“It is unconscionable for the USPTO to continue to allow the PTAB to operate without a separate, distinct and legitimate Code of Conduct that at a minimum mandates recusal when an APJ cannot objectively preside over both parties in the proceeding.”
Andrei Iancu, the Director of the United States Patent and Trademark Office (USPTO), has a real mess on his hands. This particular mess relates to the Patent Trial and Appeal Board (PTAB) and the astonishing reality that the Administrative Patent Judges (APJs) on the PTAB are not bound by any Code of Judicial Conduct, as is applicable to Article III federal judges. Instead, PTAB Judges are only bound by the same ethics standard that applies to all other employees, which requires them to recuse themselves from any decisions relating to former employers for one year. That is how several PTAB Judges have been able to adjudicate inter partes review (IPR) and covered business method (CBM) challenges filed by a former litigation client – Apple, Inc.
Indifferent at Best, Disgraceful at Worst
It makes absolutely no sense for PTAB Judges to be allowed to adjudicate matters dealing with former clients. How the USPTO has allowed for this to happen is a mystery, and why they continue to allow it to happen is nothing short of a startling display of indifference. Chief Justice John Roberts of the United States Supreme Court famously recuses himself of any case dealing with Microsoft, and has for his entire career, and will for the rest of his career, but PTAB Judges are allowed to adjudicate Apple challenges only 12 months after they stop representing Apple? Obviously, that is absurd in the extreme and it is both demeaning and disgraceful that the USPTO has not done anything to fix this problem in the nearly three years since it was first brought to the attention of the Office.
What is scandalous is the dismissal of this behavior in the recently filed amicus brief filed at the United States Court of Appeals for the Federal Circuit by the United States Department of Justice (USDOJ) in the matter of Apple, Inc. v. Voip-Pal, Inc., Nos. 2018-1456, 2018-1457. In this case there are no clean hands, although you can certainly feel for the patent owner.
Ex Parte Communications
The events leading up to the current appeal took place after Apple had filed petitions for IPR proceedings to challenge the validity of VoIP-Pal patent claims that had been asserted against the consumer tech giant in federal district court. A series of six letters was sent by former VoIP-Pal CEO Dr. Thomas Sawyer to former PTAB Chief Judge David Ruschke, former Acting USPTO Director Joseph Matal and Secretary of Commerce Wilbur Ross between May 2017, almost a year after Apple first petitioned for IPR proceedings on VoIP-Pal’s patent claims, and October 2017.
The content of the Dr. Sawyer letters included a series of allegations of various criminal activities and other ethical infractions. For example, in a letter dated June 21, 2017, Dr. Sawyer complained about the cancellation rates for IPRs and suggested potential ethical violations posed by conflicts of interest with administrative patent judges (APJs) which went unreported by Apple. In the final letter, Dr. Sawyer suggested that the PTAB engaged in potential criminal violation of the Racketeering Influenced and Corrupt Organizations (RICO) Act and that IPR proceedings operated as a “killing field” for small inventors.
Clearly, these types of ex parte communications are not the appropriate way to handle the grievance; sanctions followed, but the USPTO did remove the PTAB panel, which Apple did not appreciate. Although no explanation as to why the panel was removed was forthcoming, Dr. Sawyer’s allegations were not the made-up rantings of a lunatic. APJ Stacy Beth Margolies had previously represented Apple in several patent litigation matters, so at a minimum there was an appearance of impropriety.
The Problem with the USPTO’s Argument
Enter the USDOJ. While the department’s brief ultimately rejects Apple’s contentions that 1) the PTAB should have imposed additional sanctions against Voip-Pal.com and 2) that the Board is required to cancel Voip-Pal’s patent claims without a determination of unpatentability or to redo the entire IPR, it also states as a matter of fact: “The impermissible ex parte communications sent by Sawyer with Voip-Pal’s involvement focused on wide-ranging and unsubstantiated claims of bias that were not ‘relevant to the merits’ of the patentability question at issue in these inter partes reviews.” Let’s parse that statement.
- Clearly, the ex parte nature of the communications was impermissible. So, this statement is true.
- Sawyer’s claims were wide-ranging and not related to the merits of the patentability issue in the IPRs. So, again, this statement is true.
- The claims of bias were not unsubstantiated. This statement is false as a matter of law.
Unless the USDOJ fundamentally disagrees with the foundational rationale for ethics and a Code of Conduct, there is simply no way they can say the substance of Sawyer’s grievance is unsubstantiated. Under any fair reading of any Code of Conduct, a panel that consists of APJ Margolies is fundamentally and hopelessly biased against Voip-Pal, period. The problem here, however, is the PTAB doesn’t have a Code of Conduct. So, does the absence of a Code of Conduct make the substance of Sawyer’s grievance “unsubstantiated”?
Trust Must be Earned
It is unconscionable for the USPTO to continue to allow the PTAB to operate without a separate, distinct and legitimate Code of Conduct that at a minimum mandates recusal when an APJ cannot objectively preside over both parties in the proceeding.
Anyone who is at all familiar with Apple and how restrictively they control their attorneys and former attorneys knows full well that Apple would never consent to one of its former litigation counsel representing Voip-Pal, and under the Rules of Professional Conduct applicable to attorneys it would be Apple’s decision whether a former attorney could take such a case adverse to them. See ABA Model Rule 1.10. Nevertheless, it is somehow acceptable for APJs to adjudicate cases involving their former client because there is no Code of Conduct to prevent it and the same Commerce Department ethics policy that applies to janitors only requires them to recuse themselves for 12 months?
Director Iancu has brought a number of procedural reforms to the PTAB, but unforced errors like APJs adjudicating cases of former clients makes it impossible to view the PTAB as a real tribunal worthy of trust and respect. This mistrust is only deepened when the Administration through the USDOJ excuses such obvious bias as “unsubstantiated”. No, it is not unsubstantiated. The bias concern is real and precisely why every Code of Conduct for Judges and every set of Rules of Ethics for lawyers would prohibit a former attorney from inserting themselves into a representative or decisional capacity in such a situation.
Image Source: Deposit Photos
Image ID: 83885332