“One can fully accept that APJs are executive-branch officials and different from Article III judges yet still recognize that their adjudicative role necessitates some meaningful opportunity to raise concerns about the appearance of partiality that may be created by ownership of a party’s stock.” – Centripetal’s Mandamus Petition
Last week, cyber threat intelligence firm Centripetal Networks filed a petition with the U.S. Court of Appeals for the Federal Circuit seeking mandamus relief from the Patent Trial and Appeal Board’s (PTAB) “extraordinary departure from basic elements of due process” during inter partes review (IPR) proceedings challenging Centripetal’s patent claims. If left unremedied, Centripetal argues to the Federal Circuit that its own treatment at the hands of the PTAB “sen[ds] a message to the entire patent bar: Any attempt to hold APJs to standards comparable to those of Article III judges [will] be met with sanctions.”
Different Results on Judge’s Financial Interests in District Court and PTAB
Last June, the Federal Circuit reversed a $2.75 billion damages award to Centripetal Networks after ruling that the district court judge should have disqualified himself over his wife’s financial interest in Cisco, the defendant in the infringement action. The interest, which was only discovered after the bench trial on infringement was conducted and the judge had already drafted the final ruling, totaled roughly $4,500 in Cisco stock.
Recognizing that the outright sale of the wife’s Cisco stock as required by the divestiture rules at 28 U.S.C. § 455(f) prior to a ruling adverse to Cisco would appear motivated by the ruling, the wife’s Cisco stock was placed in a blind trust. However, the Federal Circuit ruled that Section 455(f) required complete divestiture of stock ownership, leading the appellate court to vacate the multi-billion dollar award to Centripetal with orders to remand for another trial in front of a new judge without regard for the previous rulings.
In parallel IPR proceedings at the PTAB challenging the validity of patent claims supporting the multibillion-dollar damages verdict against Cisco, Centripetal learned after the trial institution phase that APJ Brian McNamara, who voted to institute the challenge to Centripetal’s patent claims, owns up to $15,000 in Cisco stock and receives an annual profit share from law firm Foley & Lardner, which represents Cisco in lobbying efforts. In response, Centripetal filed a motion for recusal and vacatur, but APJ McNamara continued to stay in the IPR proceedings and even sat on the panel when it granted a motion to join Cisco, who was otherwise time-barred from challenging Centripetal’s patent claims through its own IPR petition.
Even Without Article III Rules, Parties Must Have Meaningful Opportunity to Address Partiality Concerns
Centripetal’s petition for mandamus relief acknowledges that APJs, Executive Branch employees tasked with adjudicatory responsibilities, are not governed by the same disqualification rules as Article III judges. However, Centripetal asserts that “[o]ne can fully accept that APJs are executive-branch officials and different from Article III judges yet still recognize that their adjudicative role necessitates some meaningful opportunity to raise concerns about the appearance of partiality that may be created by ownership of a party’s stock.” Pointing out that “even APJ McNamara apparently saw enough of an issue with his continued participation in the proceedings to withdraw,” Centripetal argued that no reasonable observer would fail to see a problem with McNamara’s “vote-first-recuse-later” behavior.
Despite the “nuanced consideration and perhaps an ounce of empathy” that the PTAB should have paid to Centripetal’s motion for recusal, the patent owner argued that it was instead met with a “chilling” response from the PTAB. In early February, the PTAB denied Centipetal’s recusal motion, finding that APJ McNamara’s Cisco holdings met de minimis exceptions to disqualification rules promulgated by the Office of Government Ethics (OGE). The PTAB dismissed Centripetal’s recusal arguments as “frivolous” and “highly inappropriate” and, shortly after the ruling, entered sanctions against Centripetal by rejecting a motion for pro hac vice admission of Centripetal’s counsel, who had signed the recusal motion.
OGE Recusal Obligations are Distinct From Criminal Safe Harbor
Centripetal’s mandamus petition notes that parties seeking mandamus typically must meet three requirements under the U.S. Supreme Court’s 2004 decision in Cheney v. U.S. District Court for the District of Columbia: no other adequate means to obtain desired relief; a clear and indisputable right to relief; and a showing that extraordinary relief is appropriate under the circumstances. However, Federal Circuit decisions following Cheney have issued mandamus without requiring satisfaction of Cheney’s requirements when “doing so is important to proper judicial administration,” Centripetal’s petition contends.
To the extent that the PTAB dismissed Centripetal’s “frivolous” arguments merely because APJ McNamara’s financial holdings in Cisco fell within a safe harbor to federal criminal liability for participating in a judicial proceeding with knowledge of a personal financial stake in the matter, “[t]hat was a clear and unmistakable legal error.” OGE recusal obligations are independent of the criminal safe harbor, Centripetal argues, and the circumstances of APJ McNamara’s Cisco stock ownership in light of decisions to institute the IPR and join Cisco “plainly raise appearance-of-partiality concerns of the first order.”
Citing to OGE rules codified at 5 CFR § 2635.502, Centripetal asserts that APJs must recuse if a financial holding would raise issues of impartiality in the mind of a reasonable person, even if the holding would not trigger federal criminal liability under 18 U.S.C. § 208(a). Within that context, the PTAB’s chastisement of Centripetal for questioning APJ McNamara’s impartiality “does not come close to dispelling the appearance concerns” created by his financial interests. “The clear message to the entire PTAB bar is that future identification of APJ financial conflicts will not be met with indulgence, but retaliation,” Centripetal’s mandamus petition contends.
Mandamus Sought to Prevent Prejudice from Tainted Final Written Decision
Centripetal concedes that the Supreme Court left open the question in Cuozzo Speed Technologies v. Lee (2016) of the appealability of PTAB institution decisions on constitutional grounds. While it was unclear whether an improper failure to recuse is appealable after the PTAB renders a final written decision this May, “[w]hat is crystal clear is that there is no further path for relief for Centripetal at the PTO,” the patent owner argued, noting that even USPTO Director Kathi Vidal herself has a Cisco conflict. Instead of waiting for a final decision that could severely prejudice Centripetal’s attempts to reinstate its multibillion-dollar damages award through the federal judiciary, Centripetal filed the mandamus petition to continue to press its recusal claim in good faith.
In arguing that mandamus was appropriate and necessary, Centripetal said that the PTAB’s refusal to address the recusal argument, “and the tongue-lashing Centripetal received for having the temerity to raise it,” is inexplicable in light of the Federal Circuit’s reversal of Centripetal’s damages award over a smaller financial interest in a party ordered to pay infringement damages. While the PTAB faulted Centripetal for a three-month delay in raising issue with APJ McNamara’s ownership of Cisco stock, Centripetal noted that this delay was attributable to the USPTO’s own efforts to keep the financial information of its APJs inaccessible to the public.
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4 comments so far. Add my comment.
Model 101March 29, 2023 02:02 am
This is bad!!!
Eileen McDermottMarch 27, 2023 10:50 pm
Sorry Joe, it’s there now.
Pro SayMarch 27, 2023 06:23 pm
Yet more PTAB shenanigans?
Worse. Malfeasance. Agency malfeasance.
Joe SmithMarch 27, 2023 02:47 pm
Any chance you can link the mandamus petition??