[00:00:00] Speaker 05:
We have five argued cases this morning. The first is number 23, 2158, VLSI technology versus open sky industries.

[00:00:14] Speaker 05:
And before we begin the argument, our reporter on timing for the argument raised this question about the confidentiality markets. most of which seem to be unjustified in the briefs. Have the parties conferred about that? I think it makes it difficult to conduct the oral argument, difficult to write the opinion, and it's hard to see what the justification is for some of this marking.

[00:00:43] Speaker 06:
You have to speak up a little.

[00:00:50] Speaker 06:
Our BL side's position is that none of the markings in the briefs need to be kept confidential. We have – we reached out to the PTO. I believe they – their counsel is busy. We did not get a response on that. Now, the other sides have – I did not have an opportunity to speak with the other parties. I know that they have opposed.

[00:01:11] Speaker 01:
Thank you, Your Honors. The USPTO's position on the confidentiality markings is that they should remain, and the reason why is because of the nature of the proceedings. The confidential material represents an ex parte communication that was sent to the office, and the office is a policy interested in not rewarding that or encouraging unsolicited ex parte communication.

[00:01:33] Speaker 05:
Well, apart from that one, the whistleblower... aspect of it. There are a lot of confidentiality markings that just have no justification in there.

[00:01:44] Speaker 05:
What's the basis for it?

[00:01:46] Speaker 01:
So the USPTO endeavored to not include confidential material in their briefs for the ease of today's argument. The only confidentiality markings that we have an interest in are the ones for the whistleblower report, so as not to encourage further... So your only position is that that should continue to be confidential? Yes, Your Honor.

[00:02:15] Speaker 00:
Good morning, Your Honors. Mark Fleming on behalf of Intel. For the Open Sky appeal, there's nothing redacted in our briefs. We have no position on what goes on in the first case. With respect to the second case, the PQA appeal, our position is the same as the patent offices, which is that this court should continue to keep under seal and to redact in the public briefs the so-called anonymous document. We think that the court can decide the appellate issues related to that. But apart from that, we can treat everything as non-confidential?

[00:02:46] Speaker 00:
Other than the anonymous document, Intel has no objection to that.

[00:02:50] Speaker 05:
Okay, so if I understand the party's position is everything other than the whistleblower allegations can be treated as non-confidential, correct?

[00:03:00] Speaker 00:
That's Intel's position, yes, Your Honor.

[00:03:02] Speaker 05:
Okay. So I think the parties should file corrected briefs eliminating the confidentiality other than the whistleblower.

[00:03:14] Speaker 06:
VLSI is, of course, okay with that. Open Sky East Council is not here today, so... cannot be sure what their position would be on removing the additional redactions on OpenSky, but if the court believes they should be removed, we're happy to do that. Okay.

[00:03:29] Speaker 05:
Okay.

[00:03:30] Speaker 04:
Perhaps you could consult with OpenSky's counsel.

[00:03:34] Speaker 06:
He's had some serious issues this week. I apologize for not having done so.

[00:03:41] Speaker 05:
It's health issues.

[00:03:43] Speaker 05:
Okay.

[00:03:44] Speaker 05:
All right. Mr. Walker.

[00:03:49] Speaker 06:
Thank you, and may it please the Court. Both of these cases should be remanded to the PTO for at least three reasons. First, the sanctions decisions rest on a policy, a June 2022 compelling merits memorandum, that the PTO has now repudiated and rescinded. The Supreme Court is clear that that kind of intervening policy change requires remand for the agency to determine, in the first instance, how the change affects the decision under review. And in fact, the PTO's brief tells us the agency would not decide the issues the same way under current policy.

[00:04:21] Speaker 06:
Second, the director lacked statutory authority to join intel to these IPRs because its petition was not properly filed under Section 315C. And third, the director's failure to impose meaningful sanctions despite finding extortion, abusive process, Flagrant violations of her orders and misleading statements were inconsistent with recent decision-making, were arbitrary and capricious. And that's on top of the errors particular to each of the cases.

[00:04:49] Speaker 06:
So I'd like to start with the PTO's rescission of the compelling merits memorandum because I think this is the most straightforward resolution of the cases.

[00:04:57] Speaker 05:
A central component... The way I would read what the PTO said about that memorandum is that they relied... on the memorandum for the standard defining what compelling merit is, not that they looked at it as a source of authority for doing what they were doing.

[00:05:16] Speaker 06:
Well, At a minimum, the sanctions decisions relied on the memorandum and the rescission notice that rescinded that memorandum. Not only... Relying on it for what?

[00:05:27] Speaker 05:
Because it seems to me that in reading it, they're relying on it for defining what the standard of compelling merit is, not as... the authority for sanctions.

[00:05:38] Speaker 06:
Well, I think, you know, obviously it dealt with a different context, but I believe the best reading is that the director understood the memorandum as being relevant to how she should strike the policy balance.

[00:05:50] Speaker 05:
You know, she said, citing the memorandum... Well, if you read it the way I just suggested, there's no problem, right?

[00:05:56] Speaker 06:
Well, I think she still relied on it and what the rescission notice has... No, but if she just relied on it for a definition...

[00:06:04] Speaker 05:
of what compelling merit is, there's no problem. That's the sole reason, that's the sole reliance, there's no problem here, right?

[00:06:13] Speaker 06:
If it were just to find a definition, perhaps. But I think she was relying on it as her declared statement of policy of how compelling merits influenced whether a proceeding should go forward, which is why she ordered a compelling merits termination per the memorandum. And whether it was just taking inspiration from the compelling merits memorandum or trying to apply it more directly, that was relying on a declared policy she herself had issued and applying it to this new context.

[00:06:46] Speaker 06:
And if the policy justification in the original context is no longer good, and the PTO has told us it's no longer good, then the agency also needs to consider whether that policy balance is good in this other context. You know, the policy of the memorandum was compelling merits often require, you know, councils going forward, setting aside what it actually had to say about abuse of process. And here she said compelling merits compels us to go forward. That is relying on the same policy that existed. That's the policy that's now been rescinded and repudiated. And she clearly relied on the memorandum.

[00:07:18] Speaker 06:
And the rescission notice says direct review decisions that rely on the memorandum shall not be binding or persuasive. So I think what we have here is a situation where the policy change does implicate the decision under review. And the PTO has told us that under current policy it would not decide the issues the same way.

[00:07:34] Speaker 04:
I'm not arguing that the PTO doesn't have a right to move forward in the absence of compelling arguments if they determine that that's the appropriate course of conduct.

[00:07:46] Speaker 06:
So they may be able to justify that result on a remand, but the agency needs to decide, does this new policy, which rejects compelling merits as being dispositive, should it apply to this case? And that is a policy judgment that the agency needs to make that the court can't make.

[00:08:04] Speaker 05:
But the policy, the rescission, doesn't say anything about this context. It has to do with the fintive.

[00:08:13] Speaker 06:
It does, but the concerns that led to the rescission of the memorandum apply in this context, too. There's a problem where compelling merits was confusing and hard to apply. PTAB, Patent Bar, complained about that. The guidance that was issued after the rescission makes clear that the compelling merits memorandum had given too much weight to the merits and declares on page 3 that it's no longer responsible.

[00:08:38] Speaker 05:
If we put aside the memorandum, How is it an abuse of discretion for the – as Judge Lynn was asking, how is it an abuse of discretion to consider compelling merit in connection with what sanctions should be imposed?

[00:08:53] Speaker 06:
So I think the problem there is that there was a declared policy that already existed that said compelling merit often requires going forward, but maybe not if there's abuse of process, if there's abuse in the IPR process.

[00:09:06] Speaker 05:
I'm asking you to put aside your argument about the memorandum.

[00:09:11] Speaker 05:
Is there any – basis for saying that apart from the memorandum and the rescission of the memorandum that there's any reason that the PTL can't consider compelling merit?

[00:09:23] Speaker 06:
Consider it, certainly, but I think it still needs to provide a reasoned explanation for why that justifies going forward with a proceeding and having declared that deterrence was an important requirement, how the sanction that was ultimately issued in fact, creates deterrence. And just look to what is going to happen in the next case.

[00:09:44] Speaker 04:
The patent owner has every incentive to give in to the... But isn't this all within the director's discretion and not subject to our review?

[00:09:56] Speaker 06:
So whatever discretion the director has is certainly subject to the recent decision-making requirements of the APA. And so if it fails to take into account important considerations or fails to justify it in light of the policies that she herself invoked, those are going to be failures of reason decision making themselves an abusive process under the APA. If the question is about reviewability, is that if you're If you're asking about reviewability, this is a sanctions decision. We're not challenging an institution decision. And sanctions is governed by a different statutory and regulatory regime from institution.

[00:10:30] Speaker 06:
It's not about Section 314, which is what the appeal bar pertains to. It's about Section 366.

[00:10:36] Speaker 03:
It's a sanctions decision that involves termination, correct?

[00:10:40] Speaker 06:
that is one of the sanctions that is possible on the table. But that can happen without regard.

[00:10:45] Speaker 03:
Isn't the argument or question as to whether the termination relates back to the institution of the proceeding?

[00:10:53] Speaker 06:
I'm sorry, I didn't.

[00:10:54] Speaker 03:
Is there not argument that the termination of the proceeding relates back to the institution of the proceeding?

[00:11:03] Speaker 06:
I don't think it needs to. This is not a situation where one of the prerequisites for institution, like disclosing all real parties' interests or something like that, just saying that one of the prerequisites for institution wasn't satisfied. This is sanctions. This is misconduct. Misconduct can happen at any time during the proceeding. The statute and regulations that govern it are not limited to institution.

[00:11:25] Speaker 05:
That may be true, but the Considerations here governing sanctions relate to institution. Compelling merit is an issue relating to institution, right?

[00:11:39] Speaker 06:
And that's only because the director chose to import that standard from the institution decision into the different context of sanctions for misconduct.

[00:11:47] Speaker 05:
And I don't think an agency... For the decision that we're reviewing, right?

[00:11:53] Speaker 06:
Yes, but the fundamental point is what is The decision the court is reviewing, and it's a sanctions decision, it isn't an institution decision, and that makes all the difference under 314D. The only thing that makes unreviewable is the institution decision. And, you know, the director can terminate without deinstituting. That is what the PTO does. That is the IBM versus intellectual venture case that's cited in our report.

[00:12:24] Speaker 06:
In our yellow brief at 22 to 23, you can terminate the IPR without also deinstituting it.

[00:12:32] Speaker 06:
Here, the director recognized the distinction between denying institution or terminating an instituted trial at Appendix 30.

[00:12:40] Speaker 06:
And here, the misconduct also continued after institution. And I think just the fact that misconduct and sanctions can arise at any part of the proceeding show why these are not statutory and regulatory provisions. that only pertain to institution. They are not prerequisites for institution and are under the default rule are reviewable by this court.

[00:13:02] Speaker 05:
If Open Sky engaged in misconduct in seeking money to abandon the proceeding, why isn't your offer to pay them money equally a problem?

[00:13:22] Speaker 06:
I'm sorry. I didn't catch it.

[00:13:25] Speaker 05:
Your contention is that OpenSky seeking financial compensation to abandon the proceeding is an improper abusive process, correct? Yes. So why isn't it equally problematic for your client to offer to pay them to abandon the proceeding? Why isn't that itself improper compensation?

[00:13:49] Speaker 06:
Well, the director certainly made no finding, and she distinguished ordinary settlement discussions from the kind of extortion that existed here.

[00:13:55] Speaker 05:
This is not ordinary settlement discussions. It doesn't really answer my question.

[00:13:59] Speaker 06:
Well, the amounts that we offered were something, you know, akin to nuisance value or litigation costs. They were not the, you know, the eight-figure, seven-figure.

[00:14:12] Speaker 05:
More than that in the other case, right?

[00:14:15] Speaker 06:
You know, the amounts were very large in the other case. I don't remember what we offered in that case, but the director... Millions, right?

[00:14:21] Speaker 05:
It was millions.

[00:14:25] Speaker 06:
I'm not sure if we offered millions in that. Mr. Lampkid could answer that, but I think more fundamentally, I think the director reasonably recognized that what happened here was, by OpenSky and PQA, was well beyond just ordinary settlement that may well be permissible in the IPR context.

[00:14:42] Speaker 05:
especially when the other party had... What's wrong is the amount that they saw?

[00:14:46] Speaker 06:
I think that's an important part of it. There's also the fact that they made misrepresentations. They blatantly violated discovery orders for the director who was trying to investigate.

[00:14:56] Speaker 05:
Those are different questions.

[00:14:57] Speaker 06:
Those are certainly different questions, but I think the director could look at this and find that the entirety of it showed that there was misconduct that was sanctionable. I am into my rebuttal time, but I will just very quickly say Intel was also improperly joined. The director only has authority to join a party that properly files a petition. The Supreme Court has said that properly filing a petition requires timeliness.

[00:15:19] Speaker 06:
Their petition was not timely, and there is nothing in the statute that exempts a petition from the one-year deadline that exists in 315B.

[00:15:28] Speaker 04:
When those actions were to join, not to file a new petition.

[00:15:34] Speaker 06:
Yes, yes, but joinder is conditioned on the party seeking joinder properly filing a petition, and so that was a statutory prerequisite to the director being able to join them.

[00:15:46] Speaker 05:
But the statute specifically says that it's without regard to the time, and the Supreme Court in the Thrive case said that's the way to interpret the statute, right?

[00:15:55] Speaker 06:
So Thrive did not have that question before, and I think everyone has agreed that that was dictum.

[00:16:01] Speaker 05:
We don't sit here to tell the Supreme Court what's dictum and what's not dictum. We have cases saying that whatever the Supreme Court says, we do.

[00:16:11] Speaker 06:
Well, I think it was not grappling with the significance of properly filed, which is a term the Supreme Court had repeatedly interpreted. And it didn't grapple with the language of the second sentence of 315B, which only says that the one-year deadline does not apply to the request for joinder and says nothing about exempting the petition itself from the one-year deadline. And I think that's the sort of dictum that had no bearing on anything that in the Royal Canine case that we cite, the Supreme Court says those kinds of offhand remarks are not worn, do not deserve precedential value.

[00:16:48] Speaker 06:
Certainly, everyone agrees that no court has actually decided this question. We would urge the court to decide it and do it consistently with the text of the statute, which says it must be properly filed and the only thing that's exempted from the one-year deadline is the request for jointer itself.

[00:17:03] Speaker 03:
With respect to properly filed, the director looks at the petition, correct, and applies the criteria that's in the regulation in order to determine whether it's a properly filed petition.

[00:17:15] Speaker 03:
In this case, when Intel... was considered for joinder.

[00:17:21] Speaker 03:
It had already waived all of its invalidity defenses before a district court. Is that right?

[00:17:27] Speaker 06:
I believe it went to trial on anticipation, but otherwise, yes. The ones that were asserted in the IPR, it had already abandoned.

[00:17:33] Speaker 03:
How can Intel become a party to the case? And I'm asking you, and I'd like the other side to answer this as well. How is it that Intel can have property filed and be joined to an action, that is considering prior and infringement claims that have already been settled, or rather even more so, that Intel has waived.

[00:18:01] Speaker 06:
So I think that points up the claim preclusion issue that Mr. Lampin will address with respect to PQA, because that is an attempt to collaterally attack.

[00:18:09] Speaker 03:
I'm asking you with respect to the requirement that the petition be properly waived.

[00:18:15] Speaker 06:
There'd be a proper... Yeah, so with respect to properly filed, what the statute requires here is that it be timely filed, and the time bar is from when it's served with the complaint, and that's without respect to how that infringement litigation ultimately proceeds. But I do think that respecting the requirements of it being properly filed shows why Congress reasonably put that into place, because otherwise you have a situation where Intel comes in and is able to commandeer someone else's IPR for its own purposes.

[00:18:44] Speaker 04:
Why does properly filed refer to timing as opposed to substance?

[00:18:50] Speaker 06:
So the Supreme Court has held time and again that the common usage, common understanding of properly filed is complying with filing deadlines. That's the Pace case, the Artuz case, the Allen case.

[00:19:03] Speaker 06:
That is the epitome of what a condition for a properly filed petition is. And we know that Congress was aware of the Supreme Court's interpretation of that language because Senator Kyle said Supreme Court in Pace, Artus, and Allen has interpreted properly filed as requiring compliance with time limitations in all cases. And I think that just goes to show Supreme Court has told us what those words mean. Congress actually understood it. It just reinforces this requirement.

[00:19:33] Speaker 06:
Unless there are any other questions.

[00:19:35] Speaker 05:
We'll give you two minutes to rebuttal. Mr. Fleming. Thank you.

[00:19:44] Speaker 05:
Well, I mean, you're listed here as going first. Very well.

[00:19:56] Speaker 00:
Good morning. May it please the Court, Mark Fleming from WilmerHale, together with Stephen Horne on behalf of Intel. The arguments that Your Honors have just heard from VLSI are all arguments that the Congress has not given this Court jurisdiction to review because they all go to the decision on institution, which is final and non-appealable under 314D. VLSI itself argued in the PQA case, which is the next one to be heard this morning.

[00:20:21] Speaker 03:
Just to be clear, you're not saying that we lack authority to review decisions based on sanctions, reviewing sanction decisions. That's not your argument.

[00:20:32] Speaker 00:
Our argument is that when the sanction that is sought is vacator of institution, then that is not something that is reviewable because Congress has made the institution decision non-reviewable.

[00:20:42] Speaker 05:
If the sanction, for instance – Atlanta case suggests that if it's a pure sanctions decision, it might be reviewed.

[00:20:49] Speaker 00:
A pure sanctions decision. So, for instance, the order to open Sky to pay $400,000 as a sanction, that is reviewable. No question about that.

[00:20:58] Speaker 05:
You could have – Even as an institution issue, if it's a pure sanctions, Atlanta suggests that might be reviewed.

[00:21:05] Speaker 00:
You have situations where you might have an entity who is seeking a termination through a final written decision in its favor. That was the case in VoIPal, right? Apple was saying as a sanction, you should enter judgment in our favor, a final written decision of unpatentability. That would have been reviewable like any final written decision would be reviewable. The denial of such a sanction would also be reviewable. But what VLSI has sought here and ultimately what they need to get in order to get what they want is vacator of institution of the entire proceeding.

[00:21:37] Speaker 00:
It's not enough just to terminate OpenSky because if you terminate OpenSky, the IPR is still properly instituted. the PTAB can still go to final written decision. It could do that even without any petitioner. So in order to achieve their goal here, which is to wipe everything out, they need this court to review the decision on institution. And that is something that Congress has not authorized this court to do.

[00:22:01] Speaker 04:
Is there no circumstance under which the Patent Office could determine, for example, that conduct during the course of the proceeding was so egregious that the entire proceeding should be discontinued.

[00:22:16] Speaker 00:
There are certainly, I'm not here to say that the director could never reach that conclusion.

[00:22:21] Speaker 04:
That would not be an institute. Your position is that's not relating to the institution. It's simply a sanction.

[00:22:29] Speaker 00:
No, my position would be that if the director takes the position in her discretion or in his discretion, to vacate institution of the IPR, then this court has said, in cases like Medtronic v. Robert Bosch, that that is a decision regarding institution that is not reviewable under 314D. I want to distinguish. The director has the authority to make that determination, but this court has not been given jurisdiction under this court's precedence to review that.

[00:22:56] Speaker 04:
Even if the conduct in question is entirely post-institution...

[00:23:03] Speaker 00:
So this court said in – so Medtronic versus Robert Bosch was a case like that. That was a case where after institution, there was consideration of whether new evidence supported the maintenance of the IPR based on real party and interest considerations. And this court said neither the decision to deinstitute nor the decision to terminate the IPR was refutable.

[00:23:25] Speaker 05:
I don't understand how your arguments consist in Atlanta.

[00:23:30] Speaker 00:
I mean, I think Atlantis said a termination decision on remand was not appealable because it was a reconsideration of a decision on institute.

[00:23:37] Speaker 05:
If it were the result of a pure sanctions decision, it suggests that it would be appealable.

[00:23:43] Speaker 00:
I mean, I think if you had a situation where the decision to terminate was distinct from all the considerations that went into the decision on institution, maybe that's what Atlanta was thinking about. But in this situation, VLSI's advocacy throughout to the director was, you should vacate the institution of this IPR. It should never have been instituted. That's 1788.

[00:24:07] Speaker 00:
Institution decisions premised on abusive petitions should be vacated. It's 1781. The director should repudiate the institution by terminating the IPR and vacating institution and joinder. That's 1790. That's how the director consistently said she was considering the request, was as a review of institution.

[00:24:24] UNKNOWN:
127, 136, 137.

[00:24:25] Speaker 00:
She constantly says she is reviewing the institution decision. And indeed, the compelling merits analysis which is what both the board and the director considered, is an institution-related consideration. It's something that the board considers at the beginning in order to determine whether to institute. And then in this case, because it happened post-institution, it was simply a reconsideration of that decision. Whether it happens in the context of a sanction or not, it is still an institution decision.

[00:24:54] Speaker 03:
Does it matter if the egregious conduct occurred pre-filing or post-filing?

[00:25:01] Speaker 00:
I don't think it matters for purposes of this court's jurisdiction, because either way, what the director is doing is either is reconsidering whether the institution was proper or not. But ultimately, whether the court agrees with me or not, even if you do get to the merits of this, I think VLSI has cited no case on the merits where this court, or frankly, any appellate court, has reversed as an abuse of discretion a lower tribunal's determination of the appropriate sanction for conduct that occurred before it as being insufficiently severe.

[00:25:36] Speaker 05:
What about the memorandum?

[00:25:38] Speaker 00:
Well, the memorandum, as the discussion indicated and as the PTO's brief makes clear, simply set forth the standard for compelling merits, and that's what the director cites on page 86 of the appendix. It's the standard of how you determine whether the merits of an IPR petition are compelling or not. That's what came out of the memorandum. The director was fully entitled to adapt that to this unusual situation as the way to balance the various interests at issue.

[00:26:05] Speaker 00:
And the...

[00:26:07] Speaker 00:
You know, the director wasn't required to apply that standard at all. The director could simply have used the statutory standard and just determined, you know, reconfirmed that, in fact, the petition met the statutory standard of reasonable likelihood and then determined to address any improper conduct through a sanctions order separate and apart from letting the IPR go forward. Instead, she adopted compelling merits, which favored VLSI. It meant the petition had to surmount a higher standard in order to keep going forward. And the fact that the memorandum, which of course on its face addresses the Fintive-related situation when you have parallel litigation, the fact that it was subsequently rescinded does not suggest that it was somehow retroactively improper to use that as a substantive standard for evaluating the merits of this petition in reconsidering whether the institution should go forward.

[00:26:57] Speaker 03:
If your argument was correct, wouldn't the statute have to use a word like ab initio, terminate, ab initio, or somehow direct the termination back to the very stage of institutions?

[00:27:13] Speaker 03:
I mean, when you terminate, you stop something that's already in process.

[00:27:19] Speaker 00:
And that's exactly what this court confronted in Medtronic v. Robert Bosch. And this court held the board's vacator of its institution decisions and termination of the proceedings constitute decisions, plural, whether to institute IPR and are therefore final and non-appealable under 316D.

[00:27:37] Speaker 00:
I mean, an agency like a lower court, like this court, always has the authority to reconsider decisions. And a decision whether to terminate and vacate the institution is simply a reconsideration of the prior decision. That's what this court said.

[00:27:50] Speaker 03:
And Atlanta was a pure sanctions decision?

[00:27:55] Speaker 00:
Yes, it was a termination decision on remand, but this court held that it was non-appealable because it was a reconsideration of a decision to institute. Saiwi, same thing.

[00:28:04] Speaker 05:
It was a pure sanctions decision.

[00:28:06] Speaker 00:
I believe that's right. But it was still not appealable. The fact that it was a sanctions decision didn't change the fact that it was a decision on reconsideration of the institution.

[00:28:17] Speaker 00:
With respect to Joinder, that is similarly outside of this court's jurisdiction.

[00:28:24] Speaker 00:
As the Supreme Court said in Thrive, the time limitation of 315B is integral to, indeed, it's a condition on institution. So that is also not reviewable. Now, VLSI is trying to say, It's not appealing institution. It's appealing the joinder decision. But they have ultimately no objection to the fact of joinder. The only objection they have is that Intel's petition was not filed within the one-year time bar.

[00:28:49] Speaker 05:
Not quite right, because they're also arguing that there was claim preclusion.

[00:28:56] Speaker 00:
I mean, the only argument they have against the joinder of Intel's petition is is that it was contrary to the time bar, which thrives.

[00:29:08] Speaker 05:
They also argue that there was claim preclusion.

[00:29:10] Speaker 00:
Not in this case. Claim preclusion is in the next case. I'm happy to talk about that, if Your Honor wishes. But in this case, in the Open Sky case involving the 759 patent, there is no claim preclusion argument. All right. Unless the Court has other questions, we would respectfully submit that the Board's decision should be affirmed, and I'll be back to talk about the PQA appeal shortly.

[00:29:30] Speaker 02:
Okay.

[00:29:31] Speaker 00:
Thank you, Your Honor. Mr. Mayeron?

[00:29:42] Speaker 01:
Thank you, Your Honors, and may it please the Court. I want to pick up where my friend left off, and that was with the discussion of Atlanta Gas. And VLSI relies heavily on the language from Atlanta Gas talking about a pure sanctions decision. And for the reasons my friend said, this does not appear to us to be a pure sanctions decision because the sanction at issue is the vacatur of an institution decision, which is what implicates 314.

[00:30:09] Speaker 01:
But even taking Atlanta Gas at face value is If you continue on... You have to do, right? Yes.

[00:30:17] Speaker 01:
Atlanta Gas decides that the board's termination decision was multifaceted and involved a holistic evaluation of multiple considerations. And so Atlanta Gas, in that case, the court determined that the board's decision was not a pure sanctions decision. And that is the case here as well. In this case here...

[00:30:38] Speaker 01:
the director was considering other factors as well other than whether to sanction. She was considering the interests of the office, the interest of the patent system, and the effect on the economy. And she discusses the full policy balance at Appendix 84 to 87. And so even if you were to disagree that this sanctions decision is not a pure sanctions decision because it touches on institution, The director's decision here was a mixed decision like in Atlanta Gas.

[00:31:12] Speaker 01:
Another point I wanted to raise was what my friend on the other side was saying about properly filed when it comes to Joinder. If you look at the full statutory language, what the statute says is properly filed under Section 311.

[00:31:28] Speaker 01:
Section 311 does not contain the one-year time bar that Intel was subject to. It contains a time bar based on the age of a patent, that a patent has to be over a certain age to be subject to an IPR proceeding. And that, I believe, is the best understanding of Senator Kyle's statement that a petition must be timely to be properly filed. The exact statutory language is properly filed under Section 311.

[00:32:02] Speaker 01:
So the 2022 memorandum was guidance that the former director provided to the board on how to evaluate discretionary denial in the context of fintech.

[00:32:13] Speaker 05:
What use did she make of that memorandum in this case?

[00:32:16] Speaker 01:
As I think your honors recognized, she used the memorandum. She didn't use the memorandum. What she did was explain a standard that she was going to apply to when she was evaluating what course to take in this case. Because she was presented with competing interests on both sides, and the way she decided to resolve them was to say, I'm going to look back at the institution phase record, and if... The petition showed compelling merits, that is, if the evidence were unrebutted at trial, it would plainly demonstrate that at least one claim is unpatentable.

[00:32:51] Speaker 01:
I am going to permit this proceeding to continue to be maintained because of the significant interest in promoting innovation and ensuring that the office is taking a look at patents as needed.

[00:33:07] Speaker 04:
But that position of the patent office has now changed.

[00:33:12] Speaker 04:
So the As a matter of policy. Yes, as a matter of. Does that mean we need to send this back for the patent office to take a look?

[00:33:23] Speaker 01:
I don't think so because, as I said, the former director did not rely on the 2022 guidance memo that's since been rescinded. What the former director did, and she was clear about this, was she was borrowing a standard that she viewed from one context, the fintive context, to also be useful in her decision of whether to permit the proceeding to be maintained. Okay. Like counsel for Intel said, we believe these issues are unreviewable and, in any event, not an abuse of discretion.

[00:33:58] Speaker 01:
With my last few honors, if I have any other further questions, we can rest on the briefs.

[00:34:02] Speaker 05:
Okay.

[00:34:04] Speaker 05:
Thank you, Mr. Walker.

[00:34:05] Speaker 01:
Two minutes.

[00:34:12] Speaker 06:
I think the best reading is the director was relying on the memorandum. She said, conducting the compelling merits determination per the memorandum, 86, note 19, remanding to determine whether it's a compelling meritorious challenge as consistent with the memorandum, appendix 86. She said that application of the compelling merit standard best serves the competing interests here, appendix 85.

[00:34:33] Speaker 06:
I think it is more than clear that she was relying on that and the policy balance. But even if she was only relying on the definition of what is compelling, if that standard proved so unworkable that the PTO ended up rescinding it in the context from which it arose, it would need to consider whether it's unworkable in the context to which she imported that definition here. And that alone is enough to remand, especially given that the rescission notice says any decisions that rely on the memorandum are also disavowed by the agency.

[00:35:01] Speaker 06:
and that they say that the current leadership would not reach the same result.

[00:35:05] Speaker 06:
The Atlanta gas case, I think that is very different from this case.

[00:35:11] Speaker 06:
It makes clear that sanctions decisions are ordinarily reviewable, The reason it was not reviewable there is because there was an action that the PTO took, ending the IPR, that could be independently justified either by the institution authority or by sanction authority. And because institution authority was enough to sustain it, and that's unreviewable, the action was unreviewable. Even if you could review, even if you were to review the sanctions decision, it wouldn't change the result because there was an independent institution-related justification for it. We have the opposite situation.

[00:35:41] Speaker 06:
She refused to take an action that could have been justified either under institution authority or under sanctions authority. We are entitled to review her rationale for refusing to terminate under her sanctions authority. We do not need a vacature of institution. The IBM versus Intellectual Ventures case makes clear you can terminate without deinstituting Sanctions also include judgment in the trial. It's a terminating sanction that doesn't require deinstituting. We asked for termination in addition to vacature of institution. That's Appendix 1790.

[00:36:12] Speaker 06:
The procedural posture here cannot dictate review.

[00:36:17] Speaker 06:
The attorney's fees, I think, would be unreviewable if the argument were, well, it came up when she was reviewing the institution decision. And The misconduct in both cases also continued post-institution. The extortion attempts in this case, in PQA, she said the discovery violations themselves, which were all after institution, could have warranted a termination. That's Appendix 1646 in PQA. Finally, on Joinder, under Section 311, Section 311 says subject to the provisions of this chapter. That includes the one-year time limitation in 315B.

[00:36:48] Speaker 06:
Okay.

[00:36:50] Speaker 03:
So just to be clear, can you briefly state your prayer of relief? What is it that you want?

[00:36:56] Speaker 06:
At this point, we think that a remand to the PTO to reconsider the intervening policy change is probably what makes the most sense. The court could also say that it was improper to join Intel, and the PTO should therefore consider how that affects the process going forward.

[00:37:13] Speaker 03:
We can't just remand. We'd have to remand with some sort of instructions. What do you believe those instructions should be?

[00:37:19] Speaker 06:
I think at a minimum it should be what food store employees, what Panhandle Eastern says. There's an intervening policy change, and so the agency now needs to make the judgment call as to whether that policy change should apply to this case and potentially lead to a different outcome. The court should also say it was improper. You did not have authority to join Intel. Now you should consider how that affects how the OpenSky's and PQA's IPRs now proceed.

[00:37:43] Speaker 05:
Okay. I think we're out of time. Thank you.

[00:37:48] Speaker 05:
Next case, thank all counsel. That case is submitted.