Fourth Circuit Says USPTO Can Withhold Documents in Repaneled Centripetal Networks IPR Featuring Alleged APJ Bias

On Tuesday, the U.S. Court of Appeals for the Fourth Circuit issued a published opinion in Malone v. U.S. Patent and Trademark Office affirming the Eastern District of Virginia’s grant of summary judgment to the USPTO after finding that the agency properly withheld documents sought by US Inventor’s Josh Malone pursuant to a Freedom of Information Act (FOIA) request related to administrative patent judge (APJ) paneling at the Patent Trial and Appeal Board (PTAB). The Fourth Circuit found that decision drafts circulated to nonpanel APJs were subject to FOIA’s exemption for predecisional and deliberative documents and were not unprotected ex parte communications.

USPTO Claims Circulated Decision Drafts Fall Under FOIA Exemption 5

Malone filed a FOIA request with the USPTO seeking information related to the reconstitution of the APJ panel overseeing inter partes review (IPR) proceedings brought by Palo Alto Networks to challenge Centripetal Networks’ patent claims. According to the Fourth Circuit, Malone’s FOIA request focused on the original APJ panel, the panel’s reconstitution following disclosures of one APJ’s stock interest in joined party Cisco, and the reconstituted APJ panel’s decision to deny Centripetal’s motion to recuse the interested APJ.

Although the USPTO produced 1,500 responsive documents, the agency withheld documents, including redlined versions of PTAB decisions at various stages of the editing and review process, and emails between PTAB employees discussing analysis of the issues presented by those drafts. The USPTO asserted that those documents were subject to FOIA’s predecisional and deliberative document exemption codified at 5 U.S.C. § 552(b)(5) (“Exemption 5”), because they both expressed proposed agency actions antecedent to adopting a position, and consisted of agency employee recommendations on legal policy matters.

Malone appealed to the Eastern Virginia district court arguing that the withheld documents were not subject to Exemption 5 because they were unlawful ex parte communications between panel and nonpanel APJs. The district court ruled on summary judgment for the USPTO, finding that the withheld adjudicatory opinion drafts with inter-agency comments were “precisely the kind of documents that are considered deliberative.” The district court also dismissed Malone’s claims under the Administrative Procedures Act (APA) and Fifth Amendment’s Due Process Clause, finding no explanation of legal authority for such claims in the FOIA context and that Malone likely lacked standing to bring those claims.

On appeal to the Fourth Circuit, Malone argued that the withheld documents could not be considered deliberative because they “involve individuals who have no authority to exert secretive influence in the decision-making process.” As such, Malone contended they violated due process rights of the parties involved, violated impartial adjudication requirements under the APA and breached the statutory mandate that only assigned APJs can deliberate on IPR proceedings.

FOIA Process Cannot Be Used for Collateral Attacks on Agency Policy

The Fourth Circuit had little difficulty finding that the USPTO’s withheld documents were categorically both predecisional and deliberative. Draft PTAB opinions proposing to resolve IPR claims, as well as comments and proposed edits by nonpanel judges, are plainly predecisional as they assist the panel in arriving at its final opinion, the Fourth Circuit found. Further, the draft nature of the documents in question, which include recommendations and other personal opinions that are not agency policy, indicated the documents were also deliberative.

Malone’s argument that communications to nonpanel APJs are not deliberative “takes far too narrow a view of judicial deliberation,” the Fourth Circuit found. Agency rules codified at 37 CFR § 43.5(b) and 37 CFR § 43.4(b)–(c) authorize draft circulation to nonpanel APJs while giving panel APJs sole discretion to accept any input, similar to practices followed by the judiciary more generally. This practice is further referred to as “part of the Board’s deliberative process” in relevant PTAB standard operating procedures.

The appellate court found Malone’s argument to rely on a fundamental misunderstanding of ex parte communications, which are generally defined as one party’s communication with a decision-maker without the presence of the adverse party. Communication between APJs, whether on the IPR panel or not, are not these same kinds of unilateral communications that are usually deemed unlawful, the Fourth Circuit held. Nothing about the USPTO’s regulations about ex parte communications purport to change the term’s traditional definition, leading the Fourth Circuit to find the communications deliberative for purposes of Exemption 5.

Any potential that the withheld documents shed light on government misconduct, as claimed by Malone, does not bear on the application of Exemption 5 under FOIA, the Fourth Circuit concluded. Malone’s further claim that the practice itself constituted government misconduct was unsupported by law, and the appellate court added that FOIA claims are limited to document production and cannot support collateral attacks on the legality or constitutionality of broader agency policy.