The USPTO Wants a Rehearing in Arthrex: Now is the Time to Put the PTAB on Trial

“Why hasn’t Director Iancu cleaned house at the PTAB following Arthrex? It would seem to be because the USPTO believes Arthrex was wrongly decided.”

https://depositphotos.com/31284937/stock-photo-return-to-sender-cardboard-box.htmlOn November 13, the United States Patent and Trademark Office (USPTO) requested the U.S. Court of Appeals for the Federal Circuit suspend all consideration of an appeal from the Patent Trial and Appeal Board (PTAB) that would raise the same issues addressed in Arthrex, Inc. v. Smith and Nephew, Inc., because the Office will seek rehearing en banc in Arthrex. See Stuben Foods, Inc. v. Nestle USA, Inc., No. 20-1082, -1083.

As a reminder, on October 31, the Federal Circuit issued an important constitutional decision in Arthrex, which found that the hiring of Administrative Patent Judges (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 statute they found to create the problem, which created the PTAB and the appointment of APJs, and by so doing turned APJs into inferior officers. The solution: APJs were judicially decreed to be employees-at-will in order to save the statute.

An Early Christmas Present

After Arthrex, enterprising patent owners that have been targets of efficient infringers and have been mercilessly treated to the indignity of the PTAB now have the upper hand for the first time, and are going to put the PTAB on trial. Josh Malone, the inventor of Bunch O’ Balloons and the vocal leader of innovators subjected to the whims of the PTAB immediately took to LinkedIn to say that he expects APJs to be fired now that they are employees-at-will.

While Malone’s statement may seem extreme, those familiar with the PTAB and its practices know well that there are some APJs who simply do not follow the agenda set out by Director Iancu. They were hired to kill patents, and for some, the shifting sentiment of the leadership of the USPTO makes no difference.

While the Patent Office continues to evade inquiries regarding the exact number of APJs currently serving on the PTAB, estimates from multiples sources familiar with the PTAB place the number of APJs north of 250, most probably between 260 to 280 APJs. One source close to the PTAB estimates the current workload likely supports approximately 150 to 160 APJs, which is why some APJs create work for themselves by instituting inter partes review (IPR) challenges that otherwise would not be instituted in a just system, or a system where an independent panel was impounded solely for the purpose of determining whether to institute challenges. That is, however, the exact mischief that can and does happen when APJs who face a work production quota are the gatekeepers of their own work.

The Federal Circuit decision in Arthrex was an early Christmas present for Director Iancu. APJs instantly transformed into employees-at-will overnight without employment protections should be exactly what the Office needs to right-size the PTAB workforce. Director Iancu should be able to clean house and at a minimum get rid of those APJs who refuse to get on board with his initiatives.

USPTO: Return This Gift to Sender

So, why hasn’t Director Iancu cleaned house at the PTAB? It would seem to be because the USPTO believes Arthrex was wrongly decided.

“The deadline for the government or the appellee in Arthrex to seek rehearing en banc is December 16, 2019,” the government wrote in its November 13 Motion to Stay Proceedings or Extend Time. “The United States intends to seek rehearing en banc in Arthrex. The United States hereby requests that proceedings in this case relating to Arthrex be stayed pending the Court’s disposition of the government’s forthcoming rehearing petition in that case.”

So, the last chapter in the constitutionality of the appointment of APJs has yet to be written. There will at a minimum be an en banc rehearing request filed by the USPTO. And this is precisely the type of archaic constitutional law question that affects almost no one that the Supreme Court will almost certainly find too riveting to ignore.

In the meantime, patent owners can and should continue to put the PTAB on trial. With the USPTO filing a request for en banc rehearing, it is hard to know how much longer patent owners will enjoy this upper hand.

Image Source: Deposit Photos
Image ID: 31284937
Copyright: iqoncept 

Share

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 as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

14 comments so far.

  • [Avatar for TFCFM]
    TFCFM
    December 5, 2019 10:05 am

    GQ@#10: “Perhaps the Director does want to regularize a dismissal procedure. Of course, if he does want to right-size the work force and get rid of those PTAB judges who refuse to go along with Office policy, he may need to do so sooner rather than later.

    That’s certainly possible, and my mind-reading skills are surely no better than yours. However, I think that evidence suggests that this is not the Director’s motivation. If it were, I think a significant number of APJs would have been sacked before the toner had cooled on the Arthrex decision.

    (In an earlier decade, I would have predicted that this would have occurred “before the ink was dry,” but such are the times in which we live…)

  • [Avatar for Concerned]
    Concerned
    December 5, 2019 07:51 am

    Angry Dude:

    I am highly disappointed that the examiners gave no weight to the Director’s 2019 memo and also no weight to an Asst Director Bahr’s memo dated a few years earlier in my prosecution.

    The memos seemed absolutely worthless, as if the memos only served some kind of official capacity, but no real application in the prosecution process. The examiners did not acknowledge or rebut our argument of those on point memos.

    I was a career government employee serving as our Department’s liaison to the State Attorney General. All the Department’s legal referrals crossed my desk as the statutory agent.

    The legal environment surrounding patents is one I find very disturbing based on the criteria set forth during my career by the State Attorney General and his assistants.. Facts, evidence and especially the law were taken very seriously or we heard from the Governor’s Office. If my boss handed me a memo, it was followed.

  • [Avatar for angry dude]
    angry dude
    December 4, 2019 10:39 pm

    Gene Quinn @10

    With all due respect, USPTO Director Iancu is nothing in the Game of Thrones being played by SV multinational corps and their well paid puppets in Wash DC
    He is not even allowed to tell his own examiners how to do their job properly… just pause and think about this for a moment…

    Is he really USPTO director with ability to hire and fire his own personnel ?
    Apparently not…

    The real USPTO Board of Directors is located in Silicon Valley

    Welcome to US Government circa 2019

    So much for draining the swamp…

    This ship is sinking and stinking, time to get out

  • [Avatar for Joachim Martillo]
    Joachim Martillo
    December 4, 2019 01:33 pm

    Probably Iancu needs to establish a procedure for termination of a PTAB Trial Division APJ, but creating the procedure will probably wait until the status of such an APJ is fully litigated through SCOTUS.

  • [Avatar for Gene Quinn]
    Gene Quinn
    December 4, 2019 01:08 pm

    TFCFM @8-

    Perhaps the Director does want to regularize a dismissal procedure. Of course, if he does want to right-size the work force and get rid of those PTAB judges who refuse to go along with Office policy, he may need to do so sooner rather than later. If he is going to ask the CAFC to reverse the panel he might actually get what he asks for. So, if he wants to address the problem of APJs creating work for themselves and doesn’t want to bifurcate institution from the merits he either (1) needs to start firing APJs; or (2) not ask for Arthrex to be overruled.

  • [Avatar for Joachim Martillo]
    Joachim Martillo
    December 4, 2019 11:10 am

    BTW, back when I was trying to find out how many APJs were employed by the USPTO Trials Division, it occurred to me that a list of APJs and their activity dates could be generated simply by groveling through PTAB trial records.

    I think the USPTO’s API would support such a procedure, and it is not impossible that someone has written the an application or service that compiles this data.

  • [Avatar for TFCFM]
    TFCFM
    December 4, 2019 09:53 am

    GQ: “So, why hasn’t Director Iancu cleaned house at the PTAB? It would seem to be because the USPTO believes Arthrex was wrongly decided.

    That’s certainly a possibility, but far from the only one. It might equally well be that the Director doesn’t presently wish to dismiss any APJs, or similarly equally that the Director wishes to establish a procedure for regularizing such dismissals.

  • [Avatar for Joachim Martillo]
    Joachim Martillo
    December 4, 2019 09:18 am

    BTW, doesn’t an Administrative Agency usually appeal a finding of un-Constitutionality of a statute under which it operates if that finding is reasonably arguable?

  • [Avatar for Joachim Martillo]
    Joachim Martillo
    December 4, 2019 09:04 am

    My LinkedIn post describing a Constitutional Amendment, which should be a first step to fixing the US patent system, has been popular to an extent that is hard to explain.

    https://www.linkedin.com/posts/joachim-martillo-11ab332_saving-the-us-patent-system-a-constitutional-activity-6606008475879301120-iNT1

  • [Avatar for Joachim Martillo]
    Joachim Martillo
    December 4, 2019 09:02 am

    My LinkedIn post describing an Article III court proceeding, which could replace USPTO review, has been popular among IP professionals and among those that work at the US Senate. BTW, I am not a lawyer, and this proposal is my first effort at writing a statute from scratch. It probably needs a subsection to deal with an ITC section 337 investigation.

    https://www.linkedin.com/posts/joachim-martillo-11ab332_saving-the-us-patent-system-replacing-uspto-activity-6606033342309691392-0AmK

  • [Avatar for Joachim Martillo]
    Joachim Martillo
    December 4, 2019 08:52 am

    Anon@3, I have inquired about the statistics and have been told that there are 3 types of APJs serving on the PTAB:

    1) an APJ that serves in a USPTO review proceeding,

    2) an APJ that serves in a review in an Appeal from Final Rejection, and

    3) an APJ that serves in both actions.

    The Director can serve in either action.

    I am not sure how this reply is an answer.

  • [Avatar for Anon]
    Anon
    December 4, 2019 07:09 am

    Admittedly a tangent, but I find this absolutely incredulous in this day and age:

    While the Patent Office continues to evade inquiries regarding the exact number of APJs currently serving on the PTAB

    How in the world is this type of factual matter not immediately available?

  • [Avatar for Night Writer]
    Night Writer
    December 4, 2019 05:51 am

    I am not sure exactly how but I’d bet there would be a lot of lawsuits if patent judges starting getting fired. Don’t underestimate the power of the federal government employees. They would all unit to protect the patent judges.

  • [Avatar for Concerned]
    Concerned
    December 3, 2019 07:46 pm

    After reading the article. is it the opinon that SCOTUS probably will accept this matter eventually?

    Has SCOTUS ruled on any matter favorably for the inventor since EBay? If no, and since the original Arthrex decision was favorably to inventors regarding PTAB, is this the reason for the opinion that SCOTUS will accept this matter eventually, to keep the screwings coming to the inventors?