Meet the New Boss, Same as the Old Boss....

When instituting an Inter Partes Review (IPR)—or any AIA trial proceeding for that matter— a panel of three administrative patent judges finds that the petitioner has made the threshold showing necessary for trial to proceed.  Later, these same three judges will assess all evidence presented during the trial to determine whether or not any claims of the subject patent should ultimately be cancelled as unpatentable.  Some patentees consider the use of the same judges from start to finish to be unfair. That is, there is a belief that use of the same judges brings with it a bias in favor of following through on the initial determination.

Yesterday, in Ethicon Endo-Surgery, Inc. v. Covidien LP The Federal Circuit considered whether the USPTO is obligated, under a variety of theories, to use different decision makers for the purpose of ensuring fairness.  

At issue in the appeal was the Board's cancellation of claims 1-14 of Ethicon's U.S. Patent 8,317,070 (directed to a surgical stapling device). In affirming the Board, the Court rejected arguments that the use of the same judicial panel from institution to Final Written Decision (FWD) was unfair (here).

Ethicon argues that to avoid these constitutional concerns, we must construe the statute to preclude the Director from delegating the decision to institute to the same panel of the Board that makes the final decision. We disagree with Ethicon and conclude that, where, as here, there are no other separate procedural-fairness infirmities alleged, the PTO’s assignment of the institution and final decisions to one panel of the Board does not violate due process under governing Supreme Court precedent.   

                           .            .            .           .          .   

Both the decision to institute and the final decision are adjudicatory decisions and do not involve combining investigative and/or prosecutorial functions with an adjudicatory function. The inter partes review procedure is directly analogous to a district court determining whether there is “a likelihood of success on the merits” and then later deciding the merits of a case                                     

                            .          .          .          .          .

Lastly, Ethicon argues that the Board panel’s exposure to a limited record in the decision to institute improperly biases it so as to disqualify it from making the final decision on the merits. But,  .    .    . adjudicators are afforded a “presumption of honesty and integrity” and even “exposure to evidence presented in nonadversary investigative procedures is insufficient in itself to impugn the fairness of [adjudicators] at a later adversary hearing.”  

(Emphasis added)

The Court also considered the argument that 35 U.S.C. § 3(b)(3)(B) limited the Director's authority to delegate to officer's she appoints (unlike PTAB judges). This argument was also rejected as 3(b) is not a delegation provision, but a source of authority. The discussion of the due process issue is lengthy and touches upon interesting Supreme Court as well as Administrative Procedure Act (APA) law, worth a closer read.

Ironically given the bias argument, the Court spent very little time on the merits, affirming the Board's decision to cancel the claims of the Ethicon patent.

Judge Newman's dissent argues that the AIA statutes' use of "Director" for the preliminary proceeding evinced a bifurcated design. She distinguishes the preliminary proceedings of trial courts as being subject to appellate review, unlike PTAB institution decisions.  Finally, she argues that the Director has no discretion to delegate in violation of the statute. While all fair points, the AIA statutes were modeled on earlier patent reexamination statutes, which also referenced Director review and patent examination procedures separately.  Of course, the same examiners initiating a patent reexamination (based upon a preliminary showing that was not subject to appeal) were also the ones conducting it.  There was no bifurcation of decision makers in reexamination until the time of appeal — as is the case with the AIA.  The only difference with reexamination was that there were two levels of appeal, first to the Board, then to the CAFC.  Nevertheless, the concern of biased fact finders would seem to be common to both scenarios.

The argument that the Board is full of "hanging judges" has always struck me as odd. If such were the case, one would expect the Federal Circuit to simply reverse all such appeals. Of course, so far, the PTAB track record is quite favorable.