Patent Owner Sues Former USPTO Officials for ‘Improperly Stacking the Deck’ Against Him

By Eileen McDermott
August 10, 2021

“The system had been rigged all along, due to the unconstitutional actions of the Defendants named herein.” – complaint of Martin David Hoyle and B.E. Technology

https://depositphotos.com/3446916/stock-photo-cheating-poker-player.htmlA patent owner has filed a lawsuit in the United States District Court for the Western District of Tennessee against former U.S. Patent and Trademark Office (USPTO) Director Michelle Lee, and a number of other former USPTO officials, for allegedly depriving the plaintiffs “of their valuable property rights in quasi-judicial administrative proceedings before the USPTO’s Patent Trial and Appeal Board (‘PTAB’).” The complaint further claims that PTAB proceedings have been “tainted by various improprieties and underhanded tactics, designed to stack the deck against [plaintiffs] and in favor of their far more powerful opponents. In short, the system had been rigged all along, due to the unconstitutional actions of the Defendants named herein.”

The lawsuit seeks an unspecified amount of damages pursuant to Bivens v. Six Unknown Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971) for violations of the plaintiffs’ due process rights under the Fifth Amendment. The officials named in the lawsuit are: Lee; James Donald Smith, former Chief Administrative Patent Judge of the PTAB; James T. Moore, former Vice-Chief Administrative Patent Judge of the PTAB; and current and former administrative patent judges (APJs) Sally Medley, Kalyan Deshpande and Lynne Pettigrew.

The plaintiffs are Martin David Hoyle and his company, B. E. Technology, and the relevant patents are U.S. Patent No. 6,628,314 (“the ’314 patent”) and U.S. Patent No. 6,771,290 (“the ’290 patent”). The ‘314 patent relates to technology aimed at gathering user data online data “for the purpose of delivering demographically appropriate, location-based, and contextually-targeted advertising products via various web-based applications” and the ’290 patent is geared to personalizing the internet experience for users via features such as “a toolbar providing the user with icons to access programs, files, and search,” which in turn allows for the delivery of targeted advertising products to users.

‘Scandalous Revelations’

According to the complaint, Google filed several patent applications in 2006-2007—when Michelle Lee was Head of Patents and Patent Strategy at Google—that were rejected by the USPTO because the technology described was already patented in the ‘314 and ‘290 patents. Google then abandoned its applications, but Hoyle discovered in 2007 that the company—along with other tech companies, such as Facebook, Microsoft and Samsung—had been using targeted advertising technologies that infringed on his patents and filed patent infringement suits against them in 2012, just after the America Invents Act (AIA) was implemented.

Also in 2012, Michelle Lee became Director of the USPTO’s office in Silicon Valley, and two years later was nominated by President Barack Obama to be Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the USPTO. She was confirmed by the Senate in 2015. This was the same year that the PTAB issued decisions in seven separate inter partes review (IPR) proceedings that Google and the other companies filed against B.E. Technology to invalidate the patents. The same three-judge panel comprised of administrative patent judges (APJs) Sally C. Medley, Kalyan K. Deshpande, and Lynne E. Pettigrew ultimately invalidated the patents as anticipated by and/or obvious in all of the IPRs. The U.S. Court of Appeals for the Federal Circuit affirmed those decisions on appeal.

The complaint goes on to outline a number of “scandalous revelations” about USPTO and PTAB operations that came to light beginning in about 2017, including USPTO admissions about “panel stacking,” improper compensation structures for APJs, and discouraging dissenting opinions. At all times “relevant to the IP proceedings” at issue in the suit, Michelle Lee was Director of the USPTO, explains the complaint. After further independent research into the APJs who decided the IPRs, Hoyle found that APJ Medley had cancelled the challenged patents in 100% of the 64 IPR proceedings she had presided over; APJ Deshpande had cancelled the challenged patents in 100% of the IPR proceedings over which he had presided as of 2015; and APJ Pettigrew had a cancellation rate of 97% as of 2015.

Hoyle claims that the USPTO leadership at the time – including former Google executive Michelle Lee – thus chose these particular APJs on purpose.

SAWS and Salaries

In further revelations, the lawsuit claims that conversations between a private investigator and a patent examiner divulged that the examiner had been instructed to flag all patent applications covering targeted advertising technologies for increased scrutiny under the Sensitive Application Warning System (SAWS) program while she was at the USPTO. This decision was made during Lee’s time as Director, according to the complaint.

Hoyle’s complaint also points to a recent paper by Ron Katznelson in which the author claims the framework of the PTAB’s bonus system raises due process concerns by incentivizing the judges to make decisions adverse to patent owners.

The Deck Was Always Stacked

Ultimately, the complaint argues that the various factors surrounding B.E. Technology’s IPRs “amount to a particularly clear and egregious violation of Plaintiffs’ rights and leave no room for debate as to the unconstitutionality of those proceedings.” While the Office has taken recent actions to address some of the issues described, such as modifying APJ compensation structures, claiming to have discontinued the SAWS program, and taking steps pursuant to Arthrex v. Smith & Nephew to cure constitutional infirmities under the AIA, it has not addressed all of the issues and, in any case, “these corrective measures offer nothing in the way of relief or remedies to the Plaintiffs—who were deprived of valuable property rights after being forced to adjudicate the validity of their patents in a forum where the deck was improperly stacked against them, without their knowledge.”

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The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 8 Comments comments. Join the discussion.

  1. Pro Say August 10, 2021 2:58 pm

    Bravo Martin.

    Superb, well-documented, fact-based brief.

    Best wishes for success with your honorable fight for justice.

    Plain and simply put: You were robbed.

  2. Anon-noyed August 10, 2021 3:37 pm

    Which law firm filed the lawsuit? Dewey, Cheatem, and Howe?

  3. Paul Morinville August 10, 2021 6:05 pm

    Anon-noyed @2. Yes. They filed the PTAB procedure against B.E.

  4. Julie Burke August 11, 2021 8:52 am

    USPTO SAWS memo 11/2008.

    “Upon agreement that the application should be reported as SAWS, the home SPE must complete the SAWS report in detail required by the attached template. The Impact Statement can be prepared by performing an Internet search to find external information indicating the sensitivity of the subject matter. On way to do this is via G00gle search of the invention, the inventors ad owner or assignee. Such information may include, but is not limited to, financially important subject matter (Is the stock of the inventor’s owner publicly traded? Have there been press releases about the invention?), political charged subject mater, and subject matter which may raise legal or ethical objections.”

  5. Sten Gerfast August 11, 2021 9:00 am

    Thank you, Thank you Eileen: You are right, the decks are stacked against you . I am an independent inventor with multiple (40) allowed patents, but are still fighting applications FILED 6 years ago. (letters to Patent Commissioner are unanswered)How can I help you ?, in your effort ? Sten

  6. Julie Burke August 11, 2021 9:01 am

    @4. At the time, some skittish USPTO insiders questioned the propriety of the agency favoring one particular internet search provider over all the others for this type of search. More paranoid ones worried that G00gle was monitoring and/or influencing the SAWS search results. That’d be crazy, right?

  7. PTO-Indentured August 11, 2021 9:47 am

    We Came, We SAWS, We Conquered — USPTO

    Then we added AIA and its unconstitutional PTAB (does the term “Patent Death Squad” ring a bell?

    Let’s not forget Google’s unprecedented level of access — not ‘merely in Washington DC’ — its founders and certain employees visited the Obama White House 427 times according to White House logs.

  8. Tim August 11, 2021 11:13 am

    Wow! Michelle Lee (formerly of Google) to USPTO. I also believe she was there when Vringo sued them and was forced around “Robin Hood’s Barn” many times before Vringo won the case: Vringo vs IP Internet. But have no fear: 2 of 3 judges at the Appeals Court sided with Google, who had been beat: 12-0 unanimously on every single charge. Judge Chen had handed Michelle Lee the reigns at the USPTO prior to going to Appeals Court, (he was the judge that “highly dissented”). But the other 2 overrode him. Supreme Court wouldn’t hear the case! United States of Google!
    Good luck beating them under “Joe Bribe’m”.

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