Patent Judge Whistleblower Case Fuels Criticism of Agency Ethics

An administrative patent judge’s initial whistleblower victory has the potential to damage the US Patent and Trademark Office’s ethical credibility, some attorneys said, as the agency faces ongoing scrutiny over its process for reviewing patent validity challenges.

The US Merit Systems Protection Board earlier this month determined that Judge Michael Fitzpatrick must be reinstated to the office’s Patent Trial and Appeal Board, which has the power to uphold or wipe out patents that can underlie high-stakes litigation in federal court.

Fitzpatrick had alleged agency officials unlawfully sidelined him in retaliation for raising concerns, beginning in 2016, about attempts to expand the number of judges on a panel after it had already reached a decision in a patent dispute between Nike Inc. and Adidas AG.

Some lawyers say the case is emblematic of broader criticisms of the agency, which last year was cited in a government watchdog report that said a majority of patent judges believe politics can influence internal judicial decisions at the US Patent and Trademark Office. The Government Accountability Office also issued recommendations to boost PTAB transparency.

“The USPTO is going to struggle, from their ethics perspective, to allow practitioners to understand that they should have faith in the process and the agency, when the way ethics is dealt out at the USPTO is, ‘Do as I say, not as I do,’” said Emil J. Ali, a partner at McCabe & Ali LLP and former employee of the agency’s Office of Enrollment and Discipline.

Fitzpatrick’s attorney, John Abramic of Steptoe & Johnson LLP, said the judge’s case confirms the findings of last year’s GAO report.

“But it also suggests that the issues identified in the GAO report might run much deeper,” Abramic said. “The PTO response to the GAO report leaves the impression that the PTO has already addressed or is at least well on its way to addressing the concerns raised by the report. But Judge Fitzpatrick’s case raises serious questions as to how that can be true in light of what happened to him.”

However, according to Ropes & Gray LLP attorney Scott McKeown, the case “is just a remnant of the past.”

“The crux of the dispute here came when there was an expanded panel,” a practice that “hasn’t happened now for a number of years for a multitude of reasons,” McKeown said. “I don’t see it impacting anything going forward, other than just pointing out that once upon a time, the board sort of flew by the seat of its pants.”

The PTO and MSPB declined to comment on the case.

The agency can challenge the MSPB’s initial decision by filing a petition for review at the board, or appealing it to the US Court of Appeals for the Federal Circuit.

Panel Expansion

Fitzpatrick’s case arose amid a long-running legal battle between Nike and Adidas over technology to create knit sneakers without punching out holes for shoelaces. That dispute has lead to multiple trips to the PTAB and the Federal Circuit.

Representatives for the shoemakers didn’t respond to requests for comment.

During the first remand from the appeals court in 2016, Fitzpatrick was on a three-judge panel that reached a new decision in an “inter partes review” of a Nike patent challenged by Adidas. However, he said a review committee “suggested” that the panel send the decision to then-PTAB Chief Judge David Ruschke and then-Deputy Chief Judge Scott Boalik, who is now chief judge.

The patent office’s politically appointed director selects the chief judge.

The review committee includes volunteer patent judges and management officials appointed by the chief judge. It reviews decisions for consistency and uniformity, and can flag cases for further management-level review, according to the MSPB decision.

Board management later expanded the panel, which Fitzpatrick viewed as unlawful because it occurred outside of the initial IPR institution or a reconsideration request, and was done without first giving Nike and Adidas notice.

When he raised concerns about it—including mentioning it in a draft concurrence—he said he was removed from the panel, which was unexpanded before issuing a decision two years later that found one patent claim to be invalid as obvious. It’s unclear whether the 2018 decision differed from the 2016 ruling. Fitzpatrick also was replaced in all other IPR proceedings in which he had been involved.

Supreme Court Concern

Around the same time, Fitzpatrick said he raised concerns with arguments made to the US Supreme Court while it was deciding 2018’s Oil States Energy Services, LLV v. Greene’s Energy Group, LLC.

The patent office, represented by the Justice Department, told the justices that panel expansions had never occurred during the merits stage of an IPR proceeding, he said. Fitzpatrick said he attempted to point out to former PTO Directors Andrei Iancu and Joseph Matal that this was untrue, given the situation in the Nike case involving Nike and Adidas—and added that he even had a phone call with Iancu.

Matal declined to comment on the case, and Iancu didn’t respond to a request for comment.

Ruschke testified before the MSPB that he attended the oral arguments in that case and didn’t “believe that any misrepresentation was made at the Supreme Court” because the panel in the case hadn’t been expanded publicly at that point.

The PTO’s answer may undermine the government’s credibility in future cases, said Saurabh Vishnubhakat, director of the Intellectual Property and Information Law Program at Yeshiva University’s Benjamin N. Cardozo School of Law. He added, though, that he doesn’t believe it impacted the decision.

MSPB Findings

Merit Systems Protection Board ALJ Andrew Niedrick on May 5 decided that Fitzpatrick showed his complaints constituted protected activity under the Whistleblower Protection Act, which shields federal employees from “abuse of authority.”

It also found that his protected disclosures contributed to the alleged retaliation.

Ruschke, the former chief judge, had testified that he originally expanded the panel because management officials had collectively determined that the case involved issues of “exceptional importance.” But Niedrick said that unrefuted records indicate the case was delayed for nearly two years after the expansion due to Ruschke and Boalik’s other management responsibilities.

The PTO also claimed that its decision to remove Fitzpatrick from IPR proceedings stemmed from Fitzpatrick’s performance problems, including a “lack of discretion and judgment” when interacting with other judges, filing untimely draft opinions, refusing to compromise “on even seemingly minor issues,” and refusing to following director guidance.

However, the MSPB said the patent office failed to prove by “clear and convincing evidence” that it would have taken the same actions against Fitzpatrick in the absence of his disclosures.

The Merit Systems Protection Board ordered the agency to take corrective action and restore Fitzpatrick to the docket.

Agency Credibility

The case will have an impact on the agency as a whole and its policy regarding expanded panels, Vishnubhakat said. It points to a need for clear and timely guidance to patent judges about expectations from the agency’s leadership, he said.

The PTO has strong incentive to appeal the decision because if the opinion stands, he said, then its findings are “pretty likely to be embarrassing to the agency and to draw public attention away from things that the agency would rather be focused on instead.”

Alex Moss, executive director of the Public Interest Patent Law Institute, said it’s important to distinguish between past and present leadership at the agency. Current Director Kathi Vidal, who took the helm last year, “has already made some changes to the patent process,” Moss said.

“But I do think that this raises important questions about transparency,” she said, adding that there is a need for unquestionably clear directions on when panel expansion is permissible.

The case is Fitzpatrick v. U.S. Dep’t of Commerce, Merit Sys. Prot. Bd., No. DC-1221-21-0423-W-2, initial decision 5/5/23.