[00:00:00] Speaker 05: The second and final case this afternoon is number 18-1638, St. [00:00:04] Speaker 05: Regis Mohawk Tribe versus Milan Pharmaceuticals, Inc., Mr. Massey. [00:00:13] Speaker 00: Thank you, Your Honor. [00:00:14] Speaker 00: May it please the Court, Jonathan Massey for the appellants, and with me at council table is Marcia Schmidt, representing the St. [00:00:20] Speaker 00: Regis Mohawk Tribe. [00:00:21] Speaker 00: With the Court's permission, I'd like to ask for five minutes for rebuttal. [00:00:24] Speaker 00: Our position is that tribal immunity in the IPRs is the logical conclusion of the system enacted by Congress. [00:00:31] Speaker 00: In creating IPRs in 2011, Congress deliberately chose an adversarial adjudicatory party-based model for IPRs rather than the agency-led inquisitorial model of reexaminations. [00:00:45] Speaker 00: The SAS court made that clear. [00:00:47] Speaker 00: Congress chose a model that the Supreme Court and this court had recognized would trigger sovereignty. [00:00:53] Speaker 04: Doesn't the Supreme Court case in all states undermine your position? [00:00:58] Speaker 04: I mean, in all states, first of all, they decided that patent is a public franchise, right? [00:01:03] Speaker 04: Correct. [00:01:04] Speaker 04: And also the court went on to say that when a patent is granted, it's granted with expectation that it could be subject to review. [00:01:15] Speaker 04: Even cancellation. [00:01:17] Speaker 00: That's right. [00:01:17] Speaker 04: And it's given the government the authority to do just that. [00:01:22] Speaker 00: Well, it's given the government the authority to do it with respect to every patent. [00:01:26] Speaker 00: The question is, does it trigger sovereign immunity? [00:01:28] Speaker 00: We don't disagree with anything in oil states. [00:01:30] Speaker 00: We actually think it supports our position because it recognizes that IPRs are a court-like, that's the phrase the court used, a court-like procedure before an adjudicatory body composed of judges. [00:01:42] Speaker 00: It said that it wasn't a form of the judicial power for purposes of Article III. [00:01:46] Speaker 00: We agree with that. [00:01:47] Speaker 00: There's no Article III violation. [00:01:49] Speaker 00: There's no Seventh Amendment violation, as Judge Knight noted. [00:01:51] Speaker 04: But there are very significant differences between an IPR and a suit before a federal court. [00:01:59] Speaker 00: Well, there are differences. [00:02:00] Speaker 00: But the question, there were differences as well in FMC and in VASCATH, differences between interferences. [00:02:07] Speaker 00: and federal court suits. [00:02:08] Speaker 00: A director had to declare an interference in VASCAP. [00:02:10] Speaker 00: It wasn't filed like a normal federal civil action. [00:02:13] Speaker 00: In FMC, there was an administrative adjudication that bore a lot of differences from federal courts. [00:02:19] Speaker 00: For example, FMC could not even enforce its own order. [00:02:22] Speaker 00: It had to go to the attorney general. [00:02:24] Speaker 00: So while then IPR can cancel a patent solidity, the FMC decision had no effect. [00:02:29] Speaker 00: It had to rely on the attorney general to enforce it. [00:02:31] Speaker 00: The FMC proceedings also weren't triggered automatically. [00:02:35] Speaker 00: The FMC proceedings occurred when a complaint was received. [00:02:40] Speaker 00: Then the FMC had to make a decision whether the complaint had been satisfied or the statute, which is 1710 subsection B. But FMC makes clear that there's nothing wrong with starting a proceeding that's initiated by a private party. [00:02:56] Speaker 05: It says that very explicitly. [00:02:57] Speaker 00: That's correct. [00:02:58] Speaker 00: It didn't tarry over the question, how exactly was this commenced? [00:03:03] Speaker 00: And it's the same, I think, SAS makes clear here, that even though an IPR, the director plays a role in instituting the IPR, and thereafter plays no role. [00:03:12] Speaker 00: I mean, there's no participation by the PTO solicitor or the director in the IPR. [00:03:17] Speaker 05: Well, unless the petitioner withdraws. [00:03:19] Speaker 00: Well, but even then, the PTO solicitor doesn't come in and take over the prosecution. [00:03:23] Speaker 00: The panel just handles the case. [00:03:26] Speaker 00: That happens in the FMC situation as well. [00:03:30] Speaker 00: In FMC, if the respondent didn't show up, the rules provided that an adverse judgment could be entered or the investigation could continue. [00:03:39] Speaker 00: And the FMC could continue with the proceeding. [00:03:42] Speaker 00: But I think the main point I want to make is that the Article III question is not the same as the sovereign immunity question. [00:03:48] Speaker 00: That we're not arguing that there's a violation of Article III, which is what oil states was concerned with. [00:03:54] Speaker 03: No, but what we're trying to do [00:03:56] Speaker 03: is to decide whether tribal immunity applies in this hybrid type of proceeding. [00:04:02] Speaker 03: This proceeding has many of the trappings of civil litigation, as you've eloquently articulated in your briefs. [00:04:08] Speaker 03: But at heart, it is reconsideration of the PTO's own prior grant. [00:04:14] Speaker 03: So is it enforcement action when it's really just a reconsideration, as oil state says, of the PTO grant? [00:04:21] Speaker 03: Or is it more like civil litigation between two parties, where both parties have something at stake? [00:04:25] Speaker 03: Right. [00:04:26] Speaker 03: And those parties don't have something at stake in this case. [00:04:29] Speaker 03: Only the patentee has something at stake in the IPR context. [00:04:34] Speaker 03: And it's the reconsideration of a prior grant. [00:04:36] Speaker 03: So I understand all the reasons you've articulated for why this is like a civil litigation. [00:04:42] Speaker 03: And Justice Gorsuch certainly helped you a lot by three separate places analogizing it to civil litigation. [00:04:47] Speaker 03: But then the majority in oil states didn't help you, and he's in the dissent. [00:04:51] Speaker 03: By the way, those two [00:04:52] Speaker 03: cases really come to loggerheads here in this exact instance for us, I think, because it's a hybrid proceeding. [00:05:00] Speaker 03: So which side of the line does it fall on and why? [00:05:02] Speaker 00: Right. [00:05:03] Speaker 00: Well, I think Congress made that decision in 2011. [00:05:05] Speaker 00: I mean, the House report made clear that it was a significant change in approach, right? [00:05:10] Speaker 00: The House report says [00:05:12] Speaker 03: You can't say Congress made this decision. [00:05:14] Speaker 03: Congress didn't speak to tribal immunity anywhere in this statute. [00:05:17] Speaker 03: So for you to come in and suggest to me that Congress decided this case in 2011 is nonsense. [00:05:23] Speaker 00: No, no. [00:05:24] Speaker 00: What I'm saying is Congress deliberately chose an adjudicative model. [00:05:28] Speaker 00: It said, the House report says, and this is blue brief page 21, Congress decided, quote, to convert. [00:05:34] Speaker 00: I'm sorry. [00:05:35] Speaker 03: I don't care what the House report says. [00:05:36] Speaker 03: If you knew anything about me, you'd know that. [00:05:38] Speaker 03: But beyond that, [00:05:40] Speaker 03: You've got the Supreme Court just as saying it three times over. [00:05:44] Speaker 03: You don't need to rely on some House report. [00:05:46] Speaker 03: We've got to follow them. [00:05:47] Speaker 03: I don't have to follow a House report. [00:05:48] Speaker 03: But I do have to follow the Supreme Court. [00:05:50] Speaker 03: So you're on better footing telling me what the Supreme Court said than you are, what some random House report said, which is not the law. [00:05:57] Speaker 00: That's correct. [00:05:58] Speaker 00: Oh, I agree. [00:06:00] Speaker 00: Let's talk about what the Supreme Court said, because I think in FMC there were the same public rights arguments, the same Article III arguments, and the court didn't even address it. [00:06:11] Speaker 00: Justice Stevenson-Briar didn't even argue that in dissent. [00:06:15] Speaker 00: The majority dropped a footnote. [00:06:16] Speaker 00: Footnote 11 in FMC made clear that an administrative [00:06:20] Speaker 00: adjudication raises more sovereign immunity concerns than a court proceeding would. [00:06:27] Speaker 00: And the fact that it involved a public right didn't make any difference. [00:06:30] Speaker 00: We concede that reexamination would not trigger sovereign immunity. [00:06:34] Speaker 00: If you have an inquisitorial agency-led model, that does not trigger sovereign immunity. [00:06:40] Speaker 00: Yes, we would say that that was still on the line of inquisitorial, examinational, no sovereign immunity. [00:06:48] Speaker 00: In fact, in this case, the director could convert all IPRs against sovereigns into ex parte re-exams. [00:06:55] Speaker 00: Anyone can institute an ex parte re-exam at any time. [00:06:58] Speaker 00: The director could deem these all to raise substantial new questions of patentability and institute ex parte re-exams. [00:07:05] Speaker 00: That would be permissible under our view. [00:07:07] Speaker 05: The thing that isn't permissible... And what's the difference between ex parte reexam and this that puts this on the other side of the line? [00:07:13] Speaker 00: Well, they're entirely inquisitorial. [00:07:16] Speaker 05: Once the party requests the ex parte... So the key difference is there's no participation by the private party? [00:07:22] Speaker 00: Right. [00:07:23] Speaker 00: There's no participation. [00:07:26] Speaker 00: The ex parte re-exam is undertaken by the examiner, so the re-examiner is just like the regular patent process. [00:07:32] Speaker 00: There's a dialogue between the examiner and the applicant and the owner, and the proceeding proceeds through that dialogue. [00:07:39] Speaker 00: There's no role for an independent third party. [00:07:41] Speaker 03: Here, not only is there a third party... That's why I asked even inter parte re-exam, because there was a role when it existed prior to IPRs, there was a role for third parties to play in that process. [00:07:52] Speaker 03: But it wasn't the same answer that yes, inter-party re-exam would have been something where the tribe doesn't have sovereign immunity because your answer to Judge Stike is no, because that's only one factor. [00:08:03] Speaker 00: Obviously, the fact that there was a there was a role for the third party, but it wasn't significant enough. [00:08:07] Speaker 00: That's why Congress changed it in 2011. [00:08:09] Speaker 00: And not only is it just that the third party starts the exam, I mean it starts the IPR, the third party sets all the bounds of the IPR. [00:08:20] Speaker 00: The only arguments the PTAP can consider are the arguments and evidence of the parties in the IPR. [00:08:25] Speaker 05: What about a 337 proceeding? [00:08:28] Speaker 05: Which side of the line would that fall on? [00:08:31] Speaker 00: I don't know. [00:08:32] Speaker 00: We'd have to look at each of the facts in these cases. [00:08:35] Speaker 00: And the trappings include, I think FMC was clear, and Discord and VASCAP listed the factors to consider. [00:08:43] Speaker 00: If something's governed by the Federal Civil Procedure Rules, if it's governed by the Federal Rules of Evidence, does it have any... Does it have anything governed by the Federal Rules of Civil Procedure? [00:08:51] Speaker 00: Well, it looks to it. [00:08:52] Speaker 00: For example, in this case, they borrowed the indispensable party rules from the Federal Civil [00:08:57] Speaker 05: There's a huge difference between the way IPRs are conducted and the way a trial is conducted. [00:09:05] Speaker 00: Of course, and so is FMC. [00:09:07] Speaker 00: FMC didn't proceed like a courtroom proceeding. [00:09:10] Speaker 00: It had depositions. [00:09:11] Speaker 00: It had a hearing. [00:09:13] Speaker 00: FMC was much less adjudicatory, frankly. [00:09:16] Speaker 00: There was a harder case than this case. [00:09:17] Speaker 00: The FMC had one small role of adjudication. [00:09:21] Speaker 00: It was a policy-making, rule-making, investigatory body. [00:09:24] Speaker 00: And it took the position before the Supreme Court. [00:09:26] Speaker 00: If you look at the government's briefs in the FMC case, it said, we just use adjudications to develop evidence so we can understand. [00:09:33] Speaker 04: So what happens in a trial case, what happens when the petitioner or the claimant abandons a case? [00:09:41] Speaker 00: In an IPR. [00:09:43] Speaker 00: No. [00:09:43] Speaker 00: Oh, I'm sorry. [00:09:44] Speaker 04: In a judicial proceeding. [00:09:45] Speaker 00: In a judicial proceeding, right. [00:09:46] Speaker 00: A default judgment can be entered against the party. [00:09:49] Speaker 04: Or the case is terminated, right? [00:09:51] Speaker 04: I mean, it comes to an end. [00:09:52] Speaker 00: Yes, that is true. [00:09:53] Speaker 00: That doesn't happen in an IPR. [00:09:55] Speaker 00: It doesn't happen. [00:09:57] Speaker 00: It can or admit. [00:09:59] Speaker 04: You don't have to have either the Pantee or the Petition of President in the IPR. [00:10:03] Speaker 00: What you do to start, you can't have an IPR starting without the patent owner being served with the petition. [00:10:09] Speaker 00: The petitioner has to start the IPR. [00:10:11] Speaker 00: Then it's true. [00:10:11] Speaker 00: The parties can drop out. [00:10:13] Speaker 00: Same was true in FMC. [00:10:14] Speaker 04: That did not stop the Supreme Court from... So in the judicial proceeding, when you look at the complaint, you look at the allegations in order to determine whether a proper claim has been stated. [00:10:25] Speaker 04: But that's not the case in an IPR, right? [00:10:28] Speaker 04: I mean, it's the director and the director alone that decides whether to institute. [00:10:33] Speaker 00: That is correct. [00:10:34] Speaker 00: That same thing was true in interferences in VASCAP, and it actually was true in the FMC case. [00:10:40] Speaker 00: But that, and I think the SAS court made clear that the director's role in instituting does not change the nature of the proceeding from a, from essentially an adjudicatory adversarial party-based system. [00:10:52] Speaker 00: That's all what Justice Gorsuch said in SAS. [00:10:54] Speaker 00: I don't think it's fair to say that. [00:10:56] Speaker 04: How can there be adjudicatory or adversarial if there's no parties involved? [00:11:00] Speaker 00: Well, there are the parties to start with. [00:11:03] Speaker 00: And if one drops out and abandons the case, it is just essentially like the FMC proceeding. [00:11:08] Speaker 00: It's still adjudicatory. [00:11:10] Speaker 00: The nature of the case is still an adjudicatory dispute between parties. [00:11:14] Speaker 00: That's what interparties really means, between the parties. [00:11:17] Speaker 00: It's not an agency-led proceeding. [00:11:19] Speaker 04: Didn't you wave immunity when you appeared in the Eastern District of Texas case, and then also when you moved to enter the IPR? [00:11:30] Speaker 00: Well, the IPR was made a special appearance, was made in the RPR, preserving immunity. [00:11:36] Speaker 00: And the PTAB did not find that to be a waiver. [00:11:39] Speaker 00: The PTAB didn't find the other thing to be a waiver. [00:11:40] Speaker 06: What about the Eastern District? [00:11:41] Speaker 00: The Eastern District, no. [00:11:42] Speaker 00: Because appearing, this court has held three times in A123 systems, in DJIC communications, [00:11:48] Speaker 00: and in the biomedical patent management case, that appearing in one forum does not waive sovereign immunity in a different forum. [00:11:55] Speaker 00: And those are involved states where there is an infringement action. [00:12:01] Speaker 05: Have you sued on all six patents that are involved here? [00:12:03] Speaker 00: Did we sue on all six? [00:12:04] Speaker 00: We sued on, yes, and then we issued covenants not to sue on the basis of four. [00:12:11] Speaker 00: And so there were actually 13 claims involved in the Eastern District of Texas. [00:12:15] Speaker 00: And there are 157 claims involved in the IPR. [00:12:18] Speaker 00: That's one reason why, frankly, the tribe has substantial rights beyond what allergens' rights are, because the allergens feel that you- But did you sue in the Eastern District of Texas on all of the patents that were involved in the IPR? [00:12:30] Speaker 00: Yes. [00:12:30] Speaker 00: And then Judge Bryson asked to winnow those down to 15 maximum. [00:12:35] Speaker 00: They would winnow down to 13. [00:12:36] Speaker 00: But yes, the patents are at issue. [00:12:39] Speaker 00: But the legal standard is different. [00:12:40] Speaker 00: And I think after Quazo, it's impossible to say that the cases are [00:12:44] Speaker 00: the same proceeding, because Quasos says that an IPR and a district court proceeding can come to diametrically opposed conclusions as to the validity of a patent. [00:12:53] Speaker 00: And in addition to the three cases I mentioned before, the rules regarding tribal waivers are much more limited than state waivers. [00:13:04] Speaker 00: The Supreme Court has held in the Oklahoma Tax Commission against the Potawatomi tribe that the tribe did not waive its sovereign immunity against a counterclaim. [00:13:14] Speaker 00: And the Supreme Court later held in the Lupita's case that the state of Georgia did waive its sovereign immunity by removing a case from Georgia's state court to federal court. [00:13:24] Speaker 00: The Lupita's expressly distinguished tribal immunity and said the rules for tribal waivers are narrower than the rules for state waivers. [00:13:32] Speaker 00: And we cite a case in the brief from the contoured spa at the Hard Rock case, the 11th Circuit decision, saying that [00:13:39] Speaker 00: The Supreme Court has clearly recognized that tribal waivers are narrower than state waivers. [00:13:45] Speaker 04: And so- Judge Bryson, when he reviewed the case, he noted great concern that it appeared that the arrangement between the tribe and allergen was one of circumvention, designed only to circumvention. [00:13:59] Speaker 04: He doesn't have to address it. [00:14:00] Speaker 04: But after I had the opportunity to review the license itself and to look at the arrangements that you entered into, I can see why he said that. [00:14:08] Speaker 04: What's your response to that? [00:14:11] Speaker 00: Well, Judge Bryson also said, quote, this court has examined the documents provided by Allergan in regards to the question as a close one. [00:14:18] Speaker 00: That's at page four. [00:14:20] Speaker 05: Yeah, but what's the answer to the question? [00:14:21] Speaker 00: Right. [00:14:22] Speaker 00: There are six. [00:14:22] Speaker 05: Wait, wait. [00:14:23] Speaker 00: Yeah. [00:14:23] Speaker 05: So did Allergan get anything out of this transaction other than a claim of sovereign immunity? [00:14:32] Speaker 00: Well, I think the question of why it entered or what its purpose is. [00:14:35] Speaker 00: No, no, no. [00:14:36] Speaker 00: OK. [00:14:36] Speaker 05: Could you answer the question, please? [00:14:37] Speaker 00: What did it get? [00:14:38] Speaker 00: It got the tribe's commitment to raise sovereign immunity so that the patents would not be subject to third or fourth or fifth serial IPR. [00:14:49] Speaker 04: That's correct. [00:14:50] Speaker 04: But why isn't that circumvention? [00:14:51] Speaker 00: Well, I don't think that's circumvention. [00:14:53] Speaker 00: Because the question is, we believe that was the system created by Congress. [00:14:58] Speaker 00: Using that system is not circumvention. [00:15:01] Speaker 00: And the license that shows, actually, that Allergan [00:15:06] Speaker 00: retain substantial rights under this court's precedent. [00:15:08] Speaker 00: I mean, there are six features of license that I would like to call your court the honors of this court. [00:15:11] Speaker 05: Well, that's a different question than the substantial rights question. [00:15:15] Speaker 05: This is a question whether there was circumvention of the IPR process and deliberate circumvention of the IPR process by buying sovereign immunity or renting it. [00:15:26] Speaker 05: Well, I think sovereign... Since that appears to be the purpose of the transaction, isn't that problematic? [00:15:34] Speaker 00: No, I don't think so, because if the system is such that pleading sovereign immunity will cause an exemption, that is the effect of sovereign immunity. [00:15:46] Speaker 04: But wouldn't it be allowing a system to grow where many companies, many pharmaceutical companies or other companies can simply go back and do the same type of [00:15:58] Speaker 04: Entering to the same type of arrangements with an Indian tribe. [00:16:01] Speaker 04: What does that mean like IPR process? [00:16:04] Speaker 00: Well, as I said, there's always ex parte re-exam there The tribe is always required to bring a lawsuit for infringement. [00:16:11] Speaker 00: So the opposing party unlike many instances I'm talking about IPR. [00:16:14] Speaker 00: Okay, the IPR process still has in the IPR process the tribe it would be [00:16:22] Speaker 00: Well, it would be changed from an inter partes to an ex parte re-exam. [00:16:27] Speaker 04: But the question of sovereign immunity always has- That's not what the law contemplates. [00:16:31] Speaker 00: Well, it does, because we think Congress enacted this in 2011. [00:16:35] Speaker 00: After nine years previously, the courts had made clear that if you create an administrative adjudication between private parties to enforce the [00:16:43] Speaker 00: to enforce the federal statute, that will trigger sovereign immunity. [00:16:46] Speaker 00: And so if that's the system created by Congress, it's not a circumvention of it. [00:16:50] Speaker 04: If that's the case, why didn't Congress write into the AIA immunity? [00:16:57] Speaker 00: Well, it didn't. [00:16:58] Speaker 00: Of course, it's considering it now. [00:17:00] Speaker 00: And that's where the ball belongs. [00:17:01] Speaker 00: I mean, the same arguments were made in Bay Mills and Cuba tribe, change the tribal immunity in commercial transactions. [00:17:08] Speaker 00: And in every instance, the court has said, this is Congress's job. [00:17:12] Speaker 00: to change the law if it wants to. [00:17:13] Speaker 00: It's not the court's job to narrow sovereign immunity, and the default rule is tribal sovereign immunity. [00:17:19] Speaker 05: States can do the same thing. [00:17:20] Speaker 05: But it is our job to apply the law and to determine whether there is sovereign immunity. [00:17:25] Speaker 00: That is correct. [00:17:26] Speaker 00: But if under the law there is sovereign immunity, I don't think that calling it a circumvention changes the result. [00:17:32] Speaker 00: And states can do exactly what Your Honor has [00:17:34] Speaker 00: has talked about. [00:17:35] Speaker 00: In the Covidian case, the PTAB rejected exactly the same arguments. [00:17:39] Speaker 04: It's pretty clear that there's a difference between Indian tribal sovereign immunity with respect to states and with respect to the federal government. [00:17:48] Speaker 00: Well, but not in a way that matters. [00:17:49] Speaker 00: Both of them are common law. [00:17:50] Speaker 04: The federal government is what grants the immunity to begin with. [00:17:55] Speaker 00: Well, the federal government can abrogate the immunity. [00:17:58] Speaker 00: It's actually a common law immunity that predated the federal government. [00:18:01] Speaker 00: That's what Bay Mills and Kiowa tribes said. [00:18:03] Speaker 00: And I think that the fact that Congress can abrogate means Congress's job. [00:18:07] Speaker 00: That just highlights my point. [00:18:08] Speaker 00: Congress's job here is to balance tribal immunity against other social factors. [00:18:15] Speaker 00: And it will do that in this area. [00:18:17] Speaker 00: Lou Breed points out that those proposals are currently pending. [00:18:20] Speaker 00: But as I was saying, states can do exactly what Your Honor is saying. [00:18:24] Speaker 00: And the sovereign immunity always has that effect. [00:18:27] Speaker 00: And we cite in the Blue Breeze. [00:18:28] Speaker 05: But what about the Colville case? [00:18:30] Speaker 05: I'm sorry. [00:18:31] Speaker 05: What about the Supreme Court's decision in the Colville case? [00:18:34] Speaker 05: In which case, I'm sorry. [00:18:36] Speaker 05: Colville. [00:18:36] Speaker 00: Colville, yes. [00:18:37] Speaker 00: Well, it said that that is about selling state taxes on cigarettes. [00:18:43] Speaker 00: And we accept that. [00:18:44] Speaker 05: Well, it disapproved the selling of sovereign immunity. [00:18:47] Speaker 00: Well, no, what it said is, in fact, the Court has made clear in Kiowa Tribe and Bay Mills and the Oklahoma Tax Commission, the State law may apply to cigarette sales on the reservation to nonmembers, but the State cannot enforce that law [00:19:04] Speaker 00: through a lawsuit against the tribe in court. [00:19:09] Speaker 00: That's exactly the system we expect. [00:19:11] Speaker 00: We admit that we're governed by the patent laws, and they can be enforced on us by an agency, and they can be enforced on us when the tribe goes to court. [00:19:21] Speaker 00: The question is, can they be enforced through a private civil case? [00:19:26] Speaker 00: that happens to be before the P-tab, but bears all the trappings of a federal civil action. [00:19:31] Speaker 00: The answer is no. [00:19:32] Speaker 00: And Congress should have known that. [00:19:34] Speaker 00: If it didn't know it, it wasn't reading the decision in Vazcath and in FMC. [00:19:39] Speaker 00: So I would lay this problem not at your doorstep, but at Congress's doorstep, and say it's Congress's job to change if it doesn't like that system. [00:19:48] Speaker 00: With respect, can I, if there are any more questions, I'll save a few minutes. [00:19:52] Speaker 00: If there are any more questions, we'll give you three minutes. [00:19:53] Speaker 00: Thank you very much. [00:20:02] Speaker 02: Good afternoon, and may it please the court. [00:20:03] Speaker 02: My name is Eric Miller, and I represent the Appellees. [00:20:06] Speaker 02: I'd like to begin with the question that you raised, Judge Moore, and that is how to draw the line between a proceeding that implicates immunity and one that does not. [00:20:16] Speaker 02: And that line is drawn in the Supreme Court's decision in Federal Maritime Commission. [00:20:20] Speaker 02: Sovereign immunity is a right not to be subject to suit at the behest of a private party. [00:20:26] Speaker 02: And the critical premise of the decision in Federal Maritime Commission was [00:20:31] Speaker 02: that if it would be an affront to a state's dignity to answer the complaint of private parties in federal courts, it would equally offend their dignity to, quote, do exactly the same thing before the administrative tribunal of an agency. [00:20:44] Speaker 02: And there are a number of procedural differences between the kind of procedures in IPR and the kind that were at issue in FMC, and those are relevant, but they're really two critical distinctions. [00:20:57] Speaker 02: that take this out of the rule articulated in FMC. [00:21:00] Speaker 02: And those two distinctions are how the process begins and what happens when it ends. [00:21:06] Speaker 02: And how the process begins in a civil lawsuit is with the filing of a complaint. [00:21:12] Speaker 02: In FMC, it was with the filing of a complaint before the agency. [00:21:16] Speaker 02: And in either of those cases, the filing of the complaint hails the defendant into court or the Maritime Commission. [00:21:23] Speaker 02: And the adjudicator has no discretion but to adjudicate the complaint. [00:21:28] Speaker 02: There is going to be a case once the complaint is filed. [00:21:32] Speaker 03: The court emphasized. [00:21:33] Speaker 03: But here, it's quite similar. [00:21:35] Speaker 03: I mean, after SAS, the director has almost no discretion. [00:21:39] Speaker 03: He doesn't have discretion to come up with his own grounds. [00:21:42] Speaker 03: He doesn't have discretion to refuse to address the grounds that were presented in the petition. [00:21:46] Speaker 03: He doesn't have the discretion to have a partial institution. [00:21:50] Speaker 03: The director has almost no discretion. [00:21:52] Speaker 03: His discretion is limited to institute or don't institute. [00:21:56] Speaker 03: And that's it. [00:21:57] Speaker 03: So why isn't this exactly like an adversarial proceeding adjudicating rights between private parties when the director has no discretion to pursue any grounds that he or she may think ought to result in the invalidation of this patent but is limited to the precise and only arguments raised by the petitioner in the petition? [00:22:19] Speaker 03: So why isn't this the adjudication of issues raised by one private party against another private party just being held in the forum of an administrative agency rather than a court? [00:22:30] Speaker 02: Because the one element of his discretion that you mentioned that he does have is critically important. [00:22:36] Speaker 02: And that is the discretion not to initiate the process at all. [00:22:39] Speaker 02: And he can only initiate it if he determines that there's a reasonable likelihood of success. [00:22:44] Speaker 02: But even if he does make that finding, he can choose [00:22:47] Speaker 02: for whatever reason. [00:22:48] Speaker 03: For administrative efficiency, not to institute at all. [00:22:51] Speaker 03: They don't have enough manpower to get through all these cases, especially now that they have to do everything in all of them. [00:22:55] Speaker 03: I get that. [00:22:56] Speaker 03: But why is that such a determinative factor? [00:23:02] Speaker 03: We're talking about tribal immunity. [00:23:04] Speaker 03: Do you think that there ought to be a thumb on the scale in favor of it? [00:23:07] Speaker 03: Do you think that there is a presumption that tribes have immunity outside of the context of civil litigation? [00:23:14] Speaker 02: No, there is not. [00:23:16] Speaker 03: How about in the context of civil litigation? [00:23:18] Speaker 02: Well, in the context of civil litigation, there's not a presumption that the law is that they have immunity in the context of civil litigation. [00:23:25] Speaker 03: So we have a hybrid proceeding, which the most recent case from the Supreme Court says in three separate places is effectively a civil litigation between parties. [00:23:33] Speaker 03: It's an adversarial proceeding between parties. [00:23:37] Speaker 03: What do we do with that? [00:23:39] Speaker 03: This is as far from an administrative enforcement action as I could imagine an administrative proceeding being. [00:23:46] Speaker 03: It is as close to civil litigation as I could imagine one being. [00:23:49] Speaker 02: Well, the discretion not to initiate the proceeding is important. [00:23:54] Speaker 02: And that's something that the court emphasized in Federal Maritime Commission. [00:23:57] Speaker 03: It's something. [00:23:58] Speaker 03: I just don't know why it's so, why is it so important? [00:24:01] Speaker 03: Tell me why that is so important, because it's all you've got left. [00:24:04] Speaker 03: now that SAS came out. [00:24:06] Speaker 02: Well, so page 764 of the decision in Federal Maritime Commission, the court emphasized that in that case, of course, the Maritime Commission had no discretion. [00:24:16] Speaker 02: And the court said if they did have discretion, then there would be political accountability. [00:24:20] Speaker 02: If the tribe is asking, or if somebody is looking at the proceeding and asking, why is the tribe here? [00:24:25] Speaker 02: Why is this proceeding going on? [00:24:28] Speaker 03: I'm sorry, what page? [00:24:29] Speaker 02: 763? [00:24:30] Speaker 02: 764. [00:24:30] Speaker 02: There's a discussion of the tribe [00:24:32] Speaker 02: political accountability considerations that would be present. [00:24:38] Speaker 03: On page 764, just so you know, I have absolutely nothing highlighted in my version. [00:24:42] Speaker 03: And practically all of FNC is highlighted. [00:24:44] Speaker 03: So what is it on 764 that's so important but obviously escaped my notice? [00:24:50] Speaker 02: Near the bottom of the page, the court says, this is the second to last sentence, not counting the citations, [00:24:57] Speaker 02: Indeed, the FMC does not even have the discretion to refuse to adjudicate complaints brought by private parties. [00:25:04] Speaker 02: And then the next sentence is, as a result, the United States plainly does not exercise political responsibility for such complaints, citing Alden. [00:25:13] Speaker 02: And Alden against Wayne. [00:25:14] Speaker 03: Just out of curiosity, so is it your suggestion that the PTO has political responsibility for every IPR it institutes? [00:25:22] Speaker 03: That's awesome. [00:25:22] Speaker 03: Is that right? [00:25:23] Speaker 03: Is that your view that we should view the PTO because it has decided, the director decides to institute an IPR, it has political responsibility for those complaints? [00:25:33] Speaker 03: Is that sort of like an imprimatur of the complaint? [00:25:37] Speaker 02: It reflects a discretionary decision by a politically accountable actor in an executive branch agency that this proceeding should go forward. [00:25:47] Speaker 02: And of course, the tribe is not immune from actions brought by the United States. [00:25:51] Speaker 02: It's sovereign dignity. [00:25:53] Speaker 03: He's admitted they're not immune from re-examination proceedings at all. [00:25:58] Speaker 03: But there's a big difference between re-exam and inter partes review. [00:26:03] Speaker 02: There are certainly procedural differences, but the fact that an executive branch official has made the discretionary decision to initiate a proceeding to reconsider the agency's own decision [00:26:14] Speaker 03: No, they're not reconsidering the agency's decision. [00:26:17] Speaker 03: That's where you're wrong. [00:26:18] Speaker 03: They're reconsidering the petitioner's petitions. [00:26:20] Speaker 03: That's what SAS makes clear. [00:26:22] Speaker 03: The agency's decision was one of patentability as a whole. [00:26:25] Speaker 03: Are they allowed to reconsider patentability as a whole, as part of an IPR? [00:26:32] Speaker 02: No. [00:26:32] Speaker 03: The answer is no. [00:26:33] Speaker 03: Correct? [00:26:34] Speaker 02: They're allowed to reconsider the claims? [00:26:36] Speaker 02: Yes. [00:26:37] Speaker 02: No, they're not. [00:26:37] Speaker 03: They're allowed to consider patentability based only on the grounds raised in the petition, after SAS. [00:26:43] Speaker 05: Yeah, but that's effectively reconsideration. [00:26:46] Speaker 03: No, that's reconsideration. [00:26:47] Speaker 03: One issue of patentability. [00:26:49] Speaker 03: It's not reconsideration of patentability. [00:26:50] Speaker 03: There could be many issues of patentability that ought to render these claims invalid, but the agency would normally be permitted to do all of those in a re-exam, well, not even a re-exam, in normal prosecution. [00:27:01] Speaker 03: But they can't in an IPR, can they? [00:27:03] Speaker 02: It is not a full reconsideration of every aspect of the decision, but it is a reconsideration of part of the decision that they made. [00:27:10] Speaker 02: And this brings me to the second. [00:27:13] Speaker 05: But there are other features here also. [00:27:15] Speaker 05: IPR is not necessarily commenced by someone who has an interest, the kind of interest that would lead to the commencement of a litigation in district court. [00:27:26] Speaker 05: It could be anybody. [00:27:27] Speaker 05: Anybody can initiate an IPR, right? [00:27:31] Speaker 02: That's right, Your Honor, and that's an important point. [00:27:33] Speaker 02: It can be initiated by somebody who does not have Article III standing. [00:27:38] Speaker 02: And once it's initiated, [00:27:40] Speaker 02: they can drop out. [00:27:41] Speaker 02: And the question was asked about how does that compare to civil litigation? [00:27:46] Speaker 02: And I think the answer was that judgment can be entered against a plaintiff who drops out. [00:27:51] Speaker 02: In fact, if the plaintiff drops out, judgment must be entered against them because there's no longer a case or controversy. [00:27:58] Speaker 02: But here, of course, the party doesn't have to pursue it once it's initiated. [00:28:01] Speaker 02: The director and the board can decide to proceed. [00:28:08] Speaker 02: That further illustrates that what's really going on here is an agency action, reconsidering a prior agency action. [00:28:15] Speaker 04: But still, at the end of the day, the agency's acting as a referee throughout the IPR proceeding. [00:28:25] Speaker 02: But in some respects, but in the sense that's relevant to the analysis of the immunity question, [00:28:36] Speaker 02: This is an agency not adjudicating a private dispute between private parties, not, as Oil States tells us, a matter that from its nature would be the subject of a suit of common law. [00:28:49] Speaker 02: It's a second look at the agency's administrative decision. [00:28:52] Speaker 02: And when the IPR ends, the only thing that can happen to the patentee is the cancellation of the public franchise that they were issued by the agency in the first place. [00:29:05] Speaker 03: I don't understand why you keep saying it's a second look at patentability. [00:29:09] Speaker 03: The only thing that the director can do in an IPR is review only and limited to the precise grounds articulated in the petition. [00:29:18] Speaker 03: So it's not a redo of patentability. [00:29:21] Speaker 03: It's adjudication of particular issues and arguments raised by one party. [00:29:26] Speaker 02: Well, the second look concept wasn't mine. [00:29:31] Speaker 02: It's what the Supreme Court said in Quozo and reaffirmed in oil states. [00:29:34] Speaker 02: It is a narrowly focused book. [00:29:37] Speaker 03: The petitioner... But neither Quozo nor Oriole States addressed the director's discretion the way Sass did. [00:29:44] Speaker 03: Sass is the heart of the director's discretion. [00:29:46] Speaker 03: And Justice Gorsuch makes it clear he has only the smidgen of discretion, and that's whether the Institute or not. [00:29:53] Speaker 03: But in your argument is that smidgen is enough, enough to get us into the land of waiver of tribal immunity. [00:30:01] Speaker 02: That's right. [00:30:02] Speaker 02: The petitioner gets to [00:30:04] Speaker 02: frame the question. [00:30:06] Speaker 02: But it's up to the director to decide whether or not to answer it. [00:30:11] Speaker 02: And the director can choose not to answer it at all. [00:30:15] Speaker 02: And if he does decide that he wants to answer it, then the reason that there's a proceeding involving the tribe's patent is not that they've been hailed into court by a private party. [00:30:25] Speaker 02: It's that a politically accountable official at an executive branch agency has made a decision. [00:30:30] Speaker 04: Does any director having to answer [00:30:33] Speaker 04: It's not the same as institution. [00:30:36] Speaker 04: That's what you do mean, right? [00:30:37] Speaker 04: The director can institute or not institute? [00:30:40] Speaker 02: Right. [00:30:42] Speaker 02: And so by making that decision, he decides whether or not he's going to answer the question posed by the petitioner. [00:30:50] Speaker 02: He can say, I'm not going to institute, and I'm not going to take another look at patentability. [00:30:59] Speaker 02: And if he does that, then there is no proceeding. [00:31:03] Speaker 04: So I thought I heard something you were just saying, concede that the tribe is not immune from ex-party re-exams. [00:31:14] Speaker 04: Does that help your case, and so how? [00:31:17] Speaker 02: Well, it does, and certainly there are procedural differences between them, but the key reasons, the reasons that they are correct to make that concession apply equally here. [00:31:32] Speaker 02: And that is that it's a process that begins with a discretionary decision of the executive branch official and ends only with the cancellation of a public franchise, not with monetary or injunctive relief of the sort that would be entered by a court. [00:31:49] Speaker 02: And so what the tribe's position here really amounts to is that they have the sovereign prerogative to assert immunity to shield [00:31:57] Speaker 02: their public franchise from reconsideration by the federal sovereign that issued it. [00:32:02] Speaker 04: So in the IPR, you have only one remedy at play, right? [00:32:07] Speaker 02: That's right. [00:32:08] Speaker 03: You say that, but what about a stopple? [00:32:10] Speaker 03: I mean, you know, the person who brings an IPR has something to lose as well. [00:32:15] Speaker 03: The right to have an Article III tribunal adjudicate not only the particular validity claim that the PTO has picked up, but anything that person could reasonably have brought at the time they brought the IPR. [00:32:27] Speaker 03: So the person on the other side does have something to lose. [00:32:30] Speaker 03: You framed it as though they don't. [00:32:31] Speaker 03: You framed it as though all that there is here to be lost is the patent by the tribe. [00:32:36] Speaker 03: But the person who brings an IPR does have something to lose. [00:32:40] Speaker 03: In this case, for example, you could lose the right to have an Article III Tribunal adjudicate not just these issues, but all issues. [00:32:51] Speaker 02: Well, that's certainly true, Your Honor, but there's nothing [00:32:56] Speaker 02: the tribe is identified or that I'm aware of in the law of sovereign immunity, that would suggest that that should give them a greater prerogative to be free from the proceeding, the fact that it potentially burdens us in some way. [00:33:10] Speaker 02: That's the petition's problem. [00:33:11] Speaker 03: But it's another way, though. [00:33:12] Speaker 03: Isn't it another indicia of the fact that this is an adversarial proceeding akin to civil litigation, where both parties have something at stake, unlike a grant of patent or a re-examination? [00:33:24] Speaker 03: where there isn't an ex parte re-examination, there isn't the same stake. [00:33:30] Speaker 02: Well, in some cases, the petitioner can have something at stake, but I think a key point here is the one that Judge Dyke raised earlier, which is that the petitioner doesn't have to have Article III standing. [00:33:41] Speaker 03: They may not be somebody who... But you do, and there is a litigation here. [00:33:46] Speaker 02: Well, we do, but the Supreme Court has never, so far as I'm aware, suggested that [00:33:54] Speaker 02: The immunity question should be determined by the nature of the proceeding, not the particular private entity that happens to be involved in it. [00:34:04] Speaker 03: And the nature of this proceeding is it's one that was meant to, as much as possible, replace civil litigation's need to resolve validity issues by taking them back to the agency. [00:34:15] Speaker 03: So it was meant to be a substitute for civil litigation. [00:34:19] Speaker 03: Now, Congress opened the door broader than that. [00:34:22] Speaker 03: Surely they did. [00:34:22] Speaker 03: And that maybe makes a difference in this case. [00:34:25] Speaker 03: But it was meant at heart to be that. [00:34:28] Speaker 02: But regardless, that is one way to characterize the purpose of it. [00:34:33] Speaker 05: If that's true, if it is, if you look at it, it's replacing civil litigation. [00:34:38] Speaker 05: In this case, the tribe commenced the civil litigation. [00:34:41] Speaker 05: which is then being continued in the IPR. [00:34:47] Speaker 05: So you would think maybe there's a case for waiver there. [00:34:50] Speaker 02: Indeed there is, Your Honor, and we have argued that here, and that is another basis for affirming the board's decision. [00:35:02] Speaker 03: So you think that if a tribe waives its right to sovereign immunity in one forum for an issue, it's waived its right to sovereign immunity in all forums? [00:35:09] Speaker 02: Not necessarily, but the test that this court has applied is that waiver is not necessarily limited to the same proceeding, but it turns on the potential for unfairness and inconsistency. [00:35:26] Speaker 03: What case are you referring to? [00:35:29] Speaker 02: Vasco says that. [00:35:29] Speaker 02: But that's the same proceeding. [00:35:30] Speaker 02: And Regents of the University of New Mexico [00:35:33] Speaker 02: refers to the fairness and consistency. [00:35:36] Speaker 05: Well, biomedical suggests that it's condo to the same proceeding. [00:35:39] Speaker 05: The question is whether you view an IPR that grows out of a district court litigation as in some sense a continuation of that proceeding, which is what there has been some suggestion about in the history of the statute. [00:35:55] Speaker 02: Yeah, that's right and I think that is certainly one way to view it and that is an appropriate way to view it here because [00:36:02] Speaker 02: The tribe has brought an action to enforce the patents. [00:36:07] Speaker 02: It's invoking the benefits of the patent system and, at the same time, trying to assert its immunity to bar another aspect of the very same system at the same time involving the same patents. [00:36:20] Speaker 04: Most of the waiver jurisprudence lies between a party and a state. [00:36:26] Speaker 04: But there is a strong presumption against waiver of tribal immunity, isn't there? [00:36:33] Speaker 04: Unless it's been expressly expressed. [00:36:38] Speaker 04: I mean, unequivocally expressed. [00:36:42] Speaker 02: There is also a strong presumption against the waiver of state. [00:36:45] Speaker 04: Where in this situation has that type of expression come in? [00:36:51] Speaker 02: The conduct amounting to the waiver is the bringing of the action in the Eastern District of Texas, and there is [00:37:00] Speaker 02: with respect to state immunity, also a strong presumption against waiver. [00:37:03] Speaker 03: And if I may- If there was some sort of potential waiver if the tribe had brought a civil litigation and then, in an IPR, a concept that I'm finding very difficult to fathom. [00:37:16] Speaker 03: But if there was such a thing, wouldn't cases like Kroll and Masonette versus Robles, which come from the regional circuits, [00:37:24] Speaker 03: cut against that notion because both cases say when a tribe steps in or a state sovereign steps in to a litigation, this is civil litigation, steps in as the person who assumes the rights and owns the property and they step in, even though if a litigation was started by someone who didn't have immunity, the tribe and or the state can then assert immunity midstream, mid litigation to end the whole thing. [00:37:52] Speaker 03: So why wouldn't that scenario play out similarly here with regard to your notion of waiver? [00:37:58] Speaker 02: So there are a couple of distinctions there. [00:38:00] Speaker 02: And we're picking up on Maisonot-Robles, the First Circuit case in particular. [00:38:06] Speaker 02: In that case and in the other cases that the tribe is relying on, the transfer was from an entity that had a fairly close relationship to the state, to a state agency. [00:38:17] Speaker 02: It was not a complete stranger to the transaction coming along. [00:38:21] Speaker 02: and purchasing the right that was the subject of litigation. [00:38:26] Speaker 03: But the first entity did not have immunity. [00:38:32] Speaker 03: And only when the second entity became the effective owner of the interest was the ability to assert immunity permitted and it was in fact permitted mid-strain, mid-litigation. [00:38:42] Speaker 02: That's right, but my point is that there was a pre-existing relationship. [00:38:48] Speaker 02: It was not purely a sale of immunity. [00:38:50] Speaker 02: They're not circumvention cases. [00:38:52] Speaker 02: That's right. [00:38:53] Speaker 03: Well, that goes to the sham issue. [00:38:55] Speaker 03: That's a totally different issue than waiver, isn't it, from a legal standpoint? [00:38:59] Speaker 02: It is a separate issue, but I was identifying that as one distinction that I think is important to bear in mind here. [00:39:05] Speaker 03: How? [00:39:05] Speaker 03: I don't see how as a legal matter that bears anything on waiver. [00:39:09] Speaker 02: Well, going back to waiver, so Maisonette-Robles specifically identified and distinguished a case in which [00:39:22] Speaker 02: an Indian tribe, purchased real property that was already the subject of litigation and suggested that in that case, and that was a case where the court had found that there was a waiver of immunity in purchasing the property that was already subject to the litigation. [00:39:39] Speaker 02: And so the court treated that as a different scenario. [00:39:42] Speaker 02: And that is much closer to what we have here where, of course, the litigation had commenced in the Eastern District of Texas. [00:39:48] Speaker 02: The IPR proceeding had not only commenced but was [00:39:52] Speaker 02: a week away from the oral hearing and then the tribe came in purchasing, purportedly purchasing the patents, subject to all of that and is now asserting immunity. [00:40:04] Speaker 02: And I think one can characterize that as circumvention or one can equally say that that's conduct that amounts to a waiver. [00:40:12] Speaker 02: But I think both of those are valid ways of looking at it. [00:40:15] Speaker 05: Okay. [00:40:16] Speaker 05: I think we're about out of time. [00:40:18] Speaker 05: Thank you. [00:40:19] Speaker 05: Thank you, Mr. Miller. [00:40:20] Speaker 05: Now we've got Mr. Freeman. [00:40:28] Speaker 01: Thank you, Your Honor. [00:40:28] Speaker 01: May it please the Court, Mark Freeman for the United States. [00:40:30] Speaker 03: Mr. Freeman, are you familiar with where we dropped off? [00:40:33] Speaker 03: Because I didn't want him to sit down, but Judge Dyke told him to. [00:40:35] Speaker 03: So are you familiar with where we just left off? [00:40:37] Speaker 01: Yeah, I would have been happy to have you continue to brush it. [00:40:39] Speaker 01: Can we make him come back up? [00:40:42] Speaker 01: I'm happy to step back. [00:40:44] Speaker 03: Are you familiar with the cases we were just talking about? [00:40:47] Speaker 01: Well, we've not pressed a waiver theory, Your Honor. [00:40:49] Speaker 01: So the point that we were here this morning to address is the ground on which the Supreme Court upheld [00:40:55] Speaker 01: this entire scheme, facing arguments very similar to those addressed by my friend today, which is that inter-purchase agreement. [00:41:01] Speaker 03: Because the only point I wanted to remind him of, I know this is your time, and I promise you'll get it. [00:41:05] Speaker 03: It's the court's time. [00:41:06] Speaker 03: Trust me, you'll get your time, was that the lease, the purchase agreement in the Mason-Robles case said that it was subject to the pending litigation. [00:41:16] Speaker 03: So the actual contract spelled that out. [00:41:19] Speaker 03: There you go. [00:41:19] Speaker 03: All right. [00:41:20] Speaker 03: Thank you, Lothar. [00:41:21] Speaker 01: Go ahead. [00:41:25] Speaker 01: I want to begin with the premise on which the Supreme Court upheld inter-parties review, which is that it is the reconsideration of the government's decision whether to grant a public franchise. [00:41:34] Speaker 01: That is the express ground on which the court upheld the proceeding against arguments exactly like those advanced by my friend today, namely that inter-parties review is just private civil litigation transplanted into a federal agency. [00:41:46] Speaker 01: These are our proceedings. [00:41:47] Speaker 03: We decide whether they can say that it's simply civil litigation. [00:41:51] Speaker 03: I mean, I thought that he took it what felt to me like a very honest approach of it being a hybrid, but it fell on the side of one or the other. [00:41:59] Speaker 03: I mean, anybody that stands up in this court and says it's all of one or all of the other has no credibility, because it's clearly not. [00:42:05] Speaker 03: The Supreme Court has made it clear. [00:42:06] Speaker 03: How do you reconcile oil states and SAS? [00:42:08] Speaker 03: They came out on the same day. [00:42:10] Speaker 01: They did, Your Honor. [00:42:10] Speaker 03: Not even by the guy who wrote the dissent in the other one. [00:42:13] Speaker 01: I agree. [00:42:14] Speaker 01: And I think my friend put it the right way. [00:42:16] Speaker 01: The right way to reconcile oil states and SAS Institute is that [00:42:21] Speaker 01: under the statute, the way Congress drafted the scheme, the petitioner gets to frame the question. [00:42:25] Speaker 01: The petitioner gets to say, if you want to reconsider the patent in my case, somebody else can petition in their case and frame the question differently. [00:42:32] Speaker 01: But if you're going to take my question, here's the question I want you to answer. [00:42:35] Speaker 01: And the director has unreviewable discretion whether to decide to answer that question. [00:42:39] Speaker 01: He can say, no, I'm not going to answer that. [00:42:42] Speaker 01: Somebody else come along and ask a different question. [00:42:44] Speaker 01: And furthermore, if he says yes, and this is a point that we didn't quite get to in the previous arguments, [00:42:48] Speaker 01: He can keep going with the proceeding, even if the parties want him to stop. [00:42:52] Speaker 01: And then when he issues a decision, what comes out is not, like in Federal Maritime Commission, a personal remedy specific to the plaintiff. [00:43:01] Speaker 01: That was a reparations order. [00:43:02] Speaker 01: What comes out is a certificate issued by the director of the U.S. [00:43:06] Speaker 01: Patent and Trademark Office under Section 318. [00:43:08] Speaker 04: Does that really make a big difference that in an IPR, the sole remedy is focused on the patent itself, not on any type of damages or sanctions or reparations? [00:43:18] Speaker 01: And I think that underscores the reasons why the Supreme Court concluded in oil states that what these proceedings are are reconsiderations of the government's decision to grant the patent in the first place. [00:43:29] Speaker 01: And just to look at that certificate that comes out... To correct an error. [00:43:33] Speaker 04: I mean, basically that's what the IPR is supposed to do in the oil states. [00:43:37] Speaker 01: Yes. [00:43:37] Speaker 01: And what comes out at the end is a certificate issued by the agency charged with administering the federal patent laws. [00:43:42] Speaker 01: that either amends or cancels or affirms the claims of an issued patent. [00:43:47] Speaker 01: And that certificate is good against the world at large. [00:43:50] Speaker 01: It is not a personal remedy to the petitioner. [00:43:52] Speaker 01: It is a public regulatory act of the United States government. [00:43:56] Speaker 01: And no Indian tribe has a sovereign right to prevent the United States government from making that public regulatory act. [00:44:03] Speaker 04: Why isn't that enough? [00:44:04] Speaker 04: I mean, why isn't it enough to say that an IPR is not a suit, a suit in law? [00:44:11] Speaker 01: Absolutely. [00:44:11] Speaker 04: And all the other questions just fall by the wayside. [00:44:14] Speaker 01: They do, Your Honor. [00:44:15] Speaker 01: And actually, on that point, just to underscore it, the Supreme Court in oil states said, if we had to pick an analogy, the analogy was a petition to the old English privy council to cancel a patent that had been issued. [00:44:28] Speaker 01: Now, nobody would think that just because that petition to the privy council in colonial or pre-colonial England was begun by a petition by a private party, that it was the private party's cancellation of the patent. [00:44:40] Speaker 01: It was the English Crown's cancellation of the patent. [00:44:42] Speaker 01: And for the same reasons, what is happening here is it is the United States Patent and Trademark Office's decision to reconsider whether it granted the patent in the first place. [00:44:51] Speaker 01: We have political accountability. [00:44:53] Speaker 03: Does your courts also have the right to cancel a patent if they conclude at the end of a litigation it should be canceled? [00:44:59] Speaker 01: As a defense to a patent infringement action, yes, Your Honor. [00:45:02] Speaker 01: No, no, no, they don't cancel a patent. [00:45:04] Speaker 01: Exactly. [00:45:04] Speaker 01: They do not cancel the patent. [00:45:06] Speaker 01: What they declare is that the claim was invalidly granted. [00:45:09] Speaker 01: And to your point, [00:45:10] Speaker 01: It is true that now, in the world of blonder tongue, the remedies look similar in some general high-level sense, but they're not. [00:45:19] Speaker 01: Because after all, you have to have standing to bring a declaratory judgment action. [00:45:23] Speaker 01: You have to have a concrete Article 3 case or controversy to get in a district court. [00:45:28] Speaker 01: What you don't have to have is that sort of controversy to get in front of the US Patent and Trademark Office. [00:45:33] Speaker 01: Because this is our decision, for which we are accountable, [00:45:36] Speaker 01: it is an action of the United States government against which an Indian tribe does not have sovereign immunity. [00:45:40] Speaker 01: For that reason, we would urge the court to hold that the board correctly said this proceeding can proceed. [00:45:46] Speaker 05: In any trust allegation, my recollection is from the Supreme Court cases that in order to cancel a patent, that it has to be brought at the instance of the United States. [00:45:58] Speaker 05: Is my recollection about that correct? [00:46:00] Speaker 01: I think that is correct. [00:46:02] Speaker 01: I'm not going to vouch for sure. [00:46:04] Speaker 01: I mean, we know that [00:46:06] Speaker 01: particularly before the 1952 Patent Act, an era of univis lens and some of those early antitrust cases involving patents, that the claims are typically brought affirmatively by the United States, just like in the Atlantic Telephone Telegraph case, where the United States brought the action to cancel the telephone patent. [00:46:22] Speaker 01: The point we make in our brief, of course, is that if a private petitioner came to the government and said, please file a civil action to cancel this patent held by an Indian tribe, there would be no immunity objection to that. [00:46:33] Speaker 01: Of course, we can do that. [00:46:34] Speaker 01: And it wouldn't change the fact [00:46:36] Speaker 01: We were told by Congress when a private party does that, you must accept the claims they bring to you or not. [00:46:42] Speaker 01: It would still be the government's petition. [00:46:44] Speaker 03: How do you distinguish? [00:46:46] Speaker 03: this case from FMC, because it's just not the case that because it's conducted within an administrative tribunal, they automatically have no immunity, or that was flying the face of FMC. [00:46:55] Speaker 03: Of course. [00:46:55] Speaker 03: And you keep harping on the idea that if this forms of allegation, it would be one thing, but because it's here, it's another. [00:47:00] Speaker 03: Why? [00:47:01] Speaker 03: Tell me the difference between this and FMC. [00:47:03] Speaker 01: So there are three critical differences between this and FMC, but the one I'll begin with is the point that my friend touched on as well, which is the Supreme Court and FMC [00:47:11] Speaker 01: placed special emphasis on the fact that the commission had no ability to turn down a non-frivolous claim complaint. [00:47:19] Speaker 01: It was called a sworn complaint under the statute there, brought before the agency. [00:47:22] Speaker 01: They had to adjudicate it. [00:47:23] Speaker 01: And if the party didn't show up, the state didn't show up, they'd enter a default judgment. [00:47:27] Speaker 01: And the court connected that to an important principle in immunity law, which is political accountability. [00:47:33] Speaker 01: The court said, look, [00:47:35] Speaker 01: What Congress has effectively done here is placed in the hands of private parties, the political accountability for imposing liability on a state, and that is impermissible. [00:47:43] Speaker 01: But the court went on to say, of course, that the commission itself could have brought the very same proceeding, or furthermore, that it could have done so at the behest of a private party. [00:47:51] Speaker 01: The fact that everyone agrees in this case, the director of the Patent and Trademark Office could simply say, no, we're not taking your case. [00:47:58] Speaker 01: We're not instituting review on any patents held by Indian tribes. [00:48:02] Speaker 01: means that the fact that we could do that means that if we decide to do so, it is our choice. [00:48:08] Speaker 01: We are politically accountable for it. [00:48:09] Speaker 01: We own that. [00:48:10] Speaker 01: When we cancel the claims, we own that decision, just like we own the decision to issue them in the first place. [00:48:15] Speaker 01: It is not hailing into court at behest of a private party. [00:48:18] Speaker 01: It is a petition to the director to exercise his unreviewable discretion to institute a USPTO reconsideration. [00:48:25] Speaker 04: Does a PTO have a type of jurisdiction that it looks like it exercises in declaring statutes to be unconstitutional? [00:48:32] Speaker 01: to declare statutes to be unconstitutional. [00:48:35] Speaker 01: I'm not aware that this court has addressed that question. [00:48:38] Speaker 01: The Supreme Court in Elgin versus Department of the Treasury, as the court knows, addressed a similar question with respect to the Merit Systems Protection Board and said that there, although the board had declined to address the constitutionality of the selective service system, that it was unclear why the board couldn't have addressed that question. [00:48:55] Speaker 01: And in other administrative cases, I'm thinking, for example, the Lucia versus SEC case in the Supreme Court at the moment, [00:49:01] Speaker 01: administrative agencies regularly do address whether the statute violates the Constitution on its face. [00:49:06] Speaker 01: But if we're speaking in constitutional terms, I think we know the answer, right? [00:49:09] Speaker 01: I mean, that's what oil states said. [00:49:11] Speaker 01: It said this proceeding is constitutional precisely because it involves the reconsideration of the agencies. [00:49:17] Speaker 04: That's my point. [00:49:18] Speaker 04: The Supreme Court said that. [00:49:19] Speaker 01: Yes. [00:49:20] Speaker 01: Yes. [00:49:22] Speaker 01: And said it on a particular ground. [00:49:23] Speaker 01: And this goes back to a point you made, Judge Moore. [00:49:26] Speaker 01: Our point is not that because it involves public rights, inter-parties review [00:49:30] Speaker 01: is necessarily doesn't implicate immunity. [00:49:33] Speaker 01: Presumably the Federal Maritime Commission case also involved public rights, otherwise it couldn't have been adjudicated in an agency. [00:49:38] Speaker 03: But can't it be wound up as part of the decision making? [00:49:42] Speaker 03: Can't the decision making be a combination of the nature of the proceeding and the nature of the right at stake taken together in this weird hybrid universe? [00:49:51] Speaker 03: that leads us to this conclusion about cyber immunity that you want us to have about tribal immunity. [00:49:56] Speaker 03: I mean, couldn't it be a combination of the two? [00:49:58] Speaker 03: Or do you really think the nature of the right is not relevant to the analysis? [00:50:02] Speaker 01: It's not that I think it's not relevant to the analysis, but let me put it this way. [00:50:05] Speaker 01: There are some types of proceedings that simply by their nature do not implicate the immunity of a domestic sovereign. [00:50:11] Speaker 01: And the Supreme Court addressed that in a case cited in some of the amicus briefs called Tennessee Student Assistant Corporation versus Hood, 2004 decision, but Chief Justice Rehnquist [00:50:21] Speaker 01: And the question there, that involved a bankruptcy proceeding where a student tried to discharge debt held by a state. [00:50:29] Speaker 01: And the state said sovereign immunity. [00:50:31] Speaker 01: And what the Supreme Court said was, no, look, the nature of bankruptcy, and the court had held for many years that states can be subject to bankruptcy proceedings. [00:50:38] Speaker 01: And they said, it didn't matter that those proceedings were adversarial in nature. [00:50:43] Speaker 01: It didn't matter, to your question earlier, [00:50:45] Speaker 01: the state or the petitioner had something to lose by having an estoppel-like effect, by having brought the claim in the first place. [00:50:51] Speaker 01: The point was, in bankruptcy, the states just didn't have an immunity objection to raise, and so the adversarial nature of the proceeding was irrelevant. [00:50:59] Speaker 01: I think the same thing is true here. [00:51:01] Speaker 01: If you just imagine that Congress enacted the very same scheme and said, except the day before the USPTO issued the patent, right? [00:51:10] Speaker 01: So Mylan comes in and says, wait, I have an expert declaration, I have prior art, [00:51:15] Speaker 01: You're about to make a mistake, USPTO. [00:51:18] Speaker 01: Don't issue this patent to an Indian tribe. [00:51:19] Speaker 01: Now, in point of fact, the application was filed by Allergan. [00:51:22] Speaker 01: Let's suppose it was filed by the Indian tribe. [00:51:24] Speaker 01: I don't think anyone would think that the Indian tribe would have a sovereign immunity right to prevent the USPTO from hearing that evidence, even if it was preceded on an adversarial basis. [00:51:36] Speaker 01: Now, we know from oil states that all that inter-parties review is is that very same question conducted after the patent issued [00:51:42] Speaker 01: and that there's nothing talismanic about the fact that the grant date came before it. [00:51:49] Speaker 01: Before you sit down, tell us what your position is on the circumvention issue. [00:51:56] Speaker 01: We framed the circumventions. [00:51:57] Speaker 01: We've not addressed a sort of antitrust-like circumvention or sham argument. [00:52:04] Speaker 01: What we've done is defend what the board said with respect to who is the actual patent owner here, and thus the proper respondent. [00:52:11] Speaker 01: in the USPTO proceeding. [00:52:15] Speaker 01: We think for all the reasons given by the board, we can all kind of recognize a shell game when we see one. [00:52:20] Speaker 01: And what's really going on is that Allergan remains for all practical purposes the patent owner, and it can defend the proceeding. [00:52:25] Speaker 01: But the point I'd like to leave the court with is, if you don't address the threshold question of immunity in this case, you're going to have it in another case or one after that, because people will just write their contracts differently. [00:52:36] Speaker 01: And in fact, you already have [00:52:38] Speaker 01: pending, as the court is undoubtedly aware, a case posing the same question involving 11th Amendment immunity. [00:52:43] Speaker 01: We think the right way to dispose of this case and to provide guidance for the court and the parties in the bar and the agency is to explain that inter-parties review is the agency's reconsideration of a decision everyone agrees it's entitled to make in the first place and simply does not implicate the immunity of domestic sovereigns. [00:53:00] Speaker 05: OK. [00:53:00] Speaker 05: Thank you, Mr. Crain. [00:53:01] Speaker 01: Thank you. [00:53:02] Speaker 05: Mr. Massey, we'll give you seven minutes instead of three. [00:53:05] Speaker 00: Thank you, Your Honor. [00:53:06] Speaker 00: That's very generous. [00:53:09] Speaker 00: We do not disagree that the PTO has the authority to reconsider the grant of a patent. [00:53:14] Speaker 00: The question is the means by which it does so. [00:53:17] Speaker 00: We concede that it could proceed by re-exam. [00:53:20] Speaker 00: We concede the United States could file an IPR and there would be no tribal immunity. [00:53:24] Speaker 00: But if the means selected to accomplish [00:53:27] Speaker 00: the re-examination or reconsideration objective resembles a private adjudication as in FMC, then there is sovereign immunity. [00:53:38] Speaker 00: FMC was a public rights case, as my friend acknowledges, [00:53:41] Speaker 00: FMC involved docking rights at public ports that you could imagine the agency making the same arguments. [00:53:48] Speaker 00: In fact, it did make exactly these arguments before the Supreme Court, saying our decisions do not implicate sovereign immunity because we need to be able to decide how to implement rules regarding docking at public ports, which are quintessential public rights. [00:54:01] Speaker 00: If we make a mistake, we need to re-examine them. [00:54:03] Speaker 00: We use, they said this in the U.S. [00:54:05] Speaker 00: Supreme Court, we use [00:54:07] Speaker 00: private complaints as an investigatory tool to understand how to make our policies. [00:54:11] Speaker 00: All of these arguments were made. [00:54:13] Speaker 00: And what the Supreme Court said was if you use an adjudication, an adversarial adjudication between private parties, it will trigger sovereign immunity. [00:54:23] Speaker 04: I asked your opponent a question concerning the authority of the PTO to declare, I said the statute unconstitutional. [00:54:29] Speaker 04: What I meant was the authority to [00:54:33] Speaker 04: to adjudicate or to issue a decision with respect to tribal immunity. [00:54:38] Speaker 04: Is it your view, yes or no, whether the PTO has authority to decide that question ab initio? [00:54:46] Speaker 00: Yes, it should have recognized that there was tribal immunity. [00:54:49] Speaker 00: As we see the system working from now on, the director, when he gets, or he or she gets an IPR that's named, that's directed at a sovereign. [00:54:59] Speaker 00: Yes, yes. [00:55:00] Speaker 00: The director would then treat it as next party re-examines. [00:55:03] Speaker 00: That's how we think the process should work. [00:55:05] Speaker 00: If the director deems that there is a substantial new question of patentability, then the director should commence an ex parte re-exam. [00:55:12] Speaker 00: That would be a simple way of having the system operate. [00:55:16] Speaker 00: I don't think that the remedies, there was discussion of the remedies making a difference, because in the remedy situation, the, I'm sorry, in the IPR situation, the PTO is issuing a certificate and so on. [00:55:28] Speaker 00: FMC is very clear that the kind of remedy issued is irrelevant. [00:55:32] Speaker 00: In FMC, there was essentially no remedy, because the commission in that case couldn't enforce its own order. [00:55:39] Speaker 00: And so the dissent goes on at length about, well, the attorney general would have to bring the lawsuit, and there's no sovereign immunity. [00:55:45] Speaker 00: You're running out of time. [00:55:47] Speaker 00: Yes. [00:55:47] Speaker 00: What would focus if you want me to discuss the institution, the director's decision to institute? [00:55:55] Speaker 00: I think Judge Moore was absolutely correct that the SAS case [00:55:58] Speaker 00: a means that the petitioner frames the issues and the PTAB can't decide, can't make a decision outside those issues and so the directors... This time can I actually ask my question instead of having you answer one that you made up in your head? [00:56:09] Speaker 00: I'm sorry, yes. [00:56:10] Speaker 03: Right. [00:56:10] Speaker 03: So you're running out of time but what I really want to know is how you respond to them and I think the strongest argument that both the attorneys on the other side made [00:56:18] Speaker 03: is the argument about the director having discretion here. [00:56:22] Speaker 03: It's similar to what you're making. [00:56:24] Speaker 03: In FMC, the court did explain that this specialized agency procedure, the director doesn't have the discretion, much like in civil litigation. [00:56:34] Speaker 03: It didn't have the discretion to say no. [00:56:38] Speaker 03: That seems like a powerful point. [00:56:42] Speaker 00: Well, the director had the same power in interferences in VasCath. [00:56:46] Speaker 00: and could say no, right? [00:56:48] Speaker 00: The director could declare there wasn't an interference, and it was the same check. [00:56:51] Speaker 00: Baskav said it still triggered sovereign immunity. [00:56:53] Speaker 00: Also, I point out the sentence immediately prior to the one my friend on the other side quoted to you in the FMC decision on the same page of 764. [00:57:03] Speaker 00: It says, the prosecution of a complaint filed by a private party with the FMC is plainly not controlled by the United States, but is controlled by that private party. [00:57:13] Speaker 00: The only duty assumed by the FMC, and hence the United States, is to assess its merits in an impartial manner. [00:57:18] Speaker 00: And then it goes on to say, and in fact, they don't even have to institute. [00:57:21] Speaker 00: Well, that sentence that I just read is exactly the SAS point about IPRs. [00:57:27] Speaker 00: The IPR is controlled by the private party, not by the director. [00:57:30] Speaker 00: The director makes the decision to institute, but then doesn't have political responsibility, as Your Honor said. [00:57:37] Speaker 00: The director is not putting the imprimatur of the United States on one side or the other. [00:57:43] Speaker 00: I think the other point to make is that even before the director institutes, the IPRs begin in a significant way. [00:57:52] Speaker 00: The RPX decision, which I'll mention, it was number, IPR number 2015-750, is an example where the direct, where even before the director instituted, the PTAP heard discovery disputes and issued sanctions on the real party and issue, the real party and interest question. [00:58:12] Speaker 00: But I think that the discretion, whether to institute or not, does not affect the overall scope and nature of an IPR as a private party, a case brought by a private party, framed by a private party. [00:58:28] Speaker 00: If the petitioner drops out, the other side pointed out, the IPR can still continue. [00:58:34] Speaker 00: But the [00:58:35] Speaker 00: The PTO solicitor does not take over the prosecution of that claim. [00:58:40] Speaker 00: And as I pointed out before, precisely the same thing happened in the ender FMC. [00:58:45] Speaker 03: Let me ask you a question. [00:58:46] Speaker 03: You said something that's just sticking in my head, and I can't figure out the answer. [00:58:49] Speaker 03: Did you tell me that in interferences, the director has the discretion not to conduct interference? [00:58:54] Speaker 00: No. [00:58:54] Speaker 03: Because I thought they didn't. [00:58:55] Speaker 00: They have to declare it. [00:58:56] Speaker 00: The procedure is, well, there's an application. [00:58:58] Speaker 00: The private party can submit, can suggest an interference. [00:59:01] Speaker 00: And then under 135, the director had to declare the interference. [00:59:05] Speaker 00: That is a, I'm just saying all of these instances. [00:59:08] Speaker 00: It's not discretionary. [00:59:09] Speaker 00: Well, it's, it depends on. [00:59:10] Speaker 03: No, that's completely unlike IP. [00:59:12] Speaker 00: Well, okay. [00:59:13] Speaker 00: Well, none of this, all I'm saying is none of these is like a civil lawsuit. [00:59:17] Speaker 00: They are all different from a civil lawsuit. [00:59:19] Speaker 00: That's not the relevant comparison. [00:59:21] Speaker 00: The relevant comparison is the adjudicatory process in FMC. [00:59:25] Speaker 00: And that process was adjudicatory in the same way that this is, the exception of the director's discretion. [00:59:31] Speaker 00: looks like, it looks like it's a difference, but it isn't a difference that makes a difference. [00:59:36] Speaker 00: And if you also, I think that the court actually exaggerated the extent of the director's discretion, or underestimated. [00:59:43] Speaker 00: If you looked at, as I mentioned before, Section 1710B, which is the section governing the FMC proceeding, the director did have discretion in how to commence an investigation. [00:59:53] Speaker 00: But when you get down to the, when you get down to the resemblances, the overall purpose of the proceeding is not determinative. [01:00:01] Speaker 00: the means by which Congress directed IPRs to proceed, that resembles the same adjudicatory process as in FMC and also as in VASCAP. [01:00:13] Speaker 05: OK. [01:00:13] Speaker 05: Thank you, Mr. Manci. [01:00:14] Speaker 05: Thank you, all counsel. [01:00:15] Speaker 05: The case is submitted. [01:00:16] Speaker 05: That concludes our session for the afternoon. [01:00:20] Speaker 06: All rise.