Posts Tagged: "Administrative Patent Judges"

In December, petitions for rehearing were filed at the U.S. Court of Appeals for the Federal Circuit by each party involved in Arthrex, Inc. v. Smith & Nephew, Inc., including the United States government as intervenor in the case. The panel decision in that case, rendered on October 31 of last year, severed a tenure provision protecting administrative patent judges (APJs) at the Patent Trial and Appeal Board (PTAB). This severance was determined by the Federal Circuit to overcome a constitutional challenge brought by Arthrex that APJs were principal officers of the United States, and thus their appointments by the U.S. Secretary of Commerce, rather than the President of the United States, with the advice and consent of the Senate, didn’t pass muster under the Constitution’s Appointments Clause. In their petitions for rehearing, Arthrex argued that the removal of the tenure provision was an insufficient solution, Smith & Nephew contended that the fix was incorrect because APJs were already inferior officers, and the U.S. government urged rehearing so that several legal errors made by the original Federal Circuit panel could be corrected. On January 3, Federal Circuit Clerk Peter Marksteiner informed  the parties in Arthrex that they could file a single response to the petitions for rehearing. Those petitions are due by January 17 and the parties have been informed that no extensions of time for submitting responses will be granted. By the end of December, the Federal Circuit had received a pair of amicus briefs in the case, one from the Association for Accessible Medicines (AAM) and the other from the New York Intellectual Property Law Association (NYIPLA).

My company, Chestnut Hill Sound Inc. (ChillSound), has been victimized by a U.S. patent system that for nearly a decade has been in a sorry state. Changes wrought by the America Invents Act (AIA) in 2011 and other recent developments cost my company, its investors and inventors millions of dollars. These changes have allowed a large company to reap great profits at our expense. Even more unfortunately, our story is too typical of many other inventors and small companies. Small businesses are the backbone of our economy and need to be cultivated, as they are the most dynamic source of new jobs and competitive products and technologies. There have always been reports of large corporations stealing inventions from small businesses, but it used to be possible via the courts to vindicate the patent rights of owners and obtain ultimate redress.  The AIA—sold by the “efficient infringers” lobby as a measure to protect big business from the expense and nuisance of so-called “patent trolls”—has turned into a weapon of deep-pocketed big businesses that enables them to steal with impunity inventions from small businesses and independent inventors. The AIA brought with it the Patent Trial and Appeal Board (PTAB) and Inter Partes Review (IPRs), a post-grant adversarial proceeding at the United States Patent and Trademark Office (USPTO). As has been amply discussed here on IPWatchdog, the Court of Appeals for the Federal Circuit (CAFC) recently opined that the so-called Administrative Patent Judges (APJs) were unconstitutionally appointed from the beginning. Yet these unconstitutionally appointed APJs continue to kill patents, especially when the patent owner is a small company that has sued a large company for infringement, as was the case with ChillSound.

For 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.

As most of us know by now, in Arthrex, Inc. v. Smith & Nephew, Inc., entered on Halloween 2019, a panel of the Federal Circuit held that the administrative patent judges (APJs) of the Patent Trial and Appeal Board (PTAB) were improperly appointed, and remanded the case for a new decision by a properly appointed panel. Almost immediately after, the court entered two orders dismissing motions for remand because the issue had not been timely raised. See Customedia Technologies, LLC v. Dish Network Corp., Nos. 18-2239 & 19-1001 (Fed. Cir., Nov. 1, 2019) (the motions were inferred from letters to the court). The Federal Circuit remanded a case in which the issue had been timely raised. Uniloc 2017 LLC v. Facebook, Inc., No. 18-2251 (Fed. Cir., Oct. 31, 2019). Predictions about the effect on pending cases overlook that the vast majority of PTAB final decisions come in appeals from the patent examining corps. Any of the hundreds of applicants dissatisfied with a recent PTAB appeal decision could appeal to the Federal Circuit and then promptly move for remand to a different panel. A reader could be forgiven for feeling a sense of déjà vu: in In re DBC, the Federal Circuit similarly found that APJs had been improperly appointed, but the issue was quickly resolved and now is remembered as a minor footnote in patent case law. In re DBC, 545 F.3d 1373 (Fed. Cir. 2008). Arthrex holds the potential to be far more significant. Indeed, Arthrex may prove more trick than treat.

The U.S. Court of Appeals for the Federal Circuit, in an opinion authored by Judge Moore, has ruled that the current statutory scheme for appointing Administrative Patent Judges (APJs) to the Patent Trial and Appeal Board (PTAB) violates the Appointments Clause of the U.S. Constitution as it makes APJs principal officers. APJs are presently appointed by the Secretary of Commerce, but principal officers must be appointed by the U.S. President under the Constitution, Article II, § 2, cl. 2. To remedy this, the statutory removal provisions that are presently applied to APJs must be severed so that the Secretary of Commerce has the power to remove APJs without cause, said the Court. Dismissing the government’s and appellees’ arguments that the Appointments Clause issue had been waived by the appellant, Arthrex, Inc., because Arthrex had not raised the issue with the PTAB, the Federal Circuit said that “this is an issue of exceptional importance, and we conclude it is an appropriate use of our discretion to decide the issue over a challenge of waiver.”

Dismissing the government’s and appellees’ arguments that the Appointments Clause issue had been waived by the appellant, Arthrex, Inc., because Arthrex had not raised the issue with the PTAB, the Federal Circuit said that “this is an issue of exceptional importance, and we conclude it is an appropriate use of our discretion to decide the issue over a challenge of waiver.”

Last week, the Patent Trial and Appeal Board (PTAB) issued 39 decisions on inter partes review (IPR) proceedings, instituting 24 IPRs and denying 15. The PTAB instituted one of four IPR petitions filed by Comcast to challenge a single patent owned by Rovi, adding a new chapter to the legal battle between those two parties over unlicensed television technologies. Spotify also saw the institution of one of three IPR petitions challenging user profile and playlist recommendation patents owned by S.I.S.V.E.L.

Earlier today the USPTO announced the substantial revision of Standard Operating Procedures (“SOPs”) for the paneling of matters before the PTAB (SOP1) and precedential and informative decisions (SOP2). The revisions deliver upon the repeated promises of USPTO Director Andrei Iancu to increase transparency, predictability, and reliability across the USPTO. These new SOPs update the procedures based upon feedback the Office received from stakeholders, courts, legislators, and six years of experience with AIA trial proceedings. These new SOPs are a major change to how PTAB panels will be comprised, and how precedential opinions will be designated. Given Director Iancu’s speeches, actions and apparent desire to have a more patent owner and innovator friendly Patent Office, these revisions will likely be game changing.

Dissent is not the highest form of judgment for judges on the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO).  As discussed in further detail below, our own analysis indicates that dissents for ex parte appeals are found in about .5% of decisions issued by the PTAB.  A PTAB judge deciding an ex parte appeal is more than ten times less likely to dissent than a Federal Circuit (CAFC) judge. Relying on internal USPTO policies and former PTAB judges’ personal experiences, a recent spate of commentary has provided different explanations regarding the rarity of dissents for ex parte appeals.  We were still left wondering why some judges go out of their way to write dissents.  In an effort to better understand this issue and what the dissents might reveal about the ex parte appeal process in general, we conducted a statistical analysis of dissents in recent ex parte appeal decisions.