MSPB Grants ‘Corrective Action’ to APJ for USPTO Retaliation Following Whistleblower Activity

“Placing the Office’s finger on the scale is precisely what happens when a panel is expanded, and it is particularly concerning to learn that the practice was surreptitiously happening.” – Gene Quinn

USPTOThe Merit Systems Protection Board (MSPB) issued a decision on May 5 granting Patent Trial and Appeal Board (PTAB) Administrative Patent Judge (APJ) Michael Fitzpatrick’s request for corrective action with respect to alleged retaliatory personnel actions against him by senior management officials at the Department of Commerce and U.S. Patent and Trademark Office (USPTO).

The 131-page decision said that Fitzpatrick filed the appeal to the MSPB in 2021, following punishment for “protected whistleblowing activity as follows:

“(1) he disclosed that agency management officials secretly and illegally interfered with the inter partes review (inter partes review or IPR) process in Adidas AG v. Nike, Inc., No IPR2013-00067 (Adidas/Nike IPR) when they expanded the PTAB review panel from three to five judges after the original three-judge panel had fully decided the case and improperly delayed the issuance of the final decision without notifying the parties that the panel had been expanded; and (2) he disclosed that the United States Deputy Solicitor General had provided “erroneous” information to the United States Supreme Court on behalf of the agency during oral arguments in Oil States Energy Service, LLC v. Greene’s Energy Group, LLC (No. 16-712) (Oil States).”

The retaliatory actions taken against him, according to the MSPB decision, included:

“(1) in May 2018, USPTO Director Andrei Iancu ‘voiced a desire to USPTO management to terminate’ the appellant and the ‘threat was conveyed’ to the appellant through intermediaries; (2) in or around April 2018, management officials pressured the appellant to omit a portion of his concurring opinion in the Adidas/Nike IPR that discussed the ‘expansion on the panel’; (3) on May 30, 2018, management officials removed him from the Adidas/Nike IPR panel, reassigned his inter partes review cases to other APJs, and assigned him to ex parte appeals; and (4) on May 30, 2018, management officials issued him a verbal performance appraisal ‘using a contrived and factually erroneous negative ‘performance appraisal’ of [his] work.’”

With respect to Adidas AG v. Nike, Inc., the decision provided a detailed recap of the procedural history, which most relevantly included a decision by then-Chief APJ David Ruschke and then-Deputy Chief APJ Scott Boalick to expand the three-judge panel to include both of them after Ruschke and Boalick had reviewed the original panel’s decision upon remand from the Federal Circuit. In the original panel’s decision on remand, Fitzpatrick had authored a concurring opinion that was critical of a previous PTAB decision, Idle Free Systems, Inc. v. Bergstrom, No. IPR2012-00027 (PTAB June 11, 2013).

According to the MSPB decision, Fitzpatrick testified that “he believed CJ Ruschke and DCJ Boalick were intentionally delaying the adjudication in the Adidas/Nike IPR because they ‘did not want [his] concurring opinion’ to ‘become public’ because it was ‘critical of Idle Free, which [was] management’s preferred views regarding motions to amend.’”

Eventually, the expanded panel came to a decision, which included another concurring opinion by Fitzpatrick that detailed the delay in issuance and the panel expansion, which he alleged was not timely disclosed to the parties and not authorized by the USPTO Director or by statute. The decision went through the AIA Review Committee (ARC) and the management review committee before issuing, and Fitzpatrick was convinced to remove information that management deemed confidential, including: “the date that the panel was expanded, the identity of the additional panel members (i.e., CJ Ruschke and DCJ Boalick), the fact that the expansion prevented the original panel from entering their decision, and that the PTAB’s email communications with the parties following the issuance of Aqua Products occurred over the appellant’s objections and left the parties with the impression that the original panel had authorized the additional briefing.”

Despite his agreement to these edits, Ruschke refused to enter the opinion with any concurring opinion “identifying the date that the panel had been expanded and/or any discussion relating to the legality of the expansion.” When Fitzpatrick attempted to speak to Ruschke and then-USPTO Director Andrei Iancu about the matter, he received no response and subsequently was told that he was being “removed from every IPR panel on his docket, to include the Nike/Adidas IPR, and would only be assigned ex parte appeals moving forward.” Fitzpatrick was replaced by another APJ and the panel was “unexpanded” when Boalick and Ruschke simultaneously removed themselves.

Fitzpatrick first filed an informal grievance under the USPTO’s Administrative Grievance Procedures regarding the removal and other allegations that he failed to meet deadlines and refused to compromise with other judges. After a decision was issued, he filed a formal grievance, which was denied by Boalick, who was then Acting Chief Judge.

Among other allegations, Fitzpatrick told the MSPB that the USPTO’s actions constituted an abuse of authority under the Manual of Patent Examining Procedure (MPEP), the Whistleblower Protection Act (5 U.S.C. § 2302(b)), a violation of the Administrative Procedures Act (APA) (5 U.S.C. §§ 551–559), and a violation of the Due Process clauses of the Fifth and Fourteenth Amendments.

Fitzpatrick also supported his argument that the disclosures he made about panel explansion were reasonable by citing an excerpt of the oral argument in Oil States Energy Service, LLC v. Greene’s Energy Group, LLC. During the argument, Chief Justice Roberts asked Deputy Solicitor General Malcolm Stewart about the legality of panel expansion, to which Stewart replied in part that the composition of a panel has never changed “at the merits stage” of an IPR “when patentability was actually being determined,” which Fitzpatrick argued is erroneous. He also said that “the Chief Justice’s inquiry demonstrates that the legality of a panel expansion halfway through an IPR proceeding is arguably unauthorized and perhaps illegal.”

The MSPB agreed that Fitzpatrick proved “by preponderant evidence that he had a reasonable basis to conclude that CJ Ruschke unlawfully expanded the panel in the Adidas/Nike IPR under the circumstances of this case.” The decision said the MPEP controls and that panel expansion is only permitted under the MPEP at two times in the IPR process: initially and on request for reconsideration. “Thus, CJ Ruschke’s decision to expand the panel nine months after the Federal Circuit’s remand and only after the originally designated panel had rendered its decision exceeded the scope of his authority as provided under § 1002.02(f)(3) because the designation action did not occur initially or on a request for reconsideration as provided by the plain language of the regulation,” wrote the MSPB judge.

The decision also cited Arthrex as proof that Ruschke did not have authority to expand the panel after the original panel had already been designated.

Ultimately, the MSPB’s Initial Decision found that Fitzpatrick had proven the USPTO was in violation of 5 U.S.C. § 2302(b)(8), and that his protected whistleblower disclosure “were a contributing factor in the agency’s reassignment and performance-appraisal actions” and that he had exhausted his administrative remedies before the Office of Special Counsel. The USPTO was thus ordered to reverse the reassignment action and restore Fitzpatrick to a docket consisting exclusively of AIA cases as he had been previously assigned.

IPWatchdog has written about the practice of “panel stacking” in the past, explaining that “the APA demands decisional independence, which obviously is not happening when the Director of the USPTO can stack a panel to achieve a particular desired outcome.”

IPWatchdog Founder and CEO Gene Quinn, commenting on the MSPB decision today, said:

“At times, for example during the time Michelle Lee was Director, she would decline to intervene in cases where patent owners felt they were being harassed. The Office claimed it was inappropriate for the Director to place her finger on the scales in favor of any party. But placing the Office’s finger on the scale is precisely what happens when a panel is expanded, and it is particularly concerning to learn that the practice was surreptitiously happening. In light of this case and the revelation that PTAB leaders did not want parties to know when panels were expanded, a serious question must be asked about how often this has happened.”



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Join the Discussion

10 comments so far.

  • [Avatar for Just An Attorney]
    Just An Attorney
    May 14, 2023 07:21 am

    This is why the New Vision appeal is so important.

  • [Avatar for Anon]
    May 13, 2023 09:45 am

    Followed the Idle Free Systems link, but could not find the concurrence.

    Is it the court’s last document that has been expunged?

  • [Avatar for Josh Malone]
    Josh Malone
    May 12, 2023 10:50 am

    Michelle Lee and James “death squad” Smith’s lackeys need to be removed. Every single one of them. They have killed the U.S. patent system with their corruption and incompetence.

  • [Avatar for Josh Malone]
    Josh Malone
    May 12, 2023 10:48 am

    And Phillip Kaufman (the APJ who killed my patent so Telebrands could steal my invention…because a POSITA doesn’t know if a balloon is substantially filled with water) is caught lying about Director Iancu, saying he threatened to fire the whistleblower.

    “For her part, VCJ Gongola80 testified she is “100 percent confident [she] was not part of any conversation with the Director about” the appellant, to include “anything along the lines of a desire for USPTO management to
    terminate” him. HT-3 at 399-400 (Gongola testimony). In addition, she explained that she never told APJ Kauffman that the Director wanted to fire the appellant, adding that this is a “pretty serious statement” and that she “would
    have remembered if something like that transpired, and [she] relayed it to Mr. Kauffman.”

    “CJ Ruschke, DCJ Boalick and VCJ Weidenfeller corroborated VCJ Gongola’s testimony in part by stating that they attended the PTAB management meetings with Director Iancu and never heard him say anything that would suggest he wanted to terminate the appellant.

  • [Avatar for OMG Read the Opinion]
    OMG Read the Opinion
    May 11, 2023 08:55 pm

    Oh man, if you read the opinion, there’s misconduct, disbarrment all over it —

    1. The PTAB (seemingly as a matter of policy rather than one-off oversight or mistake) violates due process and other constitutional rights. Parties have the right to know who their decision-makers are, under the Due Process clause and the right to petition. This decision criticizes Ruschke/Boalick’s secret decisionmaking (pages 63-70) Chief APJs’ Ruschke and Boalick’s attempts to rationalize this away are deeply troubling. Star Chamber secret decision-making was one of the things we fought the Revolution over! Ruschke’s/Boalick’s explanations that they had not engaged in panel-stacking and that panel-stacking had not influenced decision-making is at best self-deception.

    2. PTAB management, apparently as a matter of policy, denies APJs their judicial independence — “bullying” is a fair word. PTAB management believes it has authority to require opinions to be written in a “certain way” (at page 74, 86-87, 93). The Gongola/Kauffman anecdote at pages 73-76 is symptomatic of a culture where bullying is so pervasive that the APJs can’t talk candidly among themselves. PTAB management considers questions about whether the PTAB is implementing court precedent accurately to be “insubordination” (pages 113-114).

    3. PTAB judges have annual performance appraisal plans (“PAP”) with four major criteria. By statute, the criteria must be objective. If a judge gets a low score on any one of the four criteria, that low score controls even if the other three are stellar. One criterion is “Supporting Mission of the Board,” and of course the “mission” is defined by PTAB management. This is not only illegally subjective, but designed to squelch independent thinking.

    4. PTAB management refuses to correct errors (the PTAB’s allocation of burden of proof before Aqua Products was obviously wrong — read the statute!). After Aqua Products set the PTAB straight, PTAB management couldn’t admit the error and pivot, instead they delayed issuing any guidance, and when it did come out it shilly-shallied. Fitzpatrick tried to steer the PTAB to follow the law, and got punished for it.

    5. Similarly, I think it’s really hard to read SAS Institute as anything other than “institute for one claim means institute for all” and that, therefore, analyzing a single claim is all that’s required. Fitzpatrick wrote that view in a concurring opinion — and got punished for it because it wasn’t PTAB management’s preferred view (page 105). Does PTAB management punish competence?

    6. Senior PTAB officials gave false information to the Solicitor General for Supreme Court oral argument, then failed to correct after it became clear that the false information was central to the Court’s deliberation. (pages 63-70, 119). My observation: Ruschke’s/Boalick’s explanation for their failure to correct is more offensive than the initial conduct — lawyers have a duty of candor to tribunals, not bare arguable truthfulness. If there’s an explanation for Ruschke’s/Boalick’s facial nonobservance of duty of candor, I don’t see it.

  • [Avatar for F22strike]
    May 11, 2023 03:13 pm

    I recently received inquiries on behalf of two individuals with technical undergraduate degrees who are interested in going to law school and becoming patent lawyers. I strongly advised both of them against pursuing a career in patent law because, with rare exceptions, U.S. patents are worthless. This is largely due to the passage of the AIA by a U.S. Congress that was, and still is, effectively bought and paid for by big-tech. It is very unlikely that in the foreseeable future Congress will sensibly limit IPRs, restore patent eligibility, reform the USPTO, and undo the disastrous anti-patent decisions of the SCOTUS. U.S. patent prosecution will decline significantly. A cadre of highly experienced patent lawyers will be involved in the cancelation of the infringed claims of the remaining formerly valuable patents until there are no bones left to pick.

  • [Avatar for George]
    May 11, 2023 02:55 pm

    The AIA is corrupt – period! Have to start over & go back to original intent of patents, which was a ‘social contract’ (for ALL Americans) but that no longer exists. Now patents are only for the powerful & wealthy! NO protections for inventors of ‘ordinary means’. None at all! The AIA was just another gift to wealthy corporations & monopolies like Apple! Independent inventors no longer stand a chance. They just go broke ‘trying’!

  • [Avatar for George]
    May 11, 2023 02:50 pm

    The USPTO is corrupt people! This is just one more proof of that! We have much more. We can prove they still have ‘secret policies’ that even Congress doesn’t know about (much less the FBI). Way past time for a full investigation of what’s going on there now. They are just cheating & defrauding most inventors, especially women inventors! This can be proven using their own data, statistics & studies. They basically admitted that in their own latest ‘diversity study’! They admitted it!

    They should now be sued for this discrimination in a massive class action! I’m taking 10’s of BILLIONS worth of discrimination & ‘RICO fraud’. I’d be happy to contribute my evidence of ‘secret policies’ at the PTO (finally admitted to me after > 12 YEARS of denials . . . on ‘breakthrough’ inventions). Luckily, they’re still trade secret, since we didn’t allow publication (and thereby access to all)! Smartest thing we ever did! Prevented China from getting them too (not that Congress seems to care)!

  • [Avatar for mike]
    May 11, 2023 02:36 pm

    More than just Fitzpatrick, what of Adidas and Nike, the parties involved in the IPR? What of everyone who owns a patent, the stakeholders involved in Oil States?

  • [Avatar for Pro Say]
    Pro Say
    May 11, 2023 02:05 pm

    Yet more confirmed-true PTAB shenanigans.

    Congress: Shut this Death Squad down. Shut. It. Down.

    It is not — and has not been — operating in the quick, easy, affordable, fair, and justice-insured manner you had intended and expected.

    Instead, it is a cancerous, toxic pox on American innovation.

    Has been from day one.

    Shut. It. Down.

    Shut the d.a.m.n. thing down.