No IN THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

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1 Case: Document: 23 Page: 1 Filed: 09/30/2016 No IN THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT EVIDEO OWNERS, MAURO DIDOMENICO, individually and on behalf of all those similarly situated, DOUGLAS BUERGER, CRAIG LINDEN, REALVIRT LLC, and PAUL BAROUS, v. UNITED STATES, Plaintiffs-Appellants, Defendant-Appellee. On Appeal from the United States Court of Federal Claims in case no. 1: , Judge Lydia Kay Griggsby. BRIEF FOR APPELLEE Of Counsel: NATHAN KELLEY Solicitor U.S. Patent and Trademark Office P.O. Box 1450 Alexandria, Virginia BENJAMIN C. MIZER Principal Deputy Assistant Attorney General MARK R. FREEMAN NICOLAS Y. RILEY Attorneys, Appellate Staff Civil Division, Room 7231 U.S. Department of Justice 950 Pennsylvania Avenue, N.W. Washington, DC (202)

2 Case: Document: 23 Page: 2 Filed: 09/30/2016 TABLE OF AUTHORITIES STATEMENT OF RELATED CASES Page STATEMENT OF JURISDICTION... 1 STATEMENT OF THE ISSUES... 1 STATEMENT OF THE CASE... 1 A. Statutory and Regulatory Background... 2 B. Factual and Procedural Background... 4 SUMMARY OF ARGUMENT... 7 STANDARD OF REVIEW... 9 ARGUMENT... 9 I. Plaintiffs lack standing to bring this suit... 9 A. Plaintiffs fail to identify any concrete injury stemming from PTO s alleged decision to review their patent applications under the SAWS program... 9 B. Plaintiff evideo Owners does not own any of the patent applications identified in the complaint II. Plaintiffs have not alleged any conduct by PTO that could plausibly give rise to an implied-in-fact contract III. Plaintiffs have abandoned their illegal-exaction claim CONCLUSION CERTIFICATE OF SERVICE CERTIFICATE OF COMPLIANCE

3 Case: Document: 23 Page: 3 Filed: 09/30/2016 TABLE OF AUTHORITIES Cases: Page(s) Bannum, Inc. v. United States, 779 F.3d 1376 (Fed. Cir. 2015)... 12, 15 Bay View, Inc. v. United States, 278 F.3d 1259 (Fed. Cir. 2001) Brandt v. United States, 710 F.3d 1369 (Fed. Cir. 2013)... 9 Brody v. Village of Port Chester, 261 F.3d 288 (2d Cir. 2001) Brooks v. Dunlop Mfg., Inc., 702 F.3d 624 (Fed. Cir. 2012) Cooper Techs. Co. v. Dudas, 536 F.3d 1330 (Fed. Cir. 2008)... 2 D & N Bank v. United States, 331 F.3d 1374 (Fed. Cir. 2003) Grady v. United States, 565 F. App x 870 (Fed. Cir. 2014) Greer v. United States, 257 F. App x 294 (Fed. Cir. 2007) Hercules, Inc. v. United States, 516 U.S. 417 (1996) Horne v. Flores, 557 U.S. 433 (2009)... 9 Merrick v. United States, 846 F.2d 725 (Fed. Cir. 1988) National R.R. Passenger Corp. v. Atchison, 470 U.S. 451 (1985) ii

4 Case: Document: 23 Page: 4 Filed: 09/30/2016 Norman v. United States, 429 F.3d 1081 (Fed. Cir. 2005) Process Gas Consumers Grp. v. Federal Energy Regulatory Comm n, 177 F.3d 995 (D.C. Cir. 1999) Ramona Two Shields v. United States, 820 F.3d 1324 (Fed. Cir. 2016)... 9 United States v. Connolly, 715 F.3d 882 (Fed. Cir. 1983) Statutes: Tucker Act, 28 U.S.C. 1491(a)(1)... 1, 5 35 U.S.C. 2(a)(1) U.S.C. 2(b)(2)(A) U.S.C U.S.C. 132(a)... 4, 5, 7, 15 Regulations: 37 C.F.R , C.F.R (a)... 4, 5, 7, 15 Rule: Fed. R. App. P. 4(a)(1)(B)... 1 iii

5 Case: Document: 23 Page: 5 Filed: 09/30/2016 Other Authorities: U.S. Patent & Trademark Office: Sensitive Application Warning System (March 2, 2015), 2, 3, 4 U.S. Patent Statistics Chart, Calendar Years , 2 Responses to Questions for the Record for Michelle K. Lee, Nominee for Under Secretary of Commerce for Intellectual Property and Director of PTO, Submitted on Feb. 5, 2015, 3 iv

6 Case: Document: 23 Page: 6 Filed: 09/30/2016 STATEMENT OF RELATED CASES No other appeal in or from the present civil action has previously been before this or any other appellate court. Plaintiffs identified Realvirt, LLC v. Lee, No (E.D. Va.), as a related case. In that case, the district court held that the plaintiff, Realvirt, LLC (one of the plaintiffs in this action) lacked standing to challenge the U.S. Patent and Trademark Office s rejection of Patent Application Serial No. 07/773,161 (one of the patents at issue in this action) because it did not own the rights to that application. Realvirt has appealed that decision to this Court, which has docketed the appeal as Federal Circuit Case No The government is not aware of any other related cases within the meaning of Federal Circuit Rule 47.5(b).

7 Case: Document: 23 Page: 7 Filed: 09/30/2016 STATEMENT OF JURISDICTION Plaintiffs complaint asserts jurisdiction in the Court of Federal Claims under the Tucker Act, 28 U.S.C. 1491(a)(1). The Court of Federal Claims dismissed plaintiffs complaint for lack of subject-matter jurisdiction and for failure to state a claim, and entered final judgment against plaintiffs on March 31, Appx1-17. Plaintiffs filed a timely notice of appeal on May 27, Fed. R. App. P. 4(a)(1)(B); Appx149. As explained below, the Court of Federal Claims properly concluded that it lacked jurisdiction over plaintiffs claims. STATEMENT OF THE ISSUES The Tucker Act gives the Court of Federal Claims original jurisdiction over claims for money damages based upon, inter alia, any express or implied contract with the United States. 28 U.S.C. 1491(a)(1). The questions presented are: (1) Whether plaintiffs have standing to bring this suit; and (2) Whether plaintiffs entered into implied-in-fact contracts with the United States by submitting patent applications to the U.S. Patent and Trademark Office and paying the requisite application fees. STATEMENT OF THE CASE Plaintiffs brought this damages action against the United States to recover certain expenses incurred in prosecuting their patent applications before the U.S. Patent and Trademark Office (PTO). They alleged that PTO had breached an implied-in-fact contract with them by flagging their applications for review under a

8 Case: Document: 23 Page: 8 Filed: 09/30/2016 now-defunct quality-assurance program known as the Sensitive Application Warning System, without notifying them. The Court of Federal Claims dismissed the complaint on the grounds that that plaintiffs had failed, among other things, to allege sufficient facts to establish an implied-in-fact contract with the government. A. Statutory and Regulatory Background PTO is responsible for the granting and issuing of patents. 35 U.S.C. 2(a)(1). Over the past decade, the agency has received an average of over half a million patent applications per year. PTO, U.S. Patent Statistics Chart, Calendar Years , To enable PTO to process all of these applications efficiently, Congress granted the agency broad authority to govern the conduct of proceedings before it. Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1335 (Fed. Cir. 2008); see 35 U.S.C. 2(b)(2)(A) (granting PTO authority to issue rules governing the conduct of proceedings in the Office ). In the early 1990s, as the number of patent applications grew rapidly, PTO undertook new efforts to maintain the quality of the patents it issued. In 1994, it created a program known as the Sensitive Application Warning System, or SAWS, which flagged certain applications of special interest for an internal quality-assurance check. PTO, Sensitive Application Warning System (March 2, 2015), ( March 2015 SAWS Notice ). These applications might involve, for example, potentially frivolous claims (such as a perpetual-motion machine or a method for preventing aging) or ethically controversial subject matter (such as 2

9 Case: Document: 23 Page: 9 Filed: 09/30/2016 claims directed to or encompassing human beings). Appx31; Pls. Response to Mot. Dismiss, Ex. 1, at 5, No (Fed. Cl. Sept. 14, 2015), ECF No Applications flagged for SAWS review would typically be referred to second examiner, who would review the applications under the same substantive standards of patentability as all other applications. Only a small fraction of applications typically around 0.04% were referred to the SAWS program. March 2015 SAWS Notice. Applicants whose submissions were referred to the program were not required to provide any additional materials or pay any additional fees. Indeed, most applicants did not even know that their applications had been referred to the program; PTO never publicly identified which applications had been flagged for SAWS review out of concern that doing so could color those applications in the public s eye and lead to unjustified inferences as to the issued patent s strength or weakness. Responses to Questions for the Record for Michelle K. Lee, at 5, Nominee for Under Secretary of Commerce for Intellectual Property and Director of PTO, Submitted on Feb. 5, 2015, In early 2015, PTO conducted a thorough review of the SAWS program and concluded that the program ultimately provide[d] minimal benefit. See March 2015 SAWS Notice. The agency noted that program had been only marginally utilized due to the small number of applications that had been flagged for SAWS review. Id. It further found that the program s value had diminished in recent years in light of the fact that today, unlike when the SAWS program was created, most applications are 3

10 Case: Document: 23 Page: 10 Filed: 09/30/2016 published eighteen months after submission and, thus, exposed to greater public scrutiny. Id.; cf. 35 U.S.C. 122(b). Based on these findings, the agency announced in March 2015 that it was retiring the program. See March 2015 SAWS notice. B. Factual and Procedural Background Shortly after PTO terminated the SAWS program, plaintiffs filed this putative class action in the Court of Federal Claims. See Appx In their complaint, they stated that they had a good faith belief that PTO had flagged their applications for SAWS review without notifying them. Appx24, Appx30, Appx31, Appx32, Appx34, Appx Plaintiffs asserted that this alleged lack of notice violated 35 U.S.C. 132(a) and 37 C.F.R (a), both of which require PTO to notify a patent applicant whenever it reject[s] one of his or her claims, or issues any objection or requirement. See Appx30, Appx Plaintiffs claimed that, by violating these notice-mandating provisions, PTO had breached an implied contract with them and infringed their rights to substantive due process under the Fifth Amendment. Appx In their prayer for relief, they sought to recover the application fees they had paid to PTO, as well as any reasonable attorney fees paid in the prosecution of their applications after the applications were designated under or associated with the S.A.W.S. program. Appx Plaintiffs invoked the Court of Federal Claims jurisdiction under the Tucker Act, which waives the United States sovereign immunity for certain non-tort claims for money damages. See Appx20. The Act gives the Court of Federal Claims 4

11 Case: Document: 23 Page: 11 Filed: 09/30/2016 jurisdiction over any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States. 28 U.S.C. 1491(a)(1). Plaintiffs asserted that their claims fell within the ambit of the Tucker Act because they were based on an implied contract with PTO. Appx39. The Court of Federal Claims dismissed plaintiffs complaint on standing grounds, for lack of subject-matter jurisdiction, and for failure to state a claim. Appx9-16. As an initial matter, the court held that plaintiff evideo Owners lacked standing to bring this suit. Appx9-10. The court noted that undisputed PTO records showed that evideo Owners never owned any of the patent applications identified in the complaint; as such, the court concluded, evideo Owners could not prove that it was harmed by PTO s alleged decision to refer those applications to the SAWS program. Appx10 & n.2. With respect to plaintiffs contract claim, the court held that plaintiffs had failed to allege any cognizable basis for finding an implied contract with the United States. Appx In reaching this conclusion, the court expressly rejected plaintiffs theory that PTO s notice obligations under 35 U.S.C. 132(a) and 37 C.F.R (a) give rise to an implied-in-fact contract between the agency and its patent applicants. Appx The court explained that plaintiffs, in relying exclusively on these statutory and regulatory provisions, had essentially alleged the existence of an implied-in-law contract, and the Supreme Court had made clear that Tucker Act 5

12 Case: Document: 23 Page: 12 Filed: 09/30/2016 jurisdiction does not extend to contracts that are implied in law. Appx7. Because plaintiffs complaint did not contain any other allegations suggesting that they had entered into an implied-in-fact agreement with PTO, the court concluded that plaintiffs could not establish jurisdiction under the Tucker Act or state a valid claim for breach of contract. Appx12 & n.3. The court dismissed plaintiffs due-process claim on similar grounds. Construing plaintiffs due-process allegations as a claim for illegal exaction of fees, 1 the court held that plaintiffs had not shown that PTO s alleged failure to notify them of the SAWS referrals could have directly resulted in the illegal exaction of any official fees. Appx13. The court noted that plaintiffs had failed to allege that they would have abandoned their patent applications, or otherwise avoided future patentprosecution expenses, if they had received notice of the alleged SAWS referrals. Id. The court also held that plaintiffs had failed to identify a statute or regulation expressly requiring PTO to return any improperly collected fees, a prerequisite to recovering illegally exacted funds. Appx12-14 & n.4. Accordingly, the court concluded, plaintiffs illegal exaction claim was untenable. Appx14. After the court entered judgment in the government s favor, plaintiffs moved for reconsideration. Appx Their motion reiterated their argument that the 1 The court explained that it construed plaintiffs claim in this way because, while it typically does not possess subject-matter jurisdiction to consider due process claims under the Tucker Act, it may consider claims that the government illegally exacted property. Appx7. 6

13 Case: Document: 23 Page: 13 Filed: 09/30/2016 notice provisions in 35 U.S.C. 132(a) and 37 C.F.R (a) gave rise to an implied-in-fact contract, but sought to clarify that their implied-contract theory was also based on another regulation namely, 37 C.F.R. 1.17, which sets forth PTO s schedule of application fees. Appx137. The court denied plaintiffs motion, concluding that they had failed to identify any valid grounds for reconsideration. Appx Plaintiffs timely appealed. Appx149. SUMMARY OF ARGUMENT The Court of Federal Claims correctly rejected plaintiffs theory that they entered into implied-in-fact contracts with the United States by submitting patent applications to PTO and paying the requisite application fees. Plaintiffs have not suffered any cognizable harm from the conduct they allege in their complaint and, even if they had, they have not identified any basis for asserting a breach-of-contract claim against the government. 1. Plaintiffs lack standing to bring this suit because they have not identified any concrete injury stemming from PTO s alleged decision to refer their patent applications to the SAWS program. Their complaint does not allege that their applications were subject to some heightened standard of patentability. Nor does it allege that they were forced to pay more in fees or submit more materials than any other patent applicant. Rather, plaintiffs assert that they were harmed by PTO s purported failure to notify them that their applications had been flagged for SAWS review and that, had they received such notice, they might have decided to somehow 7

14 Case: Document: 23 Page: 14 Filed: 09/30/2016 prosecute their patent applications differently. That hypothetical claim is too speculative to constitute a cognizable injury. 2. The Supreme Court has long recognized that implied-in-law contracts are not enforceable against the federal government. Rather, to bring a valid claim against the government based on an implied contract, a plaintiff must plausibly allege the existence of a contract implied in fact. Among other things, the plaintiff must identify some conduct by a government official, beyond the mere performance of his or her statutory and regulatory duties, evincing an intent to enter into a binding contract. Plaintiffs have failed to satisfy this burden here. All of the contractual obligations they seek to attribute to PTO arise from statutes and regulations governing PTO s patent-examination duties. Although plaintiffs argue that these statutory and regulatory provisions effectively create implied-in-fact contracts for patent examination services, Pls. Br. 9, this Court s precedents make clear that statutory and regulatory provisions like these cannot be construed as contractual terms. 3. Plaintiffs do not challenge the dismissal of their illegal-exaction claim on appeal. To the contrary, their opening brief indicates that they never intended to rely on an illegal-exaction claim to establish jurisdiction in this case. See Pls. Br. 9. Accordingly, plaintiffs have waived any argument that their illegal-exaction claim should be revived. Further, even if plaintiffs had not waived the issue, the Court of Federal Claims properly dismissed the claim on the merits. 8

15 Case: Document: 23 Page: 15 Filed: 09/30/2016 STANDARD OF REVIEW This Court review[s] de novo the Court of Federal Claims dismissals based on lack of jurisdiction and failure to state a claim for which relief can be granted. Ramona Two Shields v. United States, 820 F.3d 1324, (Fed. Cir. 2016) (citation omitted). [T]he plaintiff bears the burden of establishing the court s jurisdiction by a preponderance of the evidence. Brandt v. United States, 710 F.3d 1369, 1373 (Fed. Cir. 2013). ARGUMENT I. Plaintiffs lack standing to bring this suit. A. Plaintiffs fail to identify any concrete injury stemming from PTO s alleged decision to review their patent applications under the SAWS program. To establish standing, a plaintiff must allege an injury that is both concrete and fairly traceable to the defendant s challenged action. Horne v. Flores, 557 U.S. 433, 445 (2009). In this case, plaintiffs have not established that they were harmed by PTO s alleged decision to refer their applications to the SAWS program. As previously explained, applications referred to the SAWS program remained subject to the same substantive standards of patentability as all other applications. See 35 U.S.C Moreover, such referrals did not subject applicants to any new fees or erect any new procedural hurdles for them to clear. In short, referring plaintiffs applications to the SAWS program would not have caused plaintiffs any concrete injury. 9

16 Case: Document: 23 Page: 16 Filed: 09/30/2016 Nor would PTO s failure to notify plaintiffs of the alleged referral. Plaintiffs assert that they were harmed financially by the lack of notice, citing the application fees and legal expenses they incurred while prosecuting their patent applications. Appx24, Appx31, Appx But they would have incurred these costs anyway. Plaintiffs identify no specific fee or expense incurred as a proximate result of the SAWS program. Moreover, as the court below noted, they have never asserted that they would have abandoned their patent applications if they had discovered that their applications had been referred to the SAWS program. See Appx13. If anything, their complaint suggests the opposite: it states that plaintiffs have been diligently pursuing a fair and final disposition to their respective patent applications since they first filed them, even though details about the SAWS program became public in December 2014 (three months before PTO retired the program). See Appx Indeed, plaintiffs fail to offer any specific details in their complaint or their opening brief about how they would have changed their behavior if PTO had notified them of the alleged SAWS referrals. 2 Although they assert generally that notice of a SAWS referral might have been useful in aiding [an] applicant to judge the propriety of continuing the prosecution of [an] application, Appx37, they never explain why notice of such a referral (which, again, would not affect their substantive rights) would 2 As the Court of Federal Claims observed, plaintiffs briefs below acknowledge[d] that, had they actually been notified of the [alleged] referral to the S.A.W.S. program, they may not have ceased the prosecution of their patent applications. Appx13 (emphasis added). 10

17 Case: Document: 23 Page: 17 Filed: 09/30/2016 have led them to abandon their applications. In any event, their claim that such notice might have been useful is too speculative to confer standing. See, e.g., Process Gas Consumers Grp. v. Federal Energy Regulatory Comm n, 177 F.3d 995, 1006 (D.C. Cir. 1999) (holding that consumers lacked standing to challenge agency s change in tariff rates based on lack of notice because their allegation that they might well have taken certain precautions had they received such notice was too speculative to satisfy standing s injury-in-fact prong); see also Brody v. Village of Port Chester, 261 F.3d 288, 290 (2d Cir. 2001) (holding that plaintiff lacked standing to challenge a city zoning decision based on the city s failure to notify him of a zoning hearing because he had not in any way indicated that he would have raised additional objections at the hearing and, thus, suffered no injury in fact from not knowing of the... hearing ). B. Plaintiff evideo Owners does not own any of the patent applications identified in the complaint. Plaintiffs make no effort to rebut the Court of Federal Claims holding that evideo Owners does not own any of the patent applications identified in the complaint. As that court explained, [p]laintiffs do not dispute that evideo Owners never owned, nor served as an assignee of any of the patent applications at issue in this case. Appx10. Indeed, plaintiffs conceded that the inventor of the two patent applications in which evideo Owners now claims an ownership interest, in fact, assigned his rights in those applications to an entity called evideo, Incorporated, 11

18 Case: Document: 23 Page: 18 Filed: 09/30/2016 which dissolved in Appx10 n.2. In light of this concession, as well as plaintiffs failure to challenge this aspect of the Court of Federal Claims ruling on appeal, this Court should affirm the dismissal of evideo Owners claims for lack of standing. Bannum, Inc. v. United States, 779 F.3d 1376, 1382 (Fed. Cir. 2015) ( An issue that falls within the scope of the judgment appealed from but is not raised by the appellant in its opening brief on appeal may properly be deemed waived. (citations omitted)). II. Plaintiffs have not alleged any conduct by PTO that could plausibly give rise to an implied-in-fact contract. The Supreme Court has long held that a plaintiff may not bring a claim for damages against the United States based on a contract implied in law. Hercules, Inc. v. United States, 516 U.S. 417, (1996). Thus, to assert a claim against the government based on an implied contract, the plaintiff must allege a breach of an implied-in-fact contract. Id. Such an agreement may only be formed through specific conduct by both parties demonstrating not merely the execution of statutory or regulatory functions, but a mutual intent to contract including an offer and acceptance, [and] consideration. Bay View, Inc. v. United States, 278 F.3d 1259, 1265 (Fed. Cir. 2001) (citations omitted). Plaintiffs failed to allege any such conduct in this case. As the Court of Federal Claims explained, in substance plaintiffs allege that they have entered into implied-inlaw rather than implied-in-fact contracts with the United States. Appx10. The sole reference in their complaint to any implied agreement with the government 12

19 Case: Document: 23 Page: 19 Filed: 09/30/2016 alleges the existence of an implied contract under 35 U.S.C. 132(a), 37 C.F.R (a)(2) and 37 C.F.R Appx39. These provisions do not impose any contractual obligations on PTO. As this Court has repeatedly recognized, [a]n agency s performance of its regulatory or sovereign functions does not create contractual obligations. D & N Bank v. United States, 331 F.3d 1374, 1378 (Fed. Cir. 2003); see also Merrick v. United States, 846 F.2d 725, 726 (Fed. Cir. 1988) ( The United States cannot be contractually bound merely by invoking the cited statute and regulation. ). Plaintiffs have not alleged any conduct by PTO, other than the performance of its statutory and regulatory duties, evincing an intent to enter into contracts with any patent applicants. Although plaintiffs characterize certain statutes and regulations (many of which they failed to cite in their complaint) as manifesting an offer by the USPTO to accept a utility patent, Pls. Br. 10, this Court has cautioned against reading statutes or regulations as creating contractual terms. As the Court explained in Brooks v. Dunlop Manufacturing, Inc., 702 F.3d 624 (Fed. Cir. 2012), absent some clear indication that the legislature intends to bind itself contractually, the presumption is that a law is not intended to create private contractual or vested rights, but merely declares a policy to be pursued until the legislature shall ordain otherwise. Id. at 630 (quoting National R.R. Passenger Corp. v. Atchison, 470 U.S. 451, (1985)). 13

20 Case: Document: 23 Page: 20 Filed: 09/30/2016 The Court s decision in Grady v. United States, 565 F. App x 870 (Fed. Cir. 2014), illustrates the error of plaintiffs reasoning. In Grady, the Court rejected an investor s claim that the Securities and Exchange Commission s statutory duty to maintain fair and orderly markets for the protection of investors gave rise to an implied-in-fact contract with him. Id. at 872 (citations and quotation marks omitted). The Court reasoned that the investor had failed to make any of the required allegations of a specific contract between himself and the SEC and, thus, held that his claim involves a contract implied-in-law. Id. The Court has rejected similar efforts to establish implied-in-fact contracts based on agencies regulatory duties. See Greer v. United States, 257 F. App x 294, 295 (Fed. Cir. 2007) (holding that agencies regulatory obligations and statements on their websites did not give rise to implied-in-fact contract). Plaintiffs contend that the Court of Federal Claims erred in failing to discuss 37 C.F.R. 1.17, which sets forth PTO s fee schedule for patent applicants. Pls. Br. 6, 9. But plaintiffs reliance on that provision only underscores that their legal theory was based on an implied-in-law contract, rather than an implied-in-fact contract. As explained above, the Court of Federal Claims properly rejected that theory. III. Plaintiffs have abandoned their illegal-exaction claim. Plaintiffs have not attempted to revive their illegal-exaction claim on appeal and, in fact, appear to disavow that claim altogether. They refer to the claim only once in their opening brief, to explain that they never intended to rely on an illegal- 14

21 Case: Document: 23 Page: 21 Filed: 09/30/2016 exaction theory as a basis for Tucker Act jurisdiction. See Pls. Br. 9 (stating that the complaint sought to demonstrate a breach of the implied-in-fact contracts... and not to establish the formation of an implied-in-law contract or any other basis for jurisdiction, such as an illegal exaction claim ). Plaintiffs have therefore waived their illegal-exaction claim. See Bannum, 779 F.3d at In any event, the Court of Federal Claims properly rejected plaintiffs illegalexaction theory on the merits. First, plaintiffs have not alleged sufficient facts to show that the fees they seek to recover were improperly paid the core element of any illegal-exaction claim. Although they contend that PTO violated the notice provisions of 35 U.S.C. 132(a) and 37 C.F.R (a)(2), those provisions only require PTO to notify an applicant of any rejections, objections, or restrictions. Neither provision requires PTO to notify an applicant of a SAWS referral. And, as the Court of Federal claims noted, even if PTO were required to notify applicants of every SAWS referral, plaintiffs have not alleged that they would have stopped paying their application fees or legal expenses had they received such notice. See Appx13; supra pt. I.A. Second, the Court of Federal Claims properly found that plaintiffs failed to identify any constitutional, statutory, or regulatory provision mandating, expressly or by implication, a return of money unlawfully exacted. Norman v. United States, 429 F.3d 1081, 1095 (Fed. Cir. 2005) (citations omitted); see also United States v. Connolly, 715 F.3d 882, 887 (Fed. Cir. 1983) (recognizing that the Due Process Clause does not 15

22 Case: Document: 23 Page: 22 Filed: 09/30/2016 directly provide for a return of illegally exacted money). Given plaintiffs failure to satisfy these basic elements of an illegal-exaction claim, the Court of Federal Claims dismissal should be affirmed. CONCLUSION For the foregoing reasons, the judgment of the Court of Federal Claims should be affirmed. Respectfully submitted, Of Counsel: NATHAN KELLEY Solicitor U.S. Patent and Trademark Office P.O. Box 1450 Alexandria, Virginia BENJAMIN C. MIZER Principal Deputy Assistant Attorney General MARK R. FREEMAN (202) s/ Nicolas Y. Riley NICOLAS Y. RILEY Attorneys, Appellate Staff Civil Division, Room 7231 U.S. Department of Justice 950 Pennsylvania Avenue, N.W. Washington, D.C (202) nicolas.y.riley@usdoj.gov SEPTEMBER

23 Case: Document: 23 Page: 23 Filed: 09/30/2016 CERTIFICATE OF SERVICE I hereby certify that on September 29, 2016, I electronically filed the foregoing brief with the Clerk of the Court for the United States Court of Appeals for the Federal Circuit by using the appellate CM/ECF system. A corrected version of the brief was electronically filed on September 30, Participants in the case are registered CM/ECF users, and service will be accomplished by the appellate CM/ECF system. s/ Nicolas Y. Riley NICOLAS Y. RILEY

24 Case: Document: 23 Page: 24 Filed: 09/30/2016 CERTIFICATE OF COMPLIANCE I hereby certify that this brief complies with the requirements of Federal Rule of Appellate Procedure 32(a). This brief contains 3904 words, excluding the parts of the brief exempted by Federal Rule of Appellate Procedure 32(a)(7)(B)(iii). This brief has been prepared in a proportionally spaced typeface using Microsoft Word 2013 in size 14-point Garamond font. s/ Nicolas Y. Riley NICOLAS Y. RILEY

25 Case: Document: 23 Page: 25 Filed: 09/30/2016 ADDENDUM OF STATUTES AND REGULATIONS

26 Case: Document: 23 Page: 26 Filed: 09/30/2016 TABLE OF CONTENTS 35 U.S.C SAppx1 37 C.F.R (a)... SAppx2

27 Case: Document: 23 Page: 27 Filed: 09/30/ U.S.C Notice of rejection; reexamination. (a) Whenever, on examination, any claim for a patent is rejected, or any objection or requirement made, the Director shall notify the applicant thereof, stating the reasons for such rejection, or objection or requirement, together with such information and references as may be useful in judging of the propriety of continuing the prosecution of his application; and if after receiving such notice, the applicant persists in his claim for a patent, with or without amendment, the application shall be reexamined. No amendment shall introduce new matter into the disclosure of the invention. (b) The Director shall prescribe regulations to provide for the continued examination of applications for patent at the request of the applicant. The Director may establish appropriate fees for such continued examination and shall provide a 50 percent reduction in such fees for small entities that qualify for reduced fees under section 41(h)(1). SAppx1

28 Case: Document: 23 Page: 28 Filed: 09/30/ C.F.R (a). Nature of examiner s action. (a) Examiner s action. (1) On taking up an application for examination or a patent in a reexamination proceeding, the examiner shall make a thorough study thereof and shall make a thorough investigation of the available prior art relating to the subject matter of the claimed invention. The examination shall be complete with respect both to compliance of the application or patent under reexamination with the applicable statutes and rules and to the patentability of the invention as claimed, as well as with respect to matters of form, unless otherwise indicated. (2) The applicant, or in the case of a reexamination proceeding, both the patent owner and the requester, will be notified of the examiner s action. The reasons for any adverse action or any objection or requirement will be stated in an Office action and such information or references will be given as may be useful in aiding the applicant, or in the case of a reexamination proceeding the patent owner, to judge the propriety of continuing the prosecution. (3) An international-type search will be made in all national applications filed on and after June 1, (4) Any national application may also have an international-type search report prepared thereon at the time of the national examination on the merits, upon specific written request therefor and payment of the international-type search report fee set forth in 1.21(e). The Patent and Trademark Office does not require that a formal report of an international-type search be prepared in order to obtain a search fee refund in a later filed international application. SAppx2