Precedent and Process in the Patent Trial and Appeal Board

Guest post by Saurabh Vishnubhakat, Associate Professor of Law at the Texas A&M University School of Law.  Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, although his arguments here should not be imputed to the USPTO or to any other organization.

On May 9, the USPTO Patent Trial and Appeal Board (PTAB) designated five opinions as “precedential”—the most significant of the four labels that the agency attaches to its administrative decisions.  This action is itself a milestone, as the USPTO has designated only three other opinions as precedential over the last 22 months.  So this is a useful moment to examine the process by which PTAB opinions become precedential and to consider what this new body of administrative precedent means for the patent validity review procedures created by the AIA.

What the Current Precedential Opinions Say

The eight PTAB precedential opinions themselves are as follow:

Designated as Precedential in May 2016

Designated as Precedential in January 2016

Designated as Precedential in July 2014

What the PTAB Designations Mean

PTAB opinions come in four varieties—until recently, it was three—and each serves a different function.  The most difficult to designate and so the rarest are precedential opinions, which are binding in all future cases before the PTAB unless and until they are superseded by later binding authority.  Two particularly strong motivations for designating an opinion as precedential is to resolve a conflict among multiple PTAB decisions and to address novel questions.

By contrast, the largest and least significant set of opinions are routine; all opinions are routine by default, and some further action is necessary to elevate an opinion’s status.  Routine opinions are still binding as to the particular case, but should generally not be cited as persuasive authority except as to their particular facts.

In the middle are two more types of non-binding opinions: informative and representative.  Informative opinions articulate the PTAB’s norms on recurring issues and offer guidance both on issues of first impression and on PTAB rules and practices.  Representative opinions offer a sample of typical decisional outcomes on a given matter.  Until recently, the only middle category was informative opinions, which presented guidance on the rules and practices of the PTAB, representative samples of opinion types, or representative samples of outcomes. On September 22, 2014, the PTAB created a new category for representative opinions—ranked below informative opinions.

In short, representative opinions are a descriptive curation of routine opinions.  Informative opinions go beyond merely surveying an issue and synthesize some further normative guidance.  Precedential opinions go further still and make the synthesis binding.

How the PTAB Designates Opinions

The process for designating opinions resides in the PTAB’s Standard Operating Procedure No. 2 (Rev. 9, Sept. 22, 2014).  Any member of the PTAB may nominate an opinion to be designated as representative, informative, or precedential.  This includes the Director and Deputy Director of the USPTO and the Commissioners for Patents and Trademarks as ex officio members.  Interested parties and members of the public may nominate an opinion within 60 days of its issuance to be designated as precedential.  Nominations are received and referred by the Chief Judge of the PTAB.

Upon a nomination to make an opinion precedential, members of the PTAB discuss the proposal for a prescribed period (usually 10 business days) and then vote.  Approval by a majority sends the opinion to the Director, whose approval is also necessary.  Upon approval by the Director, the opinion is designated as precedential and published (with appropriate notice and opportunity for written objection where confidentiality applies under 37 C.F.R. § 1.14).

For opinions already designated as precedential, any member of the PTAB may suggest that later authority has overcome the opinion’s precedential value.  If first the Chief Judge and then the Director both agree, then the opinion loses its precedential force, and a notice of the change is posted in its place among the list of precedential PTAB opinions.

The Chief Judge of the PTAB may designate any opinion as informative or representative so long as it is not already precedential.

Why the PTAB’s Precedents (and Process) Matter

Both the content of the PTAB’s body of precedential opinions and the PTAB’s process have important implications for ex post administrative review of patent validity.

As to content, it is telling that all eight precedential opinions pertain to the procedural structure of IPR and CBM proceedings, particularly insofar as that procedural structure interacts with the structure of patent litigation in the federal courts.  The separation of patent powers between the executive and the judiciary is now before the Supreme Court in multiple cases, and this body of precedential opinions should be understood as a signal of the USPTO’s strong interest in shoring up its regime of administrative adjudication.

The opinions in SecureBuy, LG Electronics, and Oracle address when earlier civil actions do and do not bar a petition for PTAB review.  Westlake Services addresses estoppel in future CBM review, and there is good reason to expect that the same reasoning will apply to the parallel statutory language that governs IPR estoppel.  Lumentum Holdings rejects a jurisdictional view of certain procedural requirements, preserving the PTAB’s broad authority to choose its cases.  MasterImage 3D frames a patent owner’s ability to amend claims during review.  And Bloomberg and Garmin Int’l address limits on trial-type discovery in both the IPR and the CBM/PGR contexts.  Making these procedural and structural decisions into binding authority is, by definition, intended to bring uniformity to the PTAB’s large and increasing body of case law.

The need for such uniformity is particularly strong right now.  The Supreme Court in Cuozzo v. Lee is evaluating whether the PTAB’s authority in instituting petitions is truly nonreviewable.  The Court in Cuozzo is also considering whether the PTAB’s claim construction standard can properly remain unaligned with federal court standards, a question that turns significantly on the ability of patent owners to amend their claims during review.  The trial-like nature of PTAB proceedings is more generally under attack as to whether IPR and CBM review violate the separation of powers doctrine and the Seventh Amendment jury trial right, as the recent cert petition in MCM Portfolio LLC, Petitioner v. Hewlett-Packard Company (No. 15-1330) suggests.  In this environment of Supreme Court scrutiny, a persuasive argument that PTAB practice is proceeding with institutional coherence may do much to influence the USPTO’s autonomy in administering the validity and scope of patent rights.

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

37 thoughts on “Precedent and Process in the Patent Trial and Appeal Board

  1. It’s notable and interesting that every one of these precedential opinions involves a question specific to the PTAB’S legal process.

    Not a single one of these opinions affects the examining corps in either substance (application of 101/102/103/112/BRI/etc.) or process.

    In other words: The PTAB continues to act more like a review board than a court of law. It is 100% focused on creating a process to resolve individual disputes according to its understanding of the existing law. It wants no part in defining the law. It doesn’t even want to do so through the aggregation of its own individual opinions.

    I can’t say that that’s particularly wrong – the review board function is desperately needed – but it does seem like a lost opportunity. One PTAB decision doesn’t have much legal effect, but thousands of them, together, profoundly define how the law actually operates for patentees. The PTAB’s tacit refusal to bundle up these decisions into some kind of coherent summary creates a zone devoid of information about a key step in the patent appeals process.

    1. Interesting comment. As the “A” stands for appeal, it’s appropriate for the Board to act as a reviewer in that capacity. But as the “T” stands for trial, maybe they should act more in line with what you suggest when they are sitting as a “trial” board.

    2. Even the Federal Circuit – in a recent decision – failed to make the distinction that you are asking for, instead acting as if the AIA did nothing to change the “Trial” view and instead “re-iterated” a more (traditional) “Appeal” view.

  2. We do not read Alice to broadly hold that all improvements
    in computer-related technology are inherently
    abstract and, therefore, must be considered at step two.
    Indeed, some improvements in computer-related technology
    when appropriately claimed are undoubtedly not
    abstract, such as a chip architecture, an LED display, and
    the like. Nor do we think that claims directed to software,
    as opposed to hardware, are inherently abstract and
    therefore only properly analyzed at the second step of the
    Alice analysis. Software can make non-abstract improvements
    to computer technology just as hardware
    improvements can, and sometimes the improvements can
    be accomplished through either route.

  3. While probably not a deciding vote, it should be noted that potential new Justice Garland would likely be highly deferential to the USPTO in these sorts of matters.

    Based on his voting records in other agency cases.

  4. For what it’s worth, shouldn’t all judicial opinions should be implicitly “precedential”? Like facts and like rules should lead to like outcomes, and if they don’t, there should be some explanation. Consistency is critical to fairness. Judges claiming that a decision is “non-precedential” seems like an excuse to avoid consistency and scrutiny. With respect to the Patent and Trademark Office, it is not a panel of appeal judges that issue a patent, it is the PTO that issues a patent. If one panel disagrees with another, they should be confronted with the discrepancy and expected to explain it. The individual judges represent the PTO and it is the PTO that issues patents and makes decisions (which are required to be backed by recorded reasons). The PTO’s decisions should be consistent with each other, or else legal outcomes become more a matter of chance.

    From Cardozo: “The first thing [a judge] does is to compare the case before him with the precedents, whether stored in his mind or hidden in the books. I do not mean that precedents are ultimate sources of the law, supplying the sole equipment that is needed for the legal armory, the sole tools, to borrow Maitland’s phrase,[11] “in the legal smithy.” Back of precedents are the basic juridical conceptions which are the postulates of judicial reasoning, and farther back are the habits of life, the institutions of society, in which those conceptions had their origin, and which, by a process of interaction, they have modified in turn.[12] None the less, in a system so highly developed as our own, precedents have so covered the ground that they fix the point of departure from which the labor of the judge begins. Almost invariably, his first step is to examine and compare them. If they are plain and to the point, there may be need of nothing more. Stare decisis is at least the everyday working rule of our law. I shall have something to say later about the propriety of relaxing the rule in exceptional conditions. But unless those conditions are present, the work of deciding cases in accordance with precedents that plainly fit them is a process similar in its nature to that of deciding cases in accordance with a statute. It is a process of search, comparison, and little more. “

    1. Hierarchy: For what it’s worth, shouldn’t all judicial opinions should be implicitly “precedential”? Like facts and like rules should lead to like outcomes, and if they don’t, there should be some explanation.

      I certainly agree with the second sentence. My take is that, generally speaking, the non-precedential opinions are limited to their specific facts and are nothing more than the application of existing precedent to those facts.

      I do think non-precedential cases should be citable as examples of both how precedent has been applied (correctly and incorrectly, in the minds of the brief writer) and how frequently it has been applied. The Federal rules to the contrary are silly.

  5. The PTAB does not have the authority to make a case precedential. 35 U.S.C. 3(a)2 provides that only the Director of the Patent Office may establish policy direction of the Patent Office. Thus, only the Director of the Patent Office may make a case precedential.

    1. As noted by the author of the post:

      Upon a nomination to make an opinion precedential, members of the PTAB discuss the proposal for a prescribed period (usually 10 business days) and then vote. Approval by a majority sends the opinion to the Director, whose approval is also necessary. Upon approval by the Director, the opinion is designated as precedential and published

      1. …so,

        The political nature of a politically appointed executive agency officer is yet again imbued into the “quasi“-judicial nature of the PTAB, since that person’s imprimatur is required…

        Talk about from the frying pan…

        1. politically appointed

          As opposed to the tooootally objective computer-appointed officers and judges?

          Welcome to America, “anon”!

          Your comment reminds me of one of my all-time favorite patent maximalist whines: “The patent system is being politicized!” Oh noes! A tiny microcommunity of entitled rich people has to defend itself against the little people! The sky is falling! The sky is falling!

          1. …and once again your penchant for “as it ever was” is reflected in your eyes clenched tight view of just why this might be a problem – given a proper understanding of the separation of powers doctrine.

            “Go figure Folks”

            1. a proper understanding of the separation of powers doctrine.

              And who decides what that “proper understanding” is, at any given point in time? Answer: a Court consisting of “politically appointed”, impeachable judges.

              Patent examination in the first instance is “quasi judicial”. Is that unconstitutional according to your “proper understanding”?

              1. Nice attempt at kicking up dust, but just because something is “quasi”-judicial, the possible impact to separation of powers is NOT the same as those instances where specific factors (the lack of objective separation between policy and supposed “objective” judges) is in play.

                Further, your rather ham-fisted “who gets to decide” is not as “cut and dried” as you may imply, because the separation of powers doctrine applies to ALL interactions of the three branches – the implication of your statement being that the judicial branch cannot violate separation of powers because they may the one deciding is simply erroneous (and, gasp, rather kindergartner like)

                Just because you may not like the subject of what is under the microscope of a separation of powers doctrine discussion just does not mean that you should clench tight your eyes to the entire concept.

    1. I agree. Thanks. I think too that we should consider how this is going to play out. Does this give the Director more or less power to control the PTAB, for example.

      1. NW, contrary to unproven suspicions in blog comments, the one clear power the PTO Director has over PTAB decisions is the right to sit in as one of the judges in a final hearing, if he or she wants to. They rarely do, except for some significant de novo legal issues. [E.g., one I recall was whether or not novel computer screen icons could be design patented.]

        P.S. When you say below that “judges ignore them” [precedential PTAB decisions] I assume you mean D.C. or Fed. Cir. judges, not PTAB APJs? IPR APJs would normally already be aware of these precedential PTAB IPR decisions even if the parties failed to cite them.

        1. in pieces then….

          Another power is the ability to choose which judges sit on any one case (related to their ability to sit themselves).

              1. Well that is FN wack – the thing that is blocked is a direct cut and paste from “good Paul’s” post.

                Perceptions, perceptions, perceptions….

  6. How are they going to enforce this? The patent judges ignore them. I guess you can petition for a re-hearing and then maybe it is more likely. So, I guess the petition for re-hearing could become like an appeal. Is the Fed. Cir. then to take these as precedent?

    Seems like you need an appeal board to really enforce these.

  7. persuasive argument that PTAB practice is proceeding with institutional coherence may do much to influence the USPTO’s autonomy in administering the validity and scope of patent rights.

    Institutional coherence has no bearing on a separation of powers argument.

    You either are violating the separation of powers or you are not.

    Whether or not your violations have “coherence” (institutional or otherwise) just does not matter – and to the extent that one wants to make it seem like it matters, the issue is being obscured.

    1. Institutional coherence has no bearing on a separation of powers argument.

      Maybe not in a sterile legal vacuum. But a lack of coherence would certainly make a difference to most judges, including the Supreme ones.

      And it’s certainly going to make a difference generally (and “generally” was the context in which the point was raised by the author).

      1. Except for the opposite fact that it is “generally” NOT as either the article or as your post indicates.

        It does not matter how much lipstick you slap on that pig, it still oinks.

        Other than you being wrong, you would be correct.

  8. The discussion of discovery in the Cuozzo case is important. Also, check the names of the APJs.

        1. Yea, Ned, I did. It was Jameson Lee, Michael Tierney and somebody else I don’t remember. So what am I supposed to take away from that?

          1. AAA JJ, well you are either being too cute, or something. Anywho, why don’t you just copy and paste the names of the judges and see it even gets by the filter.

            1. Why don’t you just tell me what you meant by “Also, check the names of the APJs.” What did you mean by that? What does the names of the APJs have to do with the discussion of discovery in the Cuozzo case?

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