[00:00:02] Speaker 01: The next case for argument is 16-1232, Gabriel Boone vs. Weed. [00:00:47] Speaker 01: Mr. Reich. [00:00:53] Speaker 03: Yes. [00:00:53] Speaker 03: May it please the court. [00:00:54] Speaker 03: Good morning, Your Honors. [00:00:55] Speaker 03: I'm Lance Reich. [00:00:55] Speaker 03: I represent Big Baboon, Incorporated. [00:00:58] Speaker 03: In the case of Big Baboon versus Lee, it's an appeal from a dismissal of our administrative procedure action in the Western District of Washington. [00:01:09] Speaker 03: My side of the case, as opposed to the earlier side of the case, has nothing to do with the merits of the re-examination at the patent office. [00:01:17] Speaker 03: It goes to the underlying procedure used by the examiner to admit the declarations of NUBER, which we've discussed extensively, and another gentleman named Burton, both SAP employees. [00:01:31] Speaker 01: Could you have raised the evidentiary challenges to the NUBER declaration in your appeal of the 275 re-exam? [00:01:39] Speaker 03: That is actually something that the government is advocating. [00:01:41] Speaker 03: That goes to the heart of something that is petitionable at the patent office versus an issue that's appealable. [00:01:48] Speaker 03: the merits of the appeal travel one path. [00:01:50] Speaker 03: They go to this court through the PTAB. [00:01:53] Speaker 03: When you petition under 1.181 to strike, which is what a batch of big veterans filed for petitions, to build in a one that was denied as the 1.181, that travels a different path, like such as a restriction requirement or other procedural matters that the director decides. [00:02:13] Speaker 03: So that is why the PTAB expressly didn't consider [00:02:17] Speaker 03: the constitutionality in those issues as they were decided under the denial of the petition. [00:02:22] Speaker 03: Those were challengeable by an APA action out in district court. [00:02:27] Speaker 01: What about the evidentiary challenges? [00:02:29] Speaker 03: We raised the evidentiary challenges at the patent office. [00:02:33] Speaker 03: So the distinction, and Judge Hughes was asking questions about this earlier, is that you have the MPEP and the rules that the patent office use internally, which they either complied with or they didn't. [00:02:46] Speaker 03: That has nothing to do with whether or not they met the constitutional floor of due process. [00:02:50] Speaker 03: That's my side of the case. [00:02:52] Speaker 03: That is what Big Babin argued. [00:02:54] Speaker 03: They raised this argument extensively at the Patent Office, and the Patent Office denied our petition to strike, saying, we don't have to comply with the FRE. [00:03:04] Speaker 03: Well, our position is, well, maybe not the FRE, but yes, the US Constitution. [00:03:09] Speaker 03: And that is... But that's all tied up with the evidentiary question. [00:03:12] Speaker 03: It is. [00:03:13] Speaker 05: which is reviewable ultimately by this court after final decision by the board. [00:03:19] Speaker 03: This case travels as a petition, Your Honor. [00:03:22] Speaker 05: Well, I understand that. [00:03:23] Speaker 05: You want to say that because you went to the director, that automatically turns into an APA suit. [00:03:30] Speaker 05: But you only get an APA suit if there's no other relief available elsewhere, right? [00:03:36] Speaker 05: And so if you can get relief, even on your constitutional challenge, by going to the board and coming to this court, then the APA suit wasn't proper. [00:03:51] Speaker 03: Petitionable versus appealable, Your Honor, it's the patent office. [00:03:55] Speaker 03: So they have the rules about how you challenge this to the director for the 181 petition. [00:04:02] Speaker 03: We challenged that. [00:04:03] Speaker 03: We said, please strike these. [00:04:05] Speaker 03: They said, no, we don't have to follow the FRE. [00:04:06] Speaker 03: But the denial of the petition is not a final agency act. [00:04:09] Speaker 03: That's issue number two. [00:04:11] Speaker 03: According to the MPEP, it is to be considered a final agency action. [00:04:17] Speaker 03: And the PTO will not hear it. [00:04:18] Speaker 05: Well, it's a final agency action with respect to the PTO's decision on that evidence. [00:04:23] Speaker 05: But it's not a final agency action with respect to the APA. [00:04:27] Speaker 05: Well, the final agency action with respect to the APA is the [00:04:32] Speaker 05: ultimate board decision denying your appeal. [00:04:36] Speaker 02: We've already said a motion to eliminate is by nature a preliminary ruling. [00:04:41] Speaker 03: Well, so Your Honor, if that's the case, the PTAB expressly didn't decide this issue. [00:04:47] Speaker 03: They said we were not going to rule on constitutionality in making their decisions on this ex parte re exam. [00:04:54] Speaker 05: That doesn't prevent us from deciding that constitutional question on appeal. [00:05:00] Speaker 05: Well, it's not a new. [00:05:01] Speaker 05: You've raised it. [00:05:01] Speaker 05: You've preserved it. [00:05:02] Speaker 05: This happens all the time. [00:05:04] Speaker 05: When administrative agencies have the authority to review certain matters, they can't declare statutes unconstitutional, but we can on review. [00:05:14] Speaker 05: I don't see anything different here. [00:05:16] Speaker 03: Well, Your Honor, that's actually why one of the questions that the government has here is how everything on this side of the case is a constitutional issue and an administrative law issue, nothing with patent law. [00:05:29] Speaker 03: There's nothing here to declare unconstitutional by way of statute. [00:05:34] Speaker 03: It's an action that the examiner took. [00:05:36] Speaker 03: We're not assailing the reexamination process. [00:05:38] Speaker 05: So that makes it even less of an APA case, because it's tied to the specific facts of this case that we get the authority to review. [00:05:48] Speaker 03: The MPEP has no internal mechanism that talks about constitutionality, and the examiners have to comply with that. [00:05:58] Speaker 03: If you were to construe that argument and say, well, an attack at the MPEP, or at least the allowance of this evidence, admitting it in this ex parte re-exam under the MPEP is also passing on constitutionality, then it would be traveling with the appeal and the merits as part of the review of the entire ex parte re-exam process. [00:06:24] Speaker 03: The way it's set up currently with the 181 declarations, denials being final agency actions, it travels a different path, just like a restriction requirement or other administrative... Well, it may be titled final agency action, but I think the comments that my colleagues have made to you, so maybe you can respond to them, is that whether they call it a final agency action, i.e. [00:06:46] Speaker 01: there's no other recourse you can get within the agency the director has spoken, [00:06:50] Speaker 01: makes it a final agency action for purposes of the APA? [00:06:54] Speaker 01: Do you think that the two are necessarily the same? [00:06:59] Speaker 01: Or wouldn't the inquiry with respect to final agency action be much more fulsome and different with regard to final agency action under the APA? [00:07:09] Speaker 03: I think they can be different, Your Honor, because if you view that path, path A, as a petition to the director, as something that is independently reviewable, [00:07:20] Speaker 03: then that would be the final agency action that is revealed by the APA. [00:07:24] Speaker 03: If you view that as a subset and set under the merits of the case, as that [00:07:31] Speaker 03: the overall review decision in this court. [00:07:32] Speaker 05: That takes the entire question though. [00:07:34] Speaker 05: I mean, you're setting up this view that because under the MPEP or the agency's procedures there's one way to do this and then there's another way to get after the patent that that necessarily results in a final APA reviewable decision. [00:07:48] Speaker 05: But doesn't the APA, I ask you this at the outset, have the other requirement that there not be any other adequate remedy in court? [00:07:56] Speaker 05: And how was there not an adequate remedy [00:07:59] Speaker 05: remedy in your friend's argument in the first case today. [00:08:03] Speaker 03: Because this is an anachronistic re-examination with no evidentiary standards to be used by the examiners, that is, when they attacked that, we attacked it not just one violation of the FRE, but four different violations of the FRE, and that's the merits of the case, Your Honor. [00:08:24] Speaker 05: Why wasn't that [00:08:25] Speaker 05: But why wasn't their appeal in the first case an adequate remedy to raise all those issues? [00:08:32] Speaker 03: Well, then PTAB said we were expressing not dealing with that. [00:08:34] Speaker 03: We're not going to consider the constitutionality. [00:08:36] Speaker 05: Well, we are. [00:08:37] Speaker 05: But if you... It doesn't say adequate remedy in an administrative agency. [00:08:41] Speaker 05: It says adequate remedy in court. [00:08:44] Speaker 05: So who's... We're a court. [00:08:46] Speaker 05: They could have raised those issues to us. [00:08:48] Speaker 05: They did raise some of those issues to us. [00:08:51] Speaker 05: I don't understand how you have a... [00:08:53] Speaker 05: APA action here that's final and reviewable. [00:08:58] Speaker 05: With respect to the honor, if you're going to review the... Let me ask you a hypothetical. [00:09:03] Speaker 05: If there wasn't this separate procedure for the director to issue rulings on evidentiary issues and reexams, and you could raise that to the examiner, and the examiner can make his or her own decision, and you could raise it to the board, and then it came up here, that would be a sufficient procedure, right? [00:09:22] Speaker 05: And so the only thing different is, in these cases, the director can make a determination and direct the examiner what to do. [00:09:31] Speaker 05: The board can still disregard the evidence. [00:09:35] Speaker 05: It may not be able to rule on the constitutionality of it. [00:09:37] Speaker 05: And then we have full plenary review. [00:09:40] Speaker 05: So I don't understand how the agency's decision to allocate one small part of this to the director [00:09:49] Speaker 05: renders that decision of final agency action, when what we're reviewing is the board decision, and you can raise those issues. [00:09:59] Speaker 03: Your Honor, that could well be the path. [00:10:03] Speaker 03: It would be different because if the PTAB has not been expressly reviewed this, so we have no lower ruling of anybody on constitutionality, not from the PTAB, not from the examiner. [00:10:14] Speaker 05: But that's not unique. [00:10:16] Speaker 05: I mean, if that's your argument, then that's a loser, because that happens all the time with administrative agencies that have authority to review the facts and the law but can't declare things unconstitutional. [00:10:28] Speaker 05: But we can. [00:10:29] Speaker 05: So if you preserve all your evidentiary objections and preserve your argument that it's unconstitutional, we can still hear it. [00:10:41] Speaker 03: If that's the case, Your Honor, then the APA action wouldn't be right, but this court would hear it on the first, now, on the other side of the case, which is, when this court ruled on the earlier case of the 272 patents involved, Your Honor, in 1416-01, it had the same issue, but in a procurement firm, it just didn't really address that at all. [00:11:05] Speaker 01: So... Well, I mean, a procurement firm means they considered it and rejected it. [00:11:12] Speaker 03: It wasn't expressly raised there. [00:11:16] Speaker 01: Was it raised by you in the case? [00:11:18] Speaker 03: Not in that case, Your Honor. [00:11:20] Speaker 01: How were they expected to deal with a due process argument that was never made? [00:11:23] Speaker 03: It was raised in the lower part of the case and in the PTAB, but the PTAB said that they're not going to consider it on appeal, and the Federal Circuit said it wasn't briefed. [00:11:34] Speaker 01: Do you think the Federal Circuit should have considered an issue that wasn't raised and briefed on appeal? [00:11:43] Speaker 03: Perhaps the appellant was mistaken on the procedure at the time, given the petition path and petition denial in the consideration of an APA. [00:11:53] Speaker 01: So you think that it wasn't raised on appeal in the 275 PTAB proceeding because you thought this was the exclusive route and couldn't raise it? [00:12:02] Speaker 03: It could have been the case, Your Honor. [00:12:03] Speaker 03: I just... Are you speculating? [00:12:06] Speaker 03: I am speculating, Your Honor. [00:12:07] Speaker 03: So I was not counsel for that present for that. [00:12:10] Speaker 01: Well, you heard in the case that you just, I assume you sat through the argument in the prior case that the due process concerns, similar to presumably the ones you would have raised here, are included in the PTAT, as part and parcel of PTAT would be okay. [00:12:24] Speaker 03: That would be correct, but then, again, that is, that's the merits of, if you're going to brief that now for the first time at the Federal Circuit and really argue it, the case would have to, it seems to, [00:12:41] Speaker 03: It's a bit of a disadvantage to start it right now, where the only statement we have is that the director only... So you're saying it's an inadequate remedy in court. [00:12:51] Speaker 03: Yeah, right. [00:12:52] Speaker 03: It would seem that you'd have to go backwards to the PTAP and get them to say something on this issue. [00:12:58] Speaker 05: What difference does it make? [00:12:59] Speaker 05: I mean, if you're arguing a constitutional violation, I mean, we may listen to what the PTAP has to say, but it's not going to be a deferential review. [00:13:10] Speaker 05: I don't understand what harm it would be to you to have to raise it here, even if no agency has opined on the constitutionality of the application. [00:13:21] Speaker 02: It happens all the time. [00:13:24] Speaker 00: May I please record Megan Barbaro on behalf of the USPTO. [00:13:37] Speaker 05: I wanted to ask you this. [00:13:39] Speaker 05: This is a little bit of a strange procedure to me. [00:13:44] Speaker 05: But let's assume, I mean, the director denies to exclude this evidence. [00:13:49] Speaker 05: Is the examiner or the board still free to disregard it if they think it's not reliable? [00:13:57] Speaker 00: Neither the examiner nor the board is free to disregard that. [00:14:02] Speaker 05: Let me make sure you're understanding me. [00:14:05] Speaker 05: I'm not saying that the examiner or the board can exclude it from the record, but they can look at it, can't they, and say, on the face of it, even though the director refused to exclude it on whatever constitutional or due process or whatever other grounds, we still find it insufficiently reliable to support a conclusion of obviousness. [00:14:28] Speaker 00: That they could do, because as is clear from the argument in the prior case and the board's decision there, the board did undertake to review the reliability of the evidence. [00:14:40] Speaker 00: I would say with respect to the director's decision that the evidence would not be excluded, that's again, as was mentioned before, not a final decision on the relevant question here. [00:14:52] Speaker 05: Well, I mean, it makes sense to me that the examiner and the board are not going to ignore the director [00:14:57] Speaker 05: and probably can't and say, even though the director didn't exclude it, we're going to. [00:15:01] Speaker 05: But to me, that seems like it makes no difference whatsoever if you can still argue for the reasons that you wanted to exclude it in the first place, that it's unreliable and that the board can refuse to rely on it. [00:15:15] Speaker 02: It's the irritating phrase that trial judges used for the 19 years I practiced law and then that I [00:15:23] Speaker 02: promptly adopted as a trial judge for 16 years. [00:15:26] Speaker 02: Well, that goes to weight, not admissibility. [00:15:30] Speaker 00: And what all of this underscores, of course, is that the final agency action, what Big Baboon is really upset about is that its patent claims are in re-examination. [00:15:40] Speaker 00: And its complaint is about the evidentiary record. [00:15:43] Speaker 00: The petition decision is wrapped up with that. [00:15:46] Speaker 00: Its complaint is that the board misunderstood the reliability of that evidence. [00:15:50] Speaker 00: All of this demonstrates that throughout the course of the proceeding, there will be preliminary interlocutory decisions. [00:15:57] Speaker 00: Some of those are by the director, but they're in the course of this underlying re-examination proceeding. [00:16:02] Speaker 00: And when Big Baboon gets to the conclusion of that re-examination proceeding, if it has been aggrieved by the board's decision, because of course it could prevail in front of the board. [00:16:12] Speaker 00: Big Baboon could convince the board that the evidence in fact was unreliable, and it could prevail. [00:16:18] Speaker 01: Do you agree with my colleagues about [00:16:20] Speaker 01: even based on the admissibility decision, the board is free to not give any weight to that. [00:16:26] Speaker 00: My understanding is that that's correct and demonstrated by the board's decision in this case because, of course, the board did discuss the reliability of the evidence. [00:16:35] Speaker 00: What it didn't discuss was whether the federal rules of evidence would apply or the constitutional question per se, which is another point that I wanted to make clear. [00:16:47] Speaker 00: There was some discussion about raising the constitutional claim for the first time in this court. [00:16:53] Speaker 00: Of course, as the Supreme Court made clear in Elgin v. Department of Treasury, [00:16:57] Speaker 00: even if the agency didn't have the authority to address the constitutional question, and in Elgin, it was a constitutional challenge to the Selective Service Registration requirements, and because employees were dismissed as a result of failure to register, their claim went up to the MSPB, and there was a question about whether the MSPB even had the authority to address the constitutional challenge. [00:17:21] Speaker 00: The Supreme Court left open, I think, the question of whether the agency, in fact, had authority, [00:17:27] Speaker 00: even if it didn't, because this court could review the constitutional challenge in the first instance, that that was sufficient to challenge the constitutional claims along with the other claims through the process that Congress had established. [00:17:39] Speaker 00: And in this case, the process that the Congress has established for review [00:17:43] Speaker 00: is on appeal to this court at the termination of the reexamination proceeding. [00:17:48] Speaker 00: That's exactly what happened in the challenge that was heard in the first appeal. [00:17:54] Speaker 00: Big Baboon has available to it the adequate remedy in this court. [00:17:59] Speaker 00: It can raise its constitutional challenges. [00:18:01] Speaker 00: It, in fact, did that. [00:18:02] Speaker 00: It could have done so in the 275 appeal. [00:18:06] Speaker 00: It elected not to, but that does not mean it did not have an adequate remedy in a court. [00:18:11] Speaker 00: It did. [00:18:13] Speaker 00: Again, because it is a re-examination proceeding and one proceeding, as this court made clear in automated merchandising system, in analyzing the final agency action question, this court makes an independent evaluation. [00:18:29] Speaker 00: Notwithstanding what the MPP says, and even in automated merchandising systems, the agency actions in that case, the petition decisions themselves said, [00:18:39] Speaker 00: mistakenly that they were final agency actions subject to review under 5 USC 704. [00:18:45] Speaker 00: This court undertook an independent analysis. [00:18:47] Speaker 00: It should do that here. [00:18:49] Speaker 00: And because at the petition stage, there hasn't been a lot of patent rights, that occurs, if at all, at the end of the re-examination proceeding. [00:18:58] Speaker 00: There's no final agency action. [00:19:00] Speaker 00: There's no consummation of the agency's decision making on the relevant question. [00:19:04] Speaker 00: And there's no determination of rights and obligations on the basis of... So perhaps the director should stop putting that line in the order. [00:19:13] Speaker 00: And it's my understanding that the director has done so and that's not on the decisions at issue in this case. [00:19:20] Speaker 00: And the final point that I would like to make is that there are many [00:19:25] Speaker 00: practical reasons why the Administrative Procedure Act channels review of procedural decisions along with review of the final agency decision. [00:19:34] Speaker 00: The statute of limitations under the APA is six years, so if that weren't the rule, you could have a proliferation of district court actions, challenging the evidentiary basis of a decision that has already been reviewed by this court on review of the board's final decision, [00:19:51] Speaker 00: And again, you would end up with piecemeal review, some of which may be unnecessary if the litigant prevails in the administrative proceedings. [00:20:00] Speaker 00: If there are no further questions, I would urge this court to affirm the district court's dismissal. [00:20:10] Speaker 01: I should have a couple minutes left. [00:20:14] Speaker 03: At least the court. [00:20:17] Speaker 03: Your Honor, if the court [00:20:20] Speaker 03: Deems that it has jurisdiction now to hear this constitutional ground that the PTAB passed on. [00:20:28] Speaker 03: It would be very hard to see how the court could, there's been no interaction. [00:20:34] Speaker 03: It's one of the problems with this re-exam, the old re-exam statute is there is no give and take in this process. [00:20:42] Speaker 03: It's the patentee and the patent office. [00:20:45] Speaker 03: And a third party comes in like SAP and files a declaration. [00:20:49] Speaker 03: And once it's admitted, there's no recourse, there's no discovery, there's nothing the patent applicant can do to pry that back out. [00:20:58] Speaker 03: And so because of that, that's why this whole path has been followed. [00:21:03] Speaker 04: Why do you need discovery to show it's a constitutional violation? [00:21:07] Speaker 03: Because the hallmark of constitutionality is the adversarial nature. [00:21:10] Speaker 03: That's why IPRs have the FRE. [00:21:13] Speaker 03: And we have to stop. [00:21:16] Speaker 03: Otherwise, [00:21:17] Speaker 03: You could admit a declaration saying virtually anything. [00:21:19] Speaker 04: The Constitution only applies to adversarial actions? [00:21:23] Speaker 04: I don't understand that answer at all. [00:21:24] Speaker 03: Well, due process, the hallmark for due process is an adversarial proceeding. [00:21:30] Speaker 03: Some agreed a way to confront the assertion of a fact. [00:21:35] Speaker 03: In some inner-partis action here, there is none of that. [00:21:39] Speaker 03: Unfortunately, a petitioner for the re-exam just files a declaration. [00:21:44] Speaker 03: And once it's admitted, that's it. [00:21:46] Speaker 03: Oh, there's only the administrative proceedings like the 181. [00:21:50] Speaker 05: How does that prevent you from challenging the constitutionality of that? [00:21:55] Speaker 05: Are you saying that because the other side's not explaining why it's constitutional that you can't challenge the constitutionality? [00:22:04] Speaker 03: That's precisely what the applicant was doing. [00:22:06] Speaker 03: But at every turn, the PTAB, the director basically said they're not considering it. [00:22:13] Speaker 03: It's petitionable. [00:22:14] Speaker 05: Again, who cares? [00:22:16] Speaker 05: You can keep saying that it's unconstitutional. [00:22:21] Speaker 05: You don't need an answer from the other side to say it's unconstitutional, do you? [00:22:26] Speaker 03: But then, with that logic, Your Honor, then the Patent Office would have conceded the point. [00:22:30] Speaker 03: They didn't argue back at all, so it's uncontested between us. [00:22:34] Speaker 05: No, they said they're not addressing it. [00:22:37] Speaker 03: That seems very arbitrary and capricious, Your Honor. [00:22:41] Speaker 05: But that's a completely different standard from the APA. [00:22:44] Speaker 05: I mean, do you know the Elgin case your friend cited? [00:22:47] Speaker 05: Because it's precisely the same thing. [00:22:49] Speaker 05: The MSPB was not going to declare a statute unconstitutional. [00:22:55] Speaker 05: And it came up here. [00:22:56] Speaker 05: And we said, I think that we can review it. [00:22:59] Speaker 05: And then it went on. [00:23:00] Speaker 05: I'm not sure if it came here. [00:23:01] Speaker 05: But that's the facts of the case there. [00:23:04] Speaker 05: You don't have to have a constitutional defense from the agency to preserve your attack. [00:23:11] Speaker 05: It baffles me while you're making that argument. [00:23:16] Speaker 03: Again, Big Baboon is going to seek its rights as best it can. [00:23:19] Speaker 03: So it's traveled both paths here. [00:23:21] Speaker 03: And so the court can decide which one is the correct one. [00:23:25] Speaker 03: Nothing further? [00:23:26] Speaker 01: Thank you. [00:23:26] Speaker 01: We thank both sides. [00:23:27] Speaker 01: The case is submitted.