New USPTO Paneling Guidance for TTAB and PTAB Requires Disclosure of Financial Interests Regardless of Dollar Value

The U.S. Patent and Trademark Office (USPTO) today announced new guidance on empaneling procedures for the Patent Trial and Appeal Board (PTAB) and Trademark Trial and Appeal Board (TTAB). Under the guidance, PTAB and TTAB management will “avoid empaneling cases to judges who hold stock or bonds (publicly traded or privately held) in any of the disclosed parties or real parties in interest, regardless of the dollar value.”

The guidance does not require PTAB and TTAB judges to divest any financial interests like stocks or bonds, and it does not prohibit them from holding any financial interests. It asks all judges to “voluntarily inform their management of any companies in which they know that the judge, the judge’s spouse, or their minor children own stocks or bonds, regardless of the dollar value.” Even if they choose not to provide this information to management up front, however, they must “promptly notify” the paneling staff once they receive notice of empaneling on a particular case whether repaneling is necessary in light of the guidance.

If judges become aware of their financial interest after paneling, they should either request repaneling or confer with the USPTO’s Office of General Counsel.

The memo comes on the heels of a case involving Centripetal Networks in which 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.

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.

The guidance specifically notes:

“Nothing in this memorandum is intended to suggest that Board judges, in any past or pending cases, have not been impartial, have created an appearance of impropriety, or have otherwise violated any obligations under existing federal ethics regulations and laws, or that they might do so going forward even if their actions comply with such regulations and laws.”

It also states that the Office “will not revisit any prior decisions-or any future decisions-in which our judges complied with the applicable ethics rules” and the USPTO Director said she does “not envision that this interim guidance will give rise to the repaneling of a large number of cases.”

the guidance takes effect 60 days from today.

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