PTO Panel Stacking: Unblessed by the Federal Circuit and Likely Unlawful

• Author: John M. Golden
• Position: Loomer Family Professor in Law, University of Texas School of Law
• Pages: 2447-2479

2447

PTO Panel Stacking:

Unblessed by the Federal Circuit and

Likely Unlawful

John M. Golden*

ABSTRACT: In recent years, the United States Patent and Trademark Office

(“PTO”) sought to control results in adjudication by its Patent Trial and

Appeals Board (“PTAB”) through a process commonly described as “panel

stacking.” In a “strong form” of this practice, the PTO Director or Director’s

delegee generated a new panel of administrative judges to conduct rehearing

proceedings after an initial panel produced a decision with which the Director

or delegee disagreed. This Essay contends that this strong-form practice raises

constitutional concerns under the Fifth Amendment’s Due Process Clause.

Consequently, the doctrine of constitutional avoidance instructs that courts

should understand the Patent Act to preclude strong-form panel stacking.

Judges and commentators have repeatedly erred by citing a plurality opinion

on panel stacking in In re Alappat as if the plurality opinion authoritatively

held that the Patent Act authorizes panel stacking. This Essay seeks to correct

that misconception and shows that, once one takes account of constitutional

concerns, the Alappat judges’ recognition of statutory ambiguity effectively

condemns strong-form panel stacking, rather than “blessing” it.

I. INTRODUCTION ........................................................................... 2448

II. BACKGROUND ............................................................................. 2450

A.THE LEGAL AND INSTITUTIONAL CONTEXT FOR PTO

PANEL STACKING .................................................................. 2450

1.Patent System Primer .................................................. 2450

2.Statutory Provisions on the PTAB and the

PTO Hierarchy ............................................................ 2452

B.JUDICIAL REACTIONS TO PTO PANEL STACKING ..................... 2454

*

Loom er Fa mily Prof essor in La w, Un iver sity of Tex as Sc hool of Law . I th ank G race Lage r

for research assistance. For helpful comments, I thank Rebecca Eisenberg, Jonathan Masur, Tejas

Narechania, Arti Rai, Todd Rakoff, John Reitz, David Taylor, Saurabh Vishnubhakat, Christopher

Walker, Melissa Wasserman, and Kipman Werking.

2448 IOWA LAW REVIEW [Vol. 104:2447

III.PANEL STACKING AND THE PLURALITY OPINION IN IN RE

ALAPPAT ...................................................................................... 2454

IV.JUDICIAL SKEPTICISM OF PTAB PANEL STACKING....................... 2459

V.PANEL STACKING’S LEGITIMACY UNDER THE DOCTRINE

OF CONSTITUTIONAL AVOIDANCE .............................................. 2461

A.DUE PROCESS AND PTO PANEL STACKING .............................. 2462

1.Constitutional Doubt Under Mathews Interest

Balancing ............................................................... …..2463

2.Likely Unconstitutionality Under “Fair Hearing”

Analysis ................................................................... …..2467

B.READING THE PATENT ACT IN LIGHT OF CONSTITUTIONAL

DOUBT .................................................................................. 2475

VI.CONCLUSION .............................................................................. 2478

I. INTRODUCTION

In the past decade, the United States Patent and Trademark Office

(“PTO”) has emerged as a primary player in disputes over issued patent rights.

In fiscal years 2015 through 2017, the PTO’s Patent Trial and Appeal Board

(“PTAB”) has instituted about one thousand new proceedings per year to

review the validity of issued patent claims.1 In the wake of the United States

Supreme Court’s recent rejection of general challenges to the

constitutionality of such proceedings,2 the PTO will likely remain a leading

trial forum for post-issuance patent challenges for the foreseeable future.3

This level of post-issuance activity at the PTO is a new phenomenon. It

results from the 2011 America Invents Act (“AIA”),4 which created an

expanded set of proceedings in which the PTO could revisit the patentability

1. PATENT TRIAL & APPEAL BD., U.S. PATENT & TRADEMARK OFFICE, TRIAL STATISTICS: IPR,

PGR, CBM 7 (2018) (reporting institution of 955 to 1,012 patent-validity post-issuance

proceedings in each of fiscal years 2015–2017), https://www.uspto.gov/sites/default/files/

documents/trial_statistics_20180731.pdf.

2. Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1370

(2018) (holding that the PTO’s inter partes review proceedings violate neither Article III nor the

Seventh Amendment).

3. Cf. Owen Byrd, Lex Machina Q4 2017 End of the Year Litigation Update, LEX MACHINA:

BLOG (Jan. 16, 2018), https://lexmachina.com/lex-machina-q4-litigation-update (reporting

that the leading numbers of new patent cases in U.S. district courts in 2017 were 866 for the

Eastern District of Texas and 777 for the District of Delaware).

4. Leahy–Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011) (codified

as amended in scattered sections of 35 U.S.C.).

2019] PTO PANEL STACKING 2449

of granted patent claims.5 In association with this increased activity, the

number of administrative patent judges has increased to more than 200.6 The

PTO still has work to do in figuring out how to manage the new workflow.

Without a statutory mechanism for central review of PTAB judgments, the

PTO Director and the Director’s delegee, the Chief Judge of the PTAB,7 have

sometimes sought to reverse disfavored PTAB judgments by convening

expande d panels of PT AB judges pers onally select ed by the Direc tor or Chief

Judge to consider a request for rehearing—a practice commonly

characterized as “panel stacking.”8 For some, this practice has recalled

President Franklin Roosevelt’s notorious “court packing” plan of 1937.9

This Essay responds to the panel-stacking controversy by examining the

legitimacy of the practice. Part II provides background on PTO panel stacking

and its statutory context. Parts III and IV then discuss judges’ reactions to the

practice both in the pre-AIA case of In re Alappat10 and in post-AIA remarks

and judicial opinions. Significantly, none of these judicial responses involve a

definitive ruling on the practice’s legality in any of its various actual or

potential forms.11 For purposes of moving analysis forward, Part V classifies a

certain class of panel-stacking situations as embodying the practice in its

“strong form.” The Essay then shows how strong-form panel stacking is

5. See Paul R. Gug liuzz a, (In)Valid Patents, 92 NOTRE DAME L. REV. 271, 272 (2016) (noting

the popularity of post-issuance PTO proceedings in the AIA’s wake); id. at 279–85 (discussing

post-issuance PTO proceedings).

6. See John M. Golden, Working Without Chevron: The PTO as Prime Mover, 65 DUKE L.J. 1657,

1683 (2016) (noting the PTAB possession “of over two hundred [administrative patent judges]”).

7. See P

ATENT TRIAL & APPEAL BD., U.S. PATENT & TRADEMARK OFFICE, STANDARD

OPERATING PROCEDURE 1 (REVISION 14): ASSIGNMENT OF JUDGES TO MERITS PANELS,

INTERLOCUTORY PANELS, AND EXPANDED PANELS 2–4 (2015), https://www.uspto.gov/sites/

default/files/documents/SOP1%20-%20Rev.%2014%202015-05-08.pdf (providing for the

Chief Judge’s designation of panel memberships and determination of when to convene “an

expanded panel”), amended by PATENT TRIAL & APPEAL BD., U.S. PATENT & TRADEMARK OFFICE,

STANDARD OPERATING PROCEDURE 1 (REVISION 15): ASSIGNMENT OF JUDGES TO PANELS (2015),

https://www.uspto.gov/sites/default/files/documents/SOP%201%20R15%20FINAL.pdf.

8. Christopher J. Walker & Melissa F. Wasserman, The New World of Agency Adjudication, 107

CALIF. L. REV. 141, 174–75 (discussing PTAB panel “stacking” practices); see also Saurabh

Vishnubhakat, Disguised Patent Policymaking 26–30 (2018) (unpublished manuscri pt),

https://ssrn.com/abstract=3242146 (same).

9. See CHARLES W. SHIFLEY, BANNER & WITCOFF, LTD., DON’T LIKE YOUR PTAB DECISION IN

IPR? ASK THE PTAB TO PACK THE COURT 1 (2017), https://bannerwitcoff.com/wp-

content/uploads/2017/09/Dont-Like-Your-PTAB-Decision-in-IPR.pdf (explicitly comparing

PTAB “court packing” to President Roosevelt’s proposal); William G. Ross, The Role of Religion in

the Defeat of the 1937 Court-Packing Plan, 23 J.L. & RELIGION 629, 631 (2007–08) (reporting that

“the proposal was tabled in July after the Senate Judiciary Committee issued a blistering report”).

10. In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994) (en banc) (plurality opinion), abrogated in

irrelevant part by In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), aff’d on other grounds by Bilski

v. Kappos, 561 U.S. 593 (2010).

11. See infra Section II.B.