US Inventor Amicus in New Vision Gaming: ‘October Effect,’ Subjective APJ Evaluations Support Due Process Argument Against PTAB

“If the PTAB system were truly just and free of perceptible bias, judging statistics at the PTAB would not systematically and significantly change based on timing within a performance evaluation year. If concern among APJs for refilling their decisional unit pipeline is not the reason for this effect, the Patent Office should come forward to explain what that reason is.” – US Inventor

On August 3, inventor advocacy group US Inventor filed an amicus brief with the U.S. Court of Appeals for the Federal Circuit in support of a due process argument raised in an appeal from the Patent Trial and Appeal Board (PTAB) by New Vision Gaming & Development. US Inventor’s brief raises two major points in support of New Vision’s contention that the financial incentive structure for administrative patent judges (APJs) destroys due process at the PTAB. First, the brief details data that proves the existence of an “October Effect,” which leads to inflated rates of petitioner-friendly PTAB trial institutions in response to the APJ performance review cycle at the USPTO. Second, the brief argues that APJ performance review criteria are inherently subjective in a way that incentivizes APJs to make pro-petitioner decisions to please supervisors who have budgetary responsibilities. Taken together, US Inventor contends that these factors would lead a reasonable person to question “whether the PTAB invalidates patents so frequently because its constituent APJs try to please their budget-minded bosses through revenue-enhancing decision making.”

APJ Performance Evaluation Cycle Creates “October Effect” in PTAB Institution Decisions

US Inventor’s brief notes that data on PTAB decisions supports arguments made by New Vision Gaming that there is too strong of a connection between APJ decisions to institute PTAB trials and financial incentives which encourage APJs to institute trials to meet productivity goals established by their supervisors at the U.S. Patent and Trademark Office (USPTO). The PTAB decisional data highlights what US Inventor calls an “October Effect” by which institution decisions made in September, the final month in the USPTO’s evaluation period for APJs, are characteristically different from decisions made in October, the first month in the next evaluation period. Data collected by US Inventor indicates that, by a factor of two, the APJs of the PTAB are issuing a higher ratio of institution decisions favorable to petitioners in October, indicating that APJs are trying to increase their decisional unit count at the beginning of the agency’s evaluation period.

The “October Effect” is underscored by the quality of trials instituted by the PTAB as determined by final decisions in those cases. In testing whether a reasonable person would question if compensation cycles for PTAB APJs affected their decision making process, the brief cites a statistic termed the “Questionable Institution Ratio,” which compares the number of instituted trials that terminated with final decisions in which at least some patent claims were not invalidated, decisions favorable to the patentee, to the number of trials with final decisions canceling and/or amending all claims, decisions favorable to the petitioner. While it’s not mentioned in the brief, such a statistic is ultimately very helpful in assessing the quality of institution decisions because petitioners must prove a reasonable likelihood of claim invalidity for APJs to institute a trial. If one month saw a higher ratio of instituted trials, a favorable petitioner outcome, that lead to final decisions which are favorable to patent owners, it stands to reason that a higher ratio of institution decisions in that month reflected questionable determinations made by APJs as to whether petitioners actually proved a reasonable likelihood of invalidity.

When comparing PTAB decisional data for the months of September and October during the six years between 2013 and 2018, the average questionable institution ratio is nearly twice as high for trials instituted in October compared to those instituted in September, when APJs have presumably already met their decisional unit goals for the year. “Relatively more Questionable Institutions happen in October,” US Inventor argues. “Relatively more patentees have to deal with trials that should never have been instituted in the first place.” Applying a standard statistical confidence interval test to the data further indicates that, with 97 percent confidence, the varying ratios of questionable institutions between September and October are not caused by random chance. US Inventor further notes that New Vision Gaming’s due process argument requires only the perception of bias and the mere existence of the October Effect’s actual skew in decisional outcomes supports this conclusion.

If the PTAB system were truly just and free of perceptible bias, judging statistics at the PTAB would not systematically and significantly change based on timing within a performance evaluation year. If concern among APJs for refilling their decisional unit pipeline is not the reason for this effect, the Patent Office should come forward to explain what that reason is.


Subjectivity in APJ Evaluation Criteria, PTAB Budget Concerns, Amplify Due Process Issues

US Inventor also contends that New Vision Gaming’s due process argument is further supported by subjectivity in the performance review criteria implemented by the USPTO for PTAB APJs. While New Vision’s appeal focuses on the production performance element, US Inventor cites USPTO APJ performance appraisal documents on the record which show that 65 percent of an APJ’s performance rating is comprised of subjective evaluation criteria: Quality (35 percent); Supporting the Mission of the Board/Leadership (10 percent); and Internal/External Stakeholder Interactions (20 percent). Quality assessments focus on whether APJ decisions and oral argument hearings have proper judicial tone, whether APJs offer “sound and helpful input” and whether they offer “frank, accurate and timely feedback” on drafts of panel decisions. Assessing an APJ’s support of the board’s mission and leadership involves determinations of whether an APJ “[s]ets a professional example for others to emulate” and whether that APJ “seek[s] constructive solutions… to achieve higher levels of performance.” Assessments of APJ interactions with stakeholders examine whether APJs address inquiries “courteously” and whether those interactions are “highly professional and appropriate to the nature of the Judge’s position, and to preserve the dignity of the Board.”

The subjectivity in APJ evaluation criteria is amplified by the budget responsibilities of the PTAB leadership conducting those performance reviews, US Inventor’s brief argues. Because APJs know that their compensation is determined in part based upon performance evaluations conducted by leadership, they’re incentivized to steer decisions, including institution decisions, in a manner friendly to petitioners. Such decisions increase the popularity of PTAB trials with petitioners, increasing agency resources through the collection of PTAB filing fees and helping PTAB leadership ensure that budgetary goals are met.

Under camouflage of subjective notions of ‘quality,’ ‘support’ and ‘courtesy,’ ‘professionalism’ and ‘dignity,’ an evaluator may bestow or withhold whatever number of performance scoring points makes the difference between an APJ bonus or no APJ bonus. Any adjudication system with those four factors will be systematically biased in favor of invalidation of patents. That is anathema to a judicial process that our Constitution guarantees to be free of bias, or even the perception of bias.

Mobility Workx Files Motion for Judicial Notice of Documents in New Vision Appeal

To date, US Inventor’s brief is the only amicus filing in New Vision Gaming’s appeal at the Federal Circuit. However, the due process arguments being raised in the case are already having an impact on other PTAB appeals. On July 30, patent owner Mobility Workx filed an opening brief  in its appeal of an inter partes review (IPR) proceeding at the PTAB brought by Unified Patents. Mobility Workx argues in its case that the PTAB’s organization, decision making process, fee structure and APJ compensation scheme create a structural bias violating due process.

On July 31, Mobility Workx Request for Judicial Notice asking the Federal Circuit to consider the constitutional flaws identified by New Vision Gaming’s appeal. “Mobility found New Vision’s Appellant’s Opening Brief compelling and read it with both great fascination and shock,” the motion reads. “Fascinating for how good it was, and a shock for what it uncovered as a systematic due process violation that if not cured may lead some to compare the esteemed and extremely intelligent PTAB judges to meter maids in black robes who are sometimes improperly subjected to incentives to write parking tickets to finance a municipality’s budget.” Like New Vision, Mobility Workx is premising much of its due process argument on the U.S. Supreme Court’s 1927 decision in Tumey v. Ohio. The motion for judicial notice asks the Federal Circuit to take notice of a limited set of publicly available documents cited in New Vision’s appeal including the USPTO’s July 2019 Federal Register notice of proposed adjusted fees for fiscal year 2020, documents available on the USPTO’s website, USPTO records produced pursuant to a Freedom of Information Act (FOIA) request filed by US Inventor, and a Congressional Research Service report.



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Join the Discussion

3 comments so far.

  • [Avatar for Anon]
    August 8, 2020 10:29 am

    Mr. Morgan,

    I find it incredulous that you would advance a statement such as “nor any evidence for the key brief assertion that APJs get paid more for IPR institution decisions than for IPR institution denials.*

    *How is that logical since…

    Your penchant for being the IPR cheerleader clearly gets in the way of basic logic.

    A decision not to institute means that no additional work — to which more ‘points’ and thus more pay are directly dependent on — would NOT ensue.

    Your assertion of “no shortage of IPR work” is nothing but a smokescreen.

  • [Avatar for Paul F Morgan]
    Paul F Morgan
    August 8, 2020 09:55 am

    The “October Effect” of increased office actions is of course also true for ex parte examination of examinations.
    What I did not find in this amicus brief is any factual evidence that the rate of IPR institution decisions versus IPR institution denials increases then, nor any evidence for the key brief assertion that APJs get paid more for IPR institution decisions than for IPR institution denials.* That has recently been directly denied by others on the Patently-O blog.
    *How is that logical since an instituted IPR trial, final hearing and decision is far more work than a denial, and there is no shortage of IPR work for the PTAB?

  • [Avatar for Anon]
    August 7, 2020 07:54 am

    Thank you for this type of effort.