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Back in 1992, 75% of the judges on the Board of Patent Appeals and Interferences sent a memo to the Commissioner of Patents and Trademarks.  The memo objected to instances in which the composition of panels of the Board had been manipulated or re-constituted.  That is a pretty remarkable consensus among the judges (then known as “Examiners-in-chief”) of the Board.

The text of the letter is as follows:

We wish to express our concern regarding matters that carry disturbing implications of which you may not be aware.  There are an increasing number of instances in which the composition of panels of the Board of Patent Appeals and Interferences (BPAI) has been manipulated in a manner which interferes with the decisional independence of the Board and gives the appearance that a predetermined or predecided outcome has been reached in cases appealed under 35 USC §134.

Recently, for example, a randomly selected three member panel, acting pursuant to its statutory authority, reached and signed a decision, favorable to the appellant in Application Serial No. ***.  The issues in this application involved matters requiring special knowledge of *** technology and case law. The three member panel assigned to decide the appeal was constituted of individuals having this special knowledge.

For reasons unknown to us, the Chairman of the BPAI prevented the mailing of that decision.  He subsequently convened a special panel formed only of management officials, namely the Commissioner, the Deputy Commissioner, the Assistant Commissioner for Trademarks, the Chairman and the Vice-Chairman of the BPAI.  All of the original panel members were replaced.  To our knowledge, none of the new panel members has any special expertise or knowledge in *** technology or case law.  The management panel rendered a decision opposite in result to that reached by the legally constituted original panel, making no mention of the earlier decision.  These circumstances reflected an appearance of impropriety, e.g., an appellant being denied procedural due process within the U.S. Patent and Trademark Office.

It is the function of the BPAI to interpret case law of reviewing courts of the United States Patent and Trademark Office and apply this case law in reaching decisions on appeals.  It is the function of either the Court of Appeals for the Federal Circuit or the District Court of the District of Columbia to review the decisions of the BPAI.  There is no statutory authorization for any individual or individuals other than the above-noted Courts for reviewing decisions of the BPAI.

Interference with the decision making process of any agency’s authorized appellate board of review has at least the appearance of being improper.  Compare 5 USC §554.

While we have referenced only a single appeal in which we believe impropriety may have occurred, there is a disturbing pattern of interference with the normal course of deciding appeals by this BPAI, either by special selection of panels or by oral threats to panel members that they will be removed from a panel if they decide “the wrong way.”

The Commissioner is authorized under 35 USC §7 to “designate” the members of a panel.  There is no apparent authority, statutory or otherwise, to un-designate a duly formed panel and to redesignate a completely new panel for any purpose, let alone the purpose of reaching a conclusion opposite to that of the original panel, after the original panel not only reached a decision, but signed that decision.

These matters raise questions of a very serious nature including ultra vires agency action, interference with the judicial independence of the BPAI and denial of an appellant’s right to procedural due process.

We respectfully submit this memorandum to apprise you of these matters and to formally disavow even the appearance that we condone them.

In response to the letter, Commissioner Manbeck responded to the examiners-in-chief that they were not judges.  His response stated in part:

In the last paragraph on page 2 of the communication of April 24, 1992, there is a reference to the “judicial independence” of the Board.  But, the Board is not a judicial body.  It is an administrative body within the Patent and Trademark Office, none of whose members are judges.  The Board’s responsibility is to assist the Commissioner by deciding ex parte appeals and inter partes interference cases.

The members of the Board are employees of the Patent and Trademark Office.  Accordingly, they are expected to follow the policy established by the Commissioner for the Patent and Trademark Office.

More detail about this exchange of letters can be found in this 1994 article: [Link].

I wonder if today’s PTAB would have the mettle to write the letter that their brethren wrote back in 1992, e.g., with respect to recent instances of panel stacking.  Perhaps the recent addition of so many new board judges has imbued the Board with an attitude of supine indifference rather than one of judicial independence.

Back in 1967, Judge Smith of the CCPA dissented from the majority in the opinion of In re Wiechert, 370 F.2d 927, 152 U.S.P.Q. 247 (C.C.P.A. 1967).  Judge Smith opined that a panel of the PTO’s board of appeals at that time had been improperly constituted.  Therefore, Judge Smith remarked that the CCPA had no jurisdiction to review the decision of the board of appeals.  The entire opinion is available [here].

Judge Smith’s dissent is shown below:

SMITH, Judge (dissenting).

The majority opinion of this court rests on the novel concept that an Article III Federal Court does not have jurisdiction to inquire into the legality of an administrative quasi-judicial board whose decision it has been requested to review. This concept is unsupported by authority or precedent and seems to me to be lacking in both reason and logic. The power to inquire into the legality of such a board is a necessary and inherent power of the reviewing court. Such power is the court’s only safeguard against putting its judicial imprimatur on a legal nullity. Our obligation is to dispose of the present controversy in a judicial matter to the end that the duty of this court will not be compromised. As we recently stated, in In re Fischer, 360 F.2d 230, 231, 53 CCPA 1211:

* * * The judicial nature of the proceedings in this court, no matter at what stage, is no longer in question. Lurk v. United States, 370 U.S. 530, [82 S.Ct. 1459, 8 L.Ed.2d 671] (1962) and Brenner v. Manson, 383 U.S. 519, [86 S.Ct. 1033, 16 L.Ed.2d 69] (1966). As stated by the Supreme Court, the bulk of this court’s work involves the disposition of cases arising under Article III of the Constitution, that is cases arising under Federal law and cases to which the United States is a party. These cases and controversies are and must be disposed of in a judicial manner. * * * [Emphasis added.]

Three “principal reasons” are advanced to support the majority position:

(1) The question was not raised on this appeal by appellant;

(2) having raised the question in the Patent Office, he abandoned it by not arguing it before us (except as we insisted on his doing so at the reargument); and

(3) our limited statutory authority precludes our consideration of the question.

While Judge ALMOND and I differ as to how the issue of the legal competency of the board is to be resolved, we have no differences as to the inherent authority of this court to pass upon the issue here raised.

As I see it, the fallacy in the majority opinion results from confusing the issues of an appeal, required to be raised under 35 U.S.C. § 141, with the basic authority of this court, wholly independent of any reason of appeal or other limitations defined in section 141, to consider whether an appeal lies from the “decision” rendered by an alleged illegally constituted tribunal.

The Issue of Jurisdiction

To emphasize the agreement between Judge Almond and myself on this issue, his concurring opinion contains the statement with which I am in full and entire agreement which I here quote and embody in this opinion:

I am not concerned with whether appellant raised the issue of jurisdiction either in the Patent Office or before this court, or with whether the issue is covered by his Reasons of Appeal, or with whether appellant abandoned the issue. It is too well-settled to require citation of authority that jurisdiction of the subject matter is neverwaived in a pending case. This is the unvarying rule even in courts of general jurisdiction, and it should be applicable with special force in this court of limited jurisdiction.

It would also be a matter of no concern if appellant, the Commissioner, and counsel for both parties all agreed that this court has jurisdiction of the subject matter of this appeal. The parties before a Federal court cannot confer appellate jurisdiction by their 941*941 mere consent; only Congress can do so. Since Congress has confined our jurisdiction in ex parte patent cases to appellate review of a “decision of the Board of Appeals” under section 141, I believe we should consider the issue of whether the questionable “board” panel in the present case was legally constituted under section 7, so that it could conceivably render a valid decision on behalf of the “Board of Appeals.” If the “board” panel could not do so because of its illegal composition, this court would lack jurisdiction of the subject matter under the statute.

The basic consideration to which we must give effect, it seems to me, is set forth in the following statement from 5 C.J.S. Appeal & Error § 1355, Want of Jurisdiction (1958):

Inasmuch as lack of jurisdiction in the appellate court renders any decision which it might make on the merits a nullity, if such lack of jurisdiction is patent, or can be readily ascertained by an examination of the record, it warrants the dismissal * * * (citations omitted, 9 columns of cases).

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The oral argument of the day is from NOBELBIZ, INC. v. GLOBAL CONNECT, LLC, No. 2016-1104 (Fed. Cir. July 19, 2017).  I enjoyed listening to this oral argument because there were a lot of references to various court precedents, particularly with respect to claim construction issues.  One of the nice aspects of listening to oral arguments like this is that they serve as a nice refresher about holdings of previous cases.

Prospective appellants will be interested in one sound bite from Judge Dyk.  During the oral argument, the appellee challenged the appellant’s reliance on the summary of the patent to construe the claims — because that argument was apparently not used at the district court.  Judge Dyk responded that it was not waiver to make new arguments on appeal as long as the issue was raised below.  He asserted that there is only waiver of issues — not waiver of arguments. [Listen].  The appellee attempted to refer the court to the Federal Circuit’s Conoco decision.  I believe the appellee was referring to Conoco, Inc. v. ENERGY & ENVIRONMENTAL INTERN., 460 F.3d 1349 (Fed. Cir. 2006), which states:

Normally, a district court faced with a patent infringement suit engages in a two-step analysis, involving: (1) construing the disputed claims of the patent — a matter of law — and (2) comparing the accused device to the patent claims — a matter of fact. Cybor Corp., 138 F.3d at 1454, 1456. However, legal issues in patent infringement suits are not immune to the doctrine of waiver on appeal, and except for certain circumstances, those issues not raised below at the district court cannot be heard for the first time on appeal. Interactive Gift Express, Inc. v. Compuserve, Inc., 256 F.3d 1323, 1344-45 (Fed. Cir.2001). Thus, a party may not introduce new claim construction arguments on appeal or alter the scope of the claim 1359*1359 construction positions it took below. Id. at 1346-47; see also NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1296 (Fed. Cir.2005). Moreover, litigants waive their right to present new claim construction disputes if they are raised for the first time after trial. See Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1360 (Fed. Cir.2004).

Conoco, Inc. v. ENERGY & ENVIRONMENTAL INTERN., 460 F.3d 1349 (Fed. Cir. 2006).  [Link]

The majority decision in NOBELBIZ, INC. v. GLOBAL CONNECT, LLC did base its decision, in part, on the summary of the patent. It did not mention Conoco.

You can listen to the oral argument here: [Listen].

You can review the court’s decision: [here].

The case of Flyers’ Rights v. FAA caught my eye today, as I am a tall person who is ever-aware of the shrinking amount of leg room on airline flights.  In Flyers’ Rights, the appellant appealed to the D.C. Circuit after the FAA denied Flyers’ Rights petition for a rulemaking by the FAA.  The proposed rulemaking had to do with the minimum amount of leg room that should be provided on a flight.

That got me to wondering whether the USPTO ever receives any proposed petitions for rulemaking and what some good new rules might be.  For example, if the vast majority of requests for amendments in IPR proceedings are being denied by the PTAB, should an industry group petition for a rulemaking to correct that situation?

Or, in view of the statement in Versata Development Group v. SAP America, Inc. that states:

The section 101 analysis applied by the PTAB was not legally erroneous under Mayo and Alice. And its underlying fact findings and credibility determinations are supported by substantial evidence in the record.

Versata Development Group v. SAP America, Inc., 793 F.3d 1306, 1336 (Fed. Cir. 2015)

and thus implies that the USPTO’s §101 determinations are based on underlying factual findings (e.g., whether a claim as a whole recites well-understood, routine, and conventional activities),  should an industry group petition for a rulemaking that a USPTO rejection of a claim under §101 must provide evidence that the proposed claim recites well-understood, routine, and conventional activities?

The D.C. Circuit’s opinion in Flyers’ Rights v. FAA is available [here].

The oral argument in Flyers’ Rights v. FAA is available [here].

My favorite quote from the Flyers’ Rights v. FAA decision is:

Flyers’ Rights v. FAA, No. 16-1011 (D.C. Cir. July 28, 2017) at page 13.

Query:  If the Director of the USPTO utilizes panel stacking to implement new USPTO procedure in place of notice and comment rulemaking, has the Director disclosed all the data relied on in reaching its decision?

For more on petitions for rulemaking under the APA see:  [link].

Those of you who like to follow the development of the legal theory of “judicial taking of property,” since that theory was discussed in the plurality opinion in Stop the Beach Ren. v. Fla. Dept. of Env. Prot., 130 S. Ct. 2592, 560 U.S. 702, 177 L. Ed. 2d 184 (2010) will be interested in yesterday’s decision in Petro-Hunt, L.L.C. v. United States [Link].   This appears to be only the fourth time that the Federal Circuit has addressed the “judicial taking of property” cause of action since Stop the Beach issued.

In a footnote in Petro-Hunt, Judge Clevenger notes for the court:

The oral argument of the day is from INTEGRATED CLAIMS SYSTEMS, LLC v. TRAVELERS LLOYDS OF TEXAS INSURANCE COMPANY, No. 2016-2163 (Fed. Cir. Apr. 11, 2017).  The oral argument primarily concerns application of the court’s SECURE AXCESS, LLC, v. PNC BANK NAT. ASSOCIATION decision from earlier this year with respect to how to determine whether a patent is subject to covered business method (CBM) review.

You can listen to the oral argument [here].

You can study the court’s Rule 36 Judgment [here].

The Federal Circuit’s en banc decision in In re Aqua Products should be out soon.  Aqua challenges the Patent Trial and Appeal Board’s amendment procedures, which require the patentee to demonstrate that amended claims would be patentable over art of record.

You can listen to the en banc oral argument [here].

You can review the vacated panel opinion [here].

Aqua Products’ supplemental brief is available [here].

Totally off-track, not particularly pertinent to this case, and not from this case; but, this is one of my favorite sound bites from Judge Dyk about interpreting regulations based on public statements: [Listen].

Those of you who like to try to read the tea leaves of other oral arguments in order to predict how the court is leaning in an en banc appeal might be interested in the oral argument of ZAGG INTELLECTUAL PROPERTY HOLDING CO., INC. v. TECH 21 UK LTD., No. 2016-1976 (Fed. Cir. Apr. 11, 2017).  That oral argument is available [here].

The oral argument of the day comes from INTELLECTUAL VENTURES II LLC v. ERICSSON INC., No. 2016-1803 (Fed. Cir. Apr. 18, 2017).  This case is primarily an obviousness case.

Interestingly, near the end of the decision, Judge Lourie, writing for the court, added the following footnote:

The Board also instituted review of claims 1 and 2 based on a combination of six references, and later determined that the six-reference combination also rendered claims 1 and 2 unpatentable as obvious. Final Decision, 2016 WL 380219, at *11-12. Because we affirm the Board’s conclusion based on the combination of Li, Yamaura, Zhaung, and Beta, we need not, and do not, reach the second combination.

That footnote is given more context by these comments during oral argument from Judge Reyna, who was concerned with possible hindsight being applied by the PTAB when a large number of pieces from different references are combined together* [Listen] and [Listen].  To listen to similar comments by other Federal Circuit judges in other oral arguments, visit this [post].

You can listen to the entire oral argument [here].

You can read the court’s opinion [here].

*Sometimes referred to as a Frankenstein’s Monster rejection.

The oral argument at the U.S. Court of Appeals for the Ninth Circuit in the Naruto v. Slater case is scheduled for July 12th in San Francisco.  [Notice].  I will post the video of the oral argument once it is available.  This case concerns whether a monkey — more specifically, a Crested Macaque — that used a photographer’s camera to take a selfie portrait can be considered an “author” under the Copyright Act.  The briefs are available [here].

For more on the background of the case, this is the link to the Wikipedia entry: [Link].

By the way, in the unique town of Boulder, CO a city regulation requires all public signage to refer to dog “guardians” rather than dog “owners.”  [Link].

Update 7/13/2017