Guest Post by Walker and Wasserman: Situating PTAB Adjudication Within the New World of Agency Adjudication

Guest post by Christopher J. Walker, The Ohio State University Moritz College of Law and Melissa F. Wasserman, The University of Texas School of Law

In 2011, Congress created a series of novel proceedings for private parties to challenge issued patents before the newly formed Patent Trial and Appeal Board (PTAB). While the PTAB proceedings are immensely popular, they have also been controversial. A series of legal challenges to these new adjudicatory proceedings are working their way through the federal judiciary and up to the Supreme Court, and the latter is deciding this Term the constitutionality of PTAB adjudication. Yet to date, there has been no sustained comparison of these new adjudicatory proceedings with other agency adjudications. This comparison could be provide numerous payoffs, including highlighting the unique facets of PTAB adjudication that may serve for successful legal challenges as well as providing opportunities for improving the decisional processes of adjudicatory boards.

In The New World of Agency Adjudication, we seek to begin this endeavor by situating PTAB adjudication in the modern administrate state. Every administrative law student learns the basics of “formal” adjudication under the Administrative Procedure Act (APA). The paradigmatic APA-governed formal adjudication involves an evidentiary hearing held before an administrative law judge (ALJ) wherein parties are entitled to oral arguments, rebuttal, and cross-examination of witnesses. The ALJ’s decision is then reviewable by the agency head, who typically can reverse the decision for largely any reason. Thus, the critical difference between APA formal adjudication—also known as Type A adjudication—and the judicial model is that the agency head has final decision-making authority.

The vast majority of agency adjudications today, however, do not take the form of APA-governed formal adjudication. The new world of agency adjudication comprises agency actions that are adjudicated by non-ALJ agency personnel that have diverse titles, such as administrative judge, administrative appeals judge, hearing officer, immigration judge—just to name a few. These non-ALJ judges have less independence and protections than ALJs. A substantial portion of these proceedings are known as Type B adjudications which still require evidentiary hearings, and hence are relatively formal. In contrast to APA governed formal adjudication, however, the APA imposes virtually no requirements on these proceedings including agency head review. Yet similar to Type A adjudication, a common feature of Type B adjudication is that the agency head has final decision-making authority.

How do the PTAB proceedings fit within this modern world of agency adjudication? Although the new PTAB proceedings have many of the hallmarks of APA formal adjudication, they lack at least two features that suggest they should not receive a Type A classification. Perhaps most saliently, the Patent Act requires these proceedings to be presided over by administrative patent judges, not administrative law judges. The second critical difference is that the Director of the Patent Office does not have final decision-making authority over PTAB determinations. Although an aggrieved party to a PTAB proceeding can file a request for a rehearing by the Board, the Director does not have the authority to review PTAB determinations as a matter of right. As a result, we argue the best understanding of PTAB proceedings is that they are Type B rather than Type A adjudication. The more difficult question is how do the new PTAB proceedings stack up to its Type B adjudication peers? We conclude quite favorably. Drawing on a recent ACUS study that focuses on identifying the best practices of Type B adjudications, we find that PTAB meets the majority of these recommendations and scores as well as most Type B proceedings.

Our Article concludes by exploring one critical difference between PTAB proceedings and most Type B adjudications: the lack of agency-head review of PTAB determinations. The standard administrative model vests final decision-making authority with the agency head for a number of reasons, including providing the agency head with policy control and the ability to bring consistency to the adjudicatory board decisions. While the Director does not have the authority to directly review PTAB determinations, she does have the ability to influence PTAB outcomes. More specifically, the Director can assign APJs to a panel that share her policy views in hopes that they will vote in accordance with her preferences. This “panel-stacking” often occurs once a rehearing and an expanded panel has been granted, so that the expanded, stacked panel reverses the original three-member decision.

Although we conclude that the Director’s designation procedures are statutorily authorized, we argue this procedure raises a colorable due process violation. Case law on permissible agency-head designation procedures is relatively sparse. One exception is the Sixth Circuit’s opinion in Utica Packing Co. v. Block, in which the Secretary of Agriculture replaced an agency adjudicator with another when the initial adjudicator failed to rule as she wished. The appellate court refused to accept the argument that the Secretary, having delegated to the agency adjudicator the original authority to resolve certain matters, could reappropriate that power at will based on disagreement with the adjudicator’s conclusions. Instead, the court held, “[t]here is no guarantee of fairness when the one who appoints a judge has the power to remove the judge before the end of proceedings for rendering a decision which displeases the appointer.”

Under the reasoning set forth in Utica, there is at least a colorable argument that the Director’s designation procedures raise substantial due process violations. Similar to the Secretary of Agriculture in Utica, the Director in effect removes the original panel before the end of the proceedings when she designates an expanded panel that she hopes will arrive at a different substantive outcome. Although the Director does not technically replace any judge, the practical effect of adding a sufficient number of new members to reverse the original panel decision is functionally equivalent to the Secretary of Agriculture’s removal of the judicial officer in Utica.

Given this colorable due process concern, our Article concludes by examining alternative mechanisms the Director of the Patent Office could utilize to ensure that PTAB consistently applies the agency’s policy preferences. While a congressional grant of agency head review would be the most straightforward way to proceed, our Article also urges the Patent Office to consider an increased reliance on rulemaking and precedential PTAB decisions. With respect to the latter, our Article encourages the Patent Office to consider streamlining the process by which it designates PTAB decisions as precedential to provide the Director with more unilateral authority in making this determination.

The current draft of our article is available on SSRN here. It’s forthcoming in the California Law Review in 2019, so there’s plenty of time for us to incorporate any comments you may have.

 

28 thoughts on “Guest Post by Walker and Wasserman: Situating PTAB Adjudication Within the New World of Agency Adjudication

  1. 10

    “colorable due process” means exactly what? Sort of due process? Every due process case that reached SCOTUS had elements of – colorable due process – but failed to provide on the two prongs – substantive and procedural due process. To be sure, PTAB fails on the second prong – since there is no right to cross examination, or to challenge ‘fake’ evidence.

    1. 10.1

      Re: “PTAB fails on the second prong – since there is no right to cross examination, or to challenge ‘fake’ evidence.”
      That is indisputably false for IPRs and other inter partes PTO trials. See. e.g. 37 CFR Part 42.

      1. 10.1.1

        Re “no right to cross examination, or to challenge ‘fake’ evidence.”
        Perhaps you were confusing the advantage of patent owners in normal ex parte PTO application prosecution in obtaining patents, or in reexaminations?

  2. 9

    MM will be interested to see the dashcam from the autodriver car accident the other day. I doubt the actual driver would have stopped from what I can see the j walker seemed to be in a shadow. Though I heard the driver was distracted.

    link to twitter.com

    1. 9.1

      Also probably intesting, allegedly how the auto industry invented j walking.

      link to vox.com

      1. 9.1.1

        Contrast the movement to eliminate guns (protected by the second amendment) and cars – nowhere protected by ANY amendment…

        1. 9.1.1.1

          They’re protected only for a Militia for a State: “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.” Considering that people aren’t in a Militia and are not necessary to the security of a free State, perhaps the “right to keep and bear Arms” is less than what is currently given to us? Is there a “need” for a person to own an AR-15?

          1. 9.1.1.1.1

            see heller decision.

          2. 9.1.1.1.2

            You’ve attempted that line or reasoning before PatentBob, but was not able to provide a cogent response to the notion that the lead-in phrase has been found to be merely hortatory.

            No need then to kick up dust with a level of arms protected (that’s not a point being made, now is it?)

            1. 9.1.1.1.2.1

              provide a cogent response to the notion that the lead-in phrase has been found to be merely hortatory.

              By Tony Scalia, a total p.o.s. human being who inhaled talk radio like crack cocaine. He’s r 0tting in he l l now.

              1. 9.1.1.1.2.1.1

                Your feelings are noted.

                (as is the implicit acceptance of the point that I provided – p.s., every other Justice had the full opportunity to state something in contradiction to Scalia, but you already knew that, right?)

    2. 9.2

      Malcolm is going to have a sad:

      The fourth-fastest area of growth identified by IFI CLAIMS was autonomous vehicles

      See link to ipwatchdog.com

  3. 8

    MM will be interested to see the dashcam from the autodriver car accident the other day. I doubt the actual driver would have stopped from what I can see the j walker seemed to be in a shadow. Though I heard the driver was distracted.

    link to twitter.com

  4. 7

    This study concerns federal administrative adjudication that consists of individualized decision making through legally required evidentiary hearings that is not regulated by the adjudication provisions of the Administrative Procedure Act (APA). I refer to this as Type B adjudication. Type A adjudication is regulated by the APA, whereas Type C adjudication does not utilize legally required evidentiary hearings to make adjudicatory decisions. This study proposes best practices that agencies engaged in Type B adjudication could adopt in procedural regulations.

    This is the FIRST floater that the APA does not apply to the PTAB.

  5. 6

    Sounds harsh, but the academic papers that you post on here are just abysmal. Not even worth my time to tear apart. I know the “academics” don’t care anyway. They have no interest in intellectual honesty.

    1. 6.1

      True that. Dennis is captured by the academics. This blog was so much better when he had a practice.

  6. 5

    Good article. I noted that the author’s paper states that the PTAB does not allow unrepresented participation in an IPR. Is this true ? Can someone proceed pro se or is there a prohibition ? I have not noticed anything in the statute that said you COULD NOT represent yourself and am not aware of any USPTO published rules that say you cannot. Not saying it is a good idea, but is there a prohibition?

    1. 5.1

      Congress’s edict was that Part I did not even need standing.

      They were entirely silent as to having legal representation (although – and this is part of the problem** – they provided enormous latitude to the administrative agency of the executive branch to “write their own rules.”

      **Not to be confused with a plethora of other infirmities of the AIA.

  7. 4

    Contrary to the latest conspiracy theory, since all PTAB post-grant and many other decisions are publicly available, and their APJs are named [both the original 3 and those of any [rarely granted] different decision on reconsideration], all alleged “panel stacking cases” are easily publicly determined. But that is not even in issue in Oil States, and being so rare, pushing on that issue instead of others would be counterproductive to getting rid of any significant number of IPRs.

    1. 4.1

      Also note this serious logical inconsistency in these conspiracy theories:
      If APJ panel members were capable of being told what to decide by the PTO Director, as alleged, then there would obviously be no need to assign new or additional APJs for a “panel stacking” reconsideration reversal of the original panel decision.

      1. 4.1.1

        Ok, so you make the case the PTAB is ultra vires ?

        1. 4.1.1.1

          He cheer leads.

          That is all that he does.

    2. 4.2

      Maybe you should appraise yourself of the issue before you assume your usual cheerleading position there Paul.

  8. 3

    “While the Director does not have the authority to directly review PTAB determinations, she does have the ability to influence PTAB outcomes. ”

    Did they just assume, and potentially mis-gender, the gender of the PTO director?

    Get this se xist nonsense outta here!

  9. 2

    Glad to see more academic study on this topic, which I had complained was lacking before, and until, the Oil State cert.

    But re: “This “panel-stacking” often occurs once a rehearing and an expanded panel has been granted, so that the expanded, stacked panel reverses the original three-member decision.” That is misleading out of context, as the number of times this has happened in the entire long history of many thousands of PTAB decisions [which started several generations before the AIA] is nearly as scarce as hen’s teeth. Also, that includes those cases in which the PTAB panel was expanded, as the statute specifically provides, to include the PTO Commissioner or Director BEFORE any panel decision. Even more to the point, there was not an expanded panel in Oil States.

    1. 2.1

      …as far as we know…

      (the level of phantom expansion – as it is being labeled – is a bottomless shadow-filled unknown [and unknowable] blight, quite similar to the SAWS program which justifiably saw severe backlash)

  10. 1

    One note to add for consideration:

    Not all administrative agencies are created equally. There is a spectrum of power and separation between any internal “adjudicative” and “policy” functions.

    To treat all admin. agencies as if this spectrum were not so is an error of the first order.

    1. 1.1

      Agreed. Admin law requires and analysis of where in the spectrum of ‘independence’ the particular administrative ‘trial’ court resides. Tax court being on one end (most court like), and probably PTAB on the other. Indeed, it’s hard to imagine a less independent court than the PTAB construct, heck the enabling statute itself declares the pto director himself is a ‘judge’ on the TPAB. Of course, ultimately the defect of the TPAB legislative scheme is the dual jurisdiction with the Art III court. Tax Court reconciles the dual jurisdictional issue by broadly applied ‘administrative estoppel,’ comity and full faith and credit to issues litigated in the Art III department. TPAB on the other hand, is openly hostile to the Art III department, it outright rejects Markman and findings of fact. That, at the end of the day, is why IMHO, Oil States must strike down the PTAB.

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