistent with due process and the relevant
`statutes. In In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994),
`several of the court’s judges suggested that panel stacking
`would violate the APA. See id. at 1550 n.11 (Archer, C.J.,
`concurring in part and dissenting in part) (“[A] case in which
`the Commissioner designated a panel to rehear a case in order
`to redo what the Commissioner believed to be incorrect
`historical fact-finding might well be deemed arbitrary and
`capricious.”); id. at 1574–75 (Mayer, J., dissenting) (“To allow
`the Commissioner to gerrymander the composition of the board
`to insure a preordained result directly conflicts with the
`concept ‘that in administrative proceedings of a quasi-judicial
`character the liberty and property of the citizen shall be
`protected by the rudimentary requirements of fair play.’”)
`(quoting Morgan v. United States, 304 U.S. 1, 14–15 (1938)).
`The majority of the court, however, declined to address the
`question because it was raised only by an amicus. See id. at
`1532 n.4, 1536.
`
`
`
`
`
`8
`
`Congress wanted ALJs to be “impartial” and
`“independent.” Id. at 21, 29; see also Butz v.
`Econcomou, 438 U.S. 478, 513 (1978) (“[T]he process
`of agency adjudication is currently structured . . . to
`assure that the hearing examiner exercises his
`independent judgment on the evidence before him,
`free from pressures by the parties or other officials
`within the agency.”). The Government cannot now
`ignore these strong interests in the impartiality and
`independence of administrative patent judges in an
`effort to save an unconstitutional appointment
`scheme.
`II.
`REVIEW OF THE FORFEITURE ISSUE IS
`NOT WARRANTED.
`A. Review of the Government’s second question
`presented (concerning forfeiture) is not warranted.
`The Federal Circuit was plainly correct in concluding
`that Arthrex and Rovi did not
`forfeit their
`constitutional challenge by raising it first in the
`court of appeals, because “the Board was not capable
`of providing any meaningful relief to this type of
`[c]onstitutional challenge and it would therefore
`have been futile for [a litigant] to have made the
`challenge there.” Arthrex, 941 F.3d at 1339. Futility
`is a well-recognized exception to the exhaustion
`requirement. See, e.g., Shalala v. Illinois Council on
`Long Term Care, Inc., 529 U.S. 1, 13 (2000) (citing
`McCarthy v. Madigan, 503 U.S. 140, 147–48 (1992)).
`Moreover, to obtain reversal of the court of
`appeals’ forfeiture holding, the Government would
`have to do more than simply show Arthrex’s and
`Rovi’s challenges were untimely: it would have to
`
`
`
`
`
`9
`
`show that the court of appeals abused its discretion
`in considering the argument notwithstanding its
`(purported) untimeliness. That is an insurmountable
`hurdle. This Court has squarely held that courts
`have discretion
`to
`address
`even untimely
`Appointments Clause arguments in light of the
`“strong
`interest of
`the
`federal
`judiciary
`in
`maintaining the constitutional plan of separation of
`powers.” Freytag v. Commissioner, 501 U.S. 868, 879
`(1991). And, as Arthrex points out, the Government
`expressly admitted below that the court of appeals
`had discretion to reach the Appointments Clause
`issue even if it was not timely raised. See Arthrex
`Response at 31 (“Court: ‘Do you agree that we have
`the discretion to address those issues?’ Government:
`‘Absolutely, Your Honor.’”) (quoting C.A. Arg. Audio
`23:07–23:10).
`In any event, the Government has not explained
`why a discretionary forfeiture determination is an
`issue worthy of this Court’s review. Cf. Joseph v.
`United States, 135 S. Ct. 705, 707 (2014) (Kagan, J.
`respecting the denial of certiorari) (concurring in
`denial of certiorari on forfeiture issue and observing
`that the Court “do[es] not often review the circuit
`courts’ procedural rules”). It is not. The Court should
`decline to grant certiorari on this issue.
`B. If the Court chooses to review the forfeiture
`issue, Rovi submits that the Court should also grant
`review in one of the pending cases presenting a
`related question: whether the Arthrex decision
`constituted an intervening change in law that would
`create an exception to otherwise-applicable forfeiture
`principles. One of these cases is in fact a different
`
`
`
`
`10
`
`lawsuit between Arthrex and Smith & Nephew. See
`Petition for Certiorari, Arthrex, Inc. v. Smith &
`Nephew, Inc., No. 19-1204 (filed Apr. 6, 2020)
`(“Arthrex II”).
`The Federal Circuit has consistently refused to
`entertain Appointments Clause challenges that were
`not raised in parties’ opening briefs, even where the
`opening briefs were filed before the decision in
`Arthrex issued. See, e.g., Customedia Techs., LLC v.
`Dish Network Corp., 941 F.3d 1173, 1174 (Fed. Cir.
`2019), pet. for cert. filed, No. 20-135 (Aug. 1, 2020);
`Sanofi-Aventis Deutschland GmbH v. Mylan
`Pharm., Inc., 791 F. App’x 916 (Fed. Cir. 2019), pet.
`for cert. filed, No. 19-1451 (June 26, 2020). That
`approach is deeply flawed, and deeply unfair.
`It is black-letter law that an intervening change
`law constitutes an exception to otherwise-
`in
`applicable forfeiture principles. See, e.g., Curtis
`Publ’g Co. v. Butts, 388 U.S. 130, 143 (1967) (“[T]he
`mere failure to interpose [a constitutional] defense
`prior to the announcement of a decision which might
`support it cannot prevent a litigant from later
`invoking such a ground.”). That is the rule in this
`Court, and it is the rule in virtually every court of
`appeals, see Joseph, 135 S. Ct. at 706–07 (Kagan, J.,
`respecting the denial of certiorari)
`(collecting
`cases)—including, usually, the Federal Circuit. See
`BioDelivery Scis. Int’l, Inc. v. Aquestive
`Therapeutics, Inc., 898 F.3d 1205, 1208–10 (Fed. Cir.
`2018)
`(concluding
`that
`forfeiture
`principles
`“clear[ly]” did not bar a party from newly raising an
`argument based on this Court’s intervening decision
`in SAS Institute v. Iancu).
`
`
`
`
`11
`
`There is good reason for this near-unanimity.
`Forfeiture principles exist to ensure that parties
`exercise “diligence,” not “clairvoyance.” Joseph, 135
`S. Ct. at 706 (Kagan, J., respecting the denial of
`certiorari). Insisting on a standard of clairvoyance
`would require parties to raise all claims—no matter
`how unfounded at the time—that might thereafter
`become viable based on later changes in the law.
`That would be “a very bad rule.” United States v.
`Vanorden, 414 F.3d 1321, 1324 (11th Cir. 2005)
`(Tjoflat, J., specially concurring). And it would be a
`decidedly “odd result for a procedural rule designed
`in part to promote judicial economy.” Joseph, 135 S.
`Ct. at 706 (Kagan, J., respecting the denial of
`certiorari).
`Accordingly, if this Court is inclined to grant
`review to address the timeliness of Arthrex’s
`Appointments Clause challenge, the Court should
`also grant review in one of the cases raising the
`related intervening-change-in-law issue. Granting
`review on both of these intertwined questions will
`allow the Court to issue a comprehensive ruling on
`
`the timeliness issue.
`
`
`
`
`
`12
`
`CONCLUSION
`for
`The Court should grant the petitions
`the
`certiorari
`in Arthrex with
`respect
`to
`constitutional question and the remedial question
`and hold this case in abeyance pending resolution of
`Arthrex. If the Court grants review as to the
`forfeiture question in Arthrex, the Court should also
`grant review in one of the cases presenting the
`intervening-change-in-law question, such as Arthrex
`II, Customedia, or Sanofi-Aventis.
`
`
`
`
`
`
`
`
`Respectfully submitted,
`
`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 Respondent
`Rovi Guides, Inc.
`
`
`
`
`
`
`
`