Sec. People, Inc. v. Iancu

971 F.3d 1355

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

United States Court of Appeals, Federal Circuit.

Decided: August 20, 2020

Frear Stephen Schmid, San Francisco, CA, for plaintiff-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. Kelly, Thomas W. Krause, Farheena Yasmeen Rasheed, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA.

Before Lourie, Wallach, and Hughes, Circuit Judges.

Hughes, Circuit Judge.

Security People, Inc., appeals the district court's dismissal of its Administrative Procedure Act suit challenging the constitutionality of the cancellation of its patent in an inter partes review proceeding. Because Congress foreclosed the possibility of collateral APA review of inter partes review decisions by district courts, and because Security People cannot bring an APA challenge when the statutory scheme separately establishes an adequate remedy 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 retroactive application of an inter partes review (IPR) proceeding 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 People 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, 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 , ––– U.S. ––––, 138 S. Ct. 2681, 201 L.Ed.2d 1074 (2018) ; Petition for Writ of Certiorari, Sec. People, Inc. , ––– U.S. ––––, 138 S. Ct. 2681, 201 L.Ed.2d 1074 (No. 17-1443). A few months after the Supreme Court denied certiorari, Security People filed the suit from which this appeal arises in the Northern District of California.

The PTO responded to the complaint by moving to dismiss 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, rendering 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 jurisdiction. See Sec. People, Inc. v. Iancu , No. 18-cv-06180-HSG, slip op. at 4, 2019 WL 2423510 (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 review of Board decisions under the APA. Decision at 3 (citing Block v. Cmty. Nutrition Inst. , 467 U.S. 340, 351, 104 S.Ct. 2450, 81 L.Ed.2d 270 (1984) ). Because the Federal Circuit is "fully capable of providing meaningful review" of any constitutional challenges to the Board's decision, Decision at 3 (quoting Elgin v. Dep't of the Treasury , 567 U.S. 1, 10, 132 S.Ct. 2126, 183 L.Ed.2d 1 (2012) ), Security People should have "proceed[ed] exclusively through the statutory review scheme," id. (citing Elgin , 567 U.S. at 10, 132 S.Ct. 2126 ). 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 affirmance 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 administrative law.

A

We first reject Security People's argument that, because the Board purportedly lacks the authority to decide constitutional claims, constitutional questions raised by an IPR final written decision must be reviewable in district court under the APA. Even accepting as true Security People's assertion that the Board may not decide a constitutional question, this court—which Congress designated to conduct judicial review of the Board's final written decisions—can meaningfully address constitutional questions on appeal. See Elgin , 567 U.S. at 17, 132 S.Ct. 2126 (citing Thunder Basin Coal Co. v. Reich , 510 U.S. 200, 215, 114 S.Ct. 771, 127 L.Ed.2d 29 (1994) ).¹ "It is not unusual for an appellate court reviewing the decision of an administrative agency to consider a constitutional challenge to a federal statute that the agency concluded it lacked authority to decide." Id. at 18, 132 S.Ct. 2126 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 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 Security 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 factual record that neither the [administrative tribunal] (because it lacks authority to decide the legal question) nor the Federal Circuit (because it is an appellate court) can create." Elgin , 567 U.S. at 19, 132 S.Ct. 2126. The Supreme Court rejected this argument. It held that the statutory review scheme at issue in that case—the Civil Service Reform Act, which provides this court exclusive jurisdiction to review MSPB decisions—"fully accommodates an [appellant's] potential need to establish facts relevant to [its] constitutional challenge to a federal statute." Id.

The Court gave two examples of how the statutory scheme accommodated factfinding for a constitutional challenge on appeal. The Court noted that "[e]ven without factfinding 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 evidence and find facts for Federal Circuit review." Elgin , 567 U.S. at 19, 132 S.Ct. 2126 (citing 5 U.S.C. § 1204(b)(1)–(2) (empowering MSPB members, administrative law judges, and designated employees to administer oaths, examine witnesses, 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 allowing 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 issuance of subpoenas in contested cases before the PTO), 316(a)(5) (authorizing the PTO Director to promulgate regulations for discovery of relevant evidence in IPRs, including "what is otherwise necessary in the interest of justice"); 37 C.F.R. § 42.100(a) ("An inter partes review is a trial subject to the procedures set forth in ...