Mobility Workx, LLC v. Unified Patents, LLC ( 2021 )

Case: 20-1441 Document: 89 Page: 1 Filed: 10/13/2021
United States Court of Appeals
for the Federal Circuit
______________________
MOBILITY WORKX, LLC,
Appellant
v.
UNIFIED PATENTS, LLC,
Appellee
ANDREW HIRSHFELD, PERFORMING THE
FUNCTIONS AND DUTIES OF THE UNDER
SECRETARY OF COMMERCE FOR
INTELLECTUAL PROPERTY AND DIRECTOR OF
THE UNITED STATES PATENT AND TRADEMARK
OFFICE,
Intervenor
______________________
2020-1441
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2018-
01150.
______________________
Decided: October 13, 2021
______________________
DAVID A. RANDALL, Hackler Daghighian Martino &
Novak, Los Angeles, CA, argued for appellant. Also
represented by MICHAEL MACHAT, Law Offices of Michael
Machat, PC, West Hollywood, CA.
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2 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
JASON R. MUDD, Erise IP, P.A., Overland Park, KS,
argued for appellee. Also represented by ERIC ALLAN
BURESH; ASHRAF FAWZY, JONATHAN RUDOLPH KOMINEK
STROUD, Unified Patents, LLC, Washington, DC.
DANA KAERSVANG, Civil Division, Appellate Staff, United
States Department of Justice, Washington, DC, argued for
intervenor. Also represented by MELISSA N. PATTERSON;
KAKOLI CAPRIHAN, SARAH E. CRAVEN, THOMAS W. KRAUSE,
FARHEENA YASMEEN RASHEED, Office of the Solicitor, United
States Patent and Trademark Office, Alexandria, VA.
ROBERT GREENSPOON, Dunlap, Bennett, & Ludwig,
PLLC, Chicago, IL, for amicus curiae US Inventor, Inc.
______________________
Before NEWMAN, SCHALL, and DYK, Circuit Judges.
Opinion for the court filed by Circuit Judge DYK.
Opinion concurring in part and dissenting in part filed by
Circuit Judge NEWMAN.
DYK, Circuit Judge.
Mobility Workx (“Mobility”) appeals a decision of the
Patent Trial and Appeal Board (“Board”) determining that
claims 1, 2, 4, 5, and 7 of U.S. Patent No. 8,213,417 (the
“’417 patent”) were unpatentable as obvious. In addition to
requesting a remand under United States v. Arthrex, Inc.,
141 S. Ct. 1970 (2021), and challenging the merits of the
Board’s decision, Mobility raises for the first time on appeal
several additional constitutional challenges, including a
challenge to the structure of the Board. We first address
these other constitutional challenges because a
determination that the Board is unconstitutionally
structured or that the proceedings are otherwise
unconstitutional would dispose of the case and make
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MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 3
consideration of the Arthrex issue or the merits
unnecessary.
We conclude that Mobility’s constitutional arguments
are without merit. Without reaching the merits of the
Board’s decision, in light of Arthrex, we remand to the
Acting Director to determine whether to grant rehearing.
BACKGROUND
I
Mobility is the owner of the ’417 patent, which is titled
“System, Apparatus, and Methods for Proactive Allocation
of Wireless Communication Resources.” ’417 patent, col. 1
ll. 1–3. The patent is “generally directed to allocation of
communication resources in a communications network.”
Appellant’s Br. 7.
The Background section of the ’417 patent explains
that mobile communication systems are typically composed
of mobile nodes (e.g., cell phones) that communicate with
one another through a series of base stations. Base
stations serve different zones or cells, such that when a
mobile node moves from one cell to another, it must connect
to a new base station. When a mobile node has connected
to a new base station, i.e., when it is moving, it must let
other mobile nodes know where it can be reached. This can
be accomplished by having a mobile node register with a
“home agent so that the home agent can remain a contact
point for other nodes that wish to exchange messages . . .
with the mobile node as it moves from one location to
another.” ’417 patent col. 1 ll. 39–44.
This system allows a mobile node to “use two IP
addresses, one being a fixed home address and the other
being a care-of address.” Id. col. 1 ll. 45–47. The home
address is assigned by the home agent. The care-of
address, on the other hand, is received when a mobile node
moves out of its home network and connects to foreign
networks using foreign agents that act “as wireless access
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4 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
points distributed throughout a coverage area of a network
or an interconnection of multiple networks.” Id. col. 1 ll.
57–60. However, delays and information losses can occur
when a mobile node moves from one foreign network to
another because “the new communication link cannot be
set up until the mobile node arrives in the new foreign
agent’s physical region of coverage.” Appellant’s Br. 8.
The ’417 patent attempts to prevent these delays and
data losses by using a ghost foreign agent and a ghost
mobile node that “can be configured to register the mobile
node and allocate resources for communicating with the
mobile node according to a predicted future state of the
mobile node.” ’417 patent col. 2 ll. 44–61. In other words,
the ghost mobile node operates by “signaling the foreign
agent before the mobile node arrives in the foreign agent’s
physical region of coverage, based upon the predicted
future state of the mobile node.” Appellant’s Br. 9. This,
in turn, increases the speed with which a mobile node can
connect to a new network, reducing delays and avoiding
information losses.
In 2017, Mobility brought suit for infringement of the
’417 patent against T-Mobile and Verizon Wireless in the
Eastern District of Texas (one of these proceedings has
settled, and the other is stayed pending resolution of this
appeal). On June 1, 2018, Unified Patents filed a petition
seeking inter partes review of claims 1–7 of the ’417 patent
on the theory that those claims would have been obvious
over U.S. Patent No. 5,825,759 in combination with several
other references. On December 2, 2019, the Board issued
its final written decision, determining that claims 1, 2, 4,
5, and 7 were unpatentable as obvious, but that claims 3
and 6 were not shown to be unpatentable. Mobility
appeals. We have jurisdiction under 28 U.S.C.
§ 1295(a)(4)(A).
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MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 5
DISCUSSION
I
For the first time on appeal, Mobility raises
constitutional challenges to the USPTO’s structure under
the Leahy-Smith America Invents Act (“AIA”), Pub. L. No.
112-29, 125 Stat. 284 (2011). Mobility argues that Board
members have an impermissible financial interest in
instituting AIA proceedings under the standard
articulated in Tumey v. Ohio, 273 U.S. 510 (1927).
Mobility’s Tumey challenge has two parts. First, Mobility
contends that Board members have an interest in
instituting AIA proceedings to generate fees to fund the
agency and ensure future job stability. Second, Mobility
contends that individual administrative patent judges
(“APJs”) have a personal financial interest in instituting
AIA proceedings in order to earn better performance
reviews and bonuses.
A
Unified Patents and the government argue that
Mobility forfeited these challenges because Mobility did not
raise these theories before the Board.
Under Supreme Court and circuit precedent, agencies
generally do not have authority to declare a statue
unconstitutional. See Oestereich v. Selective Serv. Sys.
Local Bd. No. 11, 393 U.S. 233, 242 (1968) (Harlan, J.,
concurring in result) (“Adjudication of the constitutionality
of congressional enactments has generally been thought
beyond the jurisdiction of administrative agencies.”);
Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 215 (1994)
(agreeing with Justice Harlan’s statement in Oestereich);
Riggin v. Off. of Senate Fair Emp. Pracs., 61 F.3d 1563,
1569 (Fed. Cir. 1995) (noting the “general rule that
administrative agencies do not have jurisdiction to decide
the constitutionality of congressional enactments”). It
follows that constitutional challenges to the statute under
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6 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
which the agency operates need not be raised before the
agency. See Weinberger v. Salfi, 422 U.S. 749, 765 (1975)
(determining that the requirement of administrative
exhaustion would be met if “the Secretary [of the
Department of Health, Education, and Welfare] has
satisfied himself that the only issue is the constitutionality
of a statutory requirement, a matter which is beyond his
jurisdiction to determine, and that the claim is neither
otherwise invalid nor cognizable under a different section
of the Act”); Celgene Corp. v. Peter, 931 F.3d 1342, 1357
(Fed. Cir. 2019) (reaching constitutional challenge to the
Board raised for the first time on appeal).
In any event, we have discretion to consider new
arguments for the first time on appeal. See Singleton v.
Wulff, 428 U.S. 106, 121 (1976) (“The matter of what
questions may be taken up and resolved for the first time
on appeal is one left primarily to the discretion of the courts
of appeals, to be exercised on the facts of individual
cases.”); Golden Bridge Tech., Inc. v. Nokia, Inc., 527 F.3d
1318, 1322–23 (Fed. Cir. 2008) (“[A]ppellate courts are
given the discretion to decide” whether to consider
arguments raised for the first time on appeal). Thus, we
have “discretion to review a constitutional challenge not
timely raised before the lower tribunal.” In re DBC, 545
F.3d 1373, 1380 (Fed. Cir. 2008).
The government nonetheless argues that we should not
address these arguments because they are dependent on
the resolution of factual issues that should be presented to
the PTAB in the first instance. Mobility did not in its
opening brief request a remand to develop a more
comprehensive record. We conclude that considering
Mobility’s constitutional challenges is appropriate because
addressing these arguments does not require resolution of
any disputed factual issues. See Celgene, 931 F.3d at 1357.
Mobility’s challenge is based on various agency
documents that Mobility argues can be judicially noticed.
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MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 7
Under the Federal Rules of Evidence, “[t]he court may
judicially notice a fact that is not subject to reasonable
dispute because it: . . . can be accurately and readily
determined from sources whose accuracy cannot
reasonably be questioned.” Fed. R. Evid. 201(b). Judicial
notice may be taken at any stage of a proceeding, including
on appeal. Fed. R. Evid. 201(d).
Here, many of the proffered documents were published
in the Federal Register or on the USPTO’s website. Other
agency documents were obtained through a Freedom of
Information Act (“FOIA”) request. One document is a
report from the Congressional Research Service. These
types of government documents are capable of being
“accurately and readily determined from sources whose
accuracy cannot reasonably be questioned.” Fed. R. Evid.
201(b)(2). 1
1 See 44 U.S.C. § 1507 (“The contents of the Federal
Register shall be judicially noticed and without prejudice
to any other mode of citation, may be cited by volume and
page number.”); Euzebio v. McDonough, 989 F.3d 1305,
1323 n.9 (Fed. Cir. 2021) (explaining that courts may take
judicial notice of agency manuals); Kareem v. Haspel, 986
F.3d 859, 866 n.7 (D.C. Cir. 2021) (taking judicial notice of
facts that “can be readily determined from reliable sources,
such as the Congressional Research Service and State
Department reports”); In re Chippendales USA, Inc., 622
F.3d 1346, 1356 (Fed. Cir. 2010) (determining that this
court could take judicial notice of the existence of a
trademark because “the registration documents by the
[US]PTO are ‘capable of accurate and ready determination
by resort to sources whose accuracy cannot reasonably be
questioned’” (quoting the 2010 version of Fed. R. Evid.
201(b)(2))); Kaempe v. Myers, 367 F.3d 958, 965 (D.C. Cir.
2004) (determining that USPTO documents were “public
records subject to judicial notice”); Fed. R. Evid. 201
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8 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
The government argues that if Mobility had introduced
these documents before the Board, the agency “would have
had an opportunity to apply its expertise to the claims
Mobility makes based on these documents, and additional
documents relevant to these questions might have been
added to the record to create a complete picture.”
Intervenor’s Opp’n to Appellant’s Mot. for Judicial Notice,
ECF No. 45, at 4 (Oct. 9, 2020). Unified Patents takes the
same position.
Because, as explained below, we determine that
Mobility’s documents, even considered in isolation, do not
establish a due process violation, neither the government
nor Unified Patents is prejudiced by our decision to take
judicial notice of these documents and to resolve the issues
to which they pertain without a remand. 2 We therefore
grant Mobility’s motion for judicial notice and address the
due process issues.
II
Mobility argues that the structure and funding of the
Board violates due process. Three Supreme Court cases
define the scope of due process in this area. The first of
these cases is Tumey v. Ohio, 273 U.S. 510 (1927).
advisory committee’s note to 1975 rule (stating that courts
may take judicial notice of “facts relating to the personnel
and records of the court . . . and other governmental facts”).
2 In a response (filed well after oral argument),
Mobility argued for the first time that if the case were
remanded pursuant to Arthrex, it should be allowed to
further develop the factual record. We conclude that any
such argument by Mobility is doubly forfeited: first,
because the issue was not raised in its opening brief and
second, because Mobility did not ask the Board to make any
factual determinations.
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MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 9
In Tumey, the Supreme Court held that a defendant’s
conviction in a mayor’s court violated due process because
a convicted defendant was required to pay fees, and the
mayor presiding over the proceedings received
compensation if the defendant was convicted, but received
no such compensation if the defendant was acquitted. Id.at 531–32. The Court additionally determined that the
structure of the mayor’s court violated due process because
the fees paid by convicted parties also funded the village
itself, and the mayor as “the chief executive of the village
. . . [wa]s charged with the business of looking after the
finances of the village.” Id. at 533. The Court explained
that
[e]very procedure which would offer a possible
temptation to the average man as a judge to
forget the burden of proof required to convict
the defendant, or which might lead him not to
hold the balance nice, clear, and true between
the state and the accused denies the latter due
process of law.
Id. at 532.
The Court again addressed the constitutionality of a
mayor’s court in Dugan v. Ohio, 277 U.S. 61 (1928). In
Dugan, the city had a “commission form of government,
with five commissioners.” Id. at 63. One member of the
city commission served as mayor. Id. “The mayor ha[d]
no executive, and exercise[d] only judicial, functions.” Id.The mayor was paid a fixed salary determined by “the votes
of the members of the commission other than the mayor”
and received no fees from the mayor’s court. Id.The Supreme Court determined that this structure did
not violate due process, distinguishing Tumey. Id. at 63–
64. The Court emphasized that, unlike the mayor in
Tumey, the Dugan mayor did not receive fees from the
conviction of defendants but instead received a fixed
salary. Id. at 65. The Court explained that while the
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mayor’s salary “[wa]s paid out of a fund to which fines
accumulated from his court under all laws contribute, it
[wa]s a general fund” and that the mayor “receive[d] a
salary in any event, whether he convicts or acquits.” Id.The Court therefore concluded that the mayor did not have
an impermissible personal financial interest in convictions.
The Court additionally determined that the mayor did
not have an impermissible interest in generating revenue
for the city. Id. The Court distinguished Tumey as
involving a mayor who served as “chief executive . . .
responsible for the financial condition of the village” and
“who by his interest as mayor might be tempted to
accumulate from heavy fines a large fund by which the
running expenses of a small village could be paid,
improvements might be made, and taxes reduced.” Id. By
contrast, the Dugan mayor was “one of five members of the
city commission” and thus had only a “remote” relation “to
the fund contributed to by his fines as judge, or to the
executive or financial policy of the city.” Id.Finally, in Ward v. Monroeville, the Supreme Court
examined a mayor’s court in which fines paid by convicted
defendants were paid to the village and not to the mayor
himself. 409 U.S. 57, 60 (1972). The Court again found a
due process violation because the mayor had “executive
responsibilities for village finances” that might “make him
partisan to maintain the high level of contribution from the
mayor’s court.” Id.A
Mobility first argues that “the fee-generating structure
of AIA review[] creates a temptation” for the Board to
institute AIA proceedings in order to collect post-
institution fees (fees for the merits stage of the AIA
proceedings) and fund the agency. Appellant’s Br. 45.
Mobility contends that the agency generates substantial
revenue from these fees, calculating that “24% of the
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MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 11
PTAB’s collections [are] dependent on instituting” AIA
proceedings. Appellant’s Br. 18–19.
Mobility contends that the Chief APJ, Deputy Chief
APJ, and Vice Chief APJs participate in AIA review
proceedings and “provide policy direction and ensure the
quality and consistency of AIA decisions,” id. at 33, while
also “oversee[ing] fiscal planning and expenditures” of the
Board, id. at 34. 3 Thus, Mobility contends that these
leadership APJs perform the “untenable dual role of
managing the [Board’s] finances in a ‘business-like sense’
and deciding AIA petitions solely on the merits.” Id.
Mobility concludes that this “impermissible mixing of
judicial and administrative/executive roles” constitutes a
violation of due process under Tumey. Id. at 36. Mobility
points out that “at least one of the three panel APJ’s [sic]”
in its IPR proceeding “was a Vice Chief APJ at the time of
Institution” and “another was an Acting Vice-Chief APJ.”
Appellant’s Reply Br. 16. We think there is no merit to
Mobility’s argument.
Unlike the mayors in Tumey and Ward, the Chief APJ,
Deputy Chief APJ, and Vice Chief APJs do not have
responsibility for the agency’s finances. While these
leadership APJs assist the Director by preparing budget
requests and executing the operating budget, “the Director,
not the APJs, has responsibility for USPTO’s budgetary
request to the Office of Management and Budget, in
consultation with the USPTO Public Advisory
Committees.” Intervenor’s Br. 28. The leadership APJs’
role in budgeting is therefore too remote to constitute a due
3 “The Office of the Chief Judge serves as the senior
level executive management of the Board. The Office of the
Chief Judge consists of the Chief Judge and the Deputy
Chief Judge.” J.A. 4614. In addition, the Vice Chief APJs
“each manage a division consisting of judges and patent
attorneys.” J.A. 4615.
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process violation. See Dugan, 277 U.S. at 65; see also
Doolin Sec. Sav. Bank, F.S.B. v. FDIC, 53 F.3d 1395, 1407
(4th Cir. 1995). 4 The role of other APJs in the budgetary
process is even more remote, and even less a due process
problem.
More fundamentally, the USPTO is a fee-funded
agency for “which Congress annually appropriates funds
. . . based on annual USPTO fee collection estimates.”
Intervenor’s Br. 3. The agency’s fees for institution and
post-institution work on AIA proceedings do not
automatically become available to the agency. See Pub. L.
No. 116-93, div. B, 133 Stat. 2317, 2389 (2019). Mobility
contends that the reality is otherwise because “[i]n the last
few years, Congress has appropriated to USPTO all the
money [the USPTO] collects” and that the “Director
effectively knows that the [US]PTO can set fees at the level
it wants and retain all the fees it collects this year.”
Appellant’s Reply Br. 9–10 (quoting Intervenor’s Br. 4).
Mobility also points out that the AIA created the Patent
and Trademark Fee Reserve Fund for fees “collected in
excess of the appropriated amount,” arguing that such a
fund creates an improper incentive to collect fees.
Appellant’s Br. 16–17 (citing 35 U.S.C. § 42(c)(2)).
Mobility’s challenge cannot succeed. The President, not
the USPTO, submits the budget, and Congress ultimately
sets the USPTO budget. Congress similarly controls
whether the USPTO has access to the surplus funds
4 To the extent Mobility contends that any mixture
“of executive and adjudicatory responsibilities in a single
agency decisionmaker” is itself unconstitutional, this
argument is without merit. See Tumey, 273 U.S. at 534 (“It
is, of course, so common to vest the mayor of villages with
inferior judicial functions that the mere union of the
executive power and the judicial power in him can not be
said to violate due process of law.”).
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MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 13
collected in the Patent Trademark Fee Reserve Fund. See
35 U.S.C. § 42(e)(4) (requiring the Secretary of Commerce
to “provide to the Committees on the Judiciary of the
Senate and the House of Representatives . . . any proposed
disposition of surplus fees by the Office”). Congress may
appropriate fees collected by the USPTO to other parts of
the government. Figueroa v. United States, 466 F.3d 1023,
1027, 1032–33 (Fed. Cir. 2006).
Other courts of appeals have held that similar
congressional control over an agency’s budget eliminates
any argument under Tumey. In Delaware Riverkeeper
Network v. Federal Energy Regulatory Commission, 895
F.3d 102 (D.C. Cir. 2018), the D.C. Circuit concluded that
the funding structure of the Federal Energy Regulatory
Commission (“FERC”), which required FERC to recover its
annual operating costs from fees and charges paid by
regulated entities, did not violate due process. Id. at 112,
overruled on other grounds by Allegheny Def. Project v. Fed.
Energy Regul. Comm’n, 964 F.3d 1 (D.C. Cir. 2020).
Appellant argued that this structure violated due process
because “the more pipelines that FERC approve[d] in the
present, the greater its ability to seek larger
appropriations from Congress in the future.” Id. The court
emphasized that “Congress sets FERC’s annual
appropriation” and that, “whereas the mayor in Dugan sat
on the five-member body that fixed his salary and exercised
control over incoming fines, FERC commissioners enjoy no
comparable degree of influence over Congress.” Id.(citation omitted). Here, too, the USPTO recovers its
annual operating costs through fees but is ultimately
funded through congressional appropriation.
In United States v. Benitez-Villafuerte, the Fifth Circuit
similarly concluded that “[a]lthough the INS’s
congressional funding depends to some extent on its
statistical workload in apprehending and deporting illegal
aliens, this fact provides too tenuous an influence” to
violate due process. 186 F.3d 651, 660 (5th Cir. 1999).
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Significantly, we rejected a similar challenge to the fee
structure for reexamination proceedings, which at the time
granted applicants “a refund of $1,200” if “the
Commissioner decide[d] not to institute a reexamination
proceeding.” Patlex Corp. v. Mossinghoff, 771 F.2d 480,
487–88 (Fed. Cir. 1985) (rejecting argument that this fee
structure “unlawfully weight[ed] the [US]PTO’s initial
decision in favor of granting reexamination, because only if
reexamination [wa]s granted w[ould] the PTO avoid
refunding $1,200 of the $1,500 fee for reexamination”). We
found no due process violation, distinguishing Tumey and
Ward because “in those cases the fines were discretionary
and were levied at the initiative of those benefiting from
the income; in the case of the [US]PTO the fees are set by
Congress, and are paid by those members of the public who
seek the benefits of the service.” Id. at 487.
Here, as in Delaware Riverkeeper, Benitez-Villafuerte,
and Patlex, congressional control of the USPTO’s budget
renders any agency interest in fee generation too tenuous
to constitute a due process violation under Tumey. 5
B
Mobility alternatively argues that individual APJs
have an unconstitutional interest in instituting AIA
5 Other cases relied on by Mobility finding a due
process violation similarly involved direct agency control
over funds, rather than a congressional appropriation. See
Cain v. White, 937 F.3d 446, 448, 454 (5th Cir. 2019);
Caliste v. Cantrell, 937 F.3d 525, 526, 532 (5th Cir. 2019);
Esso Standard Oil Co. v. Lopez-Freytes, 522 F.3d 136, 146
(1st Cir. 2008); Rose v. Village of Peninsula, 875 F. Supp.
442, 450–52 (N.D. Ohio 1995).
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MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 15
proceedings because their own compensation in the form of
performance bonuses is favorably affected.
APJ compensation is governed by statute and
regulation, and APJs recover a fixed salary. 35 U.S.C.
§ 3(b)(6) (“The Director may fix the rate of basic pay for the
administrative patent judges . . . at not greater than the
rate of basic pay payable for level III of the Executive
Schedule under section 5314 of title 5.”). However, APJs
are also eligible to receive performance bonuses. APJ
performance is evaluated by an annual performance
review. These reviews look at four elements of
performance: quality, production, support for the mission
of the Board/leadership, and stakeholder interactions.
APJs that are rated “fully successful” or higher are eligible
for bonuses. Intervenor’s Br. 9–10. To earn a performance
bonus, an APJ must generally earn at least 84 decisional
units per year, which Mobility asserts creates an incentive
to institute IPR proceedings. Mobility contends that APJs
can “receive a bonus of $4,000 to $10,000.” Appellant’s Br.
21.
Mobility makes a similar argument with respect to APJ
salary increases, which are conditioned on performance
reviews. Mobility contends that an “APJ’s salary can be
increased, up to five percent, depending on the APJ’s
numerical rating and final Performance Rating.” Id.Even accepting Mobility’s characterization of APJ
compensation, however, we conclude that APJs do not have
a significant financial interest in instituting AIA
proceedings to earn a bonus. Initially, we note that the
number of decisional units earned by an APJ “is based
upon the number of decisions authored” and “does not
depend on the outcomes of those decisions.” Intervenor’s
Br. 38. This stands in sharp contrast to Tumey and Ward,
which involved fees that were only collected upon
conviction of the defendants. See Tumey, 273 U.S. at 531;
Ward, 409 U.S. at 58; see also Dugan, 277 U.S. at 65
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(explaining that the mayor “receive[d] a salary which [wa]s
not dependent on whether he convict[ed] in any case or
not”).
Even though an APJ will earn decisional units for a
follow-on merits decision if he or she issues a decision
instituting an AIA proceeding, there has been no showing
that APJs institute AIA proceedings to earn sufficient
decisional units to qualify for a bonus. Decisional units can
be earned by participation in non-AIA proceedings, and
there is a significant backlog of ex parte appeals. While
APJs are generally assigned to specific jurisdictions of the
Board (e.g., AIA proceedings or ex parte appeals), APJs are
free to “request ex parte appeals to be added to his or her
docket.” J.A. 4355. Mobility does not dispute that APJs
have access to non-AIA work or that there is sufficient non-
AIA work for APJs to meet the 84 decisional unit threshold
for additional compensation. Thus, even if there were an
incentive to institute AIA proceedings to earn decisional
units, any interest APJs have in instituting AIA
proceedings to earn decisional units would be too remote to
constitute a due process violation. 6 See, e.g., Del.
6 The situation here is quite different from that
prevailing in the cases relied on by Mobility. See, e.g., Esso,
522 F.3d at 147 (Hearing Examiners working for the
Puerto Rico Environmental Quality Board were
independent contractors whose pay was “entirely
dependent upon the discretionary assignment of cases from
the” Environmental Quality Board); Brown v. Vance, 637
F.2d 272, 277, 281–82 (5th Cir. 1981) (“The income of
judges in all Mississippi counties depend[ed] on the volume
of criminal cases heard”; “law enforcement officers ha[d]
discretion as to which judge in the district w[ould] hear
each case”; and “the possibility exist[ed] that judges . . .
w[ould] compete for business by currying favor with
Case: 20-1441 Document: 89 Page: 17 Filed: 10/13/2021
MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 17
Riverkeeper, 895 F.3d at 112 (rejecting due process
challenge directed at agency’s interest in “seek[ing] larger
appropriations from Congress in the future”); see also Van
Harken v. City of Chicago, 103 F.3d 1346, 1353 (7th Cir.
1997).
Mobility has therefore failed to establish that APJs
have an unconstitutional financial interest in instituting
AIA proceedings. 7
IV
Mobility raises several additional constitutional
challenges not raised before the agency that have been
previously rejected by this court in other cases.
Mobility argues that the Director’s delegation of his
authority to institute AIA proceedings violates due process
and the Administrative Procedure Act because the Director
has delegated the initial institution decision to “the exact
same panel of Judges that ultimately hears the case.”
Appellant’s Br. 46. We have previously rejected a nearly
identical challenge. See Ethicon Endo-Surgery, Inc. v.
Covidien LP, 812 F.3d 1023, 1033 (Fed. Cir. 2016) (“[B]oth
as a matter of inherent authority and general rulemaking
authority, the Director had authority to delegate the
institution decision to the Board. There is nothing in the
Constitution or the statute that precludes the same Board
arresting officers or taking biased actions to increase their
caseload.”).
7 Amicus curiae US Inventor, Inc. presents a
statistical study purportedly showing that there are more
meritorious institution decisions in September (at the end
of the APJ performance review year) than in October (at
the beginning of the performance review evaluation
period). This hardly establishes that APJs are instituting
AIA proceedings to earn decisional units.
Case: 20-1441 Document: 89 Page: 18 Filed: 10/13/2021
18 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
panel from making the decision to institute and then
rendering the final decision.”).
Mobility additionally argues that subjecting a pre-AIA
patent to AIA review proceedings “constitutes an unlawful
taking of property.” Appellant’s Br. 4. Again, we have
previously rejected a nearly identical challenge. See
Celgene Corp. v. Peter, 931 F.3d 1342, 1360 (Fed. Cir. 2019)
(“In this case it suffices for us to decide that IPRs do not
differ sufficiently from the PTO reconsideration avenues
available when the patents here were issued to constitute
a Fifth Amendment taking.”), cert. denied, 141 S. Ct. 132(2020).
V
Finally, Mobility raises an Appointments Clause
challenge. We agree that a remand is required under the
Supreme Court’s decision in Arthrex to allow the Acting
Director to review the final written decision of the APJ
panel pursuant to newly established USPTO procedures.
See https://www.uspto.gov/patents/patent-trial-and-
appeal-board/procedures/uspto-implementation-interim-
director-review (June 29, 2021);
https://www.uspto.gov/sites/default/files/documents/20210
701-PTAB-BoardsideChat-Arthrexfinal.pdf (July 1, 2021).
However, Mobility now argues that it is entitled to more
than a remand. Following the Supreme Court’s decision in
Arthrex, Mobility argued, for the first time, that we should
instruct the Acting Director “to issue a certificate under [35
U.S.C.] § 318(b) confirming the challenged claims, or, in
the alternative, dismissing [Unified Patent’s] petition for
failing to reach a final determination within the” 12-month
statutory period for final determination in an inter partes
review under 35 U.S.C. § 316(a)(11). Appellant’s Br. in
Resp. to Arthrex Order, ECF No. 85, at 2–3 (July 8, 2021).
This argument, and any other challenge to the USPTO’s
implementation of Director review under Arthrex, should
be raised before the agency on remand.
Case: 20-1441 Document: 89 Page: 19 Filed: 10/13/2021
MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 19
We therefore remand to the Board for the limited
purpose of allowing Mobility the opportunity to request
Director rehearing of the final written decision. Mobility
must file any such request for rehearing within 30 days
from the date of this decision. We will retain jurisdiction
over this appeal during this limited remand. Within 14
days of a decision granting rehearing, the government shall
inform this court of that decision and make any request to
remand the case in full or continue the stay of proceedings.
The government’s request shall include a statement of
consent or opposition. We decline to reach Mobility’s
merits challenge until the Acting Director has determined
whether rehearing is warranted.
REMANDED
COSTS
No costs.
Case: 20-1441 Document: 89 Page: 20 Filed: 10/13/2021
United States Court of Appeals
for the Federal Circuit
______________________
MOBILITY WORKX, LLC,
Appellant
v.
UNIFIED PATENTS, LLC,
Appellee
ANDREW HIRSHFELD, PERFORMING THE
FUNCTIONS AND DUTIES OF THE UNDER
SECRETARY OF COMMERCE FOR
INTELLECTUAL PROPERTY AND DIRECTOR OF
THE UNITED STATES PATENT AND TRADEMARK
OFFICE,
Intervenor
______________________
2020-1441
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2018-
01150.
______________________
NEWMAN, Circuit Judge, concurring in part, dissenting in
part.
I agree with the decision to remand this case to the Di-
rector of the U.S. Patent and Trademark Office for review
of the final decision of the Patent Trial & Appeal Board
(PTAB or “Board”). This remand implements the Supreme
Case: 20-1441 Document: 89 Page: 21 Filed: 10/13/2021
2 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
Court’s decision in United States v. Arthrex, Inc., 141 S. Ct.
1970 (2021), as a way to achieve compliance with the Ap-
pointments Clause of the Constitution, for the Court ob-
served that “the source of the constitutional violation is the
restraint on the review authority of the Director, rather
than the appointment of the APJs by the Secretary . . . .”
Id. at 1988. The Court achieved constitutional compliance
by authorizing the Director to review the PTAB’s decisions.
The Court in Arthrex did not discuss any other aspect
of this new (since 2012) system whereby issued patents are
subject to review and cancellation by the Patent and Trade-
mark Office (PTO). Mobility Workx raises several issues
concerning this system, including constitutional issues. In
addition, the Court’s Arthrex decision now raises another
possible Appointments Clause concern, stemming from the
PTO’s conduct of the procedure of “institution.”
From my colleagues’ endorsement of the status quo, I
respectfully dissent.
DISCUSSION
New technologies are the drivers of today’s economy
and the source of our national strength. New technologies
present new complexities of law, science, and societal im-
pact, with fresh issues of public and private interest. In
the America Invents Act, legislators, inventors, technology
industries, and other concerned interests sought to adapt
the patent system to today’s needs. Now, after a decade of
experience with this Act, it is ripe for critical evaluation.
During the gestation of the America Invents Act, pro-
ponents stressed the burdens, delays, and costs of civil lit-
igation, and sought to develop a more efficient system for
review of the most common issues in patent litigation,
through the administrative process and benefitting from
the technological and legal expertise of the PTO. See H.R.
Rep. No. 112-98, pt.1 at 48 (2011) (the purpose is “providing
quick and cost effective alternatives to litigation”). Thus
Case: 20-1441 Document: 89 Page: 22 Filed: 10/13/2021
MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 3
the America Invents Act created a new mechanism
whereby the most common issues of patent validity, viz. an-
ticipation (§ 102) and obviousness (§ 103), can be reviewed
by the PTO in an expedited agency procedure, with the re-
sult binding in any civil litigation. The review is conducted
by a body called the Patent Trial and Appeal Board, whose
members are designated “Administrative Patent Judges.”
The procedure called “institution” was established by
the America Invents Act in response to concerns that the
proposed system of agency review would be subject to
abuses such as harassment, delay, and opportunistic at-
tacks on valuable patents, for there is no requirement of an
Article III controversy for these agency proceedings, alt-
hough the statute provides for cancellation (or enforce-
ment) of property rights. The procedure of “institution” is
intended to provide a safeguard against unwarranted
agency procedures by requiring petitioners to meet an “el-
evated threshold” and establish “serious doubts about the
patent’s validity” before subjecting the patent owner to the
burden and delay of this new procedure. 157 Cong. Rec.
S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl). Sen-
ator Kyl explained:
Among the most important protections for patent
owners added by the present bill are its elevated
thresholds for instituting inter partes and post-
grant reviews. The present bill dispenses with the
test of ‘‘substantial new question of patentability,’’
a standard that currently allows 95% of all re-
quests to be granted. It instead imposes thresholds
that require petitioners to present information that
creates serious doubts about the patent’s validity.
Under section 314(a), inter partes review will em-
ploy a reasonable-likelihood-of-success thresh-
old . . . .
Id. The House Report at enactment similarly stated that
the America Invents Act assures that these new agency
Case: 20-1441 Document: 89 Page: 23 Filed: 10/13/2021
4 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
procedures “are not used as tools for harassment or a
means to prevent market entry through repeated litigation
and administrative attacks on the validity of a patent.”
H.R. Rep. No. 112-98, pt.1 at 48 (2011).
Mobility states that these promises have not been kept.
Mobility states that the PTO’s institution procedures are
duplicative, expensive, delaying, and subject to bias. These
aspects require more attention than my colleagues have ac-
corded them, and raise new constitutional concerns.
The institution decision is final and nonap-
pealable and its conduct raises Appointments
Clause issues
Guided by the Supreme Court’s recent decision in Ar-
threx, the procedure of institution appears likely to violate
the Appointments Clause, for institution, as it is currently
conducted by the PTAB, is a final decision of an inferior
officer, without supervision or control or review by a prin-
cipal officer of the agency. Mobility also states that the in-
stitution procedure, as it is conducted by the PTAB, does
not apply the elevated standard of the legislative purpose,
and simply increases the burden on inventors and patent
owners and the system of innovation.
The PTO’s brief as Intervenor describes the conduct of
institution as follows:
AIA proceedings, including inter partes review,
have two stages. First, the Board decides whether
to institute proceedings. This decision is “final and
nonappealable,” 35 U.S.C. §§ 314(d), 324(e). If the
agency decides to institute proceedings, the Board’s
final written decision as to patentability is subject
to judicial review in this Court. See id. §§ 318(a),
319, 328(a), 329.
PTO Br. 8 (footnote omitted).
Case: 20-1441 Document: 89 Page: 24 Filed: 10/13/2021
MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 5
As the PTO brief states, “the Board decides whether to
institute proceedings.” Id. However, the America Invents
Act assigned the institution decision to the Director, not
the Board. The Act separated institution from adjudica-
tion, to be performed by separate administrative authori-
ties:
35 U.S.C. § 314 – Institution of inter partes re-
view
(a) Threshold.—The Director may not authorize an
inter partes review to be instituted unless the Di-
rector determines that the information presented
in the petition filed under section 311 and any re-
sponse filed under section 313 shows that there is
a reasonable likelihood that the petitioner would
prevail with respect to at least 1 of the claims chal-
lenged in the petition.
Thus the Director decides whether a requested inter partes
review will be conducted; the statute sets the timing for
this decision:
§ 314(b) Timing.—The Director shall determine
whether to institute an inter partes review under
this chapter pursuant to a petition filed under sec-
tion 311 and any response filed within 3 months af-
ter— (1) receiving a preliminary response . . . ; or
(2) . . . the last date on which such response may be
filed.
The Director’s decision whether to institute review is final
and is not appealable:
§ 314(d) No Appeal.—The determination by the Di-
rector whether to institute an inter partes review
under this section shall be final and nonappealable.
The Supreme Court referred to the nonappealability of in-
stitution, in Cuozzo Speed Technologies, LLC v. Lee, 136 S.
Ct. 2131 (2016):
Case: 20-1441 Document: 89 Page: 25 Filed: 10/13/2021
6 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
[W]here a patent holder merely challenges the Pa-
tent Office’s “determin[ation] that the information
presented in the petition . . . shows that there is a
reasonable likelihood” of success “with respect to at
least one of the claims challenged,” § 314(a), or
where a patent holder grounds its claim in a stat-
ute closely related to that decision to institute inter
partes review, § 314(d) bars judicial review.
Id. at 2142 (alterations in original). The Court was not con-
cerned in Cuozzo with the identity or appointment of the
decision-maker.
Although the America Invents Act assigned the insti-
tution decision to the Director, soon after enactment the
agency assigned institution to the PTAB, retaining no con-
trol or supervision or review by the Director. See Changes
to Implement Inter Partes Review Proceedings, Post-Grant
Review Proceedings, and Transitional Program for Covered
Business Method Patents, 77 Fed. Reg. 48612-01 (Aug. 14,
2012):
The authorities to determine whether to institute a
trial and conduct a trial have been delegated to a
Board member or employee acting with the author-
ity of the Board.
Id. at 48647.
The removal of institution from the Director and as-
signment to the PTAB eliminated the legislative design
whereby separate entities conduct separate determina-
tions, as would also conform to the Administrative Proce-
dure Act. The agency’s explanation is “efficiency,” the PTO
stating in Ethicon that “The Director’s delegation of the in-
stitution decision to the Board is consistent with the statu-
tory purpose of increasing efficiency because it avoids the
need for two separate entities to become familiar with the
patent and the prior art.” Br. for PTO as Intervenor in Eth-
icon Endo-Surgery Inc. v. Covidien LP, at 33 (Fed. Cir.
Case: 20-1441 Document: 89 Page: 26 Filed: 10/13/2021
MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 7
Mar. 23, 2015) (No. 14-1771), ECF No. 33. However, this
action not only contravenes the America Invents Act and
the Administrative Procedure Act, but the placement of
this final, nonappealable decision with an inferior officer
also raises Appointments Clause concerns. As the Court
explained in Freytag v. Comm’r, 501 U.S. 868 (1991), effi-
ciency does not override the Constitution:
Because it articulates a limiting principle, the Ap-
pointments Clause does not always serve the Exec-
utive’s interests. For example, the Clause forbids
Congress to grant the appointment power to inap-
propriate members of the Executive Branch. Nei-
ther Congress nor the Executive can agree to waive
this structural protection. . . . The structural inter-
ests protected by the Appointments Clause are not
those of any one branch of Government but of the
entire Republic.
Id. at 880. The Court also pointed out that the right to
raise a constitutional concern cannot be forfeited or waived.
Id. at 879.
In Arthrex the PTO argued, as it does here, that the
Director controls everything that happens in the PTO, to
which the Court stated:
[T]he unchecked exercise of executive power by an
officer buried many layers beneath the President
poses more, not less, of a constitutional problem.
141 S. Ct. at 1983. The issue is not whether PTAB mem-
bers have the skill to make the institution decision and to
do so impartially, as the PTO argues. The issue is whether
this final nonappealable decision requires the authority of
a principal officer.
This aspect is now before us, but it could benefit from
further briefing in view of Arthrex. It cannot, after Arthrex,
be dispatched as a non-issue, as the Federal Circuit held in
Ethicon Endo-Surgery, Inc. v. Covidien LP, 812 F.3d 1023Case: 20-1441 Document: 89 Page: 27 Filed: 10/13/2021
8 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
(Fed. Cir. 2016) (“There is nothing in the Constitution or
the statute that precludes the same Board panel from mak-
ing the decision to institute and then rendering the final
decision.”). The Court in Arthrex confirmed the flaw in this
reasoning, ruling that “[o]nly an officer properly appointed
to a principal office may issue a final decision binding the
Executive Branch in the proceeding before us.” 141 S. Ct.
at 1985. The Court stated:
We hold that the unreviewable authority wielded
by APJs during inter partes review is incompatible
with their appointment by the Secretary to an infe-
rior office. . . . Only an officer properly appointed
to a principal office may issue a final decision bind-
ing the Executive Branch in the proceeding before
us.
Id.
The PTAB’s institution decision, whether for or against
post-issuance review, binds the parties and is not appeala-
ble to the Director or to any court. The America Invents
Act assigned this decision to the Director. With the Arthrex
confirmation that the Director is a principal officer and the
administrative patent judges are inferior officers, this
court’s reasoning in Ethicon appears to have been over-
taken.
The status of the “institution” decision in light of Ar-
threx requires resolution, with application of the Court’s
ruling that PTAB final decisions must be controlled by a
principal officer:
Given the insulation of PTAB decisions from any
executive review, the President can neither oversee
the PTAB himself nor “attribute the Board’s fail-
ings to those whom he can oversee.” APJs accord-
ingly exercise power that conflicts with the design
of the Appointments Clause “to preserve political
accountability.”
Case: 20-1441 Document: 89 Page: 28 Filed: 10/13/2021
MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 9
Arthrex, 141 S. Ct. at 1982 (quoting Free Enter. Fund v.
Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 496 (2010) and
Edmond v. United States, 520 U.S. 651, 663 (1997)).
This court should consider whether the removal of in-
stitution from the Director is in accordance with law and
the Constitution.
Mobility and amicus curiae US Inventor also argue
that the current conduct of institution raises Due Process
issues, as I next outline.
Bias or the appearance of bias in the conduct
of institution
Mobility raises issues of both pre-judgment bias and
structural bias. Mobility states that pre-judgment bias or
the appearance of pre-judgment bias arises when the deci-
sion of unpatentability is made by the same APJs who
made the decision for institution. Mobility further states
that structural bias or the appearance of structural bias
arises when the APJs charged with adjudication also con-
trol their workload via institution and administer a com-
pensation structure based on a system that favors
subjecting issued patents to agency review. Mobility states
that the post-issuance procedures have destabilized the
system of patents, to the detriment of the national interest
in technological advance:
The decision to seek a patent is fundamentally a
decision to invest. To conceive of a new invention
and reduce it to practice often requires a massive
dedication of time, capital, and human effort.
Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480
(1974) (“The patent laws promote this progress by
offering a right of exclusion for a limited period as
an incentive to inventors to risk the often enormous
costs in terms of time, research, and develop-
ment.”).
Mobility Br. 54.
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10 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
Mobility states that the post-issue proceedings of the
America Invents Act have not provided the promised bene-
fits of speed, economy, and superior results as compared
with district court proceedings, and often simply increase
cost and delay. In addition to this failure of purpose, Mo-
bility states that in their present form the PTO’s proce-
dures are contrary to the Administrative Procedure Act,
the Due Process Clause and the America Invents Act.
Prejudging bias and the appearance of bias
The appearance of bias is as important as actual bias,
for confidence in the objectivity of adjudication is critical to
a nation ruled by law. Prejudging bias is a recognized con-
cern in adjudication. The concern here is the current con-
duct of institution, where the same panel of APJs decides
whether to institute review, and then conducts the trial
and finally decides the question. The America Invents Act
separated these functions, as does the Administrative Pro-
cedure Act:
5 U.S.C. § 554(d)(2) [¶ 2]. An employee or agent
engaged in the performance of investigative or
prosecuting functions for an agency in a case may
not, in that or a factually related case, participate
or advise in the decision, recommended decision, or
agency review . . . except as witness or counsel in
public proceedings.
Despite this stricture, the PTO combined the investigative
and adjudicative functions, as discussed ante with respect
to the Appointments Clause. When the PTO requested
public comments on the shift of the institution function
from the Director to the PTAB, the patent bar expressed
concern about the actual or perceived bias against the pa-
tent owner because the administrative patent judges are
put in the position of defending their prior decisions to in-
stitute the review. AIPLA, Comments on Trial Proceedings
Under the America Invents Act Before the Patent Trial and
Case: 20-1441 Document: 89 Page: 30 Filed: 10/13/2021
MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 11
Appeal Board, 20 (October 16, 2014), http://www.uspto.gov/
ip/boards/bpai/aipla_20141016.pdf.
The Pharmaceutical Researchers and Manufacturers
of America stated similar concerns:
The AIA thus separates the responsibility for insti-
tuting an IPR or PGR from the responsibility for
conducting an instituted IPR or PGR. The PTAB’s
role under the AIA is specifically limited to “con-
duct[ing]” a review that was already “instituted.”
Separating the decision to institute on IPR or PGR
from the PTAB’s decision on the merits would in-
crease patent owners’ due process protections, re-
duce perceptions of bias, and more fully meet the
requirements of the AIA.
Pharm. Researchers & Mfrs. of Am., Comments on Trial
Proceedings Under the America Invents Act Before the Pa-
tent Trial and Appeal Board, 14 (October 16, 2014),
https://www.uspto.gov/sites/default/files/ip/boards/bpai/
phrma_20141016.pdf (alterations in original).
Commentator Public Knowledge observed that “it is
unsurprising that the Board has generally invalidated pa-
tents it reviews” because “[r]eview before the Board will
only be granted where it is likely” in the view of the same
APJs who will conduct the trial and decide the case, “that
at least one claim will be cancelled.” Public Knowledge,
Comments on Trial Proceedings Under the America In-
vents Act Before the Patent Trial and Appeal Board, 5
(September 30, 2014), https://www.uspto.gov/sites/default/
files/ip/boards/bpai/public_knowledge_20140930.pdf (sup-
porting the current structure).
The PTO responded to these concerns by rejecting the
possibility of prejudging bias on the part of PTO employees:
The Office believes that the panel deciding whether
to institute an AIA proceeding is not predisposed to
rule in favor of any party, whether the petitioner or
Case: 20-1441 Document: 89 Page: 31 Filed: 10/13/2021
12 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
patent owner, and that each panel applies the ap-
propriate legal standard to make a fair and unbi-
ased decision based upon the evidence and
arguments of record.
Amendments to the Rules of Practice for Trials Before
the Patent Trial and Appeal Board, 80 Fed. Reg. 50720-01,
50740 (Aug. 20, 2015).
Scholars of cognition are not so sanguine, and “have re-
peatedly documented the tendency for people to justify past
conduct, especially when that conduct casts doubt on their
competence or integrity and is public knowledge,” report-
ing that: “Accountable subjects had a harder time than un-
accountable subjects in writing off ‘sunk costs’ and in
acknowledging that they had made a mistake.” Philip E.
Tetlock, Linda Skitka & Richard Boettger, Social and Cog-
nitive Strategies for Coping with Accountability: Conform-
ity, Complexity, and Bolstering, 57 J. Personality & Soc.
Psychol. 632, 633 (1989).
The Court has remarked, in connection with the
growth of quasi-adjudicative functions in administrative
agency activity, that:
[L]egislators and others concerned with the opera-
tions of administrative agencies have given much
attention to whether and to what extent distinctive
administrative functions should be performed by
the same persons.
Withrow v. Larkin, 421 U.S. 35, 51 (1975) (discussing Con-
gress’ various approaches to the problems of investigative
bias, stating: “For the generality of agencies, Congress has
been content with § 5 of the Administrative Procedure Act,
5 U.S.C. § 554(d), which provides that no employee engaged
in investigating or prosecuting may also participate or ad-
vise in the adjudicating function, but which also expressly
exempts from this prohibition ‘the agency or a member or
members of the body comprising the agency.’”).
Case: 20-1441 Document: 89 Page: 32 Filed: 10/13/2021
MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 13
The concern is not only the possibility of bias, including
unconscious bias, but also the appearance of bias. The Ad-
ministrative Procedure Act confronted the issue by requir-
ing that different persons should perform the investigative
and the adjudicative functions of a given issue. The Court
explained in Wong Yang Sung v. McGrath, 339 U.S. 33(1950), that § 554(d) was included in the APA to “amelio-
rate the evils from the commingling of functions” where
“[t]he discretionary work of the administrator is merged
with that of the judge.” Id. at 42, 46. The separation of
investigative and decisional functions is necessary, the
Court explained, lest the agency decision “lie under the
suspicion of being rationalizations of the preliminary find-
ings which the commission, in the role of prosecutor, pre-
sented to itself.” Id. at 42 (internal quotation marks
omitted). The Court summarized: “The Administrative
Procedure Act did not go so far as to require a complete
separation of investigating and prosecuting functions from
adjudicating functions. But that the safeguards it did set
up were intended to ameliorate the evils from the commin-
gling of functions as exemplified here is beyond doubt.” Id.
at 46.
Bias is not a simple concept, and may be unconscious,
as the Court observed in Williams v. Pennsylvania, 136 S.
Ct. 1899, 1905 (2016), where the Court referred to the:
risk that the judge “would be so psychologically
wedded” to his or her previous position as a prose-
cutor that the “judge would consciously or uncon-
sciously avoid the appearance of having erred or
changed position.”
Id. at 1906 (quoting Withrow, 421 U.S. at 57). The Court
observed that bias may not be recognized by the biased per-
son, and imposed the rule that “under the Due Process
Clause there is an impermissible risk of actual bias when
a judge earlier had significant, personal involvement as a
prosecutor in a critical decision regarding the defendant’s
Case: 20-1441 Document: 89 Page: 33 Filed: 10/13/2021
14 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
case.” Id. See Caperton v. A.T. Massey Coal Co., 556 U.S.
868 (2009):
The judge’s own inquiry into actual bias, then, is
not one that the law can easily superintend or re-
view, though actual bias, if disclosed, no doubt
would be grounds for appropriate relief. In lieu of
exclusive reliance on that personal inquiry, or on
appellate review of the judge’s determination re-
specting actual bias, the Due Process Clause has
been implemented by objective standards that do
not require proof of actual bias.
Id. at 883. The Court has stressed that “any tribunal
permitted by law to try cases and controversies not only
must be unbiased but also must avoid even the appearance
of bias.” Commonwealth Coatings Corp. v. Cont’l Cas. Co.,
393 U.S. 145, 150 (1968). The Court stated:
To establish an enforceable and working frame-
work, the Court’s precedents apply an objective
standard that, in the usual case, avoids having to
determine whether actual bias is present.
Williams, 136 S. Ct. at 1905.
In sum, there must be confidence in objective adjudica-
tion in any contested proceeding that is entrusted to gov-
ernment. An administrative agency performing
adjudicative functions is no less subject to these concerns.
See Gibson v. Berryhill, 411 U.S. 564, 579 (1973) (“It has
also come to be the prevailing view that ‘[m]ost of the law
concerning disqualification because of interest applies with
equal force to . . . administrative adjudicators.’” (quoting
Kenneth Culp Davis, ADMINISTRATIVE LAW § 12.04, p. 250
(1972) (alterations in original)).
The America Invents Act was structured to avoid these
concerns by simply separating the threshold investigative
function from the adjudicative function, along with the au-
thorities performing them. My colleagues err in their
Case: 20-1441 Document: 89 Page: 34 Filed: 10/13/2021
MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC 15
perfunctory ratification of the current practice, particu-
larly when the issue could be resolved simply by restoring
the Director to the statutory role in the institution proce-
dure.
Structural bias and the appearance of bias
Mobility also raises issues of structural bias, based on
the PTAB’s fee and compensation structures. Data and
statistical analysis have been submitted by amicus curiae
US Inventor. Mobility cites Esso Standard Oil Co. v.
Lopez-Freytes, 522 F.3d 136 (1st Cir. 2008), for the propo-
sition that “[a]lthough members of the EQB Governing
Board may not stand to gain personally . . . a pecuniary in-
terest need not be personal to compromise an adjudicator’s
neutrality.” Id. at 147 (quoting Esso Standard Oil Co. v.
Cotto, 389 F.3d 212, 219 (1st Cir. 2004) (alterations in orig-
inal)).
The PTO defends its objectivity, and my colleagues give
scant weight to Mobility’s charge. However, there is no
“feeling, so important to a popular government, that justice
has been done.” Marshall v. Jerrico, Inc., 446 U.S. 238, 242
(1980) (quoting Joint Anti-Fascist Refugee Comm. v.
McGrath, 341 U.S. 123, 172 (1951) (Frankfurter, J., con-
curring)).
In Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir.
1985), this court considered the newly enacted system of
inter partes reexamination, and stated:
The Commissioner reminds us of the complex
structure of modern government through adminis-
trative agencies, and we agree that such delegation
of administrative functions, often including quasi-
judicial functions, is now beyond facial challenge—
provided that constitutional safeguards are re-
spected. The massive body of jurisprudence that
suffered the evolution of administrative agencies in
Case: 20-1441 Document: 89 Page: 35 Filed: 10/13/2021
16 MOBILITY WORKX, LLC v. UNIFIED PATENTS, LLC
the federal government insisted on fair opportunity
for judicial review and full respect for due process.
Id. at 604. Mobility flags this “respect for due process,” in
asking this court to assure that the PTO and its tribunal
are adequately scrupulous in their avoidance of bias and
the appearance of bias. “[J]ustice must satisfy the appear-
ance of justice,” Offutt v. United States, 348 U.S. 11, 14
(1954). This is our responsibility. From my colleagues’ fac-
ile endorsement of the present system, although these due
process concerns are not resolved, I respectfully dissent.