Case: 19-2117 Document: 48 Page: 1 Filed: 05/05/2020
United States Court of Appeals
for the Federal Circuit
______________________
CIENA CORPORATION,
Appellant
v.
OYSTER OPTICS, LLC,
Appellee
ANDREI IANCU, UNDER SECRETARY OF
COMMERCE FOR INTELLECTUAL PROPERTY
AND DIRECTOR OF THE UNITED STATES
PATENT AND TRADEMARK OFFICE,
Intervenor
______________________
2019-2117
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2018-
00070.
______________________
NONPRECEDENTIAL ORDER ISSUED: January 28, 2020
PRECEDENTIAL ORDER ISSUED: May 5, 2020 *
* This order is being issued as a precedential order
pursuant to a request filed by the U.S. Patent and Trade-
mark Office under Fed. Cir. R. 32.1(e).
Case: 19-2117 Document: 48 Page: 2 Filed: 05/05/2020
2 CIENA CORPORATION v. OYSTER OPTICS, LLC
______________________
ON MOTION
______________________
JOSEPH PALYS, Paul Hastings LLP, Washington, DC,
for appellant. Also represented by IGOR VICTOR
TIMOFEYEV, ANDERSON TO.
WAYNE MICHAEL HELGE, Davidson Berquist Jackson &
Gowdey, LLP, McLean, VA, for appellee. Also represented
by JAMES THOMAS WILSON, ALDO NOTO.
MOLLY R. SILFEN, Office of the Solicitor, United States
Patent and Trademark Office, Alexandria, VA, for interve-
nor. Also represented by THOMAS W. KRAUSE, FARHEENA
YASMEEN RASHEED, MAUREEN DONOVAN QUELER.
______________________
Before MOORE, O’MALLEY, and STOLL, Circuit Judges.
O’MALLEY, Circuit Judge.
ORDER
Ciena Corporation (“Ciena”) moves to vacate and re-
mand for further proceedings in light of Arthrex, Inc. v.
Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019). Oys-
ter Optics, LLC (“Oyster”) and the Director of the United
States Patent and Trademark Office oppose the motion.
For the reasons explained here, the motion is DENIED.
Oyster owns U.S. Patent No. 8,913,898 (“the ’898 pa-
tent”). In 2016, Oyster filed suit in district court, alleging
that Ciena infringed several patents, including the ’898 pa-
tent. Ciena petitioned the Patent Trial and Appeal Board
(“Board”) for inter partes review of the asserted patents. At
Ciena’s request, the district court stayed the litigation. In
May 2018, the Board instituted review proceedings on the
’898 patent. After conducting proceedings, the Board
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CIENA CORPORATION v. OYSTER OPTICS, LLC 3
issued a final written decision in May 2019, concluding
that Ciena had failed to demonstrate by a preponderance
of the evidence that any of the challenged claims were un-
patentable. Ciena then filed this appeal.
Ciena argues that, under Arthrex, the Board’s decision
must be vacated and remanded for a new hearing before a
differently constituted panel because the members of the
Board panel that issued the decision were not appointed in
compliance with the Appointments Clause. The problem
with Ciena’s request is that, unlike the patent owner in Ar-
threx, Ciena requested that the Board adjudicate its peti-
tion. It, thus, affirmatively sought a ruling from the Board
members, regardless of how they were appointed. Ciena
was content to have the assigned Board judges adjudicate
its invalidity challenges until the Board ruled against it.
Under those circumstances, we find that Ciena has for-
feited its Appointments Clause challenge.
The Supreme Court cases cited by Ciena do not compel
a different conclusion. Ciena primarily relies on Commod-
ity Futures Trading Commission v. Schor, 478 U.S. 833
(1986). In that case, Schor invoked the Commodity Fu-
tures Trading Commission’s (“CFTC’s”) reparations juris-
diction by filing complaints against his broker, while the
broker filed a competing lawsuit in federal district court
against Schor. Schor moved to stay or dismiss the district
court action, arguing that the agency action would fully re-
solve and adjudicate all the rights of the parties. The bro-
ker subsequently dropped the civil suit and filed a
counterclaim at the agency. After the agency ruled against
Schor, Schor argued that the agency’s adjudication of the
counterclaim violated Article III of the Constitution.
Under those circumstances, the Court held that “Schor
indisputably waived any right he may have possessed” to
having the matter adjudicated in an Article III court. Id.
at 849. The Court explained that “Schor expressly de-
manded that [the broker] proceed on its counterclaim in the
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4 CIENA CORPORATION v. OYSTER OPTICS, LLC
reparations proceeding rather than before the District
Court.” Id. And like Ciena here, the Court explained that
Schor “was content to have the entire dispute settled in the
forum he had selected until the ALJ ruled against him on
all counts; it was only after the ALJ rendered a decision to
which he objected that Schor raised any challenge to the
CFTC’s consideration of” the counterclaim. Id.
Despite its finding of waiver, the Court nonetheless ad-
dressed whether the Executive Branch tribunal’s handling
of Schor’s claims violated Article III. It explained that it
was doing so because “[t]o the extent that [a] structural
principle [regarding the separation of powers] is implicated
in a given case,” “notions of consent and waiver cannot be
dispositive because the limitations serve institutional in-
terests that the parties cannot be expected to protect.” Id.
at 851. After assessing the potential structural issue it
identified, the Court concluded that, where a decision to in-
voke a forum is freely made by the complaining party, “sep-
aration of powers concerns are diminished.” Id. at 855.
The Court then found that Schor’s consent to having the
CFTC adjudicate the matters it put to it—particularly
while eschewing the very Article III forum to which he
claimed entitlement—was sufficient to allow the Court to
find that no structural concern regarding the integrity of
the judiciary was actually implicated. Id.
The Court again forgave waiver because of potential
structural concerns regarding separation of powers in Frey-
tag v. Commissioner, 501 U.S. 868 (1991). There, the peti-
tioners sought review in the United States Tax Court and
consented to having a special trial judge preside over their
case. On appeal, the Fifth Circuit held that the petitioners
had waived any constitutional challenge to the appoint-
ment of the special trial judge by their consent and by fail-
ing to raise the challenge in the Tax Court. Id. at 872. The
Supreme Court agreed that waiver had occurred, but none-
theless decided to take up the Appointments Clause chal-
lenge. It first agreed that Appointments Clause challenges
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CIENA CORPORATION v. OYSTER OPTICS, LLC 5
are non-jurisdictional, and thus, waivable. Id. at 878–79.
The Court noted, however, that it had included “Appoint-
ments Clause objections to judicial officers in the category
of” structural separation of powers issues it had previously
exercised its discretion to consider even if not preserved be-
low. Id. The Court concluded that “this is one of those rare
cases in which we should exercise our discretion to hear
petitioners’ challenge to the constitutional authority of the
Special Trial Judge.” Id. at 879.
Proceeding once more to scrutinize the structural ques-
tion it identified, again, the Court found that no separation
of powers concern actually was implicated. Id. at 891–92.
It based that conclusion on the fact that the Tax Court is a
“Court[] of Law[,]” exercising “its judicial power in much
the same way as the federal district courts exercise
theirs[,]” and being subject to review by the courts of ap-
peals “in the same manner and to the same extent” as dis-
trict courts. Id. at 891. Given those conclusions, the Court
found the appointment of tax court judges by the chief
judge to be constitutional because the Tax Court was “in-
dependent of the Executive and Legislative Branches.” Id.
Importantly, while the Court did consider the Appoint-
ments Clause challenge before it based on possible “struc-
tural concerns,” it did not answer the question of whether
“a party’s consent to have its case heard by a special tax
judge constitute[s] a waiver of any right to challenge the
appointment of that judge on the basis of the Appointments
Clause.” Id. at 893 (Scalia, J., concurring in part and con-
curring in the judgment). And, it did not tell us whether
lower courts must always forgive waiver where a structural
constitutional deficiency under the Appointments Clause is
alleged.
Relying on Schor and Freytag, Ciena argues that this
court must consider its objection to the authority of the
panel members who decided its case and set aside their de-
cision because structural interests justify forgiving Ciena’s
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6 CIENA CORPORATION v. OYSTER OPTICS, LLC
clear waiver. There are several problems with Ciena’s re-
quest.
First, while we agree that courts of appeals may forgive
waiver or forfeiture of claims that implicate structural con-
stitutional concerns, we do not believe we are always bound
to do so. Neither Schor nor Freytag compel such a conclu-
sion. Indeed, the Court in Freytag not only said it was ex-
ercising its “discretion” to consider the otherwise waived
constitutional challenge; it said that exercising such discre-
tion should only occur in “rare” circumstances. 501 U.S. at
879. In Arthrex, we considered the Appointments Clause
challenge presented not only because of the structural na-
ture of the challenge, but because of its importance to liti-
gants, and, importantly, because we had not considered the
question previously. Arthrex, 941 F.3d at 1326–27. We did
not say we had no choice but to consider the issue.
While the presence of a structural separation of powers
issue can justify considering a matter in the face of a clear
waiver or forfeiture, it does not compel it. In Freytag, the
Supreme Court did not say that the Fifth Circuit erred in
refusing to address the Appointments Clause challenge in
that case; it only said that it would exercise its own discre-
tion to do so. Freytag, 501 U.S. at 879. The Supreme Court
clearly explained the interaction between forfeiture and as-
sertions of structural constitutional defects in Plaut v.
Spendthrift Farm, Inc., 514 U.S. 211, 231 (1995). The
Court made clear both (1) that “the proposition that legal
defenses based upon doctrines central to the courts’ struc-
tural independence can never be waived simply does not
accord with our cases” and (2) that what follows from a con-
clusion that a structural constitutional principle has been
violated in a given case “is not that waivers of res judicata
are always impermissible, but rather that . . . waivers of
res judicata need not always be accepted.” Id. (citing
Schor, 478 U.S. at 849, 851; Freytag, 501 U.S. at 878–879;
Coleman v. Ramada Hotel Operating Co., 933 F.2d 470, 475
(7th Cir. 1991); In re Medomak Canning, 922 F.2d 895, 904
Case: 19-2117 Document: 48 Page: 7 Filed: 05/05/2020
CIENA CORPORATION v. OYSTER OPTICS, LLC 7
(1st Cir. 1990); Holloway Constr. Co. v. U.S. Dept. of Labor,
891 F.2d 1211, 1212 (6th Cir. 1989)).
Understanding that it is a discretionary decision to for-
give waivers of non-jurisdictional challenges comports with
our conclusion in Customedia Technologies, LLC v. Dish
Network Corp., 941 F.3d 1173 (Fed. Cir. 2019), where, after
Arthrex, we held that the type of constitutional challenge
at issue in both Arthrex and here is subject to forfeiture.
And it explains the many same holdings by our sister cir-
cuits post-Freytag. See, e.g., Island Creek Coal Co. v.
Wilkerson, 910 F.3d 254, 256 (6th Cir. 2018); Turner Bros.
v. Conley, 757 F. App’x 697, 699–700 (10th Cir. 2018);
NLRB v. RELCO Locomotives, Inc., 734 F.3d 764, 798 (8th
Cir. 2013). Having forgiven forfeiture in Arthrex to con-
sider a structural challenge that presented an important
case of first impression in this Circuit, we remain free to
exercise our discretion to impose standard principles of
waiver in other cases raising the same challenge. See
United States v. Booker, 543 U.S. 220, 268 (2005) (“[W]e
expect reviewing courts to apply ordinary prudential doc-
trines,” including those relating to waiver, even in cases in-
volving constitutional challenges).
Second, even if we chose to consider Ciena’s structural
challenge, its consent to the jurisdiction of the Board would
most certainly doom it. As in Schor, Ciena had a valid al-
ternative forum in which it could have challenged Oyster’s
patent claims—the district court. In district court, there
would be no question that the matter would be adjudicated
by a properly appointed judicial officer. But, like Schor,
Ciena asked the Board to address its challenge. Where the
decision to invoke a forum “is left entirely to the parties,”
“separation of powers concerns are diminished.” Schor,
478 U.S. at 855. “Leaning heavily on the importance of
Schor’s consent, the Court [in Schor] found no structural
concern implicated by the CFTC’s adjudication of the coun-
terclaims against him.” Wellness Int’l Network, Ltd. v.
Sharif, 135 S. Ct. 1932, 1943 (2015).
Case: 19-2117 Document: 48 Page: 8 Filed: 05/05/2020
8 CIENA CORPORATION v. OYSTER OPTICS, LLC
The Supreme Court has “reiterated the importance of
consent to the constitutional analysis” of separation of pow-
ers concerns on more than one occasion since Schor. Id. at
1943. In Wellness, the Court considered whether bank-
ruptcy court judges were constitutionally permitted to de-
termine claims that they are otherwise not authorized to
consider by virtue of the Supreme Court’s earlier decision
in Stern v. Marshall, 564 U.S. 462 (2011) (holding that
bankruptcy courts, as non-Article III forums, cannot issue
final decisions on state common law counterclaims). Where
the party challenging the ruling consented to adjudication
by the bankruptcy court, the Court determined that they
can; it concluded that no constitutional concerns exist
where a party consents to a particular form of adjudication.
Wellness, 135 S. Ct. at 1945 n.10, 1947; see also Peretz v.
United States, 501 U.S. 923, 932, 937 (1991) (defendant’s
consent to supervision of voir dire by Magistrate Judge—
which is otherwise unconstitutional—“significantly
changes the constitutional analysis” and negates implica-
tion of structural constitutional concerns).
In this case, Ciena not only consented to adjudication
by the Board, but it affirmatively sought to delay any con-
sideration of its patent challenges by seeking a stay of the
district court litigation initiated by Oyster. Any constitu-
tional concern regarding the appointment of the Board
judges in this case is negated by Ciena’s forfeiture.
CONCLUSION
For these reasons, we decline to take up Ciena’s Ap-
pointments Clause challenge. Its motion is DENIED.