What is stunning, however, is that after dissenting APJ James Arpin was mysteriously and without explanation removed from the case, replaced by APJ Thomas Giannetti.
It is difficult to convey to those who do not closely watch the Patent Trial and Appeal Board (PTAB) the depths of the systemic malfeasance that permeates the very fabric of the institution. But every once in a while, there is something that happens that is so outrageous, so egregious, that any and every fair-minded person ought to be able to agree – that simply should never happen, at least not in America. Such an event recently transpired in IPR2017-01738, the matter of ESET, LLC v. Finjan, Inc.
On July 4, 2017, ESET filed a petition for inter partes review of Finjan’s U.S. Patent No. 7,975,305. On January 31, 2018, a PTAB panel comprising Administrative Patent Judges Patrick Boucher, Zhenyu Yang and James Arpin, issued an order partially instituting an IPR. The PTAB panel “decline[d] to instituted review of claims 1-25 as unpatentable under 35 U.S.C. § 103(a) over Freund and Chandnani.” The panel would go on to note: “We agree with Patent Owner that Petitioner oversimplifies the prosecution history and that the Examiner considered other distinctions with Freund.”
As the result of the U.S. Supreme Court’s decision in SAS Institute Inc. v. Iancu, partial institutions of inter partesreview petitions is no longer an option for the PTAB. On April 24, 2018, a 5-4 majority ruled that there is no authorization in the statute for the Patent Trial and Appeal Board (PTAB) to partially institute a petition for inter partes review. Thus, the Supreme Court held that when the Patent Office institutes an inter partes review it must decide the patentability of all of the claims the petitioner has challenged. See Patent Office must decide patentability of all challenged claims.
Considering the significant change in practice mandated by the SAS ruling, on April 26, 2018, the USPTO issued guidance. For pending trials which have already been instituted, the USPTO announced it would apply the precedent set by SAS in a retroactive manner. Specifically, pending trials which were instituted on only part of the challenged claims, however, can be adjusted to include all claims challenged by the petitioner if the panel of APJs issues an order to institute on all claims.
Obviously, the institution decision in ESET v. Finjan would have to be corrected to become compliant with the Supreme Court’s ruling in SAS.
On May 21, 2018, a Per Curiam Order was issued by the panel after a telephone conference was conducted with counsel on April 30, 2018. The purpose of the conference was to determine how to handle the case in light of the Supreme Court’s ruling in SAS. APJs Patrick Boucher and Zhenyu Yang voted to instituted review on claims 1-25 as unpatentable under 35 U.S.C. § 103(a) over Freund and Chandnani, despite the fact that the original institution decision determined the arguments made by the petitioner lacked merit and oversimplified the prosecution history relied upon. Thus, Finjan now must defend a challenge that the panel has already determined lacks merit.
APJ James Arpin did not agree with Boucher and Yang and dissented from the May 21, 2018 Per Curiam Order. He explained that SAS requires the panel to institute on all challenged claims if an IPR is instituted, but also that there is no obligation for the PTAB to institute any IPR. Considering the early stage of the proceeding, Arpin wrote that he “would vacate the Institution Decision and dismiss this proceeding.”
What comes next is worse, and almost unbelievable if it were not done by the PTAB.
On June 13, 2018, Finjan filed a Request for Rehearing for the purpose of requesting an expanded panel and reconsidering the decision to institute review on claims 1-25 as unpatentable under 35 U.S.C. § 103(a) over Freund and Chandnani. On August 10, 2018, the PTAB panel issued its decision denying both requests, which is not surprising. What is stunning, however, is that after dissenting APJ James Arpin was mysteriously and without explanation removed from the case, replaced by APJ Thomas Giannetti.
This is the type of trial by ambush that has become common at the PTAB. Panels are expanded without warning or explanation. APJs not assigned to cases deliberate with APJs assigned, which is a clear violation of the Administrative Procedures Act. Now APJ Arpin issues a dissenting opinion that favors the patent owner and is promptly removed from the case.
Clearly, patent owners do not receive anything that approximates a fair and reasonable chance at the PTAB. The Office has admitted to stacking panels at the PTAB in order to achieve the outcome desired, which in and of itself is an egregious breach of notions of justice. These are contested proceedings where the patent owner is facing challenges, and as we know from Finjan’s record, repeated and harassing challenges from a multitude of challengers. Yet in these contested proceedings the PTAB continues to pick winners and losers using whatever procedural shell game available. Whether it is stacking panels, or as in this case removing a sympathetic APJ who wrote a dissent on his own time realizing he would not receive credit toward his work production goals unless it was approved by the very people who decided to remove him from the case.
Perhaps there is an innocent explanation for what happened here, but in the secretive, backroom world of the PTAB innocent explanations are becoming harder and harder to envision. And, frankly, given how the PTAB has run amok for so long the tribunal has lost any legitimate claim to the benefit of doubt.
If there is nothing nefarious going on, then why is it that the patent owner always seems to be on the wrong end of these procedural irregularities? Why is it that the invisible hand of the PTAB always winds up on the side of the scale that takes patent rights away?
Many patent owners believe the PTAB bends over backwards to benefit challengers in order to encourage more challenges. After all, if the post grant challenge system were fair patent owners would have a chance and that would cut down on challenges. Thus, the cynical within the industry believe it is about job security. Whatever the case may be, parlor tricks and shell games ensure the invisible hand of the PTAB supports challengers.
Tip From: Patent Attorney USPTO Makes Judge Arpin Disappear.
Image Source: Deposit Photos.