“Gorsuch’s dissent in Thryv draws together key threads of his judicial philosophy, and in particular his concern for separation of powers and protection of courts’ Article III authority.”

In an energetic dissent in Thryv, Inc. v. Click-to-Call Tech., LP, 590 U.S. __ (Apr. 20, 2020), U.S. Supreme Court Justice Neil Gorsuch provides a compelling defense of patent rights, and he champions a patent owner’s ability to obtain judicial review of certain threshold administrative decisions from the Patent Trial and Appeal Board (PTAB). But while Justice Gorsuch’s insightful analysis is receiving accolades from many in the patent community, it failed to garner any support among his Supreme Court colleagues, save for one, Justice Sotomayor.

The Recap

As previously reported on IPWatchdog, in the proceedings leading up to this recent decision, Click-to-Call sued Thryv for patent infringement. As is common in such litigation, Thryv filed an inter partes review (IPR) petition with the PTAB, challenging the patentability of Click-to-Call’s patent. Click-to-Call responded to the petition by arguing, in part, that a previous lawsuit between the parties more than a year earlier precluded the IPR petition under 35 U.S.C. § 315(b), the so-called “one-year time bar”. In its Institution Decision, the panel of three Administrative Patent Judges (“APJs”) disagreed with Click-to-Call, finding that the previous litigation had been dismissed “without prejudice”, and thus did not trigger Section 315(b)’s time bar. In its Final Written Decision at the conclusion of the IPR proceeding, the same 3-APJ panel found that Thryv had successfully proven that Click-to-Call’s patent was unpatentable (?invalid) in view of Thryv’s asserted prior art. The panel also reiterated that the IPR proceeding was not time barred under Section 315(b).

Click-to-Call appealed the PTAB’s decision to the U.S. Court of Appeals for the Federal Circuit. With respect to the Section 315(b) time bar issue, Thryv argued that 35 U.S.C. § 314(d) prohibited the Federal Circuit from reviewing the PTAB’s threshold decision to institute the IPR proceeding, including the PTAB’s interpretation of Section 315(b). The Federal Circuit (ultimately sitting en banc) disagreed, determining that Section 314(d) only prohibited the Court’s review of issues closely related to patentability, and not to issues ancillary to patentability, such as the proper interpretation of Section 315(b)’s time bar. The Federal Circuit thus proceeded to interpret Section 315(b) as a question of law, and decided that the parties’ dismissal “without prejudice” of the previous lawsuit did not avoid the one-year time bar. Thus, because Thryv’s belated petition violated the statutory bar, the Federal Circuit reversed the PTAB, thereby saving Click-to-Call’s patent.

Thryv then appealed to the Supreme Court. Interestingly, at this stage of the litigation, on the substantive merits of patentability, the parties did not dispute that Click-to-Call’s patent was invalid. But reciprocally, on the procedural merits of the one-year time bar, the government (i.e., the DOJ supporting Thryv) did not dispute that the IPR proceeding should have been prohibited under Section 315(b), the PTAB’s contrary decision notwithstanding. Thus, the key issue for the Court to resolve was whether Section 314(d) prohibited Article III courts from any review of the Article I agency’s decision on the statutory time bar issue.

Majority Focuses on “Bad Patents”

The majority opinion, drafted by Justice Ginsburg, answered this question with an emphatic “Yes!” Quoting the Court’s decision in Cuozzo Speed Techs., LLC v. Lee, 579 U. S. __, __ (2016), the majority reasoned that “§314(d) bars review at least of mat­ters ‘closely tied to the application and interpretation of statutes related to’ the institution decision . . . .” The majority then concluded that “a §315(b) challenge easily meets that measurement.”

Part III-C of the majority opinion (interestingly not joined by Justices Thomas and Alito) will undoubtedly be cited by patent litigants and commentators for years to come. There, the Court characterizes, then consults, the purpose of the America Invents Act for interpretive guidance: “Congress, concerned about overpatenting and its diminishment of competition, sought to weed out bad patent claims effi­ciently.” Indeed, the Court interjects the term “bad patent” three times in this part of its opinion. Perhaps most revealing of the Court’s sentiments and underlying rationale is the following somewhat disquieting passage:

The agency held Click-to-Call’s patent claims invalid, and Click-to-Call does not contest that hold­ing. It resists only the agency’s institution decision, mind­ful that if the institution decision is reversed, then the agency’s work will be undone and the canceled patent claims resurrected.

Gorsuch Warns of Erosion of Article III Courts

In dissent, Justice Gorsuch begins his multi-faceted critique of the majority decision by warning that it “permits a politically guided agency to revoke an inventor’s property right in an issued patent” and “allow[s] the agency’s decision to stand immune from judicial review.” But, for Justice Gorsuch, more is at stake than merely the availability of judicial review of the PTAB’s time-bar rulings. To him, Thryv is a harbinger of the erosion of the separation of powers, and in particular, of the courts’ power under Article III of the Constitution. He lays down this marker early in his dissent, echoing Chief Justice Marshall’s famous declaration in Marbury v. Madison, 5 U.S. 137, 177 (1803) (“It is emphatically the province and duty of the judicial department to say what the law is”) when he characterizes Thryv’s argument as an “insist[ence] that Article III courts lack authority even to say what the law demands.”

In a methodical and hierarchical sequence, Gorsuch employs a series of judicial tools of statutory interpretation. He starts with the statutory text (Part II-A), something (as he has explained in his recent book) he strongly favors. See Gorsuch, A Republic, If You Can Keep It (“A Republic”) at 128-134. Then he moves to broad context and policy arguments (Part II-B), something he generally disfavors, see A Republic at 138, but which here he finds to be neutralized by equally persuasive countervailing arguments. Next in Part III, he focuses at some length on the judicial presumption favoring judicial review, established by longstanding precedents. Toward the end of this analysis, he further rejects Thryv’s arguments from statutory purpose – a form of argument that he has forcefully rejected. See A Republic at 137-142. Perhaps risking protesting too much, though, Gorsuch contrasts several interpretive tools: “The historic presumption of judicial review has never before folded before a couple stray pieces of legislative history and naked policy appeals.” Of course, “historic” doctrines will always win out over “a couple stray” items and “naked” arguments. Gorsuch concludes with an argument that the precedent relied on by Thryv is mere dicta (Part IV), and a call to overturn Oil States (Part V) – the latter being a theme he covered at length, along with the separation-of-powers themes that frame his dissent, in A Republic at 38-74. In sum, Gorsuch’s dissent in Thryv draws together key threads of his judicial philosophy, and in particular his concern for separation of powers and protection of courts’ Article III authority.

A Dire Prediction

Gorsuch’s ominous conclusions will undoubtedly raise the alarm for many in the patent community:

[T]he Court . . . carries us another step down the road of ced­ing core judicial powers to agency officials and leaving the disposition of private rights and liberties to bureaucratic mercy. . . . Inventors like Mr. DuVal just have to hope that the bureaucracy revoking their property rights will take the extra trouble of doing so in accordance with law.

Whether Gorsuch’s dire predictions will come to pass remains to be seen.