Federal Circuit Affirms PTAB’s Sanctions Order Regarding Ex Parte Communications

Apple filed petitions for inter partes review against two patents Voip-Pal had asserted against it in district court; both reviews were instituted.  During the proceedings, Dr. Thomas Sawyer, the former CEO of Voip-Pal, sent six letters directed to various members of the PTAB, the then-Acting Director of the USPTO, and the Secretary of Commerce, and sometimes copying the President, other Cabinet Secretaries, Supreme Court Justices, and Federal Circuit Judges, among others.  These letters contained Dr. Sawyer’s concerns that the current state of the Patent Trial and Appeal PTAB did not embody the patent review system envisioned by the AIA.  The last few letters sought judgment in Voip-Pal’s favor in the two inter partes reviews, and indicated that the USPTO had committed ethical violations and perhaps even criminal violations of the Racketeer Influenced and Corrupt Organizations Act.  The final letter indicated that Dr. Sawyer had prepared the letters in cooperation with Voip-Pal.  All six letters were received by the PTAB—but were not sent to Apple. 

By the time Final Written Decisions were issued in the two inter partes reviews, Apple was aware of only two of these letters.  Those Final Written Decisions found that Apple had not shown that the challenged claims were unpatentable.  Subsequently, Apple filed a motion for sanctions against Voip-Pal, requesting either judgment in its favor or a fresh proceeding before a new panel.  The PTAB then changed panels of administrative patent judges. The replacement panel ruled on Apple’s sanctions motion, finding that the appropriate sanction was to allow Apple to petition for rehearing of the Final Written Decisions.

Apple appealed, arguing that the replacement panel’s decision, which deferred to the previous panel’s Final Written Decisions, violated the Administrative Procedure Act and Apple’s right to due process.  Apple would have the right to petition for rehearing of the Final Written Decisions anyway, it argued, so the PTAB’s “sanction” was no sanction at all.  And according to Apple, USPTO regulations do not allow the PTAB to prescribe its own sanction; rather, the PTAB must choose one of the few sanctions available, which do not include allowing a party to petition for rehearing.  Further, Apple argued its right to due process was violated because Dr. Sawyer’s ex parte communications with the PTAB prevented Apple from having a full and fair opportunity to present its case before an unbiased panel. 

Voip-Pal argued that the PTAB is not limited to the sanctions listed in USPTO regulations; rather, those regulations allow the PTAB expansive authority to impose sanctions of its choosing.  Further, Voip-Pal asserted Apple’s delay in waiting until after the Final Written Decisions were issued to seek sanctions indicates that Apple was not seriously concerned about its due process rights until after the unfavorable decisions.  Finally, Voip-Pal argued that the letters did not address the merits of the two cases and thus could not have biased the PTAB. 

The USPTO intervened, agreeing with Voip-Pal that the PTAB’s sanction was appropriate.  Further, the USPTO argued Apple’s right to due process was not violated because it had the opportunity to respond to the letters during the rehearing process, and in any event due process concerns are not implicated by “irrelevant communications.”

In a mixed decision for Apple, the Federal Circuit ultimately affirmed the Board’s sanctions decision.  But first, the Court found that Apple’s appeal relating to many of the subject claims was rendered moot by the Court’s intervening opinion in Voip-Pal.com, Inc. v. Twitter, Inc., 798 F. App’x 644 (Fed. Cir. 2020), which found those claims ineligible for patenting under 35 U.S.C. § 101.

Nevertheless, fifteen claims remained at issue.  Apple argued that Voip-Pal should be precluded from asserting those claims because they were “essentially the same” as those found ineligible in Twitter.  The Federal Circuit disagreed, holding that the patentability of those claims would need to be decided separately, and that the Board had committed no legal error in finding those claims nonobvious.

Finally, the Court turned to the Board’s sanctions order. Disagreeing with Apple, the Federal Circuit held that the statutory provision regarding sanctions did not limit the Board to the listed sanction options.  Rather, because that provision provided that the Board “may impose a sanction…include[ing]…one or more of the following” (emphasis added), the Court held that the Board may issue sanctions not explicitly listed.  Thus, the Court held that the Board did not violate the Administrative Procedures Act by issuing an unlisted sanction. And regarding Voip-Pal’s ex parte letters, the Court recognized that the Board introduced the letters into the record—thereby giving Apple an opportunity to respond—and did not deprive it of due process.

The Federal Circuit thus remanded the Board’s determination of nonobviousness of several claims with instructions to dismiss those claims as moot. The Court affirmed the Board’s determinations of nonobviousness of the remaining claims, as well as the Board’s sanctions orders.