MSPB Grants ‘Corrective Action’ to APJ for USPTO Retaliation Following Whistleblower Activity

The Merit Systems Protection Board (MSPB) issued a decision on May 5 granting Patent Trial and Appeal Board (PTAB) Administrative Patent Judge (APJ) Michael Fitzpatrick’s request for corrective action with respect to alleged retaliatory personnel actions against him by senior management officials at the Department of Commerce and U.S. Patent and Trademark Office (USPTO).

The 131-page decision said that Fitzpatrick filed the appeal to the MSPB in 2021, following punishment for “protected whistleblowing activity as follows:

“(1) he disclosed that agency management officials secretly and illegally interfered with the inter partes review (inter partes review or IPR) process in Adidas AG v. Nike, Inc., No IPR2013-00067 (Adidas/Nike IPR) when they expanded the PTAB review panel from three to five judges after the original three-judge panel had fully decided the case and improperly delayed the issuance of the final decision without notifying the parties that the panel had been expanded; and (2) he disclosed that the United States Deputy Solicitor General had provided “erroneous” information to the United States Supreme Court on behalf of the agency during oral arguments in Oil States Energy Service, LLC v. Greene’s Energy Group, LLC (No. 16-712) (Oil States).”

The retaliatory actions taken against him, according to the MSPB decision, included:

“(1) in May 2018, USPTO Director Andrei Iancu ‘voiced a desire to USPTO management to terminate’ the appellant and the ‘threat was conveyed’ to the appellant through intermediaries; (2) in or around April 2018, management officials pressured the appellant to omit a portion of his concurring opinion in the Adidas/Nike IPR that discussed the ‘expansion on the panel’; (3) on May 30, 2018, management officials removed him from the Adidas/Nike IPR panel, reassigned his inter partes review cases to other APJs, and assigned him to ex parte appeals; and (4) on May 30, 2018, management officials issued him a verbal performance appraisal ‘using a contrived and factually erroneous negative ‘performance appraisal’ of [his] work.’”

With respect to Adidas AG v. Nike, Inc., the decision provided a detailed recap of the procedural history, which most relevantly included a decision by then-Chief APJ David Ruschke and then-Deputy Chief APJ Scott Boalick to expand the three-judge panel to include both of them after Ruschke and Boalick had reviewed the original panel’s decision upon remand from the Federal Circuit. In the original panel’s decision on remand, Fitzpatrick had authored a concurring opinion that was critical of a previous PTAB decision, Idle Free Systems, Inc. v. Bergstrom, No. IPR2012-00027 (PTAB June 11, 2013).

According to the MSPB decision, Fitzpatrick testified that “he believed CJ Ruschke and DCJ Boalick were intentionally delaying the adjudication in the Adidas/Nike IPR because they ‘did not want [his] concurring opinion’ to ‘become public’ because it was ‘critical of Idle Free, which [was] management’s preferred views regarding motions to amend.’”

Eventually, the expanded panel came to a decision, which included another concurring opinion by Fitzpatrick that detailed the delay in issuance and the panel expansion, which he alleged was not timely disclosed to the parties and not authorized by the USPTO Director or by statute. The decision went through the AIA Review Committee (ARC) and the management review committee before issuing, and Fitzpatrick was convinced to remove information that management deemed confidential, including: “the date that the panel was expanded, the identity of the additional panel members (i.e., CJ Ruschke and DCJ Boalick), the fact that the expansion prevented the original panel from entering their decision, and that the PTAB’s email communications with the parties following the issuance of Aqua Products occurred over the appellant’s objections and left the parties with the impression that the original panel had authorized the additional briefing.”

Despite his agreement to these edits, Ruschke refused to enter the opinion with any concurring opinion “identifying the date that the panel had been expanded and/or any discussion relating to the legality of the expansion.” When Fitzpatrick attempted to speak to Ruschke and then-USPTO Director Andrei Iancu about the matter, he received no response and subsequently was told that he was being “removed from every IPR panel on his docket, to include the Nike/Adidas IPR, and would only be assigned ex parte appeals moving forward.” Fitzpatrick was replaced by another APJ and the panel was “unexpanded” when Boalick and Ruschke simultaneously removed themselves.

Fitzpatrick first filed an informal grievance under the USPTO’s Administrative Grievance Procedures regarding the removal and other allegations that he failed to meet deadlines and refused to compromise with other judges. After a decision was issued, he filed a formal grievance, which was denied by Boalick, who was then Acting Chief Judge.

Among other allegations, Fitzpatrick told the MSPB that the USPTO’s actions constituted an abuse of authority under the Manual of Patent Examining Procedure (MPEP), the Whistleblower Protection Act (5 U.S.C. § 2302(b)), a violation of the Administrative Procedures Act (APA) (5 U.S.C. §§ 551–559), and a violation of the Due Process clauses of the Fifth and Fourteenth Amendments.

Fitzpatrick also supported his argument that the disclosures he made about panel explansion were reasonable by citing an excerpt of the oral argument in Oil States Energy Service, LLC v. Greene’s Energy Group, LLC. During the argument, Chief Justice Roberts asked Deputy Solicitor General Malcolm Stewart about the legality of panel expansion, to which Stewart replied in part that the composition of a panel has never changed “at the merits stage” of an IPR “when patentability was actually being determined,” which Fitzpatrick argued is erroneous. He also said that “the Chief Justice’s inquiry demonstrates that the legality of a panel expansion halfway through an IPR proceeding is arguably unauthorized and perhaps illegal.”

The MSPB agreed that Fitzpatrick proved “by preponderant evidence that he had a reasonable basis to conclude that CJ Ruschke unlawfully expanded the panel in the Adidas/Nike IPR under the circumstances of this case.” The decision said the MPEP controls and that panel expansion is only permitted under the MPEP at two times in the IPR process: initially and on request for reconsideration. “Thus, CJ Ruschke’s decision to expand the panel nine months after the Federal Circuit’s remand and only after the originally designated panel had rendered its decision exceeded the scope of his authority as provided under § 1002.02(f)(3) because the designation action did not occur initially or on a request for reconsideration as provided by the plain language of the regulation,” wrote the MSPB judge.

The decision also cited Arthrex as proof that Ruschke did not have authority to expand the panel after the original panel had already been designated.

Ultimately, the MSPB’s Initial Decision found that Fitzpatrick had proven the USPTO was in violation of 5 U.S.C. § 2302(b)(8), and that his protected whistleblower disclosure “were a contributing factor in the agency’s reassignment and performance-appraisal actions” and that he had exhausted his administrative remedies before the Office of Special Counsel. The USPTO was thus ordered to reverse the reassignment action and restore Fitzpatrick to a docket consisting exclusively of AIA cases as he had been previously assigned.

IPWatchdog has written about the practice of “panel stacking” in the past, explaining that “the APA demands decisional independence, which obviously is not happening when the Director of the USPTO can stack a panel to achieve a particular desired outcome.”

IPWatchdog Founder and CEO Gene Quinn, commenting on the MSPB decision today, said:

“At times, for example during the time Michelle Lee was Director, she would decline to intervene in cases where patent owners felt they were being harassed. The Office claimed it was inappropriate for the Director to place her finger on the scales in favor of any party. But placing the Office’s finger on the scale is precisely what happens when a panel is expanded, and it is particularly concerning to learn that the practice was surreptitiously happening. In light of this case and the revelation that PTAB leaders did not want parties to know when panels were expanded, a serious question must be asked about how often this has happened.”