Posts Tagged: "Administrative Patent Judges"

On September 6, New Vision Gaming and Development Inc. (New Vision) filed a brief with the U.S. Court of Appeals for the Federal Circuit (CAFC) on return from remand after the U.S. Patent and Trademark Office (USPTO) denied its request for Director Review. The case relates to a Patent Trial and Appeal Board (PTAB) decision canceling all claims of U.S. Patent No. 7,325,806 (‘806 patent) and was previously appealed to the CAFC. But since the last appeal, a report demonstrating evidence that PTAB judges are influenced by U.S. Patent and Trademark Office (USPTO) leadership gives new weight to New Vision’s arguments, says the brief.

B.E. Technology, a company owned by Martin David Hoyle, developer of internet advertising technology who has been embroiled in litigation with big tech companies like Facebook, Twitter and Google for close to a decade now, today filed a petition for writ of mandamus with the U.S. Court of Appeals for the Federal Circuit (CAFC). The petition asks the court to intervene to “prevent an unconstitutional deprivation of B.E.’s property rights in the onslaught of IPR proceedings that have been brought to challenge the validity of its most critical patents.” B.E. specifically asks the CAFC to direct the Patent Trial and Appeal Board  (PTAB) to vacate its decisions to grant institution in four separate inter partes review (IPR) proceedings: Twitter, Inc. and Google LLC v. B.E. Technology, L.L.C., Nos. IPR2021-00482, IPR2021-00483, IPR2021-00484, and IPR2021-00485. The question presented is: “Whether a writ of mandamus should issue to prevent an unconstitutional deprivation of the Petitioner patent owner’s property rights without due process of law?”

In an appeal from the Patent Trial and Appeal Board (PTAB) brought by Mobility Workx against Unified Patents, the U.S. Court of Appeals for the Federal Circuit today ruled that the structure of the PTAB does not violate due process rights under the U.S. Constitution. While the PTAB’s ruling was ultimately remanded to the USPTO Director for review under Arthrex v. Smith & Nephew, the court said there is no evidence that PTAB administrative patent judges (APJs) have a financial interest in instituting inter partes review (IPR) proceedings. Judge Newman dissented from the majority’s “endorsement of the status quo.”

In Part I, we looked at two of the legal principles that govern Arthrex Director review: Director review must be implemented by notice-and-comment “regulation,” not website, and the Administrative Procedure Act (APA) requires that the Director’s decision demonstrate “reasoned decisionmaking.” Today, we’ll look at a few more legal obligations that confine the U.S. Patent and Trademark Office’s (USPTO’s) discretion as the USPTO seeks a lawful implementation of Director review. This Part II concludes with a plea that the USPTO take the public interest seriously, as the public interest is reflected in various statutes outside the Patent Act.

A working definition of inertia is the tendency of a body to maintain its state of rest or uniform motion unless acted upon by an external force. As it did in Oil States (S.C. 2018), inertia appears to have played a role in the Supreme Court’s decision in the United States v. Arthrex, in which the central dispute was the remedy to address the unconstitutional appointment of administrative patent judges (APJs). Possible remedies included vacating hundreds or thousands of prior final decisions by unconstitutionally appointed APJs, requiring all APJs to be confirmed by the Senate and then rehear previously-decided reviews, finding the entire statutory structure unconstitutional and handing invalidity/unpatentability determinations back to Article III Courts, removing employment protections for APJs (as the Federal Circuit did), or adding a layer of review so that inferior officers had appropriate responsibility under the Appointments Clause. Faced with these possibilities, the Supreme Court’s holding maintains the inertia of the Patent Trial and Appeal Board (PTAB) and again solidifies its role in patent litigation today.

The Supreme Court issued a split 5-4 decision earlier today, in which a plurality of the Court agreed with the U.S. Court of Appeals for the Federal Circuit (CAFC) that the structure of the Patent Trial and Appeal Board (PTAB) under the America Invents Act (AIA) has resulted in Administrative Patent Judges (APJs) being unconstitutionally appointed principal officers, but took a different approach than the CAFC to fixing the problem. Some were surprised by the conservative Court’s choice to sever the statute and ultimately hand the United States Patent and Trademark Office (USPTO) Director—a political appointee—power to review final decisions, though it was not surprising that they attempted to fashion a solution that would preserve the PTAB and inter partes review (IPR) system. Justice Gorsuch, in his partial dissent, said that he would have identified the constitutional violation, explained his reasoning, and simply “set aside” the PTAB decision at issue. Instead, said Gorsuch, “Effectively, the Court subtracts statutory powers from one set of executive officials and adds them to another.”

While the decision is not likely to have any immediate impact, it does raise questions about implications down the line, including how the USPTO and its new Director will address the ruling. Below, industry stakeholders consider what the Court did (and did not do) and provide their take on this highly anticipated holding.

Buffalo is a small Texas town of less than 2,000 people. On the way into town, school zone signs flank both sides of a speed limit sign. I drove through on a Sunday, when school zones do not apply, so I didn’t slow down. Almost immediately, the police lights lit up and I was awarded a speeding ticket. When I started to fight the ticket, I was met with resistance at every level of city government. It quickly became clear that the speed trap was a significant source of revenue for the small town and that the judge, mayor, city employees and even the officer who pulled me over all benefited from that revenue. So, I just paid the ticket and walked away. It is the very definition of a corrupt system when those who make the rules and decisions receive financial benefit from the results of their rules and decisions. New Vision Gaming v. SG Gaming, Inc. (Federal Circuit No. 2020-1399) illustrates this phenomenon as it applies to the U.S. Patent and Trademark Office’s (USPTO’s) Patent Trial and Appeal Board (PTAB).

Yesterday, the Supreme Court heard oral arguments in the most closely-watched patent case of the term, United States / Smith & Nephew v. Arthrex. IPWatchdog reached out to some of the amici in the case, as well as patent practitioners and other stakeholders, to get their take on how the hearing went and what the future holds for the Administrative Patent Judges (APJs) of the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB). Most agreed that it’s unlikely the Court will dismantle the PTAB altogether, but that they were clearly uncomfortable with the present structure. Below, our experts weigh in on some potential outcomes.

The Justices of the U.S. Supreme Court today heard arguments in United States/ Smith & Nephew v. Arthrex, in which the Court will decide whether the administrative patent judges (APJs) of the Patent Trial and Appeal Board (PTAB) are “principal” or “inferior” officers of the United States, and—if they are principal officers—whether the Federal Circuit’s 2019 fix was sufficient to cure any Appointments Clause defect. The Court generally seemed extremely skeptical of the “unusual” powers APJs seem to have compared with other administrative agencies and pushed both sides to offer reasonable solutions.

On December 2, eComp Consultants (eComp) filed an amicus brief urging the U.S. Supreme Court to find Administrative Patent Judges (APJs) of the Patent Trial and Appeal Board (PTAB) in U.S. v. Arthrex, Inc., Nos. 19-1434/-1452/-1458. In its brief, eComp argues that the U.S. Supreme Court should reverse the decision of the Federal Circuit and confirm that APJs of the PTAB are merely inferior officers of the United States who were, therefore, constitutionally appointed. eComp’s Amicus Brief clarifies the errors in the Federal Circuit’s decision. 

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.”

In Article 1, Section 8, Clause 8, of our Constitution, the founders were relatively specific. The founders give Congress power to secure “the exclusive Right” to “Authors and Inventors” in the “Writings and Discoveries”. Congress is given  specific direction on how to do it (i.e., “for Limited Times”), and why it should be done (i.e., “To promote the Progress of Science and useful Arts”). Unfortunately, the Leahy-Smith America Invents Act (AIA) of 2011 dramatically changed how the Executive branch implements the Constitutional prerogative.  The AIA transferred power constitutionally allocated to the judicial branch to the executive branch – specifically, to Administrative Patent Judges (APJs) in the USPTO. In the process of implementing the Patent Trial and Appeals Board (PTAB) on which the APJs sit, judicial independence, judicial ethics, rules of evidence, and other protections commonly afforded rights holders in disputes adjudicated by the federal judiciary were sacrificed in the name of expediency.

The Supreme Court is currently considering several pleas to review the holding in Arthrex v. Smith & Nephew I and Arthrex v. Smith & Nephew II in the form of four petitions for writs of certiorari: U.S. v Arthrex, No. 19-1434, Smith & Nephew v. Arthrex, No. 19-1452, Arthrex v. Smith & Nephew, No. 19-1458, and Arthrex v. Smith & Nephew, No. 19-1204.  Recently, there has been an uptick in activity in the various cases, with Arthrex most recently filing response briefs in two cases and amicus brief filed by Askeladden LLC and the New York Intellectual Property Law Association (NYIPLA) in U.S. v Arthrex.

The U.S. Court of Appeals for the Federal Circuit has denied rehearing en banc in Arthrex v. Smith & Nephew, a decision that made the Patent Trial and Appeal Board’s (PTAB’s) administrative patent judges (APJs) “inferior officers” under the U.S. Appointments Clause, in order to skirt the problem that they had been unconstitutionally appointed under the America Invents Act. Five of the 12 Federal Circuit judges wrote separately to explain their reasons for denying, or dissenting from denial on, rehearing. Judge Moore wrote to concur with the denial, and Judges O’Malley, Reyna and Chen joined, saying that granting rehearing “would only create unnecessary uncertainty and disruption.” Moore added that the Arthrex panel followed Supreme Court precedent in concluding that APJs were improperly appointed principal officers, and also followed precedent in its solution which severed a portion of the statute “to solve that constitutional problem while preserving the remainder of the statute and minimizing disruption to the inter partes review system Congress created.”