Fed Circ sends Mobility case to USPTO director, but spurns bias claims
The US Court of Appeals for the Federal Circuit has rejected claims that Patent Trial and Appeal Board (PTAB) judges are motivated by "unconstitional" financial incentives when instituting AIA proceedings.
The Federal Circuit issued the precedential decision yesterday, Tuesday, October 13, in a dispute over patented wireless tech between Mobility Workx and Unified Patents, an organisation that claims to “fight patent trolls”.
In a split 2-1 ruling, the panel of judges rejected Mobility’s novel argument that the structure of the Patent Trial and Appeal Board (PTAB) was inherently biased against patent owners due to financial considerations.
However, the judges on the appellate panel, Timothy Dyk, Alvin Schall and Pauline Newman, all sided with Mobility’s appointments clause challenge, agreeing that SCOTUS’ landmark Arthrex decision meant that the case merited a review by the director of the US Patent and Trademark Office (USPTO).
In June, the Supreme Court found that PTAB administrative patent judges (APJs) were unconstitutionally appointed, and handed greater power to the USPTO director to review cases.
“We agree that a remand is required under the Supreme Court’s decision in Arthrex to allow the acting director to review the final written decision of the APJ panel pursuant to newly established USPTO procedures,” they concluded.
Background
This case stems from an earlier lawsuit launched by Mobility in 2017 against T-Mobile and Verizon Wireless, both members of Unified, for alleged patent infringement in the Eastern District of Texas.
In response, Unified challenged Mobility’s patent, US number 8,213,417, titled, “System, Apparatus, and Methods for Proactive Allocation of Wireless Communication Resources.”
In December 2019, the board issued its final written decision, determining that claims 1, 2, 4, 5, and 7 were unpatentable as obvious,
In addition to requesting a remand under Arthrex and challenging the merits of the board’s decision, Mobility raised for the first time on appeal several additional constitutional challenges, including a challenge to the structure of the board.
Mobility argued that board members have an “impermissible financial interest in instituting AIA proceedings” to generate fees to fund the agency and ensure future job stability.
Second, Mobility contended that individual APJs have a personal financial interest in instituting AIA proceedings in order to earn better performance reviews and bonuses.
However, Judges Dyk and Schall dismissed Mobility’s broader arguments that the board’s structure “is biased against patent owners”.
“Mobility’s challenge cannot succeed. The president, not the USPTO, submits the budget, and Congress ultimately sets the USPTO budget. Congress similarly controls whether the USPTO has access to the surplus funds…” they noted.
The judges said that APJs do not have a significant financial interest in instituting AIA proceedings to earn a bonus. The number of decisional units earned by an APJ “is based upon the number of decisions authored” and “does not depend on the outcomes of those decisions”, they added.
“Mobility has therefore failed to establish that APJs have an unconstitutional financial interest in instituting AIA proceedings,” they concluded.
Partial dissent
Nonetheless, Judge Newman was sympathetic to Mobilty’s arguments in a partial dissent, noting Mobility’s valid grievances over the agency’s decisions to institute inter partes reviews that were “duplicative, expensive, delaying, and subject to bias”.
“These aspects require more attention than my colleagues have accorded them, and raise new constitutional concerns after Arthrex”, she wrote.
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