No. 14-619 IN THE Supreme Court of the United States ZOLL LIFECOR CORPORATION, v. Petitioner, PHILIPS ELECTRONICS NORTH AMERICA CORPORATION AND KONINKLIJKE PHILIPS N.V., Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Federal Circuit RESPONDENTS BRIEF IN OPPOSITION January 12, 2015 J. MICHAEL JAKES Counsel of Record KATHLEEN A. DALEY DAVID K. MROZ FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP 901 New York Avenue, NW Washington, DC 20001 (202) 408-4000 mike.jakes@finnegan.com Counsel for Respondents WILSON-EPES PRINTING CO., INC. (202) 789-0096 WASHINGTON, D. C. 20001
QUESTION PRESENTED Petitioner s question presented misinterprets the statutes on inter partes review in the U.S. Patent and Trademark Office ( PTO ) and appeals to the Court of Appeals for the Federal Circuit, and otherwise tries to manufacture conflicts with Supreme Court precedent where none exists. Restated, the question presented is whether this Court should review the Federal Circuit s dismissal order concluding that it lacked jurisdiction to hear Petitioner s appeal, where Petitioner sought to challenge rulings from the PTO denying institution of inter partes review for eight different patents under a statutory regime that not only provides no affirmative right to appeal, but expressly bars it. (i)
ii LIST OF PARTIES AND RULE 29.6 STATEMENT The parties to the proceedings below are Petitioner Zoll Lifecor Corporation and Respondents Philips Electronics North America Corporation and Koninklijke Philips N.V. Pursuant to Supreme Court Rule 29.6, Respondents state that no corporations or publicly held companies own 10% or more of Koninklijke Philips N.V. s stock and that Philips Electronics North America Corporation is a wholly owned subsidiary of Philips Holding USA, Inc., which, directly and indirectly, is a wholly owned subsidiary of Koninklijke Philips N.V.
TABLE OF CONTENTS QUESTION PRESENTED... LIST OF PARTIES AND RULE 29.6 STATEMENT... TABLE OF AUTHORITIES... Page STATUTORY PROVISIONS INVOLVED... 1 STATEMENT OF THE CASE... 4 I. Procedural History of the Philips v. Zoll Litigations... 4 II. Zoll Medical s Close Relationship with Zoll Lifecor... 8 III. Requirements of the Inter Partes Review Statute... 10 IV. Zoll s Failure to Comply with Inter Partes Review Statute and Related Regulations... 12 REASONS FOR DENYING THE PETITION... 14 I. No Statute Gives Zoll the Right to Appeal a Decision Denying Institution of Inter Partes Review... 14 II. 35 U.S.C. 314(d) Bars Appeals from All Board Decisions Denying Institution of Inter Partes Review... 16 III. Additional Arguments Why the Board s Decision Denying Institution Cannot Be Appealed... 21 i ii v (iii)
iv TABLE OF CONTENTS Continued Page A. The Plain Language of the Inter Partes Review Statute Obviates the Presump-tion of Reviewability... 21 B. Zoll Misreads the St. Jude Case... 22 C. Zoll s Statutory Interpretation Would Flood the System with Appeals... 23 D. Only a Brief Notice Is Required for a Noninstitution Decision... 24 IV. The Question Presented Is Uncertworthy. 25 CONCLUSION... 28
v TABLE OF AUTHORITIES CASES Page(s) Block v. Cmty. Nutrition Inst., 467 U.S. 340, 349 (1984)... 21 Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988)... 14, 18 Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984)... 10 Dey Pharma, LP v. Sunovion Pharm. Inc., 677 F.3d 1158 (Fed. Cir. 2012)... 26 In re Dominion Dealer Solutions, LLC, 749 F.3d 1379 (Fed. Cir. 2014)... 7, 18, 25 In re Procter & Gamble Co., 749 F.3d 1376 (Fed. Cir. 2014)... 7, 18, 25 Moreland v. Fed. Bureau of Prisons, 547 U.S. 1106 (2006)... 25, 26 Nalley v. Nalley, 53 F.3d 649 (4th Cir. 1995)... 20 St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014)...passim Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330 (Fed. Cir. 2007)... 26 Traynor v. Turnage, 485 U.S. 535 (1988)... 21 TRW Inc. v. Andrews, 534 U.S. 19 (2001)... 14, 15
vi TABLE OF AUTHORITIES Continued Page(s) United States v. Fausto, 484 U.S. 439 (1988)... 21 STATUTES 21 U.S.C. 355(j)(5)(C)... 26 28 U.S.C. 1295...passim 35 U.S.C. 134... 15, 16 35 U.S.C. 141...passim 35 U.S.C. 271(e)(5)... 26 35 U.S.C. 301... 27 35 U.S.C. 302... 27 35 U.S.C. 303... 22, 27 35 U.S.C. 304... 27 35 U.S.C. 305... 27 35 U.S.C. 306... 15, 27 35 U.S.C. 307... 27 35 U.S.C. 311... 10, 11, 17 35 U.S.C. 312...passim 35 U.S.C. 313...passim 35 U.S.C. 314...passim 35 U.S.C. 315...passim 35 U.S.C. 316...passim 35 U.S.C. 317... 10, 11 35 U.S.C. 318...passim
vii TABLE OF AUTHORITIES Continued Page(s) 35 U.S.C. 319...passim 35 U.S.C. 324(e)... 22 35 U.S.C. 329... 15 Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585... 26 Leahy-Smith America Invents Act Technical Corrections, Pub. L. No. 112-274, 1(d)(1), 126 Stat. 2456 (2013)... 11 RULES S. Ct. R. 10(a)... 25 S. Ct. R. 10(c)... 26 REGULATIONS 37 C.F.R. 42.8(a)(1)... 12 37 C.F.R. 42.8(b)(2)... 12 37 C.F.R. 42.108... 11, 17 Setting and Adjusting Patent Fees, 78 Fed. Reg. 4212, 4233 (Jan. 18, 2013)... 7 OTHER AUTHORITIES 149 Cong. Rec. S15885 (daily ed. Nov. 25, 2003)... 26-27 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011)... 12 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011)... 15, 24
viii TABLE OF AUTHORITIES Continued Page(s) Fed. Trade Comm n, Generic Drug Entry Prior to Patent Expiration: An FTC Study (July 2002)... 26 President George W. Bush, Remarks on Prescription Drugs (Oct. 21, 2002), available at http://www.gpo.gov/fdsys/pkg/ppp-2002- book2/pdf/ppp-2002-book2-doc-pg1848. pdf 26
STATUTORY PROVISIONS INVOLVED 35 U.S.C. 312 provides in pertinent part: (a) Requirements of Petition. A petition filed under section 311 may be considered only if... (2) the petition identifies all real parties in interest;.... 35 U.S.C. 313 states: If an inter partes review petition is filed under section 311, the patent owner shall have the right to file a preliminary response to the petition, within a time period set by the Director, that sets forth reasons why no inter partes review should be instituted based upon the failure of the petition to meet any requirement of this chapter. 35 U.S.C. 314 states: (a) Threshold. The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition. (b) Timing. The Director shall determine whether to institute an inter partes review under this chapter pursuant to a petition filed under section 311 within 3 months after
2 (1) receiving a preliminary response to the petition under section 313; or (2) if no such preliminary response is filed, the last date on which such response may be filed. (c) Notice. The Director shall notify the petitioner and patent owner, in writing, of the Director s determination under subsection (a), and shall make such notice available to the public as soon as is practicable. Such notice shall include the date on which the review shall commence. (d) No Appeal. The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable. 35 U.S.C. 315 provides in pertinent part:... (b) Patent Owner s Action. An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c). 35 U.S.C. 316 provides in pertinent part:... (b) Considerations. In prescribing regulations under this section, the Director shall
3 consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter. 35 U.S.C. 318 provides in pertinent part: (a) Final Written Decision. If an inter partes review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d). 35 U.S.C. 319 states: A party dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) may appeal the decision pursuant to sections 141 through 144. Any party to the inter partes review shall have the right to be a party to the appeal. 35 U.S.C. 141 provides in pertinent part:... (c) Post-Grant and Inter Partes Reviews. A party to an inter partes review or a post-grant review who is dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) or 328(a) (as the case may be) may appeal the Board s decision only to the United States Court of Appeals for the Federal Circuit.
4 28 U.S.C. 1295 provides in pertinent part: (a) The United States Court of Appeals for the Federal Circuit shall have exclusive jurisdiction... (4) of an appeal from a decision of (A) the Patent Trial and Appeal Board of the United States Patent and Trademark Office with respect to a patent application, derivation proceeding, reexamination, post-grant review, or inter partes review under title 35, at the instance of a party who exercised that party s right to participate in the applicable proceeding before or appeal to the Board, except that an applicant or a party to a derivation proceeding may also have remedy by civil action pursuant to section 145 or 146 of title 35; an appeal under this subparagraph of a decision of the Board with respect to an application or derivation proceeding shall waive the right of such applicant or party to proceed under section 145 or 146 of title 35[.] STATEMENT OF THE CASE I. Procedural History of the Philips v. Zoll Litigations Philips filed a complaint in the Massachusetts District Court in June 2010 against Zoll Medical Corporation, accusing Zoll s defibrillators of infringing U.S. Patent Nos. 5,607,454; 5,749,905; 5,803,927; 5,836,978; 6,047,212; and 5,735,879. (Pet. App. at 2a.) These patents cover Philips s SMART Biphasic waveform technology a crown-jewel technology that
5 allows a defibrillator to treat cardiac arrest by sensing a patient s impedance and then using that impedance measurement to adjust the defibrillation shock for that patient. The purpose of the defibrillation shock is to restore the patient s heartbeat to its normal rhythm. Quick treatment is important for defibrillation, where seconds can be the difference between life and death. The survival rate of a patient suffering from cardiac arrest decreases 10 percent for each minute that passes. By sensing impedance and adjusting the shock to account for the patient s body type, Philips s patented waveform technology allows for early, effective, and lifesaving treatment. Philips s pioneering waveform technology also helped make its defibrillators reliable enough for untrained people to use. In fact, Philips s defibrillators became so reliable that one of them (the HeartStart) earned over-the-counter clearance from the U.S. Food and Drug Administration in 2004, which allowed defibrillators into homes. This is important because over 70% of cardiac arrests happen at home. The HeartStart defibrillator remains the only defibrillator available for purchase over the counter. Forbes Magazine honored the HeartStart defibrillator as a product of the decade, along with Netflix, Google, the ipod, Skype, and YouTube. A jury in the Massachusetts case found that Zoll Medical infringed Philips s waveform patents, and the damages case is ongoing. On September 21, 2012, Philips filed a second complaint against Zoll Lifecor, 1 a wholly owned subsidiary of Zoll Medical, in the 1 Philips will refer to Zoll Lifecor as Zoll throughout this Opposition but will specify Zoll Lifecor when necessary.
6 Western District of Pennsylvania. (Pet. App. at 2a.) Philips asserted the same six waveform patents that it asserted in Massachusetts, as well as two others: U.S. Patent Nos. 5,593,427 and 5,749,904. (Id. at 2a 3a.) The product accused of infringement was Zoll Lifecor s LifeVest, an external wearable defibrillator. On September 23, 2013, a year after Philips filed the Pennsylvania case, and over three years after Philips filed the Massachusetts case, Zoll Lifecor sought to invalidate all eight waveform patents by petitioning for inter partes review at the PTO. (Id. at 3a.) The Patent Trial and Appeal Board ( Board ) declined to institute Zoll s petitions, however, because Zoll failed to comply with the statutory requirements. Specifically, the Board found that Zoll failed to comply with 35 U.S.C. 312(a) in all eight petitions because it did not identify Zoll Medical as a real part[y] in interest in those petitions. (Id. at 7a.) Petitioners are ordinarily given a month to correct this type of error, but Zoll did not file its petitions until the last possible day under 35 U.S.C. 315(b), which precludes petitions filed more than 1 year after the date on which the petitioner... is served with a complaint alleging infringement of the patent. (Id. at 22a 23a.) Thus, any filing to correct the real-party-ininterest error would have fallen outside 315(b) s one-year window. (Id. at 22a 23a.) The 315(b) bar applied to all eight petitions because the eight Philips patents addressed in those petitions were also in the Pennsylvania complaint. (Id. at 2a 3a, 22a 23a.) The Board provided additional reasons for denying the petitions on the six patents from the Massachusetts case, finding these petitions were barred under 315(b) because Zoll Medical is a privy of Zoll Lifecor and because Philips served a complaint on Zoll
7 Medical alleging infringement of these six patents more than a year before the petitions were filed. (Id. at 19a 22a.) 2 The PTO allows fee refunds after denials of institution. See Setting and Adjusting Patent Fees, 78 Fed. Reg. 4212, 4233 (Jan. 18, 2013). The PTO allocates its filing fees between a petition fee and a postinstitution fee. Id. Zoll applied for and obtained a $120,000 refund of its post-institution fees for all eight petitions because no inter partes review was instituted. (Pet. App. at 38a.) But Zoll could not recoup its $80,000 petition fee that was required to obtain an institution decision for the eight petitions. (Id.) Thus, when viewed in the proper context, Zoll s complaint that the USPTO kept $80,000 of the fees lacks merit. (See Pet. at 14 n.9.) While asking for its money back, Zoll appealed the Board s noninstitution decisions to the Federal Circuit. But the appeals were dismissed after the court found that it lacked jurisdiction. (Pet. App. at 3a 5a.) The Federal Circuit has consistently held that it lacks jurisdiction to review Board decisions denying institution. See, e.g., St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., 749 F.3d 1373, 1376 (Fed. Cir. 2014) (Taranto, J.); In re Dominion Dealer Solutions, LLC, 749 F.3d 1379, 1381 (Fed. Cir. 2014); In re Procter & Gamble Co., 749 F.3d 1376, 1377 (Fed. Cir. 2014). 2 The judges on the Board are attorneys. Thus, contrary to Petitioner s assertions (Pet. at 21 22), these judges are qualified to decide legal issues, such as privy and real-party-in-interest, in addition to determining patentability. Indeed, the judges in this case applied statutes, regulations, legislative history, and precedent from this Court in their analysis. (See Pet. App. at 15a 23a.)
8 In dismissing Zoll s appeals, the Federal Circuit concluded that 28 U.S.C. 1295(a)(4)(A), the statute providing the Federal Circuit with jurisdiction to hear appeals from Board decisions on inter partes review petitions, must be read in context with the appeal provisions of the inter partes review statute. (Pet. App. at 3a, 4a.) Under the inter partes review statute, only the Board s final written decision which issues after review is instituted can be appealed. (Id. at 4a); 35 U.S.C. 141, 318, 319. The court determined that no provision in the Patent Act authorizes an appeal from a decision denying institution of inter partes review. (Pet. App. at 4a.) Zoll never requested en banc review of the Federal Circuit s decision. (Id. at 30a 31a.) II. Zoll Medical s Close Relationship with Zoll Lifecor The Board based its real-party-in-interest and privy findings on evidence showing a close relationship between Zoll Medical and Zoll Lifecor. (Id. at 9a 11a, 15a 22a.) Zoll acquired Lifecor in 2006 and formed Zoll Lifecor. (Id. at 9a.) It is undisputed that Zoll Lifecor is a wholly owned subsidiary of Zoll Medical. (Id.) Zoll Medical controls 100% of Zoll Lifecor and authorizes Zoll Lifecor s budget and plans. (Id. at 17a, 20a.) After the acquisition, Zoll Medical has referred to itself and Zoll Lifecor collectively as ZOLL. (Id. at 9a.) Zoll Medical represents in its public financial statements that it now manufactures and markets [a] wearable external defibrillator system... through its subsidiary, ZOLL Lifecor Corporation. (Id. (alteration in original) (citation omitted).) Zoll Medical also used a dedicated sales force to sell Zoll Lifecor s LifeVest,
9 which Zoll Medical also markets on its website. (Id. at 9a, 10a.) Zoll Medical further represented in 2008 that it was conducting clinical trials on the LifeVest. (Id. at 10a.) The close relationship between Zoll Medical and Zoll Lifecor is evident in the way the companies have handled the Massachusetts and Pennsylvania litigations. Both companies used the same counsel from the same law firm. (Id. at 18a.) Three officers from Zoll Medical attended a court-ordered mediation in the Pennsylvania case, even though Zoll Medical was not a party. (Id. at 10a.) One of those officers, Aaron Grossman, serves as Zoll Lifecor s secretary and provides legal guidance to both Zoll Medical and Zoll Lifecor. (Id. at 10a, 20a.) Moreover, in urging the court to stay the Pennsylvania case pending resolution of the Massachusetts case, Zoll Lifecor represented that there was a high degree of overlap between the two cases because the invalidity issues in Massachusetts applied directly to the eight patents in Pennsylvania. (Id. at 10a (citation omitted).) Zoll Lifecor also argued that a stay in Pennsylvania was appropriate to allow the parties to focus on the upcoming trial in Massachusetts even though Zoll Lifecor was not a party in the Massachusetts case. (Id. at 10a 11a.) In making its stay arguments, Zoll Lifecor and Zoll Medical repeatedly referred to themselves as a single entity: ZOLL. (Id. at 21a.) And they did this intentionally to allege prejudice in moving forward with both district court cases. (Id.) Thus, Zoll tried to exploit the close relationship between Zoll Medical and Zoll Lifecor when asking for a stay in Pennsylvania, but then tried to distance itself from that close
10 relationship to argue against the Board s real-partyin-interest and privy determinations. These were the facts that the Board relied on to show that Zoll Medical was a real-party-in-interest and in privy with Zoll Lifecor. Contrary to Petitioner s assertions (see Pet. at 13), the Board did not confuse standard[s] with factor[s]. It applied the proper legal analysis, correctly concluding that the realparty-in-interest determination involves a consideration of control. (Pet. App. at 16a, 18a.) The Board s analysis was flexible and relied on this Court s precedent to focus on the parties common interests in addition to control: regardless of whether ZOLL Medical keeps a tight reign over Petitioner, the evidence presented is that ZOLL Medical and Petitioner s interests are aligned they have operated continuously with a common corporate consciousness. (Id. at 20a (emphasis added) (citing Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 771 72 (1984)).) III. Requirements of the Inter Partes Review Statute 35 U.S.C. 311 319 provide a methodical and detailed framework for inter partes review proceedings. Section 312 describes requirements for the initial petition. The petitioner may submit evidence, including declarations and expert opinions, in support of its petition. 35 U.S.C. 312(a)(3). The patent owner has the right to file a preliminary response. 35 U.S.C.
11 313. The Board then has three months to decide whether to institute review. 35 U.S.C. 314(b). 3 Section 314 defines when institution is appropriate, and states that institution decisions are final and nonappealable. 35 U.S.C. 314(d) (emphasis added). Section 315 addresses the impact of other proceedings on an inter partes review petition e.g., the bar on filing a petition when the petitioner, real-party-ininterest, or privy was served with a complaint on the same patent more than one year earlier. 35 U.S.C. 315(b). The inter partes review statute also outlines the proceedings after institution. 35 U.S.C. 316 319. The Board is required to issue a final written decision within a year of institution, though this deadline can be extended six months for good cause. 35 U.S.C. 316(a), 318(a). And, unlike a decision from the Board denying institution, the statute expressly permits an appeal from a final written decision after institution. 35 U.S.C. 319. The rights provided by the inter partes review statute are not unfettered Congress equipped the statute with gatekeeping provisions. For example, petitions cannot be filed until nine months after the grant of a patent. 35 U.S.C. 311(c). 4 Petitions also cannot be filed if the one-year bar in 315(b) applies 3 While the statute says that [t]he Director makes this determination, the Director has delegated this authority to the Board. See St. Jude, 749 F.3d at 1375 n.1; 37 C.F.R. 42.108. 4 Congress later modified this provision to allow petitions for inter partes review to be filed within nine months of the grant of a patent that was filed under the first-to-invent regime. See Leahy-Smith America Invents Act Technical Corrections, Pub. L. No. 112-274, 1(d)(1), 126 Stat. 2456 (2013).
12 or if the petition fails to show a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition. 35 U.S.C. 314(a). 5 Congress also limited appeals in the inter partes review statute, prohibiting them from noninstitution decisions. 35 U.S.C. 314(d). As Petitioner describes, inter partes review petitions have been popular, largely because of their low cost and efficiency as compared to district court litigation. The carefully crafted statutory procedures and deadlines strike a balance, allowing for this streamlined yet effective system. IV. Zoll s Failure to Comply with Inter Partes Review Statute and Related Regulations The Board found that Zoll failed to meet statutory obligations by not including Zoll Medical in its petitions as a real-party-in-interest. See supra p. 6. In fact, Zoll Lifecor did its best to keep its relationship with Zoll Medical and the Massachusetts case under wraps. Regulations required Zoll to identify any other judicial or administrative matter that would affect, or be affected by, a decision in the proceeding. 37 C.F.R. 42.8(a)(1), (b)(2). Zoll never mentioned the Massachusetts case in its petitions for inter partes review, despite identifying the Pennsylvania case. (Pet. App. at 37a.) Zoll s failure to alert the Board of the Massachusetts case was inexcusable, as six of the eight patents at 5 Congress selected the more stringent reasonable likelihood of prevailing standard over the previous substantial new question of patentability standard because the old standard was too lenient, allowing 95% of all requests to be granted. 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
13 issue in its petitions were asserted in that litigation. Even worse, Zoll failed to identify the Massachusetts claim-construction order, which construed some of the same limitations that Zoll asked the Board to construe. Zoll s failure to disclose the Massachusetts case and relevant orders to the Board is especially alarming given its argument in district court that the Pennsylvania case should be stayed because of overlap with the Massachusetts case. (Id.) Zoll could and should have addressed the facts on the real-party-ininterest and privy issues in its original petitions. Section 312(a)(3) provided this opportunity, allowing Zoll to proffer evidence such as testimony in the form of affidavits or declarations, which Zoll declined. Despite not being required to do so, the Board permitted Zoll to file a reply to Philips s preliminary response addressing the real-party-in-interest and privy issues. (Id. at 25a 27a.) The Board even allowed Zoll to submit evidence with its reply brief, though Zoll was not authorized to submit testimony. (Id. at 26a.) In its Petition for a Writ of Certiorari, Zoll complains of the Board s bar on proffering testimony in the reply brief. (Pet. at 13 14.) But Zoll had no statutory or regulatory right to file this brief, or testimony along with it. Thus, Zoll Lifecor complains about a discretionary right it was not entitled to have. The disputed testimony should have been filed in the initial petition. 35 U.S.C. 312(a)(3). In other cases where a 315(b) bar was a possibility, this is exactly what happened the petitioner presented evidence in its initial petition to support an argument that a bar was not appropriate. (Pet. App. at 36a.) But instead, Zoll Lifecor hid its relationship with Zoll Medical from the initial petition, failing even to mention the Massachusetts case. (Id.)
14 REASONS FOR DENYING THE PETITION I. No Statute Gives Zoll the Right to Appeal a Decision Denying Institution of Inter Partes Review Courts created by statute can have no jurisdiction but such as the statute confers. Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 818 (1988) (citation omitted). No statute allows the Federal Circuit to hear appeals from Board decisions denying institution of inter partes review. In arguing for jurisdiction, Zoll relies on 28 U.S.C. 1295(a)(4)(A), which authorizes the Federal Circuit to hear an appeal from a decision of... the Patent Trial and Appeal Board of the United States Patent and Trademark Office with respect to a[n]... inter partes review under title 35. Zoll argues that this provision provides a grant of jurisdiction to the Federal Circuit that contains no limitations. (Pet. at 16.) But Zoll ignores the under title 35 limitation in 1295(a)(4)(A). Because of this term, the Federal Circuit can only exercise 1295(a)(4)(A) jurisdiction over inter partes review determinations if Title 35 specifically allows for an appeal. To conclude otherwise would make the under title 35 language meaningless. See TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) ( It is a cardinal principle of statutory construction that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant. (citation omitted)). Congress carefully crafted the appeal framework for inter partes review proceedings in Title 35 only appeals from a final written decision are allowed. See 35 U.S.C. 319. In authorizing this type of appeal,
15 319 incorporates 141, which states that a party to an inter partes review... who is dissatisfied with the final written decision of the Patent Trial and Appeal Board under section 318(a) 6... may appeal the Board s decision only to the United States Court of Appeals for the Federal Circuit. 35 U.S.C. 141(c). Title 35 also grants specific and limited appeal rights for other PTO proceedings besides inter partes review. See, e.g., 35 U.S.C. 134 (appeal rights for patent applicants whose claims have been twice rejected and patent owners in reexamination); 35 U.S.C. 141 (appeal rights for examinations, reexaminations, post-grant and inter partes reviews, and derivation proceedings); 35 U.S.C. 306 (appeal rights for reexamination); 35 U.S.C. 329 (appeal rights for post-grant review). If one reads 1295(a)(4)(A) as Zoll suggests to have no limitations on Federal Circuit jurisdiction then all of the appeal provisions in Title 35 would be meaningless. See TRW, 534 U.S. at 31. The under title 35 language in 1295(a)(4)(A) must mean that the Federal Circuit s jurisdiction is limited to appeals allowed by Title 35. Otherwise, the complex statutory framework established by Congress unravels. The legislative history confirms that 1295(a)(4)(A) must square with the appeal provisions in Title 35. When 1295 was amended in connection with the America Invents Act ( AIA ), Senator Kyl commented that [t]he language [of 1295(a)(4)(A)] is also generalized and clarified, recognizing that the details of what is appealable will be in sections 134 and 141. 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement 6 35 U.S.C. 318(a) provides requirements for the Board s final written decision in an inter partes review proceeding.
16 of Sen. Kyl). Congress did not intend for every decision from the PTO to be appealable only those identified in 35 U.S.C. 134 and 141. Neither of these provisions allows an appeal from a Board decision denying institution of inter partes review. In fact, no provision in Title 35 provides appeal rights for noninstitution decisions. The Federal Circuit has been consistent in concluding that Title 35 defines the types of appeals it may hear under 1295(a)(4)(A). In St. Jude, the court stated that 1295(a)(4)(A) is most naturally read to refer precisely to the Board s decision under section 318(a) on the merits of the inter partes review, after it conducts the proceeding that the Director has instituted. 749 F.3d at 1376. Accordingly, the St. Jude court held that 1295(a)(4)(A) did not grant it jurisdiction to hear an appeal from a decision denying institution of an inter partes review. Id. The St. Jude holding (and related reasoning) on 1295(a)(4)(A) was adopted by the Federal Circuit in this case. (Pet. App. at 3a 5a (stating that Title 35 provides no authorization to appeal a non-institution decision (quoting St. Jude, 749 F.3d at 1375)).) II. 35 U.S.C. 314(d) Bars Appeals from All Board Decisions Denying Institution of Inter Partes Review Even more than providing no affirmative right to appeal noninstitution decisions, Title 35 expressly bars such appeals. 35 U.S.C. 314(d). Section 314(d) is clear: No Appeal. The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable. Zoll argues that the under this section language
17 limits this statutory bar to appeals from noninstitution decisions under 314, and that the statutory bar cannot apply to appeals from noninstitution decisions under other sections such as 312 or 315. (Pet. at 20 21.) According to Zoll, the Federal Circuit has jurisdiction to hear its appeals because the challenged Board decisions in this case originate from the realparty-in-interest term in 312 and the privy term in 315. (Pet. at 21 24.) But Zoll s argument has a major flaw. All decisions denying institution of inter partes review are made under 314 even when 312 or 315 provides a basis for denying institution. Congress carefully structured the statute to funnel all noninstitution decisions through 314. As an initial matter, Congress titled 314 Institution of inter partes review. 7 Moreover, 314 tasks the PTO Director with determining whether to institute a petition in a way that requires consideration of other sections in the statute. 8 For example, 314(b) expressly requires the Director to determine whether to institute an inter partes review under this chapter (emphasis added). And under the plain text of 314, the institution decision must consider both the information required by 311 and the information in the patent owner s preliminary response filed under 313. The preliminary response must set forth reasons why no inter partes review should be instituted based upon the failure of the petition to meet 7 Section 312 is titled Petitions and 315 is titled Relation to other proceedings or actions. 8 The Director has delegated the authority for making institution decisions to the Board. See St. Jude, 749 F.3d at 1375 n.1; 37 C.F.R. 42.108.
18 any requirement of this chapter. 35 U.S.C. 313 (emphasis added). Thus, the scheme contemplated by 314 requires an institution decision made under that section that considers all the requirements of Chapter 31, including the real-party-in-interest requirement of 312 and the privy requirement of 315. Because all noninstitution decisions are ultimately made under 314, they are barred from appeal including decisions where 312 or 315 provides a basis for denying inter partes review. Accordingly, 314 bars Zoll from appealing the Board s denial of its petitions for inter partes review. For Zoll s appeal rights to vest under the statute, a petition had to earn institution and a final written decision had to issue from the Board. 35 U.S.C. 318(a), 319. The Federal Circuit correctly concluded that 314(d) barred Zoll s appeal. (Pet. App. at 4a (explaining that 314(d) contains a broadly worded bar on appeal from noninstitution decisions (quoting St. Jude, 749 F.3d at 1376)).) Indeed, the Federal Circuit has consistently held that 314(d) precludes it from exercising jurisdiction over appeals from Board decisions denying institution. See St. Jude, 749 F.3d at 1376; Dominion Dealer Solutions, 749 F.3d at 1381; Procter & Gamble, 749 F.3d at 1377. Zoll s argument that 312 and 315 provide independent avenues to appeal fails for another reason. Nothing in 312 or 315 grants an affirmative right to appeal anything. Christianson, 486 U.S. at 818 ( Courts created by statute can have no jurisdiction but such as the statute confers. (citation omitted)). Congress took great care in expressing when the inter partes review statute allows appeals, and when it does not. If Congress wanted 312 or 315 to provide an independent basis for appeal, it would have said so.
19 Allowing general provisions like 312 and 315 (that mention nothing about appeals) to provide an independent basis for appeal in Title 35 would create illogical results. Operating under this assumption, Congress would have had to attach an appeal bar to each section it did not want to lead to appeal; otherwise, the appeal framework established in Title 35 would have no meaning. Congress made clear what could be appealed in the inter partes review context final written decisions on the merits and what could not noninstitution decisions. Congress did not envision a statutory regime in Title 35 where a backup layer of appeal bars was necessary to preserve the integrity of the appeal provisions already in place, such as 314(d) and 319. Moreover, Zoll s statutory interpretation ignores changes in the patent statute. Section 314(a) states that the Director should not institute inter partes review unless the petitioner shows that there is a reasonable likelihood it will prevail on at least one challenged patent claim. Zoll admits that appeals from these reasonable likelihood determinations are barred under 314(d), but contends that appeals from determinations on real parties-in-interest-under 312 and privies under 315 are not. (Pet. at 21 24.) Zoll argues that this dichotomy makes sense because the Board has expertise in making patentability determinations but not determinations in other areas of the law. (Id.) 9 9 Philips disagrees with Zoll s characterization of the Board s skills the judges on the Board are attorneys more than capable of addressing legal issues involving real-parties-in-interest and privies.
20 While Zoll s argument lacks merit for the reasons above on statutory interpretation, the argument also fails because it does not square with the previous version of the patent statute. The AIA created inter partes review to replace a PTO proceeding called inter partes reexamination. The prior inter partes reexamination statute, 35 U.S.C. 312(a) (2011), required the Director to determine whether a substantial new question of patentability existed. Section 312(c) of the inter partes reexamination statute stated that a determination by the Director under subsection (a) shall be final and non-appealable (emphasis added). When 312(a) and (c) were read together in the old reexamination statute, it was clear that Congress barred appeals only from patentability determinations (i.e., decisions under subsection (a) on the substantial new question of patentability issue). In the new inter partes review statute, Congress did not confine the appeal bar to a particular subsection or issue the appeal bar applies to all of 314. Put differently, Congress did not intend to limit the appeal bar in 314(d) only to appeals from the reasonable likelihood decisions described in 314(a). See Nalley v. Nalley, 53 F.3d 649, 652 (4th Cir. 1995) ( When the wording of an amended statute differs in substance from the wording of the statute prior to amendment, we can only conclude that Congress intended the amended statute to have a different meaning. ).
21 III. Additional Arguments Why the Board s Decision Denying Institution Cannot Be Appealed A. The Plain Language of the Inter Partes Review Statute Obviates the Presumption of Reviewability Zoll argues that certiorari should be granted because there is a strong presumption in favor of appellate review of agency actions, and there is no congressional intent to block appeals from the PTO s decisions on the real-party-in-interest and privy issues. (Pet. at 18.) The presumption in favor of appellate review of agency actions can be overcome, however, by a specific congressional intent to preclude judicial review that is fairly discernable in the detail of the legislative scheme. Traynor v. Turnage, 485 U.S. 535, 542 (1988) (citation omitted); see also United States v. Fausto, 484 U.S. 439, 452 (1988) ( Here, as in Block, we think Congress intention is fairly discernible, and that the presumption favoring judicial review... [has been] overcome by inferences of intent drawn from the statutory scheme as a whole. (alteration in original) (quoting Block v. Cmty. Nutrition Inst., 467 U.S. 340, 349, 351 53 (1984) (presumption favoring judicial review was overcome because the structure of the statute at issue implie[d] that Congress intended to preclude... challenges ))). The inter partes review statute is clear decisions denying institution are not appealable. The only reviewable agency action in an inter partes review proceeding is the final written decision that issues after institution. See 35 U.S.C. 141(c), 318(a), 319. If that were not clear enough, Congress went even
22 further by expressly indicating what cannot be appealed the determination by the Director whether to institute an inter partes review. 35 U.S.C. 314(d). Congress used appeal bars in other areas of Title 35 as well e.g., in conjunction with post-grant review proceedings. See 35 U.S.C. 324(e). Appeal bars in the patent context are nothing new. In the old version of Title 35, Congress precluded appeals from denials of requests for ex parte and inter partes reexamination. See 35 U.S.C. 303(c), 312(c) (2002). In sum, Congress s intent to remove the presumption of reviewability from noninstitution decisions in inter partes review proceedings is clear from the statute. And this intent is fortified by other provisions in Title 35, both old and new, that preclude appeal. B. Zoll Misreads the St. Jude Case Zoll argues that the St. Jude case, which the Federal Circuit relied on in rejecting Zoll s petitions for inter partes review (Pet. App. at 3a 4a), lacks relevance because that case was limited to an appeal under 314, not an appeal under 312 or 315. (Pet. at 14 16.) Zoll is incorrect. St. Jude s petition was dismissed because it was barred by 315(b) the patent holder had filed a counterclaim accusing St. Jude of infringement more than two years before St. Jude filed its petition for inter partes review. St. Jude, 749 F.3d at 1375. In arguing for institution, St. Jude made the same arguments that Zoll makes here. (Pet. App. at 35a, 77a (St. Jude argued that there is a strong presumption that administrative decisions are subject to review, that it had a right to appeal under 28 U.S.C. 1295(a)(4)(A), that the 314(d) appeal bar is limited to that section, and that appeal can be taken
23 separately under 315(b)).) While 315(b) provided the basis for dismissal, the St. Jude court concluded that it was 314(d) that barred the appeal. 749 F.3d at 1375. The court reasoned that the statute does not allow for an appeal from a noninstitution decision, only from the Director s decision on the merits after the inter partes review has been instituted. Id. at 1376. C. Zoll s Statutory Interpretation Would Flood the System with Appeals Adopting Zoll s argument for a limited application of the appeal bar in 314(d) would result in a flood of appeals to the Federal Circuit. Under Zoll s statutory interpretation, parties could challenge noninstitution decisions on a number of procedural grounds. Nothing suggests that Congress intended 1295(a)(4)(A) to apply so broadly, especially in the context of inter partes review proceedings, which were intended to be streamlined and inexpensive. In fact, Congress built safeguards into the statute designed to protect against a flood of inter partes review petitions (and subsequent appeals). Section 316(b) requires the PTO to pass regulations that consider the ability of the Office to timely complete proceedings instituted. The legislative history explains the basis for this provision: [I]n prescribing regulations, the Office is required to take into account, among other things, the Office s ability to timely complete proceedings instituted under those chapters. It is expected that the Office will include in the threshold regulations a safety valve that allows the Office to decline to institute further proceedings if a high volume of pending
24 proceedings threatens the Office s ability to timely complete all proceedings. 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl). Limiting the appeal bar in 314(d) as Zoll suggests would have the opposite effect of what Congress intended it would lead to an increase in appeals to the Federal Circuit and remands back to the Board. D. Only a Brief Notice Is Required for a Noninstitution Decision The inter partes review statute sets forth different requirements for the types of decisions that the PTO must issue. For example, the final written decision that issues at the end of the inter partes review must address the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d). 35 U.S.C. 318(a). Thus, in the final written decision, reasoning behind the decision is required. Much less is required for a decision on institution. The PTO need only issue a public notice that notif[ies] the petitioner and patent owner of the Director s decision in writing and, in the event of institution, includes the date on which the review shall commence. 10 35 U.S.C. 314(c). Nothing in the inter partes review statute requires the PTO to provide an analysis on the real-party-in-interest and privy issues if it relies on 312 or 315 to deny a petition. It cannot be that Zoll has a right to appeal a 10 The legislative history also requests that the Board make clear if it denies institution because of a safety valve regulation authorized by 35 U.S.C. 319(b). 157 Cong. Rec. S1377 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl).
25 noninstitution decision on grounds that the Board did not have to provide. That the inter partes review statute requires no reasoning for decisions denying institution but does for final written decisions aligns with Congress s decision to bar all appeals on institution decisions and permit appeals from final written decisions. IV. The Question Presented Is Uncertworthy No statute, including 28 U.S.C. 1295(a)(4)(A), grants the Federal Circuit jurisdiction over an appeal from a Board decision denying institution of inter partes review. See supra pp. 14 16. Even more, 35 U.S.C. 314(d) clearly bars all appeals from Board decisions on institution. See supra pp. 16 20. The inter partes review statute only permits appeals from final written decisions, which issue after institution. 35 U.S.C. 318, 319. This framework makes sense because the patent holder s property right cannot be revoked in an institution decision, but it can be in the final written decision. Thus, the appeal rights vest at the moment of truth (i.e., at the stage when the property right can be revoked). Philips s proposed statutory constructions are those that have been adopted and applied by the PTO and the Federal Circuit. See, e.g., St. Jude, 749 F.3d at 1376; Dominion Dealer Solutions, 749 F.3d at 1381; Procter & Gamble, 749 F.3d at 1377. There is no circuit split, no conflict between the PTO and the Federal Circuit, and no conflict within the Federal Circuit on how to interpret 35 U.S.C. 312, 314, and 315 or 28 U.S.C. 1295. See S. Ct. Rule 10(a); Moreland v. Fed. Bureau of Prisons, 547 U.S. 1106, 1107 (2006) ( The fact that 10 Courts of Appeals have either agreed with, or deferred to, the Government s interpretation provides a principled basis for denying these certiorari
26 petitions. ) (Stevens, J., statement respecting denial of certiorari). Moreover, the Federal Circuit s decision in this case in no way conflicts with this Court s precedent. See S. Ct. Rule 10(c). If Congress disagrees with the PTO and the Federal Circuit s interpretation of 35 U.S.C. 312, 314, and 315 or 28 U.S.C. 1295, it can remedy the situation. Supreme Court intervention is unnecessary. See Moreland, 547 U.S. at 1107 ( Congress of course has the power to clarify the matter. ) (Stevens, J., statement respecting denial of certiorari). Congress has done this in the past with the patent statute. For example, before 2003, the Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585 ( Hatch-Waxman Act ), was said to have loopholes that allowed brandname pharmaceutical companies to game the system when asserting patents against generic pharmaceutical companies. See, e.g., Dey Pharma, LP v. Sunovion Pharm. Inc., 677 F.3d 1158, 1160 61 (Fed. Cir. 2012); Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330, 1342 (Fed. Cir. 2007). After litigation and pressure mounted, 11 Congress amended the Hatch- Waxman Act (see 21 U.S.C. 355(j)(5)(C)) and the patent statute (see 35 U.S.C. 271(e)(5)) to level the playing field by allowing a generic drug company to seek a prompt resolution of patent issues by bringing a declaratory judgment action. 149 Cong. 11 See, e.g., Fed. Trade Comm n, Generic Drug Entry Prior to Patent Expiration: An FTC Study at vii-viii, 10 (July 2002) (FTC study recommending amendments to Hatch-Waxman Act); President George W. Bush, Remarks on Prescription Drugs (Oct. 21, 2002), available at http://www.gpo.gov/fdsys/pkg/ppp-2002- book2/pdf/ppp-2002-book2-doc-pg1848.pdf (requesting that Congress close the loopholes and promote fair competition ).
27 Rec. S15885 (daily ed. Nov. 25, 2003) (remarks of Sen. Kennedy). Denying certiorari in this case does not leave Zoll without a remedy in challenging the eight Philips patents covered in its petitions for inter partes review. Zoll can, and has, contested the validity of these patents in district court. In particular, Zoll Medical unsuccessfully challenged six of the eight patents in the Massachusetts case, and Zoll Lifecor has challenged all eight in the Pennsylvania case. Zoll can also challenge the patents at the PTO through ex parte reexamination. See 35 U.S.C. 301 307. Certiorari is also not appropriate here because Zoll could not prevail even if given the opportunity to appeal the PTO s noninstitution decisions. The evidence in the record before the PTO left no room for doubt that Zoll Medical was a privy to its wholly owned subsidiary Zoll Lifecor, which it controlled both in the business world and in litigation, and was a real-partyin-interest in the petitions for inter partes review. See supra pp. 8 10. Indeed, it cannot be disputed that Zoll Medical, who lost a jury trial on six of the patents at issue in the petitions, had an interest in having those patents overturned in inter partes review. See supra p. 5. Zoll simply would not be able to establish on appeal that Zoll Medical was not a privy to Zoll Lifecor or a real-party-in-interest. While a purpose of inter partes review is to provide an efficient and cost-effective alternative to district court litigation, not everyone is entitled to this right. The statute clearly specifies who is entitled to review, and who is not Zoll fell short. Because of the clarity of the appeal framework along with the other reasons stated above, Supreme Court review of Zoll s Question Presented is unnecessary.
28 CONCLUSION Zoll s Petition for a Writ of Certiorari should be denied. Respectfully submitted, January 12, 2015 J. MICHAEL JAKES Counsel of Record KATHLEEN A. DALEY DAVID K. MROZ FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP 901 New York Avenue, NW Washington, DC 20001 (202) 408-4000 mike.jakes@finnegan.com Counsel for Respondents