Congressional Committee Calls On GAO To Investigate Whether Patent Office Director Is Putting Thumb On The Scale Of Patent Reviews

from the very,-very-interesting dept

The chair and ranking member of the House IP subcommittee that covers intellectual property is now asking the Government Accountability Office (GAO) to investigate whether or not the Director of the Patent Office is pressuring the important Patent Trial and Appeal Board (PTAB) to make certain decisions on the validity of patents. There's a lot of important background here, but it's all kind of fascinating how two big legal issues are coalescing in this result, in which the USPTO's own legal arguments may reveal how the Director has been unfairly influencing decisions. The two key points to understand are (1) the Inter Partes Review (IPR) process, and (2) questions about the constitutionality of certain appointments -- both of which are issues that we've covered for years, that seem deep in the weeds, but turn out to be quite important.

First, we've got the IPR process. This was an effort that was put in place with the America Invents Act (AIA) back in 2012. It was a recognition (FINALLY) that the Patent Office was approving way too many bad and overly broad patents, that were then being abused to shake down companies. The fact that the USPTO was approving so many awful patents was a built in bug (or feature?) of the way the patent system works.

The process for getting a patent is not truly adversarial. You have the party seeking the patent, and the examiner. Yet examiners were often judged on how many applications they dealt with, rather than the quality of the patents they approved. So there's no party arguing for why something does not deserve a patent. In theory, the examiner might do that, but the incentive structure there is broken as well. There is something called a "final" rejection from a patent examiner, but it's not actually final, since the party seeking the patent can continue to file renewed requests/appeals forever. And with the Patent Office getting heat for having too long a backlog, sooner or later, there are strong incentives for the examiner to just approve a patent to get it off his or her docket.

Rather than fix the many inherent problems in this setup, the AIA introduced a compromise that was better than nothing. It would create this special PTAB, which anyone could use to challenge a previously granted patent. At that point (usually once someone started threatening or suing over a patent) then finally, there would be a more careful review, with an adversarial process, to examine whether or not the patent should have been granted in the first place. Patent trolls and their friends have hated the whole IPR process since it began and have tried a variety of ways to challenge it. In 2018, the biggest legal challenge to the whole IPR process was rejected by the Supreme Court, who said that of course the PTO can invalidate the patents it never should have granted.

But that hasn't stopped the efforts by trolls and friends to invalidate the IPR process. The latest attempt is in the US v. Arthrex case, in which it is argued that the "judges" on the PTAB are unconstitutional for violating the Constitution's appointments clause. That case was heard by the Supreme Court a few months ago and a ruling should be coming soon.

And that takes us to the other deep in the weeds issue we've talked about for over a decade: whether or not appointments to various quasi-legal tribunals within the executive branch violate the Constitution's appointments clause. The Appointments Clause says certain "principle officers" of the government, including judges, need to be nominated by the President and approved by the Senate. There have been questions for years about whether or not certain roles that were appointed by various department heads violated this clause. Back in 2012, for example, a court said that the Copyright Royalty Board nominations were unconstitutional (though the court then immediately worked around that issue with a sort of wink and a nudge).

So, now the question at the heart of Arthrex is whether or not the PTAB judges are constitutionally appointed, since they're appointed not by the President with the consent of the Senate, but directly by the director of the Patent Office. And, in that case, the US government (defending the constitutionality of the PTAB judges) claimed that they were not principal judges, but rather "inferior officers" who could be appointed by the PTO director. That's all very interesting, but a key argument made by the government in defending that was that the PTO Director controls the PTAB judges, including how they decide cases.

And while that may be necessary to prove that their appointments were constitutional under the Appointments clause, it rang some alarm bells because it sure as hell suggested that the PTAB might be deciding whether or not patents are valid not based on the evidence before it but based on what the PTO director wanted. And that would be a big problem.

And, so that finally gets us to the latest bit of news, in which Reps. Hank Johnson and Darrell Issa, a bipartisan sort of odd-couple who head up the IP subcommittee are asking the GAO to look into whether or not the USPTO director is actually pressuring the PTAB judges into deciding the validity of patents one way or the other:

Recently, the Supreme Court granted certiorari in United States v. Arthrex, Inc., an appeal from a Federal Circuit decision that determined that APJs were “primary officers of the United States” and, thus, unconstitutionally appointed without Senate confirmation. In that appeal, the government’s position is that APJs are instead “inferior officers” who do not require Senate confirmation because they are subject to significant oversight and control by the Director of the USPTO, who is a Senate-confirmed political appointee. The government argues that this control includes, for example, the ability of the Director to dictate the outcome of PTAB cases by controlling which APJs decide which cases (i.e., APJs who will decide each case as the Director wishes) and by providing policy directives that APJs are obligated to follow.

If the government’s arguments are accurate, PTAB cases may have been decided based on factors outside of the evidentiary record and public legal authority (e.g., statutes, regulations, court precedents) available to the parties. This possibility raises potential due process concerns and would be inconsistent with the intent of Congress in enacting the AIA.

There is then a long list of fairly specific requests for the GAO to investigate that could raise some eyebrows. Here are just a few:

The policies, written or unwritten, that exist at the USPTO to effectuate each of the above mechanisms, as well as the statutory or other legal authority that forms the basis for each of the above mechanisms.

How APJs understand the role of the Director in the decisions they reach in AIA cases, including APJs’ awareness of the above mechanisms and associated policies and the number of APJs who have been subject to one or more of them. Also, the impact that the exercise of these mechanisms and policies have had on the decision-making of APJs in AIA cases.

Whether any APJs have objected or dissented, or attempted to object or dissent, to the above mechanisms and policies, or the exercise of those mechanisms and policies in specific AIA cases. If so, the results of those objections and the processes that were made available to APJs to object or dissent. Also, how APJs understand the extent to which they may object or dissent.

How often the Director, or a designate thereof, has directly influenced or changed a decision in a specific AIA case (i.e., inter partes review, post-grant review, or covered business method review). Also, the way those decisions were influenced or changed by the Director, and the mechanisms that were used to influence or change those decisions.

Whether specific notice was provided to the parties in those cases indicating that the Director, or designate thereof, was influencing or changing a decision in the case, and the information included in any such notice. Also, whether the decisions themselves document that influence or change, and explain the reasoning or justification for it.

In other words... either the Patent Office director is unfairly controlling or strongly influencing PTAB IPR decisions or the Patent Office lied to the Supreme Court. The most charitable explanation, of course, is that the PTO director could step in and order certain decisions, but has chosen not to. But even that would be worrisome and problematic. None of this looks particularly good for the PTO.

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Filed Under: appointments, darrell issa, gao, hank johnson, inter partes review, ipr, patents, ptab, uspto