Patent Owner Sues Former USPTO Officials for ‘Improperly Stacking the Deck’ Against Him

By Eileen McDermott
August 10, 2021

“The system had been rigged all along, due to the unconstitutional actions of the Defendants named herein.” – complaint of Martin David Hoyle and B.E. Technology

https://depositphotos.com/3446916/stock-photo-cheating-poker-player.htmlA patent owner has filed a lawsuit in the United States District Court for the Western District of Tennessee against former U.S. Patent and Trademark Office (USPTO) Director Michelle Lee, and a number of other former USPTO officials, for allegedly depriving the plaintiffs “of their valuable property rights in quasi-judicial administrative proceedings before the USPTO’s Patent Trial and Appeal Board (‘PTAB’).” The complaint further claims that PTAB proceedings have been “tainted by various improprieties and underhanded tactics, designed to stack the deck against [plaintiffs] and in favor of their far more powerful opponents. In short, the system had been rigged all along, due to the unconstitutional actions of the Defendants named herein.”

The lawsuit seeks an unspecified amount of damages pursuant to Bivens v. Six Unknown Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971) for violations of the plaintiffs’ due process rights under the Fifth Amendment. The officials named in the lawsuit are: Lee; James Donald Smith, former Chief Administrative Patent Judge of the PTAB; James T. Moore, former Vice-Chief Administrative Patent Judge of the PTAB; and current and former administrative patent judges (APJs) Sally Medley, Kalyan Deshpande and Lynne Pettigrew.

The plaintiffs are Martin David Hoyle and his company, B. E. Technology, and the relevant patents are U.S. Patent No. 6,628,314 (“the ’314 patent”) and U.S. Patent No. 6,771,290 (“the ’290 patent”). The ‘314 patent relates to technology aimed at gathering user data online data “for the purpose of delivering demographically appropriate, location-based, and contextually-targeted advertising products via various web-based applications” and the ’290 patent is geared to personalizing the internet experience for users via features such as “a toolbar providing the user with icons to access programs, files, and search,” which in turn allows for the delivery of targeted advertising products to users.

‘Scandalous Revelations’

According to the complaint, Google filed several patent applications in 2006-2007—when Michelle Lee was Head of Patents and Patent Strategy at Google—that were rejected by the USPTO because the technology described was already patented in the ‘314 and ‘290 patents. Google then abandoned its applications, but Hoyle discovered in 2007 that the company—along with other tech companies, such as Facebook, Microsoft and Samsung—had been using targeted advertising technologies that infringed on his patents and filed patent infringement suits against them in 2012, just after the America Invents Act (AIA) was implemented.

Also in 2012, Michelle Lee became Director of the USPTO’s office in Silicon Valley, and two years later was nominated by President Barack Obama to be Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO. She was confirmed by the Senate in 2015. This was the same year that the PTAB issued decisions in seven separate inter partes review (IPR) proceedings that Google and the other companies filed against B.E. Technology to invalidate the patents. The same three-judge panel comprised of administrative patent judges (APJs) Sally C. Medley, Kalyan K. Deshpande, and Lynne E. Pettigrew ultimately invalidated the patents as anticipated by and/or obvious in all of the IPRs. The U.S. Court of Appeals for the Federal Circuit affirmed those decisions on appeal.

The complaint goes on to outline a number of “scandalous revelations” about USPTO and PTAB operations that came to light beginning in about 2017, including USPTO admissions about “panel stacking,” improper compensation structures for APJs, and discouraging dissenting opinions. At all times “relevant to the IP proceedings” at issue in the suit, Michelle Lee was Director of the USPTO, explains the complaint. After further independent research into the APJs who decided the IPRs, Hoyle found that APJ Medley had cancelled the challenged patents in 100% of the 64 IPR proceedings she had presided over; APJ Deshpande had cancelled the challenged patents in 100% of the IPR proceedings over which he had presided as of 2015; and APJ Pettigrew had a cancellation rate of 97% as of 2015.

Hoyle claims that the USPTO leadership at the time – including former Google executive Michelle Lee – thus chose these particular APJs on purpose.

SAWS and Salaries

In further revelations, the lawsuit claims that conversations between a private investigator and a patent examiner divulged that the examiner had been instructed to flag all patent applications covering targeted advertising technologies for increased scrutiny under the Sensitive Application Warning System (SAWS) program while she was at the USPTO. This decision was made during Lee’s time as Director, according to the complaint.

Hoyle’s complaint also points to a recent paper by Ron Katznelson in which the author claims the framework of the PTAB’s bonus system raises due process concerns by incentivizing the judges to make decisions adverse to patent owners.

The Deck Was Always Stacked

Ultimately, the complaint argues that the various factors surrounding B.E. Technology’s IPRs “amount to a particularly clear and egregious violation of Plaintiffs’ rights and leave no room for debate as to the unconstitutionality of those proceedings.” While the Office has taken recent actions to address some of the issues described, such as modifying APJ compensation structures, claiming to have discontinued the SAWS program, and taking steps pursuant to Arthrex v. Smith & Nephew to cure constitutional infirmities under the AIA, it has not addressed all of the issues and, in any case, “these corrective measures offer nothing in the way of relief or remedies to the Plaintiffs—who were deprived of valuable property rights after being forced to adjudicate the validity of their patents in a forum where the deck was improperly stacked against them, without their knowledge.”

Image Source: Deposit Photos
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Copyright:AlexKosev 

The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

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. Read more.

Discuss this

There are currently 20 Comments comments. Join the discussion.

  1. Pro Say August 10, 2021 2:58 pm

    Bravo Martin.

    Superb, well-documented, fact-based brief.

    Best wishes for success with your honorable fight for justice.

    Plain and simply put: You were robbed.

  2. Anon-noyed August 10, 2021 3:37 pm

    Which law firm filed the lawsuit? Dewey, Cheatem, and Howe?

  3. Paul Morinville August 10, 2021 6:05 pm

    Anon-noyed @2. Yes. They filed the PTAB procedure against B.E.

  4. Julie Burke August 11, 2021 8:52 am

    USPTO SAWS memo 11/2008.

    “Upon agreement that the application should be reported as SAWS, the home SPE must complete the SAWS report in detail required by the attached template. The Impact Statement can be prepared by performing an Internet search to find external information indicating the sensitivity of the subject matter. On way to do this is via G00gle search of the invention, the inventors ad owner or assignee. Such information may include, but is not limited to, financially important subject matter (Is the stock of the inventor’s owner publicly traded? Have there been press releases about the invention?), political charged subject mater, and subject matter which may raise legal or ethical objections.”

  5. Sten Gerfast August 11, 2021 9:00 am

    Thank you, Thank you Eileen: You are right, the decks are stacked against you . I am an independent inventor with multiple (40) allowed patents, but are still fighting applications FILED 6 years ago. (letters to Patent Commissioner are unanswered)How can I help you ?, in your effort ? Sten

  6. Julie Burke August 11, 2021 9:01 am

    @4. At the time, some skittish USPTO insiders questioned the propriety of the agency favoring one particular internet search provider over all the others for this type of search. More paranoid ones worried that G00gle was monitoring and/or influencing the SAWS search results. That’d be crazy, right?

  7. PTO-Indentured August 11, 2021 9:47 am

    We Came, We SAWS, We Conquered — USPTO

    Then we added AIA and its unconstitutional PTAB (does the term “Patent Death Squad” ring a bell?

    Let’s not forget Google’s unprecedented level of access — not ‘merely in Washington DC’ — its founders and certain employees visited the Obama White House 427 times according to White House logs.

  8. Tim August 11, 2021 11:13 am

    Wow! Michelle Lee (formerly of Google) to USPTO. I also believe she was there when Vringo sued them and was forced around “Robin Hood’s Barn” many times before Vringo won the case: Vringo vs IP Internet. But have no fear: 2 of 3 judges at the Appeals Court sided with Google, who had been beat: 12-0 unanimously on every single charge. Judge Chen had handed Michelle Lee the reigns at the USPTO prior to going to Appeals Court, (he was the judge that “highly dissented”). But the other 2 overrode him. Supreme Court wouldn’t hear the case! United States of Google!
    Good luck beating them under “Joe Bribe’m”.

  9. Paul F Morgan August 11, 2021 2:03 pm

    See more serious comments on filing cases like this in Patently-O

  10. Pro Say August 11, 2021 4:19 pm

    “See more serious comments on filing cases like this in Patently-O”

    Sorry Paul, but these comments are no less serious, no less valid, no less entitled to be taken seriously than anyone else’s comments.

    One does not have to be an attorney or academic to know when someone’s been robbed of their constitutional intellectual property rights.

    Does not.

  11. Anon August 11, 2021 5:20 pm

    “more serious”…?

  12. B August 11, 2021 5:37 pm

    “The lawsuit seeks an unspecified amount of damages . . . for violations of the plaintiffs’ due process rights under the Fifth Amendment.”

    So in other words, the USPTO was acting too much like the Federal Circuit, who sees 5th Amendment due process as filler blah blah blah

    @ Annoyed “Which law firm filed the lawsuit? Dewey, Cheatem, and Howe?”

    Spoken like a government worker who has no regard for due process.

  13. Sky Price Warrior August 11, 2021 5:38 pm

    So, no one actually looked at the patent in question and noticed that it is exactly the sort of awful patent that the IPR system was designed to eliminate?

    I mean targeted advertising has been around for a while. Its not an innovation. Advertisers have used it for a century or more. Having a computer do it is similarly not innovative, every big and small tech company uses it and it is the core of most tech. companies business. None of whom got the idea from these people.

  14. Sick n Tired of PTAB August 12, 2021 11:52 am

    Sky Price Warrior

    Targeted Advertising did NOT exist in 1998. It was truly innovative for the time. Awful patent? Hopefully this was a mistake on your part, in that you did not understand the limited technology of that day (bandwidth, software, browsers, modems) I would hate to think you were truly that clueless on purpose.

  15. PAUL V MORINVILLE August 12, 2021 1:06 pm

    Sick n Tired, Sky Prince assumes that stuff invents itself. It’s the argument of monopolies who say “we could have invented that. And because we could have invented it, we are fully justified in stealing it, and that, little useless inventor, is why you can’t have protection. Besides, we have all the money, market and political power, so go back to your hole.”

    Sky Prince believes we should never let a good monopoly go to waste. He justifies that believing you are waste.

    For that reason, he deserves no response to his dribble. He is a hack.

  16. Concerned August 12, 2021 1:43 pm

    I intentionally placed documents from every Medicaid authority in the nation in my official record that revealed no State uses my process to avoid the routine, conventional and well understood argument. In fact, no field of any commerce uses my inventive concept.

    The USPTO still deemed the process routine, conventional and well understood with no rebuttal evidence, the USPTO merely said it was such.

    Perhaps intelligent life on Mars uses my process? I will ask one of the billionaires to check next time they are in space.

  17. Sky Prince Warrior August 12, 2021 5:52 pm

    Hah, nice try.

    Targeted advertising has been around since the 70s. The notion that certain demographic groups preferentially like certain things IS obvious as of before 1998.

    Now, having a computer do that MIGHT be innovative. IF you either implement something real, or come up with a SPECIFIC way of doing it that no one thought of and was specifically copied. Google did both. The people who filed this patent did neither.

    Google monopoly is a problem … the way one overcomes it is by being better. There are other solutions, NONE of which involve taking those profits and giving it to a so called inventor who didn’t actually invent anything!

    Tell me, what was the specific algorithm that was copied here? There wasn’t one, it was the concept. I can patent a specific chair design, I can’t patent “thing you sit on” and then sue people for sitting!

    Google’s insight wasn’t to steal this idea and use its monopoly powers (which it didn’t even have back then!) to put it, Google insight is that one can use targeted advertising, combine it with search, and that can be profitable business model. Thats clever. Thats insightful. And the patent does not have that last point. Because these people never came up with it. Google did.

    You can stop Google from buying up all its competitors and stealing genuine innovative ideas. Targetted search is not one of those genuine innovative ideas. You can give people the resources to BUILD BETTER PRODUCTS, NOT simple give them to trolls. patenting obvious ideas, who are completely unproductive entities.

  18. BP August 12, 2021 8:47 pm

    “Google insight is that one can use targeted advertising, combine it with search, and that can be profitable business model.”

    Yes, indeed, an illegal business model. Rather than relevance (which is inferred, wink-wink), results are based on how much an advertiser pays. That’s unless the advertiser is backed by the VC arm, using intelligence gleaned from search engine and marketing data generated via paying advertisers to manipulate the system to the detriment of those paying advertisers. And, the positive feedback of the loop, the paying advertisers pay more and more as the illegal competition (i.e., cherry picked ad placement and higher search result rankings) rises to enrich the mothership while the mothership further screws them: if you’re not doing well, pay us more!

  19. Sky Price Warrior August 13, 2021 4:08 pm

    And that has to do with the patent in question how?

  20. Paul Morinville August 13, 2021 5:46 pm

    Sky Prince, You are the one who diverted the subject. The case is not about the patent. The case is about USPTO corruption and presumably it will lead to the role of Big Tech in that corruption, more specifically Google’s role in that corruption.

    But the question for you is: what does the patent have to do with the case? Perhaps you are deliberating trying to divert attention away from your paymasters?

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