APPLE INC. v. VIDAL
Oral Argument — 01/12/2023 · Case 22-1249 · 45:13
0:00
Judge Lourie
Our next case is Apple et al. v. Catherine Vidal, Director of the Patent Office, 2022-12-49.
0:11
Good morning, Ms. Carroll.
0:13
Appellant Attorney (Catherine Carroll)
Good morning, Your Honor, and may it please the Court.
0:16
The Fintive Rule unlawfully restricts access to IPR for precisely the class of petitioners that Congress understood would have needed it the most,
0:27
that is, petitioners that have been accused in litigation of infringing questionable patents.
0:34
Now, judicial review is presumptively available to review challenges to allegedly unlawful agency rules.
0:41
So although the District Court correctly rejected the Director's standing arguments, it erred in dismissing this case under Section 314D.
0:51
That decision violates decades of settled precedent,
0:56
holding that a statute of limitations on the right to use the IPR is not in place.
0:58
A statute that precludes review of a specified agency determination does not bar review of an agency rule that governs those decisions.
1:08
And in that respect, this case, I think, is indistinguishable from the Supreme Court's decision in Bowen, which we rely on in our briefs.
1:16
Judge Taranto
That was not a non-enforcement case.
1:19
Appellant Attorney (Catherine Carroll)
Bowen was a reviewability by statute case.
1:24
Judge Taranto
I'd like you to focus more on the committed to agency discretion piece.
1:27
I agree.
1:28
I don't want to engage with whether 314D goes beyond its language in some way to make 701A1 applicable to things that are other than the individual determination.
1:44
So I guess that, for me at least, I'm very focused on the fact that this is a non-enforcement decision, and Bowen is not that.
1:50
Appellant Attorney (Catherine Carroll)
No, that's certainly correct.
1:53
Bowen, you're right, goes more to the 701A1 issue.
1:56
I think the Director...
1:58
The District Court's decision clearly contradicts Bowen and the DACA decision as to that point.
2:02
As to 701A2, the question whether this is agency action committed to discretion by law, we think we have a very strong case that that provision does not preclude review here for a few reasons.
2:17
As this Court and the Supreme Court and other courts have explained, that provision applies very narrowly only in the rare circumstances where there is no law to apply.
2:28
And I think it's helpful to consider that provision with respect to each of the counts in our complaint and why there's law to apply for each.
2:37
Judge Taranto
I see the argument about...
2:39
And it's not just no law to apply.
2:42
I think the Court has not said it's limited only to that.
2:45
There are certain categories, in particular non-enforcement action, which certainly overlap with the no law to apply.
2:51
And I do think that there's something to the notion that for your...
2:58
EPA 5UIC 553, notice and comment rulemaking argument, that that is not one of those.
3:06
And indeed, in Lincoln against Vigil, the Court reviewed the notice and comment rulemaking claim.
3:14
And the government, in fact, included a footnote in its brief that said,
3:18
we understand that's not one of the committed to agency discretion by law things because 553 supplies the law to apply.
3:26
And that's also not...
3:28
That's not a non-enforcement decision.
3:29
But what about your two substantive challenges to a rule, if that's what one wants to call it,
3:36
and I don't mean anything technical by it, that simply says we have discretion,
3:43
or rather the director says I have discretion, I delegated that discretion to the board,
3:48
and here are a list of non-exclusive considerations that will guide how you, as my delegue, will exercise the discretion.
3:58
What's the case law that you have cited for why that is...
4:04
That kind of enumeration of discretionary considerations is itself not committed to agency discretion?
4:11
Appellant Attorney (Catherine Carroll)
So I want to provide the case law and explain why we think it's on our side.
4:15
And I also want to address how the rule here operates and why we think it's within that case law,
4:22
because I think we would characterize it slightly differently than Your Honor just did.
4:27
Maybe taking that last...
4:28
Part first, sort of as the premise of the application of the cases.
4:33
The fintive rule here is not simply a list of factors that the board must consider.
4:41
I think even if that's all it were, to be clear, I think our case would be reviewable anyway.
4:46
But it goes much farther than that.
4:49
It is a list of factors combined with direction to the board about you must consider these factors.
4:56
When you find this factor, it weighs...
4:58
When you find this factor, it weighs this direction.
4:59
When you find this factor, it weighs the other direction.
5:03
And when the sum total of those factors indicate that conducting IPR would be, quote-unquote,
5:09
inefficient in light of the litigation, that leads to denial.
5:14
So to take an example, I think the board's application of the rule in the supercell institution decision,
5:21
which we cite at 16 to 17 of our opening brief, is a really good example of...
5:25
Judge Taranto
But the Supreme Court case is about non-enforcement.
5:28
You know, Heckler and Heller...
5:28
I think it's Cheney is kind of the, I don't know, the seminal one or something.
5:32
But Lincoln talks about this as...
5:35
Right.
5:35
So I think the...
5:36
Please do not...
5:38
I apologize, Your Honor.
5:40
So they say there are obvious choices about how to give priority to what agency resources should be used
5:51
and a number of other things that are absolutely traditional non-enforcement considerations
5:56
at the heart of discretion of non-enforcement.
5:58
How does this go beyond that?
6:01
Appellant Attorney (Catherine Carroll)
So I believe the Supreme Court's decisions in Heckler, in Weyerhaeuser,
6:08
this court's decision in Ray Vivant, the controlling circuit precedent in the Ninth Circuit,
6:14
and the Perez-Perez decision all cited in the briefs make clear a few key propositions that we rely on here.
6:20
One is that mere discretion, including non-enforcement discretion, doesn't suffice where the statute,
6:29
being implemented, sets clear boundaries, which is our allegation here.
6:35
And, of course, the merits are not at issue here.
6:38
Our claim on the merits is the statute prohibits the director from denying institution based on the pendency of parallel litigation.
6:48
And that provides the metric against which the court evaluates the exercise or articulation of discretion.
6:58
Just as in...
6:59
In, for example, in Weyerhaeuser, in Vivant, considering the comparable language in 325D,
7:07
where this court said even that express grant of discretion did not trigger 701A2
7:14
because there are statutory limits.
7:17
And as even Heckler recognizes, even in the non-enforcement context,
7:21
if there is a statutory constraint, that constraint is enforceable.
7:28
And I...
7:29
I guess maybe a different way to think of it.
7:32
Judge Lourie
Counsel, on justiciability as opposed to jurisdiction,
7:37
why isn't there a lack of particularity about whether your clients will be subject to this fintive rule?
7:48
I know you argued that they have in the past, but the future is speculative, isn't it?
7:55
Appellant Attorney (Catherine Carroll)
In this case, with respect, I think looking to the allegations of the complaints,
7:59
it's not speculative.
8:02
We've alleged, first of all, a clear pattern of past applications of the rule,
8:07
along with specific allegations that these plaintiffs regularly develop technologies,
8:14
that they are regularly subject to infringement claims and litigation,
8:18
that they routinely file IPR petitions in that context,
8:22
that the board is obligated by law to apply the rule to petitions filed in that context,
8:28
that there are pending petitions.
8:29
Judge Lourie
And you can raise that issue when there's a denial.
8:35
Appellant Attorney (Catherine Carroll)
The board does not entertain those arguments because it understands that it is obligated by the rule
8:43
and it cannot deviate from the rule.
8:45
And this court has also held that no appeal from a denial is available on this basis.
8:51
And so I think this is a critical point that cuts through both the standing argument
8:57
and the justiciability arguments,
8:58
which is that if this suit is precluded,
9:02
the consequence is that there is no avenue available for any rule governing institution of IPR,
9:11
not on appeal, not on mandamus, not under the APA.
9:14
You could have a new director come in who just makes a naked policy substitution.
9:21
I don't know what Congress was thinking in creating IPR.
9:25
I just think it's a bad idea.
9:27
From now on,
9:28
the board should deny all IPR petitions unless they're filed within 30 days after service of a complaint.
9:36
I think it would be quite clear that such a rule would violate the AIA.
9:41
But under the director's position, that rule would be unenforceable.
9:46
It reads Section 314D as well as the standing and other justiciability principles.
9:54
Judge Stoll
It's your position that a writ of mandamus would not be...
9:58
able to be brought to this court, and why not?
10:01
Appellant Attorney (Catherine Carroll)
So this court held in Milan that mandamus would be available to review a denial
10:06
only in the case of a colorable constitutional claim,
10:10
and the director has taken that position as well.
10:12
So that really does leave the APA as the only available route,
10:17
which is what the Supreme Court said in Quoso and Sass and adhered to in Thrive,
10:24
that 314D and the statute in general does not enable the PT,
10:28
to act outside its statutory authority.
10:31
I guess I would look at it this way.
10:33
Suppose you had a provision in the AIA that explicitly said,
10:38
the director may not deny institution based on dependency of parallel litigation.
10:44
I don't want to speak for the government,
10:47
but I would assume that they would agree that the fintive rule would be unlawful,
10:52
if that's what the statute explicitly said,
10:54
and that courts are available as they presumptively are,
10:58
in the absence of a law,
10:59
in the absence of clear and convincing contrary evidence,
11:01
to enforce the statute against the director's unlawful rule.
11:05
Judge Taranto
So what you just said scans very easily on 701A1.
11:13
But 701A2, what you just said,
11:17
would be clearly inapplicable to that,
11:20
because that would not be committed to agency discretion.
11:24
And there's a body of D.C. Circuit law,
11:26
which you did not cite,
11:28
that talked,
11:29
that talks about the kind of exception to committed to agency discretion by law,
11:34
where the statutory violation is particularly clear.
11:38
I don't really see that you're in that ballpark,
11:41
and you haven't argued that you're in that ballpark.
11:43
You're making an argument that the statutory structure,
11:47
the statutory policy,
11:48
the practicalities make this a really bad fit for this regime.
11:54
Appellant Attorney (Catherine Carroll)
So, Your Honor,
11:55
we haven't made that argument here because it goes more to the merits,
11:58
but I think it's a good argument.
11:59
But we did make that argument in our summary judgment briefing below.
12:01
I seem I'm about to cross into my rebuttal time,
12:04
but if I could provide an answer to the question.
12:08
We do think that this is effectively that same situation for a few reasons
12:13
in the text structure and context and purposes of the statute.
12:17
We have, first of all,
12:18
Section 315B that sets the one-year period,
12:22
implicitly acknowledging and permitting IPR petitions in the wake of an infringement,
12:28
assertion in court provided there timely.
12:32
We have the sort of traffic control measures in 315A,
12:37
which explicitly dictate the circumstances in which the pendency of an infringement claim
12:44
in litigation does or does not preclude IPR from going forward.
12:51
We have other provisions related to parallel proceedings before the office,
12:56
as opposed to litigation,
12:58
where Congress,
12:58
expressly conferred discretion on the director to handle parallel proceedings in his or her discretion.
13:07
Those provisions would be totally superfluous if the statute allowed something like the Fintive Rule.
13:14
So we have all of those provisions together in light of the purpose of IPR in the first place,
13:20
which is to make a more efficient,
13:24
streamlined procedure for challenging questionable patents,
13:28
which is to make a more efficient, streamlined procedure for challenging questionable patents,
13:28
which is to make a more efficient, streamlined procedure for challenging questionable patents,
13:29
available precisely when those patents have been asserted in litigation.
13:33
So we think very much, again,
13:35
this is a merits question,
13:36
and for jurisdictional justiciability purposes,
13:40
of course,
13:40
the court takes the merits as they come.
13:43
But on the merits,
13:45
we think there's a very strong case that,
13:47
in fact,
13:48
this rule does exceed the guardrails around the director's discretion in exactly the way that was true in the cases that Your Honor is referring to.
13:58
And,
13:58
granted,
13:59
the director disagrees with our reading of the statute.
14:03
And if the complaint is reinstated as it should be,
14:07
the court,
14:08
the district court will have to resolve that dispute about statutory interpretation.
14:13
Does the statute prohibit this rule or doesn't it?
14:17
But that's exactly why there is law to apply here.
14:21
And there is a metric against which to measure the director's exercise of discretion here.
14:27
This is not a case,
14:28
like this court's decision in Allman Brothers,
14:31
for instance,
14:32
which was another 701 case where the issue was that the U.S.
14:39
trade representative could accept certain trade benefits that the secretary deemed satisfactory.
14:44
The court has no way to decide whether something should or shouldn't be satisfactory to an agency.
14:51
But a court certainly has the ability to interpret a statute,
14:57
decide whether a rule,
14:58
violates the statute,
15:00
decide whether the agency engaged in reasoned decision-making as required by the APA.
15:05
And of course,
15:06
as I think Your Honor mentioned earlier,
15:08
the notice and comment claim wouldn't be subject to the 701 objection at all because agencies have no discretion not to follow those required procedures.
15:18
Judge Lourie
Unless the court has-
15:19
As you notice,
15:20
your time has expired,
15:22
but we'll give you back your rebuttal time.
15:24
Thank you.
15:24
I appreciate that.
15:25
Mr. Shaw.
15:26
Appellee Attorney (Weili J. Shaw)
May I please the court,
15:28
Waley Shaw,
15:28
for Director Vidal.
15:30
As the Supreme Court and this court have held,
15:33
Congress gave the director unreviewable discretion to deny institution of IPR.
15:38
The politically accountable director could exercise that discretion herself without any explanation based on considerations she holds only in her head.
15:49
And we would not be here today if she had done that.
15:52
However,
15:53
the director has delegated that authority to the board and the previous director in an act of transparency,
15:58
and good governance,
15:59
gave his subordinates written instructions about things they should think about when exercising his discretion,
16:06
that is,
16:06
defensive factors.
16:08
Now the plaintiffs have already come to this court multiple times,
16:12
making the same arguments that they are making now.
16:16
But this court has-
16:17
Mr. Shaw,
16:17
Judge Stoll
can I interrupt you?
16:18
I really would like to have your response to Ms. Carroll's hypothetical about what if the,
16:25
there was a statute that said,
16:27
um,
16:28
you know,
16:28
you cannot,
16:30
uh,
16:30
choose to not institute because of the,
16:33
uh,
16:33
existence of parallel district court litigation,
16:36
and then the PTO had the finted factors anyway,
16:40
so that it was a clear,
16:41
uh,
16:42
statutory violation.
16:43
Would there be judicial review and how so?
16:46
Appellee Attorney (Weili J. Shaw)
Well,
16:46
I think that if it were true that there was some clear statutory command governing the,
16:52
um,
16:53
uh,
16:54
director's discretion to deny institution,
16:56
then the case law would look completely different.
17:00
For example,
17:00
this court's decision in my land would not have held that,
17:04
uh,
17:04
mandamus is not available except for colorable constitutional claims because there are essentially
17:10
no statutory limits on,
17:12
um,
17:12
the director's discretionary denial authority.
17:15
Um,
17:15
this court and the Supreme Court have both said that,
17:18
uh,
17:19
the director can deny review for basically any reason.
17:23
Um,
17:23
in my land,
17:24
this pointed out,
17:25
uh,
17:25
in,
17:25
in my land,
17:26
uh,
17:26
this court said that the Supreme Court had determined in quoso that the,
17:30
uh,
17:30
institution decision is committed to agency discretion by law.
17:34
So I think this,
17:35
this,
17:36
uh,
17:37
this court's precedent and the Supreme Court's precedent indicate that it is not the case
17:41
that there are any clear statutory limitations on the director's denial authority,
17:46
which just goes to show how inappropriate it is,
17:50
um,
17:50
for,
17:51
uh,
17:51
the plaintiffs to come back to this court again,
17:54
um,
17:55
making the same arguments that they have,
17:56
um,
17:57
in previous cases that have been rejected,
17:59
but now doing so by a more secure,
18:02
secure,
18:02
circuitous route.
18:03
So they recognize,
18:04
um,
18:05
I'm not,
18:06
Judge Taranto
I'm not sure that that's really a fair characterization.
18:08
I mean,
18:09
maybe,
18:09
maybe in the district court to the extent that the plaintiffs were arguing,
18:14
there are statutory constraints,
18:18
um,
18:19
maybe of a less than,
18:21
um,
18:21
express and directly applicable sort,
18:24
but nevertheless enough statutory constraints that that isn't,
18:29
you may be right that that's inconsistent on the merits with the assertion,
18:33
um,
18:34
with,
18:34
with the premises of a number of our decisions and the Supreme Court's Arthrex and Closio
18:38
about discretion.
18:39
But in this court,
18:41
all they're asking for is an opportunity to argue about that.
18:45
Appellee Attorney (Weili J. Shaw)
Right.
18:46
So what they are asking,
18:47
so let's start with the district court example or,
18:50
or,
18:50
um,
18:50
let's start with,
18:51
um,
18:51
the final ring.
18:52
Judge Taranto
Just because we don't have any case,
18:55
that involves an attack on a director or otherwise PTO authoritative,
19:03
generic pronouncement about how to go about making the,
19:08
uh,
19:08
yay or nay institution decision.
19:10
All of our cases are about individual determinations,
19:13
right?
19:14
Appellee Attorney (Weili J. Shaw)
Um,
19:14
in,
19:14
in terms of,
19:15
I think you're referring to cases interpreting the preclusion and review with respect to inter-partisan review.
19:20
Judge Taranto
Do we have any cases,
19:22
um,
19:22
that involve attacks on,
19:25
on generic,
19:26
um,
19:27
director or otherwise authoritative pronouncements about the standards that will apply to the
19:34
yay or nay institution decision?
19:36
Appellee Attorney (Weili J. Shaw)
Um,
19:36
I,
19:36
I,
19:37
I certainly am not aware of any in the IPR context.
19:39
And I think there's a good reason for that because,
19:41
um,
19:43
this,
19:44
the director's decision to deny institution is akin to the enforcement discretion that
19:50
was discussed in Heckler.
19:51
And those,
19:51
um,
19:52
decisions are made,
19:53
uh,
19:54
as a matter of discretion.
19:55
They are traditionally unreviewable and are based on,
19:57
on factors that are up to the politically accountable decision makers.
20:01
Judge Taranto
Is it your position that whenever a,
20:04
um,
20:05
dis-
20:05
an individual case specific determination is committed to agency discretion,
20:10
that an agency's pronouncements about how that discretion will be exercised in the future
20:16
are thereby also committed to the agency's discretion?
20:20
Appellee Attorney (Weili J. Shaw)
I certainly don't think that it's possible to draw any sort of bright line rule,
20:24
but I think in,
20:25
in this case,
20:25
if you look at the,
20:27
uh,
20:27
design of the statutory scheme,
20:29
um,
20:29
the purposes of,
20:30
uh,
20:31
insulating the,
20:32
the denial decision from the,
20:34
the institution decision from judicial review,
20:36
um,
20:37
this court's precedents and the Supreme Court's precedents discussing,
20:40
um,
20:41
the,
20:42
uh,
20:42
the unreviewable,
20:43
unreviewability of those determinations.
20:45
I think it's clear that it would be,
20:47
so in,
20:48
Judge Taranto
in the answer you're giving right now,
20:50
yes,
20:51
I think would,
20:53
um,
20:55
require,
20:55
require you to say what about Judge Stoll's,
20:58
um,
20:59
example of a very clear,
21:03
um,
21:03
statutory constraint on the exercise of that discretion.
21:06
Appellee Attorney (Weili J. Shaw)
Well,
21:06
I,
21:07
I think that would be a very different decision.
21:09
So,
21:09
for example,
21:09
if that were the case,
21:10
I would imagine that in my land,
21:13
this court would not have said that there is no,
21:16
uh,
21:16
mandamus review for,
21:18
um,
21:19
or,
21:19
for statutory claims,
21:21
only for colorable constitutional claims.
21:23
And perhaps this court,
21:24
you know,
21:24
the Supreme Court,
21:25
would not have said that the denial decision is com,
21:27
committed to agency discretion by law.
21:29
Um,
21:30
but that is,
21:30
in fact,
21:31
what the courts have said.
21:32
Um,
21:32
and so,
21:33
uh,
21:34
so I,
21:35
I guess it's hard to sort of generalize about this,
21:37
or hard to sort of discuss this hypothetical,
21:39
because it would mean that the entire,
21:41
um,
21:42
uh,
21:42
case law,
21:43
all the case law and,
21:45
and understandings of the statute would be different.
21:47
Well,
21:47
Judge Stoll
so sit,
21:48
let's set that case law aside and say it doesn't exist,
21:50
and this is the first case before us.
21:52
What would be your answer?
21:54
Appellee Attorney (Weili J. Shaw)
Um,
21:54
hypothetical.
21:55
Yeah,
21:56
I,
21:56
I,
21:56
I guess I,
21:57
I suppose it's hard to say.
21:58
I mean,
21:58
I suppose if there were an absolutely clear statutory command and the director were clearly
22:02
violating it,
22:03
then maybe,
22:03
you know,
22:04
the mandamus review would be something that,
22:06
uh,
22:07
this court might consider,
22:08
and it would depend on how clear the statutory command would be.
22:11
Um,
22:12
and,
22:12
you know,
22:12
all of the sort of discretionary decisions that go into the grant of mandamus review.
22:17
Um,
22:18
but I,
22:18
I would,
22:19
uh,
22:19
so I think that would present a very different situation.
22:23
Um,
22:23
I,
22:24
Judge Taranto
can I ask what,
22:25
what,
22:25
um,
22:25
why is,
22:27
um,
22:27
the 553 claim,
22:30
um,
22:31
not,
22:32
um,
22:33
reviewable?
22:34
I think,
22:34
I think you mean 701 ,
22:36
701 ,
22:37
both.
22:37
Appellee Attorney (Weili J. Shaw)
I think it's clearly incompatible with the statutory scheme because,
22:41
again,
22:42
this is a scheme that allocates unreviewable discretion to the director,
22:46
allows her,
22:47
she could be making.
22:48
Judge Taranto
Why is this different from Lincoln?
22:50
In Lincoln,
22:52
the Indian Health Service had said,
22:54
we have,
22:55
under a lump sum appropriation unreviewable discretion about how to spend it.
23:01
And the Supreme Court said first,
23:03
yes,
23:03
you're,
23:04
you're quite right about that substantively unreviewable discretion because the nature
23:08
of a lump sum appropriation is we're not constraining how you spend it.
23:12
But then the Supreme Court went on to decide on the merits,
23:16
the question of whether the exercise of that discretion to cancel a particular program
23:21
and reallocate funds was in fact,
23:24
um,
23:24
subject to review for whether it needed to be done by notice and comment rulemaking.
23:29
And in a footnote in your brief,
23:31
in that case,
23:32
you said quite right.
23:33
There is,
23:33
of course,
23:34
law to apply to that decision,
23:37
namely the process for going about making the decision.
23:41
The law being specifically 553 and its standards.
23:45
You probably won that issue,
23:47
but that's a merits victory.
23:49
Appellee Attorney (Weili J. Shaw)
I think,
23:50
I think the answer is that a claim that,
23:55
that notice and comment rulemaking is required to determine what the director may consider
24:01
in exercising her unreviewable discretion to deny institution of IPR is fundamentally
24:06
incompatible with the statutory scheme.
24:09
I mean,
24:09
just imagine what,
24:10
what would happen if the director were exercising that authority herself,
24:14
which she does sometimes do,
24:16
um,
24:17
through,
24:17
uh,
24:17
director review decisions.
24:19
I mean,
24:19
the,
24:20
the,
24:20
I mean,
24:20
would she have to sort of,
24:23
would she be required if she,
24:25
has some considerations that she thinks about in her head,
24:28
um,
24:28
and she intends to consistently apply across cases,
24:31
would she be required to then solicit notice and comment?
24:33
I mean,
24:34
this type of claim.
24:36
Well,
24:36
what's the,
24:36
Judge Taranto
what's distinctive here is that the issuance,
24:40
this presidential opinion binds her 250
24:46
delegies in their exercise of the delegated authority.
24:49
So this is not just,
24:50
um,
24:51
in an individual decision maker set.
24:53
It's a binding,
24:56
proclamation.
24:56
I'm just trying to avoid APA words here.
24:59
Right.
24:59
Um,
25:00
that governs,
25:01
um,
25:02
her delegies,
25:04
uh,
25:04
exercise of authority.
25:06
Appellee Attorney (Weili J. Shaw)
And she is plainly permitted to,
25:08
um,
25:08
instruct her,
25:09
her subordinates as to how to exercise her destructs discretion.
25:13
She can issue a memo.
25:15
She can designate a presidential decision.
25:17
She can undertake,
25:18
she can review,
25:20
uh,
25:20
she has the authority to review institutions decisions herself.
25:24
Um,
25:24
and so she has a range of methods by which she can exercise her management authority
25:29
over the board.
25:30
Um,
25:30
it,
25:30
the board's exercise of her discretion.
25:33
Um,
25:34
and so the,
25:35
the idea that her choice among these methods could be
25:37
dictated,
25:39
um,
25:39
particularly when she could have exercised the discretion herself,
25:41
I think is just incompatible with the statutory scheme.
25:44
I would just,
25:45
Judge Stoll
can I just make sure I understand you're saying her discretion is so vast
25:49
that even the procedure under which she should be making them exercising that discretion,
25:54
um,
25:55
uh,
25:55
outside of,
25:56
uh,
25:57
appellate,
25:57
uh,
25:57
court review.
25:59
Is that what you're saying?
26:00
Appellee Attorney (Weili J. Shaw)
I think,
26:01
I think it is clear in the statutory scheme that the director has the ability to deny,
26:07
uh,
26:08
deny institution for any constitutionally permissible reason.
26:11
And I think efforts by the courts to dictate,
26:17
um,
26:17
to the director,
26:18
what factors she may or may not consider and exercise procedure.
26:22
Judge Stoll
Let's set aside the factor.
26:23
You're talking about merits now.
26:25
I'm going back to Judge Toronto's questions about the procedure and the notice and comment rulemaking.
26:30
So I'm trying to understand,
26:31
I thought I was repeating back to you what I understood you to be saying.
26:35
So could you focus just on the notice and comment rulemaking?
26:37
Appellee Attorney (Weili J. Shaw)
I think that's,
26:38
I think that,
26:39
I think that is correct that it would intrude on the director's ability to exercise the unreviewable discretion granted to her by statute that Congress intended for her to be able to have.
26:52
Um,
26:52
Judge Stoll
even,
26:53
even for her to be able to determine,
26:55
not just what the factors are,
26:57
but unfettered abilities on how she's going to determine.
27:00
Appellee Attorney (Weili J. Shaw)
I,
27:01
you know,
27:01
I,
27:01
I,
27:02
you know,
27:02
perhaps there's some,
27:03
I,
27:03
I don't know if there's some way of procedural way of exercising her authority that would be so outside the bounds of constitutional permissibility that there would be a claim there.
27:13
But certainly the,
27:14
the,
27:14
the,
27:14
this type of claim that,
27:16
you know,
27:16
she has to set out her factors by notice and comment rulemaking is not consistent with,
27:21
with the statute.
27:22
Um,
27:22
I,
27:22
I,
27:23
I also want to sort of turn to the idea that this is the,
27:26
the,
27:27
the factors are binding or that dictate results in particular cases.
27:32
And I think that is maybe do very different things.
27:36
Judge Taranto
And in fact,
27:36
they are obviously very different things.
27:38
Yeah,
27:38
I,
27:39
I think that's right.
27:39
Is binding to consider the factors with,
27:42
um,
27:42
you know,
27:43
some arrows attached to the factors.
27:45
Yeah,
27:45
Appellee Attorney (Weili J. Shaw)
I,
27:45
I think that's exactly right.
27:46
Um,
27:47
and,
27:47
and the,
27:48
the,
27:49
furthermore,
27:49
the idea that plaintiffs can be sure of how,
27:52
um,
27:52
these factors are going to be applied is,
27:54
um,
27:55
entirely speculative.
27:56
I would just point out that on,
27:57
um,
27:58
pages three and four of their reply brief plaintiff site,
28:01
um,
28:02
I think five pending IPR petitions or that were pending at the time the reply brief was
28:07
written.
28:07
Now,
28:08
um,
28:08
I,
28:08
I looked into some of those or I looked into the ones that are standing now.
28:12
Uh,
28:14
yes,
28:14
but I think this,
28:15
this also speaks to a broader question of sort of the,
28:19
the,
28:19
um,
28:20
speculative nature of,
28:21
uh,
28:23
plaintiff's efforts to,
28:24
um,
28:26
indicate how you're,
28:27
you're right on.
28:28
I mean,
28:28
I think this,
28:29
this,
28:29
this answer mostly goes to standing,
28:30
um,
28:32
out of those decisions,
28:33
every single one has already an institution decision has been made in each one of those
28:38
cases.
28:39
And in none of those cases did the,
28:42
uh,
28:42
the,
28:43
the board rely on the fintive factors.
28:45
There was always some other basis,
28:47
um,
28:48
for the decision.
28:49
Um,
28:50
and so the idea that the fintive factors are,
28:52
are,
28:52
are certainly going to cause farm to them,
28:54
um,
28:55
is,
28:55
I,
28:55
I think again,
28:56
entirely speculative and not sufficient to support standing.
28:59
And I think that goes broadly,
29:01
that goes to sort of a more general problem with,
29:04
um,
29:05
the plaintiff's case,
29:06
which is that it's absolutely clear that they cannot,
29:09
uh,
29:10
on review of a final written,
29:11
they cannot attack a decision applying the fintive factors in a particular case.
29:17
And so what it,
29:19
at least in that case,
29:20
it would be clear for standing,
29:21
standing purposes,
29:22
um,
29:23
you know,
29:24
what,
29:24
whether the fintive factors will be applied and what the potential effects of
29:28
the decision are,
29:28
but they can't do that because Congress has made the judgment that that review
29:32
is not allowed.
29:33
Now,
29:34
what they want to do is shift to an earlier point in the process when it's
29:40
still very unclear whether the factors will be applied to them or not.
29:45
And in that,
29:46
that's where they run up against the standing problem.
29:48
So by trying to,
29:49
to sort of shift away from attacking,
29:51
attacking individual decisions and relying on their injuries from particular,
29:55
uh,
29:56
denials of IPR and trying to sort of attack the scheme as a whole,
30:01
you know,
30:01
they are changing their problem from,
30:03
um,
30:04
the preclusion review problem to a standing problem.
30:08
Granted,
30:09
you know,
30:10
I,
30:10
we contend that preclusion and review governs in every,
30:14
uh,
30:14
the statutory preclusion and review governs both types of claims.
30:18
But according to them,
30:19
if we,
30:19
even if you accept their preclusion,
30:21
a review argument,
30:21
um,
30:22
they still face the standing argument upfront.
30:24
And that's something that they can't get around because,
30:27
um,
30:28
Congress has precluded them.
30:29
Judge Taranto
You can help me understand this a little bit more precisely.
30:31
I,
30:32
I,
30:32
at least coming in the way I was thinking about this,
30:35
that,
30:35
um,
30:36
just focus on Apple.
30:37
It's not clear to me.
30:38
This is true of all five plaintiffs,
30:40
but,
30:40
um,
30:41
Apple has been the,
30:43
a defendant,
30:43
patent infringement defendant in a vast number of suits continuing.
30:49
As far as we know,
30:50
it has been an IPR petitioner in a vast number of,
30:54
uh,
30:54
matters.
30:55
Um,
30:57
why is it unduly speculative that,
31:05
um,
31:06
particularly maybe,
31:07
maybe this is irrelevant,
31:08
maybe this is unnecessary,
31:09
but particularly in light of at least there being some numbers of fintive based,
31:15
um,
31:16
denials of institution that Apple would be,
31:20
uh,
31:20
adversely affected,
31:21
even though sitting here today,
31:24
it cannot almost by definition,
31:26
identify the particular instance.
31:29
Why is that not enough for standing?
31:32
Appellee Attorney (Weili J. Shaw)
Yeah.
31:32
So,
31:32
um,
31:33
first,
31:33
um,
31:34
I have at least two responses that I'd like to get out.
31:36
The first is just that,
31:37
that the probability is not as high as they say,
31:40
especially since the,
31:41
the fintive factors are,
31:43
um,
31:44
while they,
31:44
they,
31:45
the factors themselves remain the same.
31:46
The director has in the exercise of her politically accountable discretion,
31:50
um,
31:51
you know,
31:51
clarify the application of the fintive factors in particular cases.
31:55
So for example,
31:55
now a compelling showing of success on a compelling showing of likelihood of
32:00
success on the merits,
32:02
um,
32:02
allows you to get around the fintive factors.
32:04
That is that they would not.
32:06
Judge Taranto
So,
32:06
is this moot as to the challenge to the fintive factor?
32:09
Appellee Attorney (Weili J. Shaw)
We're not contending that it's moot,
32:11
but I'm just saying that the,
32:12
the application of the factors,
32:13
um,
32:14
may depend on,
32:15
um,
32:17
for example,
32:18
interim guidance that's been issued by the director.
32:20
On director review decisions that sort of clarify how the factors should be
32:24
applied.
32:25
But,
32:25
um,
32:26
Judge Taranto
and there has not yet been an announcement about the idea floated last
32:30
spring or summer about conducting a rulemaking.
32:33
Is that right?
32:34
Um,
32:34
Appellee Attorney (Weili J. Shaw)
the,
32:34
the rulemaking,
32:35
the director has requested comments,
32:37
um,
32:37
Judge Taranto
has not yet issued comments about whether to propose.
32:41
Right.
32:41
Appellee Attorney (Weili J. Shaw)
There has not been a notice of proposed rulemaking.
32:44
That's correct.
32:44
Um,
32:45
and,
32:45
uh,
32:46
but the director has issued interim guidance about how the fintive factor
32:50
should be applied.
32:50
Should be applied.
32:51
Um,
32:52
they,
32:52
uh,
32:52
they include,
32:53
for example,
32:54
um,
32:54
the,
32:55
the,
32:55
uh,
32:56
role I indicated about compelling showing of likelihood of success on the merits.
33:02
Um,
33:02
and the,
33:04
the final point is just that the,
33:07
the idea that you can say just,
33:09
you know,
33:10
I,
33:10
um,
33:12
I expect,
33:13
you know,
33:13
because I have so many,
33:14
so much litigation going on,
33:16
I expect to be injured.
33:17
You know,
33:17
there's a high probability I will be injured in some case.
33:20
Um,
33:20
that is not the kind of showing that the Supreme Court has said is sufficient.
33:24
In the Summers case,
33:25
the plaintiff organization made this very kind of argument.
33:29
There was a regulation governing logging in national forests.
33:32
And,
33:33
um,
33:33
the,
33:33
the plaintiff organization said,
33:35
I have so many men,
33:37
you know,
33:37
I have thousands and thousands of members.
33:39
They live all over the country.
33:40
They visit national forests all the time.
33:43
So they are certain to be,
33:45
they are statistically certain to be,
33:47
uh,
33:47
impacted by this regulation.
33:49
What the Supreme Court said,
33:50
said is that is not enough.
33:52
It may,
33:52
there may be a statistical probability that some harm will occur,
33:57
but you need to be specific.
33:58
You need to say which plaintiff visiting which forest.
34:02
I don't remember.
34:02
Judge Taranto
I don't remember this,
34:03
the court's decision,
34:04
but that,
34:05
I mean,
34:06
that at least had the organizational aspect.
34:08
So it would be fair to say that it was speculative as to any individual member of the organization.
34:16
Is that right?
34:17
And here we don't have that issue.
34:18
We have just focusing,
34:20
focusing on Apple,
34:21
a single company that's been sued in hundreds.
34:25
Right.
34:25
Appellee Attorney (Weili J. Shaw)
To be sure.
34:26
Right.
34:26
We have a limited number of plaintiffs,
34:28
but they still need to be.
34:29
So,
34:29
so even beyond showing which member they need to say,
34:31
well,
34:32
what forest are you planning to visit?
34:33
When are you planning to visit it?
34:35
And what?
34:36
Judge Taranto
There's only,
34:37
I don't,
34:37
there's only one forest.
34:38
It's the PTO.
34:39
Appellee Attorney (Weili J. Shaw)
No,
34:40
but the,
34:40
the,
34:41
the,
34:41
the analogy here,
34:42
I think,
34:42
is that plaintiffs need to be able to show,
34:44
well,
34:44
I,
34:44
you know,
34:45
which IPR petitions are likely to have the,
34:48
uh,
34:48
well,
34:49
first,
34:49
you know,
34:50
they,
34:50
they need to meet the statutory minimum criteria for institution.
34:53
Then it has to be likely that the fintive factors will be applied to them.
34:57
It has to be likely that the fintive factors will actually be dispositive of
35:01
institution.
35:01
And that was the,
35:02
that was the point that I was speaking to earlier with regard to the five cases
35:06
cited in the reply brief,
35:07
in which none of those cases had the fintive factors applied to them in a
35:11
dispositive way.
35:12
Um,
35:12
Judge Stoll
and you're,
35:14
you're,
35:15
there's a part of summers that I just want to ask you about.
35:18
Um,
35:18
there is at least,
35:19
there is at least one,
35:20
uh,
35:20
particular member of the organization,
35:24
uh,
35:25
matter Rosie.
35:26
And I think it is,
35:27
um,
35:28
who said that they had repeatedly visited a particular place,
35:31
uh,
35:32
PTO,
35:33
um,
35:33
that they had imminent plans to do so again,
35:36
and that the,
35:36
they had interest in viewing the flora and fauna of the area,
35:39
and those would be harmed if the project went forward.
35:42
And in that case,
35:43
the government conceded that that was sufficient to establish article three standing.
35:48
So your characterization,
35:49
of the case troubles me because at least for somebody who,
35:52
to me sounds a little bit like some of the parties here,
35:56
uh,
35:56
that was conceded by the government and not considered.
35:59
I,
35:59
the court didn't consider that any further than what I've just said.
36:03
Appellee Attorney (Weili J. Shaw)
So first,
36:03
I,
36:03
I,
36:04
I think I was referring to sort of the second part of summer.
36:06
So if you look down from that portion of the opinion,
36:08
you'll see the discussion I was talking about,
36:10
but with regard to the particular plaintiff,
36:12
I think that plaintiff made a,
36:14
uh,
36:15
made a standing showing that the plaintiffs in this case have not made,
36:18
he said,
36:18
you know,
36:19
yes,
36:19
I am the plaintiff.
36:20
I am planning to visit this specific forest,
36:23
which is in fact subject,
36:26
you know,
36:27
has a,
36:27
uh,
36:27
logging or,
36:28
or timber project plan for it.
36:31
That is specifically covered by the regulation.
36:33
So it was absolutely clear.
36:35
Judge Stoll
Your view is that that is more concrete.
36:37
Yes,
36:37
absolutely.
36:38
Then I,
36:39
uh,
36:40
expect I'll be filing petitions and I expect that they will be done based on definitive
36:44
factors based on my experience in the past.
36:46
Right.
36:46
Appellee Attorney (Weili J. Shaw)
Just,
36:47
just a general experience.
36:48
I,
36:48
I have,
36:48
I have lots of petitions.
36:50
I,
36:51
uh,
36:51
you know,
36:51
I,
36:52
I,
36:52
based on the sheer number of petitions,
36:55
I,
36:55
I am sure as a statistical matter that I am going to be injured.
36:59
I think that is the kind of showing that is not sufficient under summers to establish
37:02
standing.
37:04
Judge Lourie
Thank you,
37:04
counsel.
37:05
I think we have your argument.
37:07
Ms.
37:07
Carroll,
37:07
you may have five minutes for a vote.
37:10
Appellant Attorney (Catherine Carroll)
Thank you,
37:11
Your Honor.
37:11
Um,
37:12
I'd like to try to make,
37:13
I think,
37:13
three points,
37:14
um,
37:15
and answer any additional questions as well.
37:18
The first thing I want,
37:19
to underscore is that we are not challenging a determination whether to institute an IPR.
37:26
We are challenging an agency rule governing that decision that we allege on the merits
37:32
does violate a clear command of the statute.
37:36
I believe Mr.
37:37
Shaw conceded that if it were sufficiently clear that that would be a reviewable contention and
37:43
the question whether or not that's in fact what this statute means is a question to be determined
37:48
by the district court on the merits.
37:50
It does not preclude reviewability.
37:53
Judge Toronto,
37:54
you asked if there are any cases out there,
37:56
whether I think in the 701A1 or the 701A2 context that say if specific decisions,
38:04
whether it's a non-enforcement decision or some other specific decision is unreviewable,
38:09
has a court ever said that makes a general rule unreviewable?
38:14
And the answer to that I'm pretty sure is no.
38:16
The director hasn't cited any such cases.
38:18
And I'm not aware of any.
38:20
And I think the reason for that is because taking that approach would work as see change
38:25
in the presumption of reviewability, which is a cornerstone of the idea that agencies
38:30
are creatures of statutes.
38:32
And when an agency, even when an agency has a broad channel of discretion,
38:37
when that discretion has guardrails around it that Congress has imposed,
38:41
we expect that the agency will comply with those limits and that courts are available
38:47
when those limits,
38:47
provide a judicially manageable standard against which to measure the exercise of discretion,
38:54
which is true here plainly with respect to the notice and comment claim,
38:58
but with respect to the other claims as well.
39:01
Mr. Shah also relied, I think, a good deal on the general statutory structure and purpose here
39:07
and the whole idea that Congress wanted this to be a hands off.
39:12
The director just gets to decide this with no limit on discretion whatsoever.
39:17
And I think it's important in that regard to bear in mind what Congress would have expected
39:22
about how the director would make rules as opposed to decide individual institution cases
39:30
and I think the additional views of the panel and Facebook
39:33
against Windy City are very helpful in this regard.
39:36
Congress authorized expressly authorized the director to make rules,
39:41
governing institution and I.P.R., and specifically how I.P.R. would relate to the
39:47
to other proceedings. That's in Section 316A4. Congress said you can make those rules, and the
39:54
way that you will make those rules is by prescribing regulations. Congress also said when you make a
40:01
specific determination in an individual case whether to institute an individual IPR, that
40:07
institution decision is unreviewable. But there is no reason to think that in doing that, Congress
40:14
would have ever thought that that would make general rules unreviewable, because Congress would
40:20
never have thought that the director would make rules by this mechanism in the first place. As the
40:26
members explained in Facebook v. Windy City, the PTO, neither the director nor the board, have
40:32
authority to make rules through adjudications.
40:35
Judge Taranto
Can I just ask you, I don't have it in front of me, but does the 316 provision about rulemaking,
40:41
or is it your, does it, or is it your view that it does?
40:44
Does it apply even when the matter would be within an exception to 553?
40:51
Appellant Attorney (Catherine Carroll)
So I believe those are perhaps separate questions. I think of 316 as a grant of authority
40:59
to promulgate regulations, and I think of Section 553 as a rule about how those regulations must
41:08
be made. And of course, the applicability of 553 turns on what particular regulations are
41:14
and what particular type of rule it is, of course. And so you could imagine, I mean,
41:19
Mr. Shaw talked about all sorts of other ways the director might have exercised discretion or
41:25
Judge Taranto
decided how discretion should be exercised. I guess I'm curious about, so in the rulemaking
41:32
part of Lincoln v. Civil, the government wins that by, on the basis of the exception to 553bA,
41:42
and Lincoln quotes Chrysler Corp.
41:44
for statements issued by an agency to advise the public prospectively of the manner in which
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the agency proposes to exercise a discretionary power. Those words have a certain resonance for
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Appellant Attorney (Catherine Carroll)
what's going on here. So respectfully, we would disagree with that, and this again goes to the
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merits of our complaint rather than reviewability up front. But as to the merits and as to that
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point, what we've argued in our, in the district court is that this is a substantive rule,
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that is subject to notice and comment requirements under the APA, because not only is it binding on
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the board, but it sort of legal, it has legal and practical consequences for regulated parties
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as well. It's not just direction to the board about how to proceed. It's direction to the
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board about how to proceed that has legal consequences for parties, and it's the same
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legal consequences that give our clients standing to bring this, to bring this complaint.
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You know, most standing arguments are generally in the form of, you know, these are the wrong
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plaintiffs, or not yet, or something along those lines. The standing argument here, I think, is
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sort of another version of the idea that the discretion the director has here is so completely
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unreviewable that no court could step in, even if an exercise of that discretion embodied in a rule
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binding on the board contradicted a clear statutory rule.
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I don't think that's correct, and I think that if this court were to endorse that theory,
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it would go quite at odds with any decision of the Supreme Court, prior decisions of this court,
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or the other regional circuits. I mean, going back to Bowen, the Supreme Court traces the
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presumption of reviewability back to Marbury v. Madison. This is not a technical innovation of
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the APA. This is a fundamental principle that agencies are expected to follow the law,
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and when they do, they're expected to follow the law.
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When they are alleged not to, and when the court has a manageable standard against which to judge
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whether the agency has violated the law, that's a reviewable complaint. We may or may not win at
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the end of the day. I think we have very good arguments that we will win as to all three of
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the claims, given the irrationality of the rule, and given the fact that it cuts off access to IPR
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in exactly the situation where Congress understood that it would be most necessary,
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and most useful. But those are Merritt's questions. As to whether this is reviewable,
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this is a bread-and-butter APA case challenging an allegedly unlawful agency rule. And these
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plaintiffs have not only—I think we're not relying on a statistical probability
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that the rule is going to be applied to us. I think of this case as closer to
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the D.C. Circuit's recent decision in Jabril, which was the terrorist watch list case that's
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discussed today. I think of this case as closer to the D.C. Circuit's recent decision in Jabril,
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where plaintiffs had a demonstrated past pattern of engaging in certain travel. They
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plausibly alleged an intention to engage in that travel again, and the Court said that was enough.
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Mr. Shaw said we can't show for certain that any specific petition would be denied. We're
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not required to show that. The standard here is substantial likelihood.
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Judge Lourie
I think we have your argument.
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Thank you so much.
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And we'll take the case under submission.
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Thank you.