One Way or Another, Arthrex Promises to Put the PTAB on Trial

By Gene Quinn
November 19, 2019

“After Arthrex, enterprising patent owners that have been targets of efficient infringers and have been unceremoniously treated to the fundamental unfairness of the PTAB now have the opportunity to put the APJs of the PTAB on trial.”

https://depositphotos.com/38780871/stock-photo-gavel-with-constitution-and-flag.htmlFor weeks now I have been asking the United States Patent and Trademark Office (USPTO) to confirm how many Administrative Patent Judges (APJs) are currently employed by the Office, a request that predates the Federal Circuit’s controversial Arthrex decision, but which was renewed after the decision issued. For reasons that I cannot explain, the Office refuses to provide an answer to what seems to be a straightforward and legitimate question: How many APJs are currently employed by the USPTO?

Regardless of the USPTO’s reluctance to identify the number of APJs employed, it seems safe to say that the employment rights and futures of several hundred APJs hang in the balance as the result of the Federal Circuit’s decision in Arthrex, which found that the hiring of APJs violated the Appointments Clause of the U.S. Constitution. The Federal Circuit did, however, attempt to provide a gift to the Office by rewriting the section of the America Invents Act (AIA) they found to create the problem, and by so doing turned APJs into inferior officers.

In order to do so, the Federal Circuit turned those uncertain number of APJs into employees-at-will, which allows for them to be fired by the Director of the USPTO. This is significant because certain APJs have not been willing to get on board with changes implemented by Director Iancu. The belief of those APJs who have not been “team players” is that they are judges and are not controlled by and do not answer to Director Iancu. Well, with the Federal Circuit’s decision in Arthrex that employment dynamic changed overnight.

‘Far From Resolved’

While it cannot be debated that the Arthrex decision turns APJs into inferior employees who must answer to the Director, other consequences of the decision remain hotly debated, with some believing little or nothing has changed and others believing the decision fundamentally undermines the fabric of the Patent Trial and Appeal Board (PTAB) on which the APJs serve.

If APJs were not properly appointed, thereby making their appointments in violation of the U.S. Constitution, how is it possible that a single three-judge panel of the Federal Circuit could issue a decision to re-write a portion of the AIA that fundamentally changes the employment relationship of those APJs to and with the United States Patent and Trademark Office (USPTO)?

“If APJs were not properly appointed yesterday, they cannot not magically be appointed properly today just because a court read their employment rights out of a statute without their representation,” Russ Slifer, former Deputy Director of the USPTO, told IPWatchdog in the immediate aftermath of the Arthrex decision. “I believe this issue is far from resolved.”

Slifer is right on point, as evidenced by reports that Director Iancu has been having frequent – perhaps daily – meetings with other Administration officials in an effort to understand the ramifications and chart a path forward. And just this afternoon, the House Subcommittee on Courts, Intellectual Property, and the Internet held a hearing to discuss the effects of Arthrex on the PTAB, during which Subcommittee Chair Hank Johnson (D-GA) said he personally finds the Arthrex remedy “inconsistent with the idea of creating an adjudicatory body to have judges who have no job security. It goes against the idea of providing independent, impartial justice if a judge is thinking about his or her livelihood while also weighing the facts of a case.”

Clearly, this is far from resolved.

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The Prospect of Individual Liability

It is no exaggeration to characterize the Federal Circuit’s decision in Arthrex as fundamentally and unilaterally turning APJs into employees-at-will who can be fired by USPTO Director Andrei Iancu. How can it possibly be appropriate for a court on any level to so fundamentally rewrite an unconstitutional statute? That isn’t the role of the Judiciary, period. And particularly so where these APJs who had been vested with such extraordinary powers have been wreaking havoc on patent property rights. These unconstitutional “officers” have destroyed tremendous value, and a great many of them would never have been able to achieve a Presidential nomination and confirmation by the Senate given their extreme inexperience at the time of their appointments.

Regardless of whether the Federal Circuit had the right to unilaterally make several hundred APJs employees-at-will, the far larger problem that could and almost certainly will face these individuals is the prospect of individual liability for the actions they took while not properly appointed.

Why would an unconstitutionally hired APJ enjoy any kind of immunity? In other words, could a patent owner who lost a patent bring a lawsuit against individual APJs personally? Normally officials would have at least qualified immunity, but how could an APJ that wasn’t even supposed to have the job, who was unconstitutionally hired, be entitled to any immunity whatsoever?

Likely Test Cases

Before you consider this ridiculous, consider former APJ Matt Clements who represented Apple in patent litigation matters and then shortly after being hired by the Office to serve on the PTAB started sitting on, hearing and ultimately deciding inter partes review (IPR) petitions filed by Apple. Not surprisingly, across the several dozen Apple petitions where Clements was on the panel, Apple did unusually well. After we reported this matter, Clements was removed from Apple cases and then shortly thereafter left the PTAB altogether. Upon leaving the PTAB, Clements was hired by Apple as an in-house attorney.

I know there are patent owners who have lost patents at the hands of the PTAB considering whether there is any lawsuit they can file that might allow them another bite at the apple, so to speak, because the APJs that took their patents away were unconstitutional “officers” acting without authority. The Federal Circuit in the Arthrex decision said the Appointments Clause argument could be waived, but we can almost certainly expect litigation to test that theory.

Still, it would seem that patent owners who lost their patents as the result of Apple petitions involving APJ Clements would be in the best position to file a lawsuit.

And don’t forget the St. Regis Mohawk tribe. We know that those unconstitutionally hired APJs had secret conversations relating to how to decide those cases with supervisors and other APJs. We know this thanks to Freedom of Information Act requests and responses. In fact, what the USPTO refused to provide under the deliberation exception is most telling. Communications denied as deliberative between APJs not assigned to the St. Regis Mohawk cases raise serious questions of inappropriate collusion once immunity is removed.

The Whole System on Trial

Even if unconstitutionally hired APJs do have some level of immunity, enterprising patent owners that have been targets of efficient infringers and have been unceremoniously treated to the fundamental unfairness of the PTAB now have the opportunity to put the APJs of the PTAB on trial. Does anyone really think that won’t happen regardless of the likelihood of success? The opportunity to litigate the mistreatment of patent owners by APJs who have a vested interest in instituting cases so they can make their quota will prove too great an opportunity to put the entire system on trial.

Whatever the fallout of the Arthrex decision, expect great scrutiny to be placed on the PTAB generally, and more specifically, the APJs themselves.

Stay tuned for a full report on the House IP Subcommittee’s hearing today on what to do about Arthrex, which included testimony from four renowned IP scholars.

Image Source: Deposit Photos
Image ID: 38780871
Copyright: alancrosthwaite 

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 21 Comments comments. Join the discussion.

  1. Pro Say November 19, 2019 7:10 pm

    All members of the PTAB Death Squad should en masse quit.

    Now. Today.

    So that American innovation will once again flourish.

    Congress: Your job is to restore patent eligibility and defang FAANG.

    Before Jan 1st, 2020.

  2. Anon November 19, 2019 9:06 pm

    I am interested in how (legally) personal liability attaches.

    As far as I am aware, “improper appointment” does not remove the immunity of the role that was being played out. Sure, the decisions may be attackable, but the role remains inviolable to such an attempt to pierce and attach personal liability.

    (Caveat: this is not my bailiwick, and I am merely shooting from the cuff, hoping that someone who does know can provide some substantiation)

  3. angry dude November 19, 2019 10:25 pm

    High Treason

  4. Annonymous November 19, 2019 11:24 pm

    Regardless of the outcome on personal liability (which, frankly, should be the government’s potential liability for unfairly taking rights away and not an individual unless it could be proven they violated their duty of fairness), we now have the opportunity to right the system and save our innovation pipeline before it is too late. I would be satisfied by removing the truly bad and anti patent biased actors. Let’s all pray it is not too late.

  5. Concerned November 20, 2019 9:09 am

    If the Director has not forced his examiners/supervisors to be subordinate, I cannot believe the Director will hold these unconstitutionally appointed APJs accountable either.

    I hope I am wrong in my assumption.

  6. Anon November 20, 2019 12:53 pm

    Concerned,

    There is a small difference in the number of actors. As Gene has noted, for some reason, the USPTO has not been forthcoming on the number of APJs, but I suspect that the number is in the 400 range. There is an order of magnitude difference with some 9,000 examiners.

  7. jacek - the troll November 20, 2019 1:08 pm

    Constitution guarantees US citizens freedom from unreasonable seize and search of their property, but…. there is “Civil forfeiture ” law allowing police to confiscate your property at will without any real cause just based on their whim. And they do not have to prove anything and will not charge you with anything. How do you expect logic and justice in the PTAB case?
    My proposition: let’s call ourselves “the trolls” to insert some irony into the nonsense peddled by efficient infringements lobby. Let’s fight stupidity with irony and humor, so nobody is going to take them seriously.
    Are you familiar with the (city) Wroc?aw’s dwarfs demonstrating in 1980 Poland against the communist regime.? Their tactics were humor against the drab reality of life under communism. It is hard to send police and tanks to fight dwarfs in the streets. Same here. The nonsense we inventors, o… pardon Trolls we are facing in the US deserve similar treatment.

  8. Eileen McDermott November 20, 2019 3:16 pm

    @Anon – During yesterday’s House hearing 260 was the number mentioned.

  9. Valuationguy November 20, 2019 3:49 pm

    The 2017 PTO Accountability Report indicates that at the time there were 388 federal employees attached to the PTAB….while the 2015 Board Operations Division (which excludes the Executive of the Board as well as the ALJs) numbered 75 people ( https://www.uspto.gov/sites/default/files/documents/Organizational%20Structure%20of%20the%20Board%20May%2012%202015.pdf ).

    Given what I know of the growth in the workload of the PTAB over time….I can only expect that both those numbers are HIGHER today than in years past. In addition, I know that the PTAB ALJs are now using law clerks…which may or may not have not be prevalent in the past. (I also don’t know if they count toward the 388 mentioned in the 2017 report since they aren’t permanent positions since they are temporary in nature.)

  10. Concerned November 20, 2019 5:33 pm

    Anon:

    Good point about the 9,000 examiners. Is there as hot line to complain about an examiner’s conduct?

    An examiner writing 8 months later in Sept 2019 that an abstract process cannot have a practical application because it is abstract. Seriously?

    The process is only allegedly abstract, the examiner dodge our argument on that aspect. However the January guidance by the Director is in direct conflict with the examiner’s statement mentioned above.

    I also resent the examiner dropping the meanful limitation of “overlooked eligibility” in his every response and continuing his analysis of the claim sentence void of that limitation. In some responses the examiner inserts routine processing with the continuation.

    Two supervisors signed off to all the above.

    Outliers or standard protocol?

  11. Anon November 21, 2019 7:55 am

    Concerned,

    Recently I had the opportunity to meet with one of the highest USPTO persons (at the regional level).

    A related question was raised and the answer is one that you are not going to like.

    There is an Ombudsman program at the USPTO. However, that program is not for the wayward examiner (or even the next level up). We really have NO effective means of dealing with members of the examination corps that “won’t play ball.” As you note, calling SPEs sometimes wont go far (and I too have had examiners who could not answer my questions with anything meaningful, but instead state that their supervisor won’t let them allow the application).

    There is also a reason why I typically speak out against fixes to the system that revolve merely around “well, just charge the applicant more.” Such are OFTEN merely band-aids and thrown at “problems” without really getting down to root causes of the problems. Further, the path of “charge more” while sounding good with at least funding A solution effort, actually sounds in the Efficient Infringer gambit of competing in things other than innovation: cash on hand. Applicants pay for a service. That does NOT mean that applicants should pay for that service provider to figure out how to best provide that service. And certainly, when a captured Congress set up a system that has NO meaningful tie of a “warranty style” fix (that is, Post Grant action) back into the front end (that is, examination), the Office drivers are simply NOT there to get it right the first time through (that is, examination quality is NOT tied to, and cannot be made better by ANY of the Post Grant programs).

    The Office remains schizophrenic in claiming that examination quality metrics are above 90% but the reality of Post Grant mechanism results turn that number upside down with some 80% of patents having some claims affected.

  12. concerned November 21, 2019 11:40 am

    Anon:

    Thank you very much for your information! On to the PTAB for me.

    My consolation would seem to be that the higher up my application goes, the more wide spread the fact pattern of my prosecution becomes. Does the USPTO really want this kind of abuse to be made more and more public?

    My story did make the book “Plight of the Patentee” which is scheduled to be out in January 2020. I will get a copy for the grand kids.

  13. Disenfranchised Patent Owner November 22, 2019 9:00 pm

    Impeach all PTAB APJ’s!!

  14. concerned November 23, 2019 8:02 am

    Anon:

    FYI. My file wrapper was just annotated that my PTAB appeal was returned to the examining corps as undocketed.

    My hope is that the examiner’s response came into question and that this matter can be resolved at the prosecution level, however, I am probably just dreaming.

  15. Anon November 23, 2019 9:27 am

    Was this return to prosecution of your volition?

    (I know that you had previously shared your application number, but I do not remember it or which thread you shared it on)

  16. Concerned November 23, 2019 12:23 pm

    Anon:

    We did not ask for this return to the examiner.

    Application: 14450042

    Thank you.

  17. Anon November 23, 2019 6:38 pm

    Concerned,

    I checked the Image File Wrapper and see two September items. The Transaction History tab does show two November items, but the specifics of those two are not yet available for me to see.

    From a quick review of the Examiner’s answer, I do not see any indicators why this item would be taken from the Appeals domain and put back into the Examiner’s domain.

  18. Concerned November 23, 2019 7:27 pm

    Anon:

    Thank you! We saw no reason either.

    I am hoping the examining section is taking a second look as there are serious issues with the examiner’s position. Issues that I would think the USPTO would not want broadcasted in a public PTAB decision.

    Not only did the examiner admit the process solved a long time problem in the response to our appeal ( pages 5 and 8), the examiner admitted using court cases not in my field during the prosecution.

    It seemed my application was dead on arrival.

    Thank you once again!

  19. Anon November 24, 2019 8:27 am

    Concerned,

    Since the Image File Wrapper tab does not (yet) indicate the November actions, can you share the content of the communication as to why this is being pulled out of the Appeals domain? I would have to imagine that the Office must make some statement, as ‘ownership’ — once transferred to the board — is not relinquished without reason.

    I am looking more for actual words rather than your personal impressions.

  20. concerned November 24, 2019 10:55 am

    Anon:

    I will share the nature of the referral back once I learn of the reason. I have not received any indication yet from the USPTO or my attorney. I learned of the referral back from a review of my file wrapper.

    Hoping for the best.

  21. concerned November 26, 2019 3:01 am

    Anon:

    Appeal was returned to examiner because my attorney forgot to submit the appeal forwarding fee. I have asked him to submit the same.

    I was hoping for the best. Thank you for your review.

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