Friday, August 21, 2020

"Security People" loses at the CAFC

The outcome: 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. The arguments 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 noted: 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 (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. The CAFC noted: 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] statutory scheme of administrative review followed by judicial review in a federal appellate court [can] preclude[] district court jurisdiction over a plaintiff’s statutory and constitutional 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 [Security People’s] claims, we examine the [statute’s] text, structure, and purpose.” Id. at 10.


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