In a recent article, the 717 Madison Place blog published a disturbing article detailing how the United States Patent and Trademark Office (USPTO) picks Administrative Patent Judges (APJs) for expanded Patent Trial and Appeal Board (PTAB) panels. In oral arguments before the Court of Appeals for the Federal Circuit in two separate cases, attorneys representing the USPTO admitted that judges were added to expanded panels in order to insure outcomes desired by the Director of the USPTO. In other words, the Director picks judges known to share her views so as to predetermine the outcome of decisions of supposedly independent and impartial panels.
This breathtaking admission was made in Yissum Research Development Co. v. Sony Corp. (Fed. Cir. 2015). The relevant part of the oral argument reads as follows:
USPTO: And, there’s really only one outlier decision, the SkyHawke decision, and there are over twenty decisions involving joinder where the –
Judge Taranto: And, anytime there has been a seeming other-outlier you’ve engaged the power to reconfigure the panel so as to get the result you want?
USPTO: Yes, your Honor.
Judge Taranto: And, you don’t see a problem with that?
USPTO: Your Honor, the Director is trying to ensure that her policy position is being enforced by the panels.
Judge Taranto: The Director is not given adjudicatory authority, right, under § 6 of the statute that gives it to the Board?
USPTO: Right. To clarify, the Director is a member of the Board. But, your Honor is correct –
Judge Taranto: But after the panel is chosen, I’m not sure I see the authority there to engage in case specific re-adjudication from the Director after the panel has been selected.
USPTO: That’s correct, once the panel has been set, it has the adjudicatory authority and the –
Judge Taranto: Until, in your view, it’s reset by adding a few members who will come out the other way?
USPTO: That’s correct, your Honor. We believe that’s what Alappat holds.
Even though admitting that the Director does not have the authority to decide cases before the PTAB, the USPTO asserts the authority of the Director to circumvent that limitation by stacking panels in order to reverse decisions that the Director does not like. Given the most recent Director’s
A similar admission was made during oral argument in another case, Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. (Fed. Cir. 2017). In a concurring opinion Judge Dyk, joined by Judge Wallach, criticized the practice saying “While we recognize the importance of achieving uniformity in PTO decisions, we question whether the practice of expanding panels where the PTO is dissatisfied with a panel’s earlier decision is the appropriate mechanism of achieving the desired uniformity.”
Given that the Federal Circuit has now passed on two opportunities to take action against this abuse by the Director, it is apparent that the Court will not take any action unless compelled to by a litigant. The PTAB has become a phony tribunal either incapable of or unwilling to fairly decide cases. The PTAB’s rulings are often arbitrary and capricious, refusing to consider all of the evidence or follow established law. Judges are routinely allowed to hear cases involving former clients, ignoring blatant conflicts of interest.
The Supreme Court, in June, agreed to hear a challenge to the constitutionality of allowing the PTAB, an Article I court, to eliminate property rights, something that should only be within the power of an Article III court, in Oil States Energy Services LLC v. Greene’s Energy Group, LLC. Hopefully, the Court will take steps to limit the PTAB’s frequent, routine violations of Due Process or even better, shut down the entire farce. However, the Court has been consistently deciding cases against patent holders for over a decade so hope for a major restoration of patent property rights by the Court is not very likely.