Putting Teeth Into The PTAB’s Sanctioning Powers: Is Mohawk A Sign Of Things To Come?

For federal court practitioners, sanctions have long existed as a deterrent to litigation misconduct and a weapon against gamesmanship.  The federal rules of civil procedure provide a range of tools for litigators who believe their opponents are not abiding by their obligations: Rule 11 checks improper pleadings and other court filings; Rules 26, 30 and 37 curb improper discovery and compel cooperation.  And beyond the rules, federal courts have always had broad inherent powers, including those under 28 U.S.C. § 1927, to fashion appropriate sanctions for litigation misconduct.

For those who litigate inter partes review (IPR) and other post-grant proceedings before the Patent Trial and Appeal Board, the possibility of sanctions have existed as well.  While the Board lacks the same inherent powers as a court, it does have rules that provide, at least in theory, “teeth” that could bite those who are not careful.

Under 37 C.F.R. § 42.12(a), for example, the PTAB may impose sanctions against a party for “misconduct,” including “[f]ailure to comply with an applicable rule or order in the proceeding.”

Still, considering the large number of IPRs that have been filed, there have been relatively few reported instances in which the PTAB has actually used its power to impose sanctions.  As PTAB expert Scott McKeown wrote only a few years ago, “[t]he Board has been reluctant to officially sanction parties given the relative newness of the AIA trial proceedings.”

Perhaps those times are changing.

Just last month in Mylan Pharma. Inc. v. Saint Regis Mohawk Tribe, a panel of administrative patent judges came down hard on a patent owner who failed to follow the procedural and scheduling rules of the PTAB.

The facts in Mohawk are straightforward.

On January 2, 2018, Saint Regis Mohawk Tribe, the patent owner, sought an oral hearing on its request for discovery “into the identity and impartiality of the merits panel assigned to this case.”  In other words, the Tribe wanted discovery from the Board itself, not a party to the proceedings or third party.  Apparently the Tribe believes that political pressure and financial interests may be improperly influencing the impartiality of the decision-makers.

The Board was not amused, and it came down hard on the Tribe and its attorneys several different ways in its relatively short (3-page) Order.

For starters, the Board noted, the Tribe’s paper was filed pursuant to 37 C.F.R. § 42.70, which states in relevant part that “[a] party may request oral argument on an issue raised in a paper at a time set by the Board.”  The Board found that the Tribe’s request for discovery “has not been raised in any paper filed with the Board” and, consequently, it is “not an issue that can be addressed at oral argument under this rule.”

In addition, the Board found that the request for oral argument was untimely: the deadline for requesting oral argument had passed months ago.

Next, the Board stated that because the Tribe’s request “is not contemplated by our rules or our Scheduling Order, the Tribe was required to seek prior authorization to file its paper.”  And instead of seeking that prior authorization, the Board remarked that, “counsel for the Tribe ignored our rules (once again) and preemptively filed its paper.”

The Board acted quickly in disposing of the Tribe’s request.  It issued its Order two days after the Tribe had filed its discovery paper.  In its Order, the Board:

  • Denied the requested discovery “because it far exceeds the scope of permissible discovery in these proceedings”; and
  • Rejected the Tribe’s argument that the requested discovery from the Board itself concerned due process and what the Tribe evidently perceived was an impartial panel–“But nowhere has the Tribe offered anything other than gross speculation as to any of its assertions of alleged impartiality.”

Finally, the Board imposed sanctions.  Most notably, the Board prohibited the Tribe from filing any further papers in the proceeding without prior permission from the Board.

The Board also warned counsel for the Tribe about its sanctions powers:

We strongly advise counsel for the Tribe to review our rules and caution that any further actions that demonstrate a disregard for our process will not be tolerated.

Okay, so maybe that was not the worst possible sanction the Board could have been imposed.  Some commentators have characterized the Board’s opinion as “scathing.”  Frankly, I have seen much worse from Article III judges.  But then again, they have life tenure.

Still, the public shaming–that coming only two (2) days after the filing of the paper that prompted it–could be a sign that the PTAB is feeling the stress of its workload and extraordinary deadlines.  Clearly, this panel has lost patience with practitioners who failed to abide by its rules and schedule.

What practitioners at the PTAB also should be aware of is that the Office of Enrollment and Discipline takes a keen interest in matters where it may appear that a practitioner is intentionally or in bad faith violating the rules of a tribunal, and doubly so when that “tribunal” is the PTO itself.

The USPTO’s Rules of Professional Conduct, for example, prohibit a patent attorney or other “practitioner” from engaging in conduct that is “prejudicial to the administration of justice.”  This is quite a broad rule of ethics and has been interpreted to cover a wide range of conduct having any negative impact on the operation of a tribunal.  Indeed, the author has defended patent practitioners before the OED who were investigated for alleged conduct “prejudicial to the administration of justice” based on a court’s finding that the practitioner violated Fed. R. Civ. P. 11 or engaged in conduct that warranted fee-shifting or other forms of sanctions.

To date, the OED has published no decision publicly disciplining a practitioner for litigation misconduct arising from a PTAB proceeding.  Still, it is relatively early.  I suspect that such decisions will come sooner than later.

Federal courts have long recognized the need to break out their sanction rules from the tribunal’s toolbox in order to get parties to comply.  Time will tell whether the PTAB is shifting in that direction as well.

1 thought on “Putting Teeth Into The PTAB’s Sanctioning Powers: Is Mohawk A Sign Of Things To Come?”

  1. Charles L. Gholz

    You could have cited Gholz and Weinstein, “What Does the Word ‘Misconduct’ in 37 C.F.R. $ 41.128(a) Mean?”, 94 Patent, Trademark & Copyright Journal 32 (September 22, 2017)!

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