Last week the Court of Appeals for the Federal Circuit (CAFC) issued its decision in Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. (here) The decision affirmed the USPTO's Patent Trial & Appeal Board cancellation of certain claims of Nidec's U.S. patent 7,626,349 (IPR2014-01121 & IPR2015-00762). In this regard, the opinion was rather unremarkable. Of particular interest to PTAB critics, however, was the Court's discussion of the Board's expanded panel practices in its concurring opinion.
Although conceding it had no impact on the outcome of the case, the concurrence took issue with the Board's expansion of a rehearing panel for the stated purpose of reversing the earlier decision. That is, in order to consistently treat questions of issue joinder under 35 U.S.C. § 315(c), the PTAB expanded a panel to include judges that had ruled differently on the same question of statutory interpretation. As a result, the expanded panel reversed the earlier decision and found issue joinder to be embraced by 315(c). The Federal Circuit signaled a strong distaste of such agency practices.
Critics were quick to lambaste the PTAB's expanded panel process in Nidec as evidence of a crooked process and an anti-patent bias. Of course, anyone that has followed this blog knows that to be false.
First, as I explained back in 2015, the expanded panel in Nidec was not about a particular result as much as it was a consistent result on a recurring question of statutory interpretation. Different PTAB panels were arriving at opposite conclusions on the question of 315(c) and issue joinder. On appeal, the Solicitor was faced with the unenviable task of defending these conflicting decisions on an arbitrary and capricious standard. The simple solution to those outside the agency would be to make a decision on one side of the debate precedential and move on. However, with the Board's Standard Operating Procedure (SOP1) requiring a majority vote of 100s of judges, precedent is impossible for all but the most straightforward of questions. So, the brute force expanded panel was employed in this limited scenario to create a de facto precedent on a recurring question of law.
While no doubt a less than an ideal mechanism, until SOP1 can be revamped, the Nidec decision was about administrative necessity. As to the winning side of this debate, this is also no surprise as the agency had also publicly declared the same to Congress. As I also pointed out in 2015, the USPTO requested that Congress adjust 315(c) to explicitly embrace issue joinder.
Second, the idea that expanded panels are somehow abetting an anti-patent PTAB mission is just as easily debunked. Expanded panels are far from common. As shown in the chart below, expanded panels have been used in roughly .5% of AIA trial proceedings. Stated another way, of the 7200 plus AIA trial proceedings, expanded panels have occurred in about 40 of those proceedings. Plainly, the Board is not using expanded panels to unravel decisions favorable to Patentees. .
The Board has explained as recently as the August Patent Public Advisory Committee (PPAC) meeting that going forward expanded panels would be used more frequently to provide for more precedent-like decisions. Unfortunately, this plan will now be complicated by the now tainted perception of expanded panel practice.
Originally published 29 August 2017
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.