Guest post by Saurabh Vishnubhakat, Associate Professor at the Texas A&M University School of Law and the Texas A&M College of Engineering. Although Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, his arguments here should not be imputed to the USPTO or to any other organization. This post is based on a new paper forthcoming in the N.Y.U. Annual Survey of American Law. Read the draft at https://ssrn.com/abstract=3113844.
Since the AIA, the Patent Office has had a relatively little-known power in post-issuance proceedings. Once a PTAB decision is appealed to the Federal Circuit, the Patent Office can intervene in the appeal as a matter of statutory right under 35 U.S.C. § 143:
With respect to an appeal described in section 142, the Director shall transmit to the United States Court of Appeals for the Federal Circuit a certified list of the documents comprising the record in the Patent and Trademark Office. The court may request that the Director forward the original or certified copies of such documents during pendency of the appeal. In an ex parte case, the Director shall submit to the court in writing the grounds for the decision of the Patent and Trademark Office, addressing all of the issues raised in the appeal. The Director shall have the right to intervene in an appeal from a decision entered by the Patent Trial and Appeal Board in a derivation proceeding under section 135 or in an inter partes or post-grant review under chapter 31 or 32. The court shall, before hearing an appeal, give notice of the time and place of the hearing to the Director and the parties in the appeal.
In the past few years, the Patent Office has exercised this intervenor authority frequently and with specific apparent policy objectives. In Knowles Electronics v. Matal, the Federal Circuit is now considering the extent to which the agency must establish Article III standing in order to exercise its intervenor authority—specifically in cases where the prevailing party below is absent from the appeal. Also in question, assuming agency standing, is whether the Director must defend the PTAB’s decision below or is free to take other positions on appeal.
Patent Office Interventions: An Empirical Summary
New data on Federal Circuit intervenors shows that the Patent Office’s pattern of strategic intervention intersects in important ways with constitutional limits on the agency’s power.
Among 96 observed disputes (across 145 docketed appeals) in which the agency intervened, every intervenor brief that the Patent Office has filed has been in full or partial defense of the PTAB’s position or of some larger structural value associated with administrative adjudication, never in opposition to the PTAB’s stance.
Where the Patent Office did choose to intervene on appeal, the outcomes below were usually defeats for the patent owner (about 80%), and the agency’s position was to affirm the defeat.
Where the Patent Office intervened specifically to stand in for a litigant who was absent on appeal, the absent litigant was always a prevailing patent challenger—never a prevailing patent owner.
This is constitutionally important because the agency’s ability to intervene often will rest on its ability to show Article III standing. The Patent Office as intervenor may be able avoid having to show its own standing—but only if (1) the agency has entered the case on the side of a party that does establish standing, and so long as (2) the agency does not seek relief that is different from what that friendly party seeks.
Patent Office Intervention and Article III Standing
The Supreme Court explained in Arizonans for Official English v. Arizona, that standing “must be met by persons seeking appellate review, just as it must be met by persons appearing in courts of first instance.” 520 U.S. 43, 64 (1997). Where the friendly party with proven standing declines to appear, the intervenor “cannot step into the shoes of the original party unless the intervenor independently fulfills the requirements of Article III”—even where the intervenor takes the same position as that of the absent party. Id. at 64–65.
Importantly, adverse parties must also have standing independently of each other. It is a common shorthand to say that a plaintiff’s duty to show standing means that standing is required only from plaintiffs. But in fact, standing to defend is necessary as well. It is true that any given defendant probably can establish standing, as a defendant’s potential injury from an adverse judgment is generally enough to satisfy Article III. Still, the case-or-controversy requirement does not merely demand standing to sue. As the Court explained in Arizonans for Official English, what is needed is standing “to sue or defend.” Id. at 64.
This view also calls into question the Federal Circuit’s recent panel decision in Personal Audio, LLC v. Electronic Frontier Found. (Fed. Cir. 2017). It also calls into question the Patent Office position in Knowles. In its briefing on the Article III standing questions, the agency has adopted an expansive view of its own authority and a very limited view of its constitutional limits. In its first supplemental brief, the Patent Office argued that it need not show its own Article III standing because it can piggyback on the standing of Knowles Electronics, the patent owner mounting the appeal—even though the Patent Office as intervenor is adverse to Knowles. The agency also argued, apparently quite broadly, that “the Director may take any substantive position he likes” on appeal. The agency’s second supplemental brief clarified, however—in light of the Chenery doctrine—that this freedom to choose “any substantive position” pertained only to “an issue [actually] decided by the Board.”
But while piggybacking on a friendly party’s standing is one thing, piggybacking on an adverse party’s standing—especially where the friendly party is absent—is quite another. Indeed, though Knowles Electronics’s supplemental brief led with this point, the agency’s briefing contained no responsive discussion of Arizonans for Official English.
Implications for Patent Office Policy and Participation in the Patent System
Choosing to intervene only in certain cases, to support only certain positions, and to stand in only for certain absent appellate parties are plainly acts of policy. The plain language of § 143 suggests that it is a policy instrument that Congress intended for the Patent Office. But the constitutional limitations of Article III, as elaborated by the Court, remain a meaningful constraint on how the agency can exercise its statutory powers. This is especially true given the agency’s observed preferences as intervenor, preferences that require standing to sue or defend and that limit the ability to piggyback on adverse or absent parties.
Apart from their inherent importance, these constitutional imitations also matter for broader participation in the patent system. Since the Patent Office began intervening in Federal Circuit appeals, the relative share of interventions by private parties has declined. The remainder has shifted to a pattern of more concentrated, multi-party interventions. Data on non-governmental intervenors during the same period (Dec. 2013–Sept. 2017) as Patent Office interventions shows that 142 private parties intervened in only 43 docketed Federal Circuit cases. By contrast, in an equivalent period of time before the Patent Office began using its intervenor power (Feb. 2010–Nov. 2013), 63 private parties had intervened in 30 docketed cases while the Patent Office apparently did not intervene in any. In other words, there has been a net offloading onto the Patent Office of the responsibility to intervene.
As I argue in my paper, this is significant precisely because private-party intervenors can often show, more than the Patent Office could, enough of a stake to intervene in a given case. However, Congress chose not to entrust the protection of larger social interests diffusely to private-party intervenors. Instead, it recognized the coordinating and policymaking function that agency intervention can properly serve—within constitutional limits. When understood this way, private parties’ interventions are a useful adjunct to the agency’s. This is especially true where parties may be dissatisfied by the agency’s priorities, which may change considerably from one administration to another. If the decline in private-party intervention has reached some equilibrium with agency intervention—or will soon do so—then that outcome seems preferable to a complete abdication by private parties of the effort to intervene. The Patent Office can do much, but it should not be required to do all that intervenors can do.