PTAB Chief Attempts to Explain Expanded Panel Decisions, Sovereign Immunity at PPAC

On the afternoon of Thursday, February 1st, an update on the activities of the Patent Trial and Appeal Board (PTAB) was delivered to the Patent Public Advisory Committee (PPAC) by David Ruschke, Chief Judge of the PTAB (pictured left). Among the days topics included expanded panels on PTAB trials and the issue of sovereign immunity, which has come up in trials involving state academic entities and Native American tribes.

PTAB Chief Ruschke Explains Expanded Panels

At the top of his remarks, Ruschke noted that the issue of expanded panels has been receiving attention and that the PPAC meeting was a good opportunity to explain the basis for decisions to expand panels and why such decisions were being made. “What we’re finding is, when we go out there to talk to the public, that folks are having a bit of a misconception as to what’s actually happening, when we do it, et cetera,” Ruschke said.

The authority to expand panels in PTAB trials is detailed in the PTAB’s standard operating procedure (SOP) 1, which delegates the authority to designate administrative patent judges (APJs) to panels from the Director of the U.S. Patent and Trademark Office to the PTAB’s Chief Judge, Ruschke noted. Of the four reasons to expand a panel listed in SOP 1, Ruschke stressed the first two as the primary reasons why decisions have been made to expand PTAB panels: when the America Invents Act (AIA) review involves an issue of exceptional importance; or when consideration by an expanded panel is necessary to secure and maintain uniformity of the Board’s decisions.

The PTAB collects requests and suggestions for expanded panels at an e-mail address dedicated to the topic, which the PTAB routinely monitors, Ruschke said. “The suggestion for panel expansion can be made by any judge, the judges on a merits panel, the judges on an interlocutory panel, but it can also be made by an applicant or patent owner in any ex parte appeal or in any of the AIA trial proceedings,” Ruschke said. Suggestions to expand panels are submitted in writing, must include reasons and basis for expansion and are typically made in conjunction with requests for rehearing, Ruschke noted. Although numbers on the number of times that panels have been expanded were not included in the PTAB update, Ruschke noted that they happened quite infrequently, keeping with the spirit of SOP 1, which states that “an expanded panel is not favored and ordinarily will not be used.”

One of the misconceptions which Ruschke wanted to address at PPAC was what he saw as a “confusion in nomenclature” regarding panel expansion, which members of the press and the public have sometimes referred to as “stacking” or “flipping” of panels. “As a matter of fact, there is a very small subset of cases that, when we expand, where the underlying result actually changes,” Ruschke said, noting that there have only been two such instances in the history of AIA trials at the PTAB. “The goals are to ensure the predictable and uniform application of agency policy,” Ruschke said. “We want the public to come to the PTAB and be treated the same and have an expectation of being treated the same irrespective of the panel that they see, both procedurally and substantively. That’s our goal and we can do that via panel expansion.”

Decisions to expand APJ panels in PTAB trials are often followed by designations that a decision rendered by an expanded panel is precedential. “When we expand a panel, it’s meaningful,” Ruschke said, citing last year’s precedential decision in General Plastics v. Canon as a “poster child” of panel expansion. Ruschke stated that the panel in General Plastics had been expanded on rehearing, the final decision was designated as informative, and then a period of voting by PTAB judges led to a designation that the decision was precedential. Instead of changing the underlying result, Ruschke said that typical panel expansion practice took a unanimous decision of 3-0 to a unanimous decision of 5-0 or 7-0 leading towards a designation of a decision as an informative one. Informative decisions are not binding on the entire Board but Ruschke noted that they were a sign to the public as to where the Board and the overall agency may be moving on a particular issue. PPAC member Peter Thurlow remarked that he thought panel expansion could be used more frequently, using the example of a petitioner who may have three APJs on a panel but only one is a subject matter expert, leaving a request for panel expansion as the lone recourse if the petitioner feels that more eyes are needed on the case.

What About Precedential Designation?

According to Ruschke, he has the discretion to designate a particular decision as informative, after which a two-week voting process opens to all 275 APJs of the PTAB in order to determine whether an informative decision will be made precedential. Ruschke also noted that about 14 to 16 APJs of the PTAB sat on a published cases committee, which reviews cases to make suggestions on particular decisions that should be designated as informative or precedential.

Given the PTAB’s ability to make decisions precedential, Ruschke’s argument about how important and meaningful it is to have expanded panels to ensure uniformity misses the mark. The PTAB does not designate many cases as precedential (another problem for a different day), but it is possible for a three-judge panel decision to be made precedential. In fact, there have been a number of cases that have been pronounced as precedential by the PTAB where the decision was made by a three-judge panel. These precedential three-judge panel decisions include:

1. Athena Automation Ltd. v. Huskey Injection Molding Systems Ltd.
2. Bloomberg Inc v Market-Alerts
3. Securebuy, LLC v. CardinalCommerce Corp.
4. Garmin Intl v. Cuozzo Speed Technologies, LLC
5. LG Electronics v Mondis Technology
6. Lumentum Holdings v. Capella Photonics
7. Oracle Corp v. Click-to-Call Techs LP
8. Westlake Services LLC v Credit Acceptance Corp.

Obviously, the ability of the PTAB to designate decisions by three-judge panels as precedential directly undermines Ruschke’s argument about the need for expanded panels in order to ensure uniformity. Uniformity can be achieved by other means. So why then does the PTAB have expanded panels?

In order for a decision to be labeled as “precedential” it must be approved for precedential designation by a majority of PTAB judges. Therefore, if we are to accept the statement that expanded panels are not intended to flip any particular decision, expanded panels must be for the purpose of sending a clear message as to what superiors on the PTAB think about a certain issue despite there not being enough support among the PTAB to designate those views as precedential.

For example, recent decisions by expanded PTAB panels denying the State of Minnesota the ability to assert sovereign immunity were not designated as precedential. See IPR2017-01068 and IPR2017-01186. Obviously, based on what Ruschke explained to PPAC, there was some obvious attempt to signal that these decisions are extremely important. Still, a majority of the PTAB obviously did not (or would not) agree with these decisions, preventing them from being labeled precedential. Stacking panels for the purpose of short-circuiting PTAB rules about making a decision precedential would seem to be an attempt to exert undue influence on Administrative Patent Judges (APJs) that under the Administrative Procedures Act (APA) are supposed to be impartial, independent actors that are insulated from pressure.

In any event, PPAC Chair Marylee Jenkins specifically raised a question from the public to Ruschke on whether the addition of himself or Deputy Chief Judge Scott Boalick could impact how the panel decides in the case. Ruschke noted that in the earlier days of the PTAB, when the agency had employed fewer APJs, panels would regularly include the Chief Judge or Deputy Chief Judge as a matter of course. “That’s not a new thing to have Scott and I on there so that there would be some sort of, I guess, implicit pressure to vote the way of your boss,” Ruschke said. “One thing that we’ve tried to maintain and stress to the judges is that when we sit on panels, we have a single vote. We all have a single vote… I guess I might analogize to, Chief Justice Roberts has one vote when he’s on the Supreme Court.” Again, Ruschke noted that the addition of himself or Boalick to a panel did not change the underlying opinion even in cases where dissent occurred; such cases would go from a 3-0 unanimous decision to a 3-2 decision on rehearing, upholding the original unanimous decision while introducing a dissent onto the record.

Of course, when Chief Justice Roberts casts his one vote he is casting his vote with others who have life tenure and who are not in any real way subordinates. The same is similarly true for any Federal Appellate Judge. It is very different for an Article III judge having life tenure to be treated as having only one vote among his or her equals, and quite another for an Article I judge with Administrative responsibilities to be voting alongside subordinates that do not enjoy life tenure.

And make no mistake; Administrative Patent Judges (APJs) are subordinates. Indeed, the PTAB Organizational Structure makes it clear that the Deputy Chief Judge reports to the Chief Judge, that the Vice Chief Judges report to the Deputy Chief Judge, and that the Vice-Chief Judges “each manage a division consisting of judges and patent attorneys.” Judges reporting to other judges and judges being managed by Vice-Chief Judges clearly shows a hierarchy of leadership and subordinates that is simply not present in any Article III court. With such a hierarchy in place, and the Chief, Deputy and Vice-Chief Judges all being assigned to certain cases, what are the other APJs supposed to do? Are they supposed to dissent when they are not given any credit toward their quota for dissenting? Are they supposed to dissent and disagree with their superiors? This seems to fly in the face of human nature.

Furthermore, even if the Chief Judge, Deputy Chief and Vice-Chief Judges are not trying to exert pressure to vote in a particular way, they are absolutely attempting to influence other PTAB judges not on the panel to treat a non-precedential decision as precedential when the decision has not been designated as precedential by a majority of the PTAB. That alone suggests that there is undue influence — even if unintentional — that violates the requirement of the APA that Administrative Judges be allowed to exercise full decisional independence.

Not Notifying Parties of Expanded Panel Decisions

Elsewhere on the topic of expanded panels, Ruschke confirmed that the SOPs of the PTAB do not require parties in an AIA trial to be notified when a decision to expand the panel was made. Ruschke said that there was some consideration given towards possibly changing the SOPs to allow for such notice for reasons of transparency.

Sovereign Immunity

Moving on to the topic of sovereign immunity, Ruschke noted that there was some overlap with the issue of expanded panels as there were a series of cases where panels were expanded upon the filing of a motion to dismiss on a sovereign immunity defense; those cases were expanded to include Ruschke, Boalick and two Vice Chief Judges. In cases involving state entities making a successful defense on sovereign immunity, Ruschke noted that the issue of waiver on sovereign immunity was either not present or not raised sufficiently in the case; in one case, Ruschke said that the PTAB decided on the sovereign immunity issue in the same way as the federal district court in related proceedings after the related contract case was moved from state court to federal district court. Cases where sovereign immunity defenses failed involved state entities that the PTAB found had waived their sovereign immunity by filing patent infringement proceedings in district court. Although the PTAB was currently working to build case law related to the sovereign immunity defense, Ruschke noted that there are no bright line rules and that the Board may need further guidance from the Court of Appeals for the Federal Circuit on the issue. Regarding cases in which sovereign immunity defenses have been raised by Native American tribes, Ruschke noted that the St. Regis Mohawk Tribe case was the first in which the PTAB sought amicus briefing, adding that the Board was hoping to draft an additional SOP on the subject of amicus briefing.