The First Post-IPR Director Reviews are Denied

One of the topics to be discussed at tomorrow’s PPAC meeting is USPTO operations following the Supreme Court’s 2021 Arthrex decision.  In Arthrex, the Supreme Court created an additional layer of review by the PTO Director in Inter Partes Review (IPR) proceedings following a PTAB final written decision.  PTO Acting Director Drew Hirshfeld has considered the first two request for Director Review, and denied both requests. (IPR2020-00081 and IPR2020-00320).  It appears that the Director personally considered both cases rather than delegating the decision back to the PTAB or another Official.  Neither decision reach the merits but rather perfunctorily state:

It is ORDERED that the request for Director review is denied; and FURTHER ORDERED that the Patent Trial and Appeal Board’s Final Written Decision in this case is the final decision of the agency.

I expect that this approach will be the standard for almost all cases going forward.


Monday March 1: US v. Arthrex — Was the PTAB Unconstitutionally Appointed

by Dennis Crouch

United States v. Arthrex, Inc. (Supreme Court 2021)

  1. Whether, for purposes of the Appointments Clause, U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges of the U.S. Patent and Trademark Office are principal officers who must be appointed by the President with the Senate’s advice and consent, or “inferior Officers” whose appointment Congress has permissibly vested in a department head.
  2. Whether, if administrative patent judges are principal officers, the court of appeals properly cured any Appointments Clause defect in the current statutory scheme prospectively by severing the application of 5 U.S.C. 7513(a) to those judges.

On Monday, March 1, 2021, the Supreme Court will hear oral arguments in this important case focusing on administrative power of the USPTO Patent Trial & Appeal Board.  PTAB judges have cancelled thousands of issued patents — that judicial role (with little direct control guidance from the USPTO Director) suggests that the PTAB judges are “Officers of the United States” that must be appointed by the President.  Although PTAB decisions are not directly reviewable by the USPTO Director, the director has substantial authority in controlling panel selection, rules of practice, and job performance.  All those suggest that perhaps the judges are “inferior Officers” that may be appointed by a Head of Department – such as the Secretary of Commerce.  If the Principal Officer theory prevails, the potential result is that a substantial number of PTAB Decisions will be rendered void.

The Federal Circuit decision in the case was a bit quirky, to be mild. The appellate court agreed with the patentee that the judges were Principal Officers that should have been appointed by the President.  However, the court also purported to “save” the appointments by eliminating some of the statutory rights provided to the Judges under the APA via judicial fiat. That severing, according to the court, was sufficient to reduce the judges once again to Inferior officers.

None of the parties were satisfied with this result, and each petitioned for writ of certiorari.  The Supreme Court granted the writ (as to the two questions above) and consolidated the cases.

I contacted my Mizzou Colleague and Constitutional Law Scholar Prof. Tommy Bennett for his take on the case.  Bennett agrees that the parties have presented differing theories of authority and power.  If you focus only on decisional authority, then Arthrex has a case that these are Officers requiring presidential appointment.  However, the staffing and organizational authority lies with the PTO Director who can “appoint, assign, and re-assign any APJ for any reason [and] set the rules and procedures by which PTAB proceedings are conducted.”  Prof. Bennett explained to me: “Which of these two views of authority prevails will, I think, determine how the case turns out.”

I also contacted Mark Perry for some commentary. Perry is arguing on behalf of the patent challenger Smith & Nephew and provided the following statement.

The PTO Director is charged by statute with providing policy direction and management supervision to the Office, including the Board.  APJs can’t start work without his approval, they have to follow his procedural and substantive guidance while working, and he has a variety of means to review their work.  Moreover, only the Director confirms or cancels patent claims at the conclusion of IPR proceedings, and thus he bears political accountability for final decisions. APJs are inferior Officers under the Appointments Clause, just as their predecessors have been since the Patent Office was created in 1836.

I’ll note here that the 1952 Patent Act required that the PTAB Judges (formerly Chief Examiners) be “appointed by the President, by and with the advice and consent of the Senate.” 35 U.S.C. 3 (1952). This does not mean that it was required, but suggests a close case.  The requirement of presidential appointment ended in 1975 when the duty of appointments was pushed-down to the Secretary of Commerce.  Appointments were later pushed-down further to the USPTO Director until Prof. John Duffy suggested that approach was unconstitutional.

March 1 Oral arguments are set to be divided as follows:

  • 15 minutes for US Gov’t Intervenor
  • 15 minutes for the patent challenger Smith & Nephew
  • 30 minutes for the patentee Arthrex

Deputy Solicitor General Malcolm Stewart will represent the U.S. at oral arguments.  Stewart has been part of the case from the beginning. Although his bosses have changed, I don’t believe that the Gov’t position has substantively wavered.  Mark Perry of Gibson Dunn will argue on behalf of Smith & Nephew; and Jeff Lamkin of MoloLamkin for the patentee.

At the briefing stage, the US Gov’t presented an additional waiver challenge — arguing that the patentee had not preserved its right to appeal on the appointments challenge. SCOTUS declined to hear that issue in this case. However, the issue is central to a parallel appointments challenge in Carr v. Saul.  That case is looking at whether administrative law judges deciding cases under the Social Security Act should have been appointed by the President

Whether a claimant seeking disability benefits under the SSA forfeits an appointments-clause challenge to the appointment of an administrative law judge by failing to present that challenge during administrative proceedings.

DocketCarr v. Saul is set for oral arguments on March 3, 2021.  I expect opinions in the cases will be released together later this term.

Now Precedential: IPR Petitioner who Waived Arthrex issue cannot Raise it on Appeal after Losing the IPR

Cienna Corp. v. Oyster Optics, LLC and Andrei Iancu (Fed. Cir. 2020)

In this case, the Federal Circuit held that an IPR petitioner did not have a right to raise the Arthrex appointments issue on appeal unless the issue was first raised before the PTAB. The court’s basic reasoning is actual and equitable waiver.

The problem with Ciena’s request is that, unlike the patent owner in Arthrex, Ciena requested that the Board adjudicate its petition. It, thus, affirmatively sought a ruling from the Board members, regardless of how they were appointed. Ciena was content to have the assigned Board judges adjudicate its invalidity challenges until the Board ruled against it. Under those circumstances, we find that Ciena has forfeited its Appointments Clause challenge. . . .

In this case, Ciena not only consented to adjudication by the Board, but it affirmatively sought to delay any consideration of its patent challenges by seeking a stay of the district court litigation initiated by Oyster. Any constitutional concern regarding the appointment of the Board judges in this case is negated by Ciena’s forfeiture.

This decision was originally released in January 2020 as a non-precedential opinion. However, on petition from the USPTO, the court has now re-designated the decision as precedential.

In its petition for redesignation, the PTO explained that losing petitioners “continue to raise the same argument [on appeal]. A precedential opinion would reduce that motions practice and save the Court time.”  Examples of pending cases:

  • Moderna Therapeutics v. Protiva Biotherapeutics, Nos. 20-1184, -1186, ECF No. 37 (Fed. Cir. motion filed Mar. 6, 2020);
  • Valve Corporation v. Ironburg Inventions, Nos. 20-1315, -1379, ECF No. 24 (Fed. Cir. motion filed Feb. 28, 2020);
  • Valve Corporation v. Ironburg Inventions, No. 20-1316, ECF No. 22 (Fed. Cir. motion filed Feb. 22, 2020);
  • Palo Alto Networks, Inc. v. Finjan, Inc., No. 19-2151, ECF No. 56, at 4, 32, 49 (Fed. Cir. blue brief filed Nov. 27, 2019);
  • United Fire Protection Corp. v. Engineered Corrosion Solutions, No. 20-1272, ECF No. 16 (Fed. Cir. motion filed Jan. 9, 2020);
  • Comcast Cable Comm. v. Promptu Sys. Corp., No. 19-1947, -1948, ECF No. 26, at 66 (Fed. Cir. blue brief filed Nov. 15, 2019);
  • Comcast Cable Comm. v. Promptu Sys. Corp., No. 19-2287, -2288, ECF No. 18, at 66 (Fed. Cir. blue brief filed Nov. 15, 2019);
  • Baby Trend, Inc. v. Wonderland Nurserygoods, No. 19-2309, ECF No. 28, at 65-66 (Fed. Cir. corrected blue brief filed Feb. 24, 2020).



Patents are Political

By Dennis Crouch

I have been repeating this mantra for quite a while – patents are political. In US v. Arthrex, the Supreme Court added an exclamation point.  By design, the US governmental system places presidential political appointees at the top of each executive agency, including the US Patent & Trademark Office so that the US President can then be held directly accountable for the successes and failures.  Note here that the accountability we’re talking about is political accountability.

The Federalist Papers (Hamilton) repeatedly focused on this issue, albeit not in the patent context: “The blame of a bad nomination would fall upon the President singly and absolutely.”  Federalist 77, for example.  Now, in the words of the Supreme Court, the Presidentially Appointed USPTO Director “is the boss.”


PTO Director Review Process following Arthrex

by Dennis Crouch

The USPTO has released some implementation information for Arthrex. In its decision, the Supreme Court held that the USPTO Director has power to review any IPR decision by the PTAB.  The Agency’s basic approach is as follows:

  1. At times, the PTO Director might initiate review of an IPR Decision sua sponte. This is unlikely.
  2. A party may request review of a final written decision for an IPR/PGR.

The request must be filed within 30-days of the PTAB’s final written decision or rehearing decision. The Agency has indicated that a request for review by the USpTO Director will be considered a request for rehearing under 37 C.F.R. 90.3(b) — that means that no appeal to the Federal Circuit will be due until after the Director acts on the request. In the short-term, the Office is not charging a fee for the request, but a fee will be added.

Request vs Petition: I’m not sure why, but the PTO is not identifying the Request for Review as a Petition for Review.

Pop-Panels and Ex Parte Proceedings: The Supreme Court identified inter partes review as demanding a process for PTO Director Review.  However, it is clear that this extends to Post-Grant and Covered-Business-Method Reviews.  It is unclear though whether it will extend to reexaminations or ordinary ex parte examination. I’m sure that the Director will still receive those petitions this month.  The Office created Precedential Opinion Panels (POP) as a mechanism for giving the PTO Director more direct control over PTAB precedent. The Agency has indicated that the POP system remains in place for now, but is could be eliminated in favor of the simpler system of director review.


Webinar: PTO will host a webinar Thursday, July 1 at 10 a.m. ET on implementation. [LINK]

Supreme Court on Patent Law for April 2021

by Dennis Crouch

Here is a rundown of what’s happening with US Supreme Court cases:

Decided: The court recently decided Google LLC v. Oracle America, Inc., holding that Google’s use of Oracle’s Java API was a fair use and therefore not copyright infringement.  The court made no determination as to whether the API was actually copyrightable in the first place. The case does not expressly decide any patent law issues, but does provide some guidance as to how courts should approach mixed questions of law and fact (such as claim construction) and the right to a jury trial. The jury trial issue was interesting.  Although a number of juries were given fair use questions pre-1791, the court held that our current version of fair use claims its ancestry from the equity rather than common law. Thus, no right to a jury trial on the question of fair use under the Seventh Amendment. “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved.”

Argued: On March 1, 2021, the court heard oral arguments in US v. Arthrex regarding  it is proper for the Secretary of Commerce to appoint the PTAB judges as inferior officers of the United States. Or, instead, are they principal officers of the United States that must be appointed by the US President and confirmed by the Senate (as we do with Article III judges).  Nobody likes the Federal Circuit’s decision, and the question really is which way it should fall. (My guess is that these judges will be seen as inferior officers).  I expect that part of the majority decision (whichever way it goes) will involve interpreting the role and involvement of the PTO Director in PTAB decisions.  An inferior officer decision will interpret the statute as providing the PTO director with substantial authority; a principal officer decision will downplay the role of the PTO director.  Decision should be released by Mid-June 2021.

Argument Pending: One final case is set to be argued this term: Minerva Surgical, Inc. v. Hologic, Inc., focusing on the issue of assignor estoppel.  Can a prior owner of a patent right (such as an inventor) who transfers title to another (typically the employer) later assert in court that the patent is invalid?  In this case, the employee started his own competing company and was sued for patent infringement.  The lower court barred an invalidity defense. Now the question presented:

Whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.

Oral arguments are set for April 21, 2021 with a decision by Mid-June 2021.

Other pending petitions:

Arthrex Issues: There are a large set of pending petitions awaiting the outcome of Arthrex. Some of these raise interesting additional issues, but most of them are pure follow-on cases : Iancu v. Luoma, et al., No. 20-74; Polaris Innovations Limited v. Kingston Technology Company, Inc., et al., No. 19-1459; Comcast Cable Communications, LLC v. Promptu Systems Corporation, et al., No. 20-92; Vilox Technologies, LLC v. Iancu, No. 20-271; Rovi Guides, Inc. v. Comcast Cable Communications, LLC, et al., No. 20-414; RPM International Inc., et al. v. Stuart, No. 20-314; Fredman Bros. Furniture Company, Inc. v. Bedgear, LLC, No. 20-408; Micron Technology, Inc. v. North Star Innovations, Inc., No. 20-679; Iancu v. Fall Line Patents, LLC, et al., No. 20-853; Immunex Corporation v. Sanofi-Aventis U.S. LLC, et al., No. 20-1285; Comcast Cable Communications, LLC v. Promptu Systems Corporation, No. 20-1220; Wi-LAN, Inc., et al. v. Hirshfeld, No. 20-1261

Patent Eligibility: Of the pending eligibility cases, I find American Axle and Ariosa the most interesting:  American Axle & Manufacturing, Inc. v. Neapco Holdings LLC, et al., No. 20-891; NetSoc, LLC v. Match Group, LLC, et al., No. 20-1412; NetScout Systems, Inc. v. Packet Intelligence LLC, No. 20-1289; Ariosa Diagnostics, Inc., et al. v. Illumina, Inc., et al., No. 20-892.

Inventorship & OwnershipOno Pharmaceutical Co., Ltd., et al. v. Dana-Farber Cancer Institute, Inc., No. 20-1258; In re Martillo, No. 20-1126 (suit to quiet title).

ObviousnessAmarin Pharma, Inc., et al. v. Hikma Pharmaceuticals USA Inc., et al., No. 20-1119 (secondary indicia); Sandoz Inc., et al. v. Immunex Corporation, et al., No. 20-1110 (obviousness type double patenting).

Willful InfringementNetScout Systems, Inc. v. Packet Intelligence LLC, No. 20-1289 (this case also raises an eligibility question).

ProcedureEricsson Inc., et al. v. TCL Communication Technology Holdings Limited, et al., No. 20-1130 (is pre-trial denial of summary judgment appealable absent post-trial JMOL); Warsaw Orthopedic, Inc., et al. v. Rick C. Sasso, No. 20-1284 (abstaining in favor of state court jurisdiction); PersonalWeb Technologies, LLC v. Patreon, Inc., et al., No. 20-1394 (preclusion under the Kessler doctrine); Tormasi v. Western Digital Corp., No. 20-1396 (does a convicted state inmate have standing to sue for patent infringement).

Retroactive Application of IPRs: Security People, Inc. v. Hirshfeld, No. 20-1380.

Attorney FeesRoadie, Inc. v. Baggage Airline Guest Services, Inc., No. 20-1420; WPEM, LLC v. SOTI Inc., No. 20-1291.

Antitrust: Abbvie Inc v. FTC (standard for showing objectively baseless “sham litigation” exception to Noerr-Pennington immunity).


United States v. Arthrex: Supreme Court Preserves the PTAB

by Dennis Crouch

United States v. Arthrex, — S.Ct. — (2021)

The Supreme Court has confirmed that PTAB Judges yield unreviewable authority during inter partes review and therefore acting as Principal Officers under the US Constitution. Therefore the APJs should have been nominated by the President and confirmed by the Senate.

BUT, the Court solved the problem in a new way–by making PTAB determinations reviewable by the USPTO Director.  This leaves the PTAB system in-place, but will place major insider political pressure on the PTO Director (and current Acting Director).

= = = =

One irony here is that the person with new political accountability is Drew Hirshfeld.  Although he is sitting in the Director’s seat, Hirshfeld was not appointed as PTO Director by anyone. Although the Supreme Court refers to him as “Acting Director,” the administration has taken pains to clearly state that he is not the acting director. Rather, Hirshfeld’s title is a person “Performing the functions and duties of the Under Secretary of Commerce for Intellectual Property and Director of the USPTO.”

= = =

Chief Justice Roberts wrote the Majority Opinion.

  • Parts I and II Concludes that APJs were acting as Principal Officers.  This portion was joined by Justices Alito, Gorsuch, Kavanaugh, and Barrett. (5 Justices)
  • Part III provides a judicial remedy by rewriting the statute to give the USPTO Director power to directly review PTAB decisions. That portion was only joined by Justices Alito, Kavanaugh, and Barrett. (only 4 Justices).  However, Justice Breyer, Sotomayor and Kagan agreed in a separate opinion that the remedy was proper (although they disagreed about whether it was needed at all).

Justice Gorsuch disagreed with the remedy — He would have simply set-aside the PTAB decisions and let Congress fix the problem.

Justice Thomas dissented from the whole majority approach – finding that Congress expressly identified APJs as inferior officers and that they are two steps below the president (i.e., pretty far down on the chain).  “For the very first time, this Court holds that Congress violated the Constitution by vesting the appointment of a federal officer in the head of a department.”  In addition, Justice Thomas argued that the remedy is inappropriate: “If the Court truly believed administrative patent judges are principal officers, then the Court would need to vacate the Board’s decision.”

= = =

It is telling that Chief Justice Roberts opinion does not begin with a discussion of “rights” but rather Congressional intent to create “a workable patent system.” Here, the court attempts to keep the train on the tracks, but does create real potential trouble by placing the USPTO Director in the political cross-hairs.

This case focuses on Inter Partes Revew proceedings that are decided by the Patent Trial and Appeal Board (PTAB) whose Administrative Patent Judges (APJs) are appointed by the Secretary of Commerce.  This setup though has a Constitutional problem because APJs issue opinions on behalf of the U.S. Government in cases involving private property interests potentially worth billions of dollars. An individual with that power is an Officer of the United States and must generally be appointed by the US President and Confirmed by the Senate, just like is done with Federal Judges and heads of office.  We obviously have some big due process problems when improperly appointed judges issue opinions deciding rights.

Regarding the Appointments Clause, Hamilton wrote that the President should appoint the officers so that the President can be held directly accountable for the good and the bad. “[S]ole and undivided responsibility of one man will naturally beget a livelier sense of duty and a more exact regard to reputation.” The Federalist No. 77.

In its opinion, the Federal Circuit found that APJ’s were improperly appointed, but then issued a savings-severance.  The appellate court invalidated the tenure protections for APJs guaranteed by statute and concluded that was enough to reduce APJs to inferior officers who did not need presidential appointment.  On reflection, the Supreme Court wrote “This satisfied no one.”

Edmond v. United States, 520 U. S. 651 (1997), is Supreme Court’s key case-on-point regarding principal-officer vs inferior-officer vs no-officer-at-all.  Here, the court applied Edmond – finding that the PTO Director has substantial authority over APJs – finding that “he is the boss” in most ways.  BUT, there is one big exception, the PTAB director does not have authority to review the actual APJ decisions.

He is the boss, except when it comes to the one thing that makes the APJs officers exercising “significant authority” in the first place—their power to issue decisions on patentability.

Slip Op.  The Appointments Clause requires politically accountable individuals be responsible in a way that leads directly to the President, and the current setup does not allow for that result. “[T]he public can only wonder ‘on whom the blame or the punishment of a pernicious measure, or series of pernicious measures ought really to fall.'” Slip Op., quoting The Federalist No. 70.  The court also looked to the history of the U.S. Patent System:

When it comes to the patent system in particular, adjudication has followed the traditional rule that a principal officer, if not the President himself, makes the final decision on how to exercise executive power. Recall that officers in President Washington’s Cabinet formed the first Patent Board in 1790. 1 Stat. 109–110. The initial determination of patentability was then relegated to the courts in 1793, but when the Executive Branch reassumed authority in 1836, it was the Commissioner of Patents appointed by the President with the advice and consent of the Senate—who exercised control over the issuance of a patent. The patent system, for nearly the next hundred years, remained accountable to the President through the Commissioner, who directed the work of his subordinates by, for example, hearing appeals from decisions by examiners-in-chief, the forebears of today’s APJs.

Slip Op. All of this leads to the conclusion that APJs are acting like principal officers:

We hold that the unreviewable authority wielded by APJs during inter partes review is incompatible with their appointment by the Secretary to an inferior office.

Note here that the court does not exactly state that “APJs are principal officers” but only that they are acting as such when deciding IPRs.  Regardless, it is improper for them to act-as-such because they are not principal officers.

For a solution, the court rejecting the Federal Circuit’s approach because it does not solve the unreviewability problem.  The Supreme Court offers its own solution: “Decisions by APJs must be subject to review by the Director.”  Here is what the court tells us: Once the PTAB makes its decision, the PTO Director then has the power to review the case and “reach his own decision.” The PTO director’s decision is then reviewable in court.

When reviewing such a decision by the Director, a court must decide the case “conformably to the constitution, disregarding the law” placing restrictions on his review authority in violation of Article II. Marbury v. Madison, 1 Cranch 137, 178 (1803).

Slip Op. The Supreme Court also makes clear that its decision only directly applies to IPR proceedings. “We do not address the Director’s supervision over other types of adjudications conducted by the PTAB, such as the examination process for which the Director has claimed unilateral authority to issue a patent.”

On remand, the Supreme Court is not requiring the PTAB to rehear any of the prior decisions. But, the PTO Director will need to issue decisions in each case indicating whether or not the office will be rehearing the case.

In deciding the cases, the PTO Director should be careful to avoid calling it a rehearing since “Only the Patent Trial and Appeal Board may grant rehearings.” 35 U.S.C. 6.

= = = =

Big questions for the patent system going forward: how does this Director-Review work and how much political lobbying is appropriate?

= = = =

I noted above that Part III – the remedy portion – of Chief Justice Robert’s opinion only garnered four votes. Not a majority.  However, Justice Breyer wrote a separate opinion joined by two others that “agree with its remedial holding.”  I have not parsed through how this statement differs from simply joining Part III.

 = = = = =

The court notes and the Thompson v. Haight decision from Judge Van Ness that I quoted a couple of weeks ago:

Judge William Van Ness—who before taking the bench had served as second to Aaron Burr in his duel with Alexander Hamilton—lamented that Congress had left the door “open and unguarded” for imposters to secure patents, with the consequences of “litigation and endless trouble, if not total ruin, to the true inventor.” Thompson v. Haight, 23 F. Cas. 1040, 1041–1042 (No. 13,957) (CC SDNY 1826). Congress heeded such concerns by returning the initial determination of patentability to the Executive Branch, see 5 Stat. 117–118, where it remains today.

Slip Op.

= = = = =

One interesting bit I saw in the opinion was the note that the Court of Customs and Patent Appeals (CCPA) was “an entity within the Executive branch until 1958.”  In Ex parte Bakelite Corp., 279 U. S. 438 (1929), the Supreme Court called the CCPA a “legislative court and not a constitutional court.” As such, there was no standing requirement under Article III of the Constitution. “Even if the  proceeding is not such a case or controversy, the Court of Customs Appeals, being a legislative court, may be invested with jurisdiction of it.”  In 1958, Congress overturned that decision with a statement that the CCPA “is hereby declared to be a court established under article III of the Constitution
of the United States.”  72 Stat. 848.


Delegating Authority

CustomPlay, LLC v., Inc. (Supreme Court 2022)

New challenge to inter partes review. In this case, the patentee argues: (1) anti-delegation and (2) due process. Questions:

  1. Whether the Patent and Trademark Office (PTO) violated the statutory text and legislative intent of the America Invents Act (AIA) by delegating the PTO Director’s responsibility to determine whether to institute inter partes review (IPR) of issued patents to the Patent Trial and Appeal Board (PTAB), which is the entity that the AIA directs to render final decisions in instituted proceedings.
  2. Whether the PTO’s administration of IPR proceedings violates a patent owner’s constitutional right to due process by having the same decisionmaker, the PTAB, render both the institution decision and the final decision.

On question 1, remember that the statutory language calls for the USPTO “Director” to decide whether to institute an IPR, and then for the “Patent Trial and Appeal Board” to actually conduct the review.  35 U.S.C. 314, 316.  But, in its rulemaking, the USPTO gave authority to the PTAB to both institute and review.


Drawing the Fall Line: No Mandamus for Real-Party-In-Interest Argument

Fall Line Patents, LLC v. Unified Patents, LLC (Fed. Cir. 2020) [FallLine]

In this case, the court begins with a lamentation that a Federal Circuit panel is “bound by the determinations of a prior panel, unless relieved of that obligation by an en banc order of the court or a decision of the Supreme Court.” Quoting Deckers Corp. v. United States, 752 F.3d 949 (Fed. Cir. 2014).*

Here, Fall Line appealed against the PTAB’s real party-in-interest determinations. That argument was recently foreclosed in ESIP Series 2, LLC v. Puzhen Life USA, LLC, 958 F.3d 1378 (Fed. Cir. 2020).  Fall Line attempted to skirt the decision by asking the court to use its “mandamus jurisdiction” to hear the case.  On appeal, the Federal Circuit concluded that would be improper in this case. Although mandamus may be proper to review “institution decisions that implicate constitutional or jurisdictional violations” — mandamus is not proper for an “ordinary dispute” over the construction of an “institution-related statute.”  Fall Line’s argument would have carried more weight – but for Thryv.

While we [previously held] that statutory prerequisites to the Director’s authority to institute an IPR were not related to institution within the meaning of § 314(d), the Supreme
Court disagreed with that conclusion in Thryv.

Slip Op.

Fall Line also argued that the Arthrex severance was inadequate to cure the appointments clause problem with PTAB judges. Here, the court concluded that argument was considered and rejected in the Arthrex decision itself. “As a panel, we are bound.”

Still, Fall Line will get a new trial at the PTAB under Arthrex.

= = = =

Note here that the opening line of the case doesn’t actually apply to this decision because it was issued with the following caveat: “This disposition is nonprecedential.”

Patentee Cannot Escape Estoppel via Pre-IPR-Institution Disclaimer

Arthrex v. Smith & Nephew (Fed. Cir. 2018) [Anthrex Decision].

The dispute in this case is about what should happen when a patentee disclaims its patent claims prior to an inter partes review institution decision.  The Arthrex patent at issue is U.S. Patent No. 8,821,541 which covers a suture anchor — similar to a dry-wall anchor, but sticks into flesh.

After Smith & Nephew filed its IPR petition Arthrex disclaimed the challenged claims.  PTO rules state that “No inter partes review will be instituted based on disclaimed claims.” 37 C.F.R. § 42.107(e). And, following the rule, the PTAB (acting pre-institution on in the shoes of the PTO director) terminated the petition without instituting the IPR.

Adverse Judgment: Following the disclaimer, the Board also issued what it termed a “Judgment Granting [Patentee’s] Request for Adverse Judgment Before Institution of Trial.”  The adverse judgment here is important because it carries with it estoppel against the patentee from “taking action inconsistent with the adverse judgment, including obtaining in any patent . . . [a] claim that is not patentably distinct from a finally refused or canceled claim.”  37 C.F.R. § 42.73(d)(3)(i).  Anthrex is has continuation applications pending with similar claims that would seemingly be impacted.

Request for Adverse Judgment. On appeal, Anthrex took issue with the Board’s determination that it had “requested” an adverse judgment. Rather, in its preliminary response to the IPR, Anthrex particularly stated that it was not requesting an adverse judgment. On appeal though, the Federal Circuit sided with the PTO — giving effect to 37 C.F.R. § 42.73(b)’s statement that “disclaimer of the involved application or patent” will be “construed to be a request for adverse judgment.”

The major difficulty I have with the decision here is that it intermingles pre- and post- institution language.  This is reflected in the rules adopted by the PTO, but not in the actual AIA that separately spells out authority and procedure for IPR institution decisions as compared with IPR trial.  Here, Anthrex appears to have not directly challenged the PTAB’s authority to issue an adverse judgment pre-institution.

Adverse Judgment Affirmed.

= = = =

Note – in the case the court also discusses why it has jurisdiction over this particular appeal.

= = = =

The decision for the court was penned by Judge Dyk and apparently joined by Judge O’Malley.  Judge O’Malley also wrote a concurring opinion explaining:

I write separately to point out that I have doubts about whether the Director had the authority under 35 U.S.C. § 316 (or any other statutory provision) to issue that regulation [i.e., 37 C.F.R. § 42.73(b)] or whether, if so, the regulation was properly promulgated.

The opinion is only a concurring opinion because the patentee here did not raise a facial challenge to the regulation.

In addition to Judge O’Malley’s concurring opinion, Judge Newman wrote in dissent – arguing that the regulation should be interpreted as only applying once an IPR is instituted.

In re ESIP: No Arthex challenges in closed case

By Jason Rantanen

In re ESIP (Panel: O’Malley, Reyna, Chen) (link to decision: In re ESIP SERIES 2)

This is a short nonprecedential decision in a petition for a writ of mandamus that was issued today but that isn’t on the Federal Circuit’s website.  (I don’t see why the Federal Circuit doesn’t just put all dispositive orders on its website; it already puts Rule 36’s and many orders in petitions for writs of mandamus on the site.)   The petitioner, ESIP, was the patent owner of a patent that was the subject of an inter partes review proceeding at the PTO.  The PTO initiated review over ESIP’s objection, and subsequently concluded that the claims were obvious.  ESIP appealed.  The Federal Circuit affirmed the obviousness determination and held that it was barred from reviewing the institution decision because that decision is nonreviewable under 35 U.S.C. 314(d).  The Supreme Court subsequently denied cert and the PTO issued a certificate of cancellation.

After the Supreme Court issued its Arthrex decision, ESIP filed a petition for Director review in the IPR proceeding in light of Arthrex.  The PTO sent an email saying that the petition was untimely.  ESIP petitioned the FEderal Circuit for a writ of mandamus.

The Federal Circuit denied the petition, ruling that (1) under the circumstances ESIP cannot directly appeal from the PTO’s email, and (2) mandamus is inappropriate here.  “ESIP could have raised an Appointments Clause challenge and sought rehearing in its prior appeal. Moreover, ESIP has not pointed to any clear and indisputable authority that the PTO violated in refusing to reopen and rehear this particular matter, which is subject to a final judgment and cancellation certificate.”

Petition denied.

Update: The Order is now available on the court’s website: 



Texas Two-Step Cannot Avoid Licensee Liability

by Dennis Crouch

Plastronics Socket Partners v. Hwang (Fed. Cir. 2022) (non-precedential).

There is a lot going in this decision, but the crux of the appeal is a license interpretation question.  Here are the rough facts:

  • Hwang licensed its patent rights to Plastronics Socket.
  • Plastronics Socket split into two companies: Plastronics Socket and Plastronics H-Pin under Texas “divisive merger” statute.   (It is odd, but under Texas law, a division in this way is legally defined as a merger).
  • As part of that split, Plastronics H-Pin took on sole responsibility for the license. Plastronics H-Pin made the licensed products (h-pins) and sold them its sole customer Plastronics Socket at a very low rate — thus greatly reducing the royalties owed.
  • Plastronics Socket resold the product, but argued that it was no longer bound by the contract because the contract liabilities had been shifted to Plastronics H-Pin.

In the appeal, the Federal Circuit confirmed that the “divisive merger” cannot be used to escape from contract obligations.  Thus, Plastronics Socket still owes the 3% that it agreed to pay for its own sales.

= = =

Statute of Limitations: Plastronics also had a counterclaim. In particular, Hwang had a right to further license the patent, but only with approval from Plastronics. Hwang admitted that he had licensed the patent, but that the license occurred 9 years before the lawsuit began and thus was outside of the 4-year statute of limitations under Texas law.  The Texas allowed the claim — since it was an ongoing license.  On appeal, however, the Federal Circuit reversed — holding that the “breach of contract … arose from a single, unauthorized license grant … almost ten years before Plaintiffs filed suit.”  As such, the case was beyond the statute of limitations.  The court distinguished other situations regarding periodic payments of royalties, where each missed payment is seen as another breach and thus can restart the statute of limitations. See Hooks v. Samson Lone Star, LP, 457 S.W.3d 52, 68 (Tex. 2015).

= = = =

These little H-pins are tiny, but have been important to the semiconductor industry:

= = = =

Cert Denied; and What is left?

Supreme Court today denied certiorari in two patent cases:

  • Fast 101 Pty. Ltd. v. Citigroup Inc., No. 20-1517 (patent eligibility)
  • Comcast Cable Communications, LLC v. Promptu Systems Corporation, No. 20-1220 (Arthrex related, but the SCT petitioner is the patent challenger party who initiated the IPR in the first place).

The court has not yet granted certiorari for any patent cases for next term. There are a few interesting ones pending that should get an up/down vote (or CVSG) in the next couple of weeks:

  • Patent Eligibility: NetSoc, LLC v. Match Group, LLC, No. 20-1412;
  • Obviousness: Amarin Pharma, Inc., et al. v. Hikma Pharmaceuticals USA Inc., No. 20-1119;
  • Attorney Fees: Roadie, Inc. v. Baggage Airline Guest Services, Inc., No. 20-1420;
  • Civil Procedure: Rick C. Sasso v. Warsaw Orthopedic, Inc., No. 20-1452; Warsaw Orthopedic, Inc., et al. v. Rick C. Sasso, No. 20-1284.

There is also a pair of cases pending certiorari involving Obamacare reimbursement that could be big $$$$.  United States v. Maine Community Health Options, No. 20-1432; Common Ground Healthcare Cooperative v. United States, No. 20-1200; United States v. Common Ground Healthcare Cooperative, No. 20-1536.

= = = = =

I should mention that we are still awaiting two merits decisions that should be released by the end of June 2021.

  • Arthrex (proper appointment of PTAB judges)
  • Minerva (assignor estoppel)

– DC

Cert Denied Feb 2021

Two patent cases denied certiorari today:

  1.  GS Cleantech Corporation, et al. v. Adkins Energy LLC, et al., No. 20-769 (Standard of review when appealing an issue decided on summary judgment that later served as the basis for an inequitable conduct finding).
  2. adidas AG v. Nike, Inc., No. 20-728 (are PTAB judges principal officers?)

The adidas decision confused me a bit – the court has held over other cases on the same question awaiting the outcome in Arthrex that is set for Oral arguments on March 1, 2021.  Nike’s patents are challenged. U.S. Patent No. 7,814,598 and No. 8,266,749.  The claims appear to be broadly directed to making a shoe-upper from cloth made in a circular knitting machine.


PTAB Violates US Const. Appointments Clause

by Dennis Crouch

We have a more complete post coming on Monday, but wanted to highlight Arthrex v. Smith & Nephew (Fed. Cir. 2019). In Arthrex, the Federal Circuit held that the PTAB Judge (APJ) appointments process “violates the Appointments Clause, U.S. Const., art. II, § 2, cl. 2.”  In particular, the court held that APJs are “principal officers” and thus require appointment by the President rather than merely the Secretary of Commerce.  The court cited and relied upon Prof. John Duffy’s paper that started this whole process: John F. Duffy, Are Administrative Patent Judges Constitutional?, 2007 Patently–O Patent L.J. 21, 25 (2007) (concluding that administrative patent judges are officers as opposed to mere employees).

In the case, the court also provided a remedy — invalidating a portion of the statute that limited the PTO’s ability to remove APJs from the board. By making removal easier, the PTAB Judges are then re-classified as inferior officers — and thus were properly appointed.


Duke Law Conference – Constitutional Principals: Administrative Adjudication and Arthrex

Jason Rantanen

In United States v. Arthrex, Inc., the Supreme Court will consider the application of the Appointments Clause to Patent Trial and Appeal Board judges–specifically, whether PTAB judges are principal officers who must be appointed by the President and confirmed by the Senate, and whether the proper remedy is to sever their statutory removal protections.

To address these issues, The Center for Innovation Policy at Duke Law and the Duke Law Program in Public Law will host a Zoom discussion on Friday, February 12, noon to 1:30 p.m. Commentators will include the Honorable Timothy B. Dyk and renowned academics whose scholarship has focused on the key patent, administrative, and constitutional issues.  Below are the details.

February 12, 2021
12:00 noon – 1:30 p.m.
Virtual [
Register here]

12:00 noon–12:45 p.m. | Panel I: IP and Innovation Policy
The Honorable Timothy Dyk
Professor John Duffy
Professor Melissa Wasserman
Moderator: Professor Arti Rai

12:45 p.m.–1:30 p.m. | Panel II: Administrative and Constitutional Law
Professor Michael Asimow
Professor Jennifer Mascott
Professor Nina Mendelson
Professor Christopher Walker
Moderator: Professor Stuart Benjamin

Contact Balfour Smith ( or Kelli Raker ( for more information.



Patent Law and Institutional Choice

On his wonderful Fed Circuit Blog, Professor Taylor is hosting an interesting online symposium on the topic of Patent Law and Institutional Choice with the following nine thought provoking essays:


Missing Decisions and the Federal Circuit

By Jason Rantanen

Last week the Federal Circuit issued two interesting orders in appeals from the USPTO.   In the first, In re Zhu (Appeal No. 2021-1761), Sept. 13, 2021, the Federal Circuit vacated the decision of the PTAB and remanded the case to the PTO “for reconsideration of whether the claims are directed to an improvement in computer functionality, especially in light of this court’s recent case law.”  (internal quotations and brackets removed).  The context of this, according to Tiffany Hu, was the Federal Circuit’s 2020 Uniloc v. LG ruling together with the PTO’s own request for a remand “to permit further proceedings” – i.e: this was a patent eligible subject matter issue that the PTO decided to take another look at while the appeal was pending.

The second, In re Boloro (Appeal nos. 2019-2349, -2351, -2353), Sept. 16, 2021, was an order by the Federal Circuit remanding the case to allow Bolero to request Director rehearing of the final written decisions in light of the Supreme Court’s decision in United States v. Arthrex, Inc., 141 S.Ct. 1970 (2021).   The Federal Circuit had previously issued an order remanding the case for assignment to a different panel, its earlier remedy for the Constitutional appointments issue with patent judges.  As Andrew Karpan recently wrote, this order extends the effects of Arthrex to ex parte appeals.

On their own, neither of these orders are that notable.  They are nonprecedential orders that contain little more explanatory reasoning than a summary affirmance under Rule 36.  On the other hand, they were enough for Law360 authors to write about.

What’s more interesting is that neither was posted to the Federal Circuit’s website.  They’re only available in PACER.  This is not itself all that unusual.  Historically, dispositive orders like these would vanish into the ether – becoming what Merritt McAlister recently characterized as Missing Decisions.  They are never published in reporters, including the Federal Appendix, and aren’t in the major research databases.  Indeed, I didn’t find either of these decisions in Westlaw or Lexis when I searched yesterday afternoon.  Yet, they are judicial decisions, and in an age where lawyers, judges and scholars have come to think that all law (or at least, all appellate decisions) is easily accessible, they highlight that it’s not.

In a forthcoming essay response to Professor McAlister’s Missing Decisions, I examine the one federal appellate court that for technical reasons McAlister didn’t  include: the Federal Circuit.  What I find is that the Federal Circuit is quite good about putting its opinions and Rule 36 summary affirmances on its website.  But there are also a lot of missing decisions, which are concentrated in certain areas.  This is concerning if our frame of reference for judicial decisionmaking is defined by what’s readily available on court websites and commercial legal databases.

Here are my main findings:

  • Based on a comparison of docketed appeals filed between 2008 and 2018 to decisions posted to the Federal Circuit’s website, 45% of docketed appeals are decided in an opinion released on the court’s website, 17% are decided in a Rule 36 summary affirmance released on the court’s website, and the remaining 37% have neither an opinion nor Rule 36 available on the court’s website.
  • The number of documents released by the court on its website are about the same as the number of documents available in the big commercial legal databases (Westlaw, Lexis & Bloomberg).  This may be because, as McAlister describes, these sites tend to pull directly from the same pool that is posted to the court’s website or just collect directly from the court’s website.
  • Taking a closer look at appeals filed in 2015, of the 497 docketed appeals without a terminating document available on the court’s website (31% of the total), a large portion involved voluntary dismissals by the appellant (303) or the parties jointly or dismissal for failure to prosecute (72).  However, there were a moderate number of appeals dismissed for lack of appellate jurisdiction (31), transferred (23), and even decided by a merits order (16).  None of these were released on the court’s website and when I looked for some of them in Westlaw and Lexis, they weren’t there either.  All were designated as “nonprecedential.”

The bottom line is that when it comes to substantive merits decisions and decisions designated by the court as “precedential,” almost all of these appear to be on the court’s website.  But there’s a host of other nonprecedential decisions–many dealing with jurisdictional issues–that aren’t.  There are also decisions in petitions for writs of mandamus, which the court currently appears to mostly be releasing on its website although that hasn’t always been the case.

Given all this, my recommendation parallels that of McAlister: the Federal Circuit should release all dispositive orders on its website, not just decisions labeled as “opinions” or summary affirmances under Rule 36.  This would be consistent with both its practice of releasing Rule 36 summary affirmances (which contain less judicial reasoning than most of the dispositive orders that it doesn’t release) and the overall goal of judicial transparency about decisions.  And for those who think that having access through PACER alone is enough, Prof. McAlister and others have described in depth why that’s not the case.

There’s more in the essay itself, which also contains links to the data I used archived on the Harvard Dataverse.    Here’s a link to the preprint of the essay: Missing Decisions and the Federal Circuit.

Thanks to Dmitry Karshtedt for calling these two Law360 articles to my attention.  And here are copies of In re Zhu and In re Boloro that I pulled from PACER.

Comments on this post are closed.

IPR Games: RPI; No Appeal; and Analogous Arts

CyWee Group v. Google (Fed. Cir. 2021)

Google won its IPR challenge against CyWee’s U.S. Patent Nos. 8,441,438 (claims 1 & 3-5) and 8,552,978 (claims 10 & 12). On appeal, the Federal Circuit has affirmed with a short opinion by Chief Judge Prost focusing on three discrete issues:

Real Party in Interest: The patentee argued that Google did not disclose all real parties in interest as required by statute 35 U.S.C. § 312(a)(2).  On appeal, the Federal Circuit held that institution stage real-party-in-interest questions are institution related and thus is not reviewable under the no-appeal provision of 35 U.S.C. § 314(d).  This issue was previously decided in ESIP Series 2, LLC v. Puzhen Life USA, LLC, 958 F.3d 1378 (Fed. Cir. 2020).   One difference here from ESIP is that the challenge was not raised to the institution decision itself, but rather as part of a post-institution motion to terminate based upon newly discovered evidence.  On appeal though, the Federal Circuit found the new motion equivalent to a request to reconsider the institution.  The court also held that the Board’s refusal to allow ESIP additional discovery was “similarly unreviewable” because the discovery ruling is tightly associated with the institution decision.

The court did not delve into the RPI issue, but CyWee was complaining about a coordinated effort by defendants in the district court litigation (including Samsung and Google) to ensure that Backmann was only seen by the Board and not also by Judge Bryson who was sitting by designation in the district court.

Approximately one month after Google filed its IPR petitions, Samsung dropped Bachmann from its invalidity contentions in the Samsung Litigation. This is consistent with what appears to be a coordinated effort between Samsung and
Google to block consideration of Bachman in the Samsung Litigation before Judge Bryson. Due to Bachmann’s shortcomings, neither wanted a summary judgement decision issuing from the district court, as CyWee’s lawsuit against Samsung was speeding toward trial and would outpace the Google IPRs. Dropping Bachmann from the Samsung Litigation assured that it could be addressed solely by the Board. This plan became more evident in January 2019 when, after the Google IPRs had been filed, Samsung moved to join the Google IPRs, thereby resurrecting its ability to rely on the Bachmann.

The PTAB concluded that this timing alone was not sufficient to find Samsung to be a Real Party in Interest and likewise found no RPI even though Samsung was being accused of infringement based upon its use of Google’s Android product.  In its decision, the PTAB noted that the fact that Patent Owner had sued each company separately, in a separate lawsuit, also provided evidence that they are not real parties in interest. (I’d call this final conclusion quite tenuous).

Appointments Violation: The patentee raised an appointments clause issue, that was rejected under Arthrex (Fed. Cir. 2019). In particular, the Federal Circuit’s Arthrex decision purported to cure all appointments clause issues for AIA Trials that had not yet reached a final written decision. It is possible that this issue will get new legs once the Supreme Court issues its opinion in the case.

Obviousness: On the merits of the obviousness case, the patentee argued that the key prior art reference was not “analogous art” and therefore could not be used for obviousness.  There are traditionally two ways to find a reference “analogous”:

  1. If the art is from the same field of endeavor, regardless of the problem addressed; or
  2. If the art is “reasonably pertinent to the particular problem with which the inventor is involved.” Bigio.

The CyWee patents cover a “3D Pointing Device” that uses a particular comparison algorithm for improved error compensation.  The prior art (Bachmann, U.S. Patent No. 7,089,148), was created by the Navy and is directed to motion tracking of bodies. Thus, the PTAB found that it was not from the “same field or endeavor.”

The PTAB did, however, conclude that Bachmann was “reasonably pertinent to the particular problem with which the inventor is involved.”  In particular, Bachman discloses a comparison algorithm for improved error compensation associated with the movements of a 3D pointing device.  Note here, if you look at the image above, you don’t see any “pointing”, but the Board broadly defined the term to include a device to “control actions on a display.” Thus, we have a reference addressing the particular problem addressed in CyWee’s patents — and thus it is analogous.  On appeal, the Federal Circuit affirmed on substantial evidence. (Analogous arts determination is a question of fact).

CyWee argued that there were too many differences between its invention and Bachmann to allow the reference to be considered analogous.  The Federal Circuit rejected that argument — holding that “a reference can be analogous art with respect to a patent even if there are significant differences between the two references.” Quoting Donner Tech., LLC v. Pro Stage Gear, LLC, 979 F.3d 1353 (Fed. Cir. 2020).

Note. Jay Kesan handled the appeal for the patentee; Matthew A. Smith for Google.

Note 2. The diagram looks a lot like a Wii. CyWee’s patents claim priority back to 2010 (Wii was released in 2006). [UPDATE – I had a big typo with a 2001 priority date. That would make a bit difference. Sorry.]


Finjan’s Claims in IPR

Palo Alto Networks, Inc. v. Finjan, Inc. (Fed. Cir. 2020)

Note – I originally misread this decision as applying the Phillips standard for claim construction. On review, I realize that I misread the decision. The court explains:

For petitions for inter partes review filed on or after November 13, 2018, the Board applies the Phillips district court claim construction standard. 37 C.F.R. § 42.100(b) (2018); Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) (en banc); Immunex Corp. v. Sanofi-Aventis U.S. LLC, 977 F.3d 1212, 1216 & n.2 (Fed. Cir. 2020). For petitions for inter partes review filed before November 13, 2018, like Palo Alto’s, we apply the broadest reasonable interpretation claim construction standard.

So, my original opinion–that the change in claim construction made the difference–is obviously wrong.

= = = =

This appeal stems from an IPR proceedings filed by Palo Alto (PANW) against Finjan’s US. Patent No. 8,141,154.  Back in 2017, the Board originally sided with Finjan and confirmed patentability of the claims (not proven unpatentable). In a 2018 appeal, however, the Federal Circuit vacated that decision under SAS.  The IPR had only been partially-instituted and the Supreme Court in SAS held that partial-institution is improper.   On remand, the Board expanded its institution to all challenged claims and then again sided with the patentee — finding none of the challenged claims were proven unpatentable.  On appeal here, the Federal Circuit has affirmed. (more…)