Court Opinion

ID: 4557213
Source: CourtListenerOpinion
Date Created: 2020-08-20 16:00:34.755117+00
Date Added: 2024-06-11T09:39:00.800351
License: Public Domain

Case: 19-2118    Document: 35    Page: 1    Filed: 08/20/2020

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                SECURITY PEOPLE, INC.,
                   Plaintiff-Appellant

                            v.

     ANDREI IANCU, UNDER SECRETARY OF
   COMMERCE FOR INTELLECTUAL PROPERTY
    AND DIRECTOR OF THE UNITED STATES
   PATENT AND TRADEMARK OFFICE, UNITED
   STATES PATENT AND TRADEMARK OFFICE,
              Defendants-Appellees
             ______________________

                        2019-2118
                  ______________________

    Appeal from the United States District Court for the
 Northern District of California in No. 4:18-cv-06180-HSG,
 Judge Haywood S. Gilliam, Jr.
                  ______________________

                 Decided: August 20, 2020
                  ______________________

      FREAR STEPHEN SCHMID, San Francisco, CA, for plain-
 tiff-appellant.

     LEIF ERIC OVERVOLD, Appellate Staff, Civil Division,
 United States Department of Justice, Washington, DC, for
 defendants-appellees.   Also represented by SCOTT R.
 MCINTOSH, ETHAN P. DAVIS; DAVID L. ANDERSON, United
 States Attorney's Office, San Francisco, CA; MARY L.
Case: 19-2118     Document: 35     Page: 2    Filed: 08/20/2020

 2                              SECURITY PEOPLE, INC.   v. IANCU

 KELLY, THOMAS W. KRAUSE, FARHEENA YASMEEN RASHEED,
 Office of the Solicitor, United States Patent and Trade-
 mark Office, Alexandria, VA.
                  ______________________

     Before LOURIE, WALLACH, and HUGHES, Circuit Judges.
 HUGHES, Circuit Judge.
     Security People, Inc., appeals the district court’s dis-
 missal of its Administrative Procedure Act suit challenging
 the constitutionality of the cancellation of its patent in an
 inter partes review proceeding. Because Congress fore-
 closed the possibility of collateral APA review of inter
 partes review decisions by district courts, and because Se-
 curity People cannot bring an APA challenge when the
 statutory scheme separately establishes an adequate rem-
 edy in a court for its constitutional challenge, we affirm the
 district court’s dismissal.
                               I
     In this suit against the United States Patent and
 Trademark Office and its Director (collectively, the PTO),
 Security People seeks a declaratory judgment that the ret-
 roactive application of an inter partes review (IPR) pro-
 ceeding to cancel claims of its patent violated its
 constitutional rights, namely its Fifth Amendment due
 process right.
     Security People obtained U.S. Patent No. 6,655,180,
 “Locker Lock with Adjustable Bolt,” in 2003. After being
 sued for patent infringement, a competitor of Security Peo-
 ple petitioned for review of certain claims of the ’180 patent
 in April 2015. The Patent Trial and Appeal Board then
 instituted an IPR, see Ojmar US, LLC v. Sec. People, Inc.,
 No. IPR2015-01130, 2015 WL 6510359 (P.T.A.B. Oct. 27,
 2015), and issued a final written decision finding the sole
 instituted claim unpatentable, see Final Written Decision,
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 SECURITY PEOPLE, INC.   v. IANCU                            3

 Ojmar US, LLC v. Sec. People, Inc., No. IPR2015-01130
 (P.T.A.B. Dec. 12, 2016).
     Security People appealed the Board’s decision to this
 court, raising only issues related to the patentability of the
 ’180 patent. See Brief for Appellant at 2, Sec. People, Inc.
 v. Ojmar US, LLC, No. 2017-1385 (Fed. Cir. Mar. 16, 2017),
 ECF No. 16. We summarily affirmed the Board’s decision.
 Sec. People, Inc. v. Ojmar US, LLC, 702 F. App’x 982
 (Fed. Cir. 2017). The Supreme Court then denied Security
 People’s petition for certiorari, which also did not raise any
 constitutional arguments. Sec. People, Inc. v. Ojmar US,
 LLC, 138 S. Ct. 2681 (2018); Petition for Writ of Certiorari,
 Sec. People, Inc., 138 S. Ct. 2681 (No. 17-1443). A few
 months after the Supreme Court denied certiorari, Secu-
 rity People filed the suit from which this appeal arises in
 the Northern District of California.
     The PTO responded to the complaint by moving to dis-
 miss the suit on three grounds: (1) the district court lacked
 subject matter jurisdiction because Congress established a
 specific means for judicial review of IPR decisions, render-
 ing collateral APA suits in district court inappropriate;
 (2) Security People failed to state a claim because it is
 barred from raising arguments it could have raised in an
 earlier proceeding; and (3) Security People failed to state a
 claim because precedent renders its claim meritless.
      The district court agreed with the PTO on the first
 ground, dismissing the suit for lack of subject matter juris-
 diction. See Sec. People, Inc. v. Iancu, No. 18-cv-06180-
 HSG, slip op. at 4 (N.D. Cal. Jun. 10, 2019), ECF No. 28,
 (Decision). The court reasoned that because the America
 Invents Act (AIA)—codified in relevant part at 35 U.S.C.
 §§ 319, 141(c)—provides for “broad Federal Circuit review”
 of the Board’s final written decisions, see Decision at 3, but
 allows for review “only” in the Federal Circuit, see § 141(c),
 Congress discernibly intended to preclude district court re-
 view of Board decisions under the APA. Decision at 3
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 4                              SECURITY PEOPLE, INC.   v. IANCU

 (citing Block v. Cmty. Nutrition Inst., 467 U.S. 340, 351
 (1984)). Because the Federal Circuit is “fully capable of
 providing meaningful review” of any constitutional chal-
 lenges to the Board’s decision, Decision at 3 (quoting Elgin
 v. Dep’t of the Treasury, 567 U.S. 1, 10 (2012)), Security
 People should have “proceed[ed] exclusively through the
 statutory review scheme,” id. (citing Elgin, 567 U.S. at 10).
 The district court thus held that it lacked subject matter
 jurisdiction over Security People’s claim. Id.
     Security People timely appealed. We have jurisdiction
 under 28 U.S.C. § 1295(a)(1). We review de novo a district
 court’s dismissal of APA claims against the PTO. Odyssey
 Logistics & Tech. Corp. v. Iancu, 959 F.3d 1104, 1108
 (Fed. Cir. 2020) (citing Pregis Corp. v. Kappos, 700 F.3d
1348, 1354 (Fed. Cir. 2012)).
                               II
      Security People contends that the district court made
 two errors in holding that Security People could only raise
 its constitutional challenge in this court on direct review of
 the Board decision. First, Security People argues that the
 Board lacks authority to consider constitutional claims,
 and that it could not then assert a constitutional challenge
 for the first time on appeal because retroactivity challenges
 raise issues requiring factual resolution. Second, Security
 People argues that its as-applied challenge was not yet ripe
 until cancellation of its patent claims, which required affir-
 mance of the Board’s decision by this court, and that it had
 to exhaust those non-constitutional claims before raising
 its constitutional claims. We disagree: Security People’s
 arguments misapply fundamental concepts of administra-
 tive law.
                               A
     We first reject Security People’s argument that, be-
 cause the Board purportedly lacks the authority to decide
 constitutional claims, constitutional questions raised by an
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 SECURITY PEOPLE, INC.   v. IANCU                            5

 IPR final written decision must be reviewable in district
 court under the APA. Even accepting as true Security Peo-
 ple’s assertion that the Board may not decide a constitu-
 tional question, this court—which Congress designated to
 conduct judicial review of the Board’s final written deci-
 sions—can meaningfully address constitutional questions
 on appeal. See Elgin, 567 U.S. at 17 (citing Thunder Basin
 Coal Co. v. Reich, 510 U.S. 200, 215 (1994)). 1 “It is not un-
 usual for an appellate court reviewing the decision of an
 administrative agency to consider a constitutional chal-
 lenge to a federal statute that the agency concluded it
 lacked authority to decide.” Id. at 18 n.8; see, e.g., Briggs
 v. Merit Sys. Prot. Bd., 331 F.3d 1307, 1312 (Fed. Cir. 2003)
 (“Whether the [MSPB] should have considered Briggs’s
 constitutional arguments is an issue we need not

     1    For this reason, Security People’s exhortation of
 the dispositive value of Free Enterprise Fund is misplaced.
 In Free Enterprise Fund, the Supreme Court concluded
 that the district court retained jurisdiction over an APA
 challenge to an agency determination because the statu-
 tory scheme at issue included several provisions precluding
 “meaningful judicial review” of the party’s “constitutional
 claims” on direct appeal; the suit was “wholly collateral” to
 the agency determination; and the claims were “outside the
 agency’s expertise.” Free Enter. Fund v. Pub. Co. Acct.
 Oversight Bd., 561 U.S. 477, 489–90 (2010). Because this
 court can provide meaningful judicial review of constitu-
 tional claims arising from IPR final written decisions, that
 is not the case here. Further, Elgin expressly rejected a
 petitioner’s invocation of Free Enterprise Fund to suggest
 that the Merit Systems Protection Board could not provide
 adequate judicial review of its constitutional claims be-
 cause of the MSPB’s lack of constitutional law expertise.
 See Elgin, 567 U.S. at 15–16.
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 6                              SECURITY PEOPLE, INC.   v. IANCU

 decide. . . . [W]e may consider his arguments and decide
 the constitutionality of the Hatch Act in this appeal.”).
      The presence of disputed factual questions does not
 change that calculus. Elgin remains instructive. Like Se-
 curity People does here, the Elgin petitioners argued that
 “even if the Federal Circuit could consider their claims in
 the first instance, resolution of the claims requires a fac-
 tual record that neither the [administrative tribunal] (be-
 cause it lacks authority to decide the legal question) nor the
 Federal Circuit (because it is an appellate court) can cre-
 ate.” Elgin, 567 U.S. at 19. The Supreme Court rejected
 this argument. It held that the statutory review scheme at
 issue in that case—the Civil Service Reform Act, which pro-
 vides this court exclusive jurisdiction to review MSPB de-
 cisions—“fully accommodates an [appellant’s] potential
 need to establish facts relevant to [its] constitutional chal-
 lenge to a federal statute.” Id.
      The Court gave two examples of how the statutory
 scheme accommodated factfinding for a constitutional chal-
 lenge on appeal. The Court noted that “[e]ven without fact-
 finding capabilities, the Federal Circuit may take judicial
 notice of facts relevant to the constitutional question.” Id.
 Our authority to take judicial notice of facts remains the
 same in appeals from the PTAB as from the MSPB. See,
 e.g., L.A. Biomedical Rsch. Inst. at Harbor-UCLA Med. Ctr.
 v. Eli Lilly & Co., 849 F.3d 1049, 1061 n.6 (Fed. Cir. 2017)
 (noting that this court can properly take judicial notice of
 certain facts in an appeal from the PTAB).
     The Court then explained that—for the rare occasions
 when a constitutional claim “requires the development of
 facts beyond those that [we] may judicially notice”—“the
 [Civil Service Reform Act] empowers the MSPB to take ev-
 idence and find facts for Federal Circuit review.” Elgin,
567 U.S. at 19 (citing 5 U.S.C. § 1204(b)(1)–(2) (empower-
 ing MSPB members, administrative law judges, and desig-
 nated employees to administer oaths, examine witnesses,
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 SECURITY PEOPLE, INC.   v. IANCU                             7

 take depositions, receive evidence, issue subpoenas for both
 persons and evidence, and order depositions)). The PTAB
 has similar fact-finding authority to the MSPB, also allow-
 ing it to resolve disputed factual questions, even if it cannot
 decide the legal question for which those factual questions
 are relevant. See 35 U.S.C. §§ 24 (providing for the issu-
 ance of subpoenas in contested cases before the PTO),
 316(a)(5) (authorizing the PTO Director to promulgate reg-
 ulations for discovery of relevant evidence in IPRs, includ-
 ing “what is otherwise necessary in the interest of justice”);
 37 C.F.R. § 42.100(a) (“An inter partes review is a trial sub-
 ject to the procedures set forth in [37 C.F.R.
 §§ 42.1–42.80].”); see also 37 C.F.R. §§ 42.52 (governing the
 compulsion of testimony by the Board), 42.53 (providing
 procedures for taking both compelled and uncompelled tes-
 timony).
                                B
      Second, we disagree with Security People’s argument
 that it could only raise its constitutional challenge after
 this court had affirmed the Board’s final written decision
 and the PTO had issued a certificate canceling its patent
 claim. Security People asserts that, for the purposes of a
 Fifth Amendment due process claim, no deprivation of
 property had occurred until after the PTO issued the cer-
 tificate canceling its patent claim. This assertion misap-
 prehends the law defining when an agency action becomes
 final for judicial review. “The core question [of the finality
 of agency action] is whether the agency has completed its
 decisionmaking process, and whether the result of that pro-
 cess is one that will directly affect the parties.” Franklin
 v. Massachusetts, 505 U.S. 788, 797 (1992). The PTO’s de-
 cision-making process in an IPR is complete after issuance
 of the final written decision (or, if parties move for recon-
 sideration, after the Board issues its decision on reconsid-
 eration). The final written decision serves as the agency
 action that will directly affect the parties.
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 8                              SECURITY PEOPLE, INC.   v. IANCU

     Judicial review of the final written decision may result
 in remand of the case to the agency for correction, or even
 reversal of the agency decision. But a judicially mandated
 outcome occurring because of judicial review intrinsically
 is not agency decision-making.           See, e.g., 5 U.S.C.
 § 701(b)(1)(B) (defining “agency” to exclude “the courts of
 the United States”). And the certificate of cancellation is
 irrelevant to the finality of the agency’s action, as no
 agency decision-making is involved in deciding to issue the
 certificate. Issuing the certificate of cancellation is a non-
 discretionary formality: the PTO is statutorily compelled
 to “publish a certificate canceling any claim of the patent
 finally determined to be unpatentable” in a final written
 decision. 35 U.S.C. § 318(b).
     Nor did the doctrine of administrative exhaustion pre-
 vent Security People from raising its constitutional claims
 on direct appeal to the Federal Circuit. That doctrine “pro-
 vides that judicial relief is not available for a supposed or
 threatened injury until the prescribed administrative rem-
 edy has been exhausted.” Sunpreme Inc. v. United States,
 892 F.3d 1186, 1192 (Fed. Cir. 2018). If, as Security People
 asserts, the Board lacked authority to decide Security Peo-
 ple’s constitutional challenges, then no administrative
 remedy exists and Security People faced no obstacle to ju-
 dicial relief of its constitutional claims on direct appeal
 from the final written decision. And if the Board does have
 authority to decide Security People’s constitutional claims,
 then Security People’s failure to raise those claims before
 the Board would lead to it forfeiting those claims, not it
 gaining the ability to raise those claims in district court
 under the APA. 2 See Pers. Audio, LLC v. CBS Corp.,

     2  Further, if the Board did have authority to decide
 Security People’s constitutional claims, Security People’s
 opportunity for administrative remedy of its challenge
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 SECURITY PEOPLE, INC.   v. IANCU                             9

 946 F.3d 1348, 1351 (Fed. Cir. 2020) (explaining that “[t]he
 exclusive vehicle for bringing” “challenges to the lawful-
 ness of the Board’s final written decision,” including on
 “constitutional bases,” “is a direct appeal to this court from
 the final written decision”). 3

 ended when it declined to file a motion for reconsideration
 of the final written decision. After that, it could receive
 only judicial relief in this court from the final written deci-
 sion.
     3    Security People also appears to imply that, under
 the constitutional avoidance doctrine, it could not have
 raised constitutional challenges to the final written deci-
 sion until this court denied its statutory arguments for re-
 lief from the final written decision. This argument
 misunderstands the courts’ exercise of constitutional
 avoidance. As relevant here, constitutional avoidance im-
 parts a “principle governing the prudent exercise of [fed-
 eral courts’] jurisdiction,” Escambia Cty., Fla. v. McMillan,
 466 U.S. 48, 51 (1984)—not a limitation on the remedies an
 appellant may request from a court. If the appellant suc-
 ceeds on the merits of its non-constitutional arguments, the
 constitutional question may become moot. Ashwander v.
 Tenn. Valley Auth., 297 U.S. 288, 347 (1936) (“[I]f a case
 can be decided on either of two grounds, one involving a
 constitutional question, the other a question of statutory
 construction or general law, the Court will decide only the
 latter.”). But the possibility that a tribunal may not decide
 a constitutional claim does not absolve an appellant of its
 obligation to raise that claim when it had the opportunity
 to assert the claim before a tribunal with jurisdiction to
 provide relief. See Henderson v. United States, 568 U.S.
266, 271 (2013) (“‘[A] constitutional right,’ or a right of any
 other sort, ‘may be forfeited in criminal as well as civil
 cases by the failure to make timely assertion of the right
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 10                              SECURITY PEOPLE, INC.   v. IANCU

                               III
                                A
     More generally, we agree with the district court that
 the statutes providing for exclusive review of the Board’s
 final written decisions in this court preclude district courts
 from exercising APA jurisdiction over claims challenging
 the constitutionality of a final written decision. “[A] statu-
 tory scheme of administrative review followed by judicial
 review in a federal appellate court [can] preclude[] district
 court jurisdiction over a plaintiff’s statutory and constitu-
 tional claims” if “Congress’ intent to preclude district court
 jurisdiction [is] ‘fairly discernible in the statutory scheme.’”
 Elgin, 567 U.S. at 9–10 (quoting Thunder Basin, 510 U.S.
 at 207). “To determine whether it is ‘fairly discernible’ that
 Congress precluded district court jurisdiction over [Secu-
 rity People’s] claims, we examine the [statute’s] text, struc-
 ture, and purpose.” Id. at 10.
      The text of 35 U.S.C. § 141(c) makes evident Congress’s
 intent to preclude district court judicial review of IPR final
 written decisions. “A party to an inter partes review . . .
 who is dissatisfied with the final written decision of the Pa-
 tent Trial and Appeal Board . . . may appeal the Board’s
 decision only to the United States Court of Appeals for the
 Federal Circuit.” § 141(c) (emphasis added). In limiting
 the possible forums for judicial review to this court, § 141(c)
 provides for our exclusive review of the Board’s final writ-
 ten decisions. And § 141(c) calls for our comprehensive re-
 view of final written decisions, allowing a party to appeal
 if “dissatisfied with the final written decision.” 4

 before a tribunal having jurisdiction to determine it.’”
 (quoting United States v. Olano, 507 U.S. 725, 731 (1993))).
     4   Congress has shown that it knows how to narrow
 the scope of our review of administrative tribunals’
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 SECURITY PEOPLE, INC.   v. IANCU                            11

      The structure of the statutory scheme also reveals con-
 gressional intent to preclude district court review of IPR
 decisions. Congress carefully considered the availability of
 judicial review in the AIA, opting to foreclose all judicial
 review of certain PTAB decisions in IPRs. See Cuozzo
 Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2141 (2016) (“The
 text of [35 U.S.C. § 314(d)], along with its place in the over-
 all statutory scheme, its role alongside the [APA], the prior
 interpretation of similar patent statutes, and Congress’
 purpose in crafting inter partes review, all point in favor of
 precluding review of the Patent Office’s institution deci-
 sions.”). When it did not foreclose judicial review of Board
 decisions entirely, Congress channeled review exclusively
 to this court. Congress integrated this exclusive Federal
 Circuit review of IPR final written decisions into the intri-
 cate existing statutory structure for judicial review of
 Board decisions, which allows for judicial review in only the
 Federal Circuit or the Eastern District of Virginia. Cf. Pre-
 gis Corp. v. Kappos, 700 F.3d 1348, 1359 (Fed. Cir. 2012)
 (“The carefully balanced framework of the Patent Act spec-
 ifies a well-defined process for how, when, where, and by
 whom PTO patentability determinations may be chal-
 lenged.”); see 35 U.S.C. §§ 141, 145. “That Congress de-
 clined to include an exemption from Federal Circuit review
 for challenges to a statute’s constitutionality indicates that
 Congress intended no such exception.” Elgin, 567 U.S.
 at 13.

 decisions when it wishes to do so. See, e.g., 38 U.S.C. § 7292
 (limiting Federal Circuit review of decisions of the Court of
 Appeals for Veterans Claims to determining only “the va-
 lidity of a decision of the [Veterans Court] on a rule of law
 or of any statute or regulation . . . or any interpretation
 thereof . . . that was relied on by the [Veterans Court] in
 making the decision”).
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 12                             SECURITY PEOPLE, INC.   v. IANCU

     Like the statutory schemes in Thunder Basin and El-
 gin, the AIA “does not foreclose all judicial review of . . .
 constitutional claims, but merely directs that judicial re-
 view shall occur in the Federal Circuit,” which “is fully ca-
 pable of providing meaningful review” of the types of
 constitutional claims asserted here. Elgin, 567 U.S. at 10.
                               B
     “[T]he APA authorizes judicial review of final agency
 actions only if ‘there is no other adequate remedy in a
 court.’” Pregis, 700 F.3d at 1356 (quoting 5 U.S.C. § 704).
 The agency action here—the final written decision of an
 IPR—is reviewable by statute, but in the Federal Circuit,
 not in an APA-based collateral attack in a district court.
 And, as explained above, the judicial review afforded Secu-
 rity People in this court under 35 U.S.C. § 141(c) offers an
 adequate remedy for any meritorious constitutional claims.
 Cf. Pregis, 700 F.3d at 1360 (holding that a party aggrieved
 by the result of an inter partes reexamination had an ade-
 quate remedy in a court because it “may obtain judicial re-
 view of . . . [a reexamination] decision . . . by appealing to
 the Board and then, if necessary, to this court”).
     “When Congress enacted the APA to provide a general
 authorization for review of agency action in the district
 courts, it did not intend that general grant of jurisdiction
 to duplicate the previously established special statutory
 procedures relating to specific agencies.” Bowen v. Massa-
 chusetts, 487 U.S. 879, 903 (1988). The APA cannot furnish
 the cause of action Security People asserts here—a collat-
 eral attack on an agency decision for which it has already
 had the opportunity for comprehensive review. “Allowing
 [patentees] to collaterally attack [IPR decisions] through
 suits under the APA would destroy the Patent Act’s careful
 framework for judicial review at the behest of particular
 persons through particular procedures.” Pregis, 700 F.3d
 at 1359.
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 SECURITY PEOPLE, INC.   v. IANCU                           13

                               III
     We have considered the parties’ remaining arguments
 and find them unpersuasive. The district court’s dismissal
 of Security People’s suit is
                          AFFIRMED