by Dennis Crouch
The bench was an active inquisitor in the Thryv v. Click-to-Call oral arguments held Dec. 9, 2020 before the U.S. Supreme Court. This is the third post-AIA Supreme Court case focusing on the no-appeal provision of 35 U.8.C. § 314(d) (“determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable”). [TRANSCRIPT]
Oral arguments focused on two major issues: (1) the extent that SAS limited Cuozzo; and (2) the importance of the time-bar since there are alternative fora for judging patentability and the patent is invalid anyway.
The first point — SAS limiting Cuozzo: In SAS (2018), Justice Gorsuch explained the holding in Cuozzo (2018) as follows:
Cuozzo concluded that § 314(d) precludes judicial review only of the Director’s “initial determination” under § 314(a) that “there is a ‘reasonable likelihood’ that the claims are unpatentable on the grounds asserted.
SAS. To be clear, if the no-appeal statute’s sole function is to block appeal of the reasonable-likelihood decision, then the decision is foreclosed in favor of the patentee (allowing appeal of the time-bar question). However, as I suggested in a prior essay, I believe that Justice Gorsuch SAS opinion overstated Cuozzo’s holding. I suspect this was an intentional shading of Cuozzo made possible because of 5-4 split. A smaller majority allows for a more extreme opinion.
This issue was ripe for discussion in the oral arguments with Thryv’s counsel Adam Charnes attempting to explain that Gorsuch’s SAS statement isn’t “wrong” per se, it just isn’t complete. Charnes would obviously rather not require overturning of the Supreme Court’s most recent case on the subject in order to win.
JUSTICE GINSBURG: What do you do with the sentence in this Court’s SAS decision that says 314(d) precludes judicial review only of the Board’s initial determination under 314(a) that there is a reasonable likelihood that the claims are unpatentable?
MR. CHARNES: We think that that’s not a complete description of Cuozzo . . . .
JUSTICE GINSBURG: So you think that that was just a wrong sentence?
MR. CHARNES: I wouldn’t say it was wrong. . . . What I’d say is that the Court had no need to describe Cuozzo more broadly … because that was not the factual circumstance of SAS. …
JUSTICE KAVANAUGH: I think you are saying “it’s wrong,” to pick up on Justice Ginsburg’s question, at least the use of the word “only.”
MR. CHARNES: I think it’s not a complete description. I think that’s not the only basis that this Court explained in Cuozzo. I think that’s — that’s a fair point.
Justice Kavanaugh is the only new member of the court since SAS and his vote is likely critical to the outcome in this case. However, the most likely swing vote is Chief Justice Roberts.
The Gov’t attorney, supporting Thryv in its no-appeal argument and agreed that the SAS statement is wrong.
MR. ELLIS: (Representing the U.S. Gov’t and supporting the no-appeal argument)I do think that sentence is wrong, and I think it’s incomplete. . . . Cuozzo concluded more than that. And I think, if you look at the decision, you’ll see that.
The wrongness of Justice Gorsuch’s statement is potentially twofold: (1) it is clearly an unduly narrow statement of the holding in Cuozzo; and (2) it might also be an incorrect interpretation of the statute. For me, this raises the interesting esoteric question about precedent and primary sources. What is the precedential and stare decisis role of the Supreme Court’s (mis)description of its prior precedent. Is the (mis)description now the leading precedent, or is it merely a secondary source helpful in interpreting the original decision.
Mr. Geyser has the easier case on these points — arguing that the patentee clearly wins under SAS, and should also win under Cuozzo.
MR. GEYSER: (Arguing for the patentee) We’re simply reading 314(d) to say exactly what this Court in SAS said it meant, which is it is limited to only the initial patentability threshold in 314(a).
My friend from the government now concedes that they think that [SAS] was wrong. I don’t believe they’ve asked this Court to overturn SAS. We don’t think that the Court was wrong.
JUSTICE KAGAN: Well, it’s not a question of overturning. It’s just — I think what they were saying is that SAS dealt with one issue in which it was unnecessary to recite Cuozzo’s full test, but Cuozzo has a broader test than SAS quoted.
MR. GEYSER: Well, to be very clear, I think that we win under Cuozzo as well, but I don’t think that the reasoning in that statement, which is a very plain statement in SAS, can be limited in that way.
[The “only” language in SAS] is an absolute part of the core holding of the case in rejecting what the government eventually framed as their primary submission in SAS.
The substantive issue on appeal in Thryv was the PTO’s interpretation of the time bar in § 315(b). Although a lawsuit had been filed and served, the PTAB found that the time-bar was not triggered because that lawsuit had been dismissed without prejudice. On appeal, the Federal Circuit found that the PTAB had misinterpreted the statute — holding that dismissal does not annul the time-bar.
The Patent Challenger and Government both argue that the a time-bar decision by the PTAB is not appealable. Justice Gorsuch pushed that question in an extreme example, and Charnes held his ground on no appeal:
JUSTICE GORSUCH: Let’s just hypothesize that someone has tried to undo this patent four times or maybe even more in a court of law, failed for various reasons every single time, and then comes to the director of patents, who has a political mission, perhaps, to kill patents, let’s just say. And it is clearly time-barred under the statute. Let’s just hypothesize that. And yet, the director goes ahead and does it anyway. Under your submission to the Court, I believe you’re saying that is a shenanigan this Court cannot review.
MR. CHARNES: It is correct that our submission is that’s not reviewable. The time bar is not reviewable.
JUSTICE GORSUCH: All right. The hypothesis, there’s no good faith, okay? The director of patent has a political desire for whatever reason to destroy this patent and many others. . . . In your circumstance, you’re telling the Court there’s no review of that decision, I believe, or maybe it’s not a shenanigan even in your — your view perhaps.
MR. CHARNES: Well, I think there is
— there is no review under — under 314(d). It may be that it’s an appropriate case for mandamus relief if the circumstances are as egregious as you suggest in your hypothetical. . . .
JUSTICE GORSUCH: So we’re going to just channel all these cases to mandamus? Is that — is that the upshot of your position?
MR. CHARNES: No, because mandamus is a rare relief. I mean, it would only be reserved for really egregious circumstances like your hypothetical.
JUSTICE GORSUCH: If the institution decision is not reviewable at all, how would it be mandamus-able? . . .
Mr. Ellis from the SG’s office added his two-cents with an argument along the lines of “you shouldn’t care about privacy if you have nothing to hide.” In this case, his argument was that we shouldn’t worry since “you’re going to get review, judicial review of the patentability” question.
MR. ELLIS: What was open for review was that patentability analysis. Now Respondent opted not to challenge that patentability analysis. But, if it had merit, that would be judicially reviewable and then the patent wouldn’t be canceled.
This discussion takes us to the second general topic for discussion — is the time-bar a big deal. In Cuozzo and in oral arguments here, the justices appeared reluctant to bar appeals of important issues such as due process violations and statutes of limitations.
CHIEF JUSTICE ROBERTS: Well, but, I mean, I don’t think it’s what we were fighting over at Yorktown. I mean, it’s just a question of whether — (Laughter.)
CHIEF JUSTICE ROBERTS: — as you said, the ultimate question, the ultimate issue that affects the property rights in a patent, it’s going to be reached. It’s just a question of whether you use one procedure or another. . . .
CHIEF JUSTICE ROBERTS: As I understand [Mr. Charnes] answer, at least part of it is more or less that this is small potatoes. It’s just about timing for — for the institution of the matter and that the basic issue of the patent validity is something you’re going to get to. You have a number of avenues to get to it.
The basic idea here is that even if the petition is time-barred, patentability could be raised in an ex parte reexamination or in a district court declaratory judgment challenge, or by a separate petitioner who was not time-barred:
CHIEF JUSTICE ROBERTS: [speaking about ex parte reexam] Well, it’s different, I’ll give you that, but, I mean, it’s focused on the same ultimate question. . . .
JUSTICE KAGAN: But if it’s not with
this Petitioner, it can be another Petitioner. . . And, indeed, even when a petitioner drops out under this statute, the Board can keep the proceeding going without the petitioner. So the fact that it is this Petitioner seems utterly unimportant under this statute.
Justice Ginsburg appeared to recognize that the time-bar is important:
JUSTICE GINSBURG: In Cuozzo, it was a particularity requirement, and that was described as a minor statutory technicality. But, here, we’re not dealing with a minor statutory technicality; we’re dealing with a time bar.
Justice Gorsuch provided a softball for the patentee’s counsel to answer:
JUSTICE GORSUCH: Well, I guess the question, though, that we’re struggling with is so what’s the big deal? If you’re stuck going to ex parte review anyway, why should we care? What’s your answer to that?
MR. GEYSER: … because inter partes review is a very different process than ex parte reexamination.
JUSTICE GORSUCH: Spell that out. Spell that out. Why?
MR. GEYSER: It’s because instead of having an opportunity for a single response, truncated discovery, you’re in an adversarial proceeding. You’re before a panel of three PTAB judges who might give you an hour oral hearing.
You get a long, iterative process with a talented patent examiner who can say this is what I think is wrong, and then you have lots of opportunities to show them exactly why
that concern is unfounded.
And, again, the PTAB is reversed a fourth of the time. It’s not like this process … is perfect or without error. . . .
JUSTICE KAGAN: It just doesn’t seem as though this petitioner makes all that much difference.
MR. GEYSER: Well, Congress felt otherwise in this heavily negotiated process that produced 315(b) as a fundamental safeguard for patents.
JUSTICE GORSUCH: Why does it matter whether it’s one petitioner or another petitioner?
MR. GEYSER: To make sure that you don’t have someone gaming the system . . .
MR. GEYSER: And [Congress] understood that this [time-bar] is a significant protection for patent owners. And it’s a significant way to divide the authority between the courts on the one hand and the agency on the other.
There is a more detailed statutory interpretation question here — The no-appeal provision is directed to institution determinations “under this section” — i.e., Section 314, and the time-bar is found under Section 315 of the Code. Under this “chapter”
JUSTICE KAVANAUGH: But “under this chapter” is used in the same provision [314(b)]. If we had “under this chapter” here [in 314(d)], that would solve your problem.
The petitioners here do a nice job of overcoming that argument and so I don’t see it as the basis for the decision, although the court may throw it in as an ancillary matter.
In the end, the case comes down to a strong presumption that agency decisions are subject to appeal in Federal Court. And, the question is whether congress did enough in the statute to overcome that presumption in this case. Patentee’s counsel (who is aware of many cases) ended his arguments with an appeal to precedent and history:
MR. GEYSER:I would submit that I’m not aware of any case that this Court has ever decided that would find Article III review cut off entirely based on language as indirect as this.
We can look for a decision in this case in the Spring of 2020. I am expecting a split opinion with the majority affirming — holding that the no-appeal provision has no force in this particular case.