Case 2:21-cv-02512-JPM-tmp Document 1 Filed 08/09/21 Page 1 of 26 PageID 1
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TENNESSEE
`
`Case No. 2:21-cv-2512
`
`JURY TRIAL
`REQUESTED
`
`MARTIN DAVID HOYLE and B.E.
`TECHNOLOGY, L.L.C.,
`
`Plaintiffs,
`
`v.
`
`MICHELLE K. LEE, in her individual capacity as
`former Director of the U.S. Patent and Trademark
`Office; JAMES DONALD SMITH, in his individual
`capacity as former Chief Administrative Patent Judge
`of the Patent Trial and Appeal Board; JAMES T.
`MOORE, in his individual capacity as former Vice-
`Chief Administrative Patent Judge of the Patent Trial
`and Appeal Board; SALLY C. MEDLEY, KALYAN
`K. DESHPANDE, and LYNNE E. PETTIGREW, in
`their individual capacities as current or former
`Administrative Patent Judges of the Patent Trial and
`Appeal Board; and various other UNKNOWN
`OFFICERS,
`
`Defendants.
`
`COMPLAINT
`
`Plaintiffs Martin David Hoyle (“Hoyle”) and B.E. Technology, L.L.C. (“B.E.
`
`Technology”), by and through the undersigned counsel, make this Complaint against Defendants
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`Michelle K. Lee, James Donald Smith, James T. Moore, Sally C. Medley, Kalyan K. Deshpande,
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`Lynne E. Pettigrew, and various Unknown Officers, and hereby allege, based upon personal
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`knowledge, belief, and relevant documents and information, as follows:
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`

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`NATURE OF THIS ACTION
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`1.
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`This is a civil rights action arising from the tortious and unconstitutional conduct
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`of federal government officials at the United States Patent and Trademark Office (“USPTO”), in
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`violation of Plaintiffs’ rights under the Due Process Clause of the Fifth Amendment to the United
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`States Constitution. U.S. CONST. amend. V.
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`2.
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`As explained herein, Plaintiffs are patent owners who were deprived of their
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`valuable property rights in quasi-judicial administrative proceedings before the USPTO’s Patent
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`Trial and Appeal Board (“PTAB”). Several years later, Plaintiffs learned that these proceedings
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`had been tainted by various improprieties and underhanded tactics, designed to stack the deck
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`against them and in favor of their far more powerful opponents. In short, the system had been
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`rigged all along, due to the unconstitutional actions of the Defendants named herein.
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`3.
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`Accordingly, Plaintiffs bring this action pursuant to Bivens v. Six Unknown Agents
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`of the Federal Bureau of Narcotics, 403 U.S. 388 (1971), and its progeny, to recover damages and
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`other such appropriate relief for the violation of their due process rights under the Fifth
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`Amendment and the resulting harm perpetrated by Defendants.
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`PARTIES
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`A. Plaintiffs
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`4.
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`Martin David Hoyle is an individual inventor with a background in computer
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`engineering, who has spent a significant portion of his career developing and patenting various
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`web-based computer applications. Mr. Hoyle is also the founder and Chief Executive Officer
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`(“CEO”) of B.E. Technology.
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`

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`5.
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`B.E. Technology is a limited liability company organized and existing under the
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`laws of the State of Delaware, which, at all times relevant to the allegations herein had its principal
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`place of business in Memphis, Tennessee.
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`B. Defendants
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`6.
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`7.
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`Defendants are all current or former officers of the United States, as follows:
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`Defendant Michelle K. Lee (“Lee”) is the former Director of the USPTO. From
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`2003 until 2012, Ms. Lee was an executive at Google, Inc., where she held multiple positions
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`including Head of Patents and Patent Strategy. In 2012, Ms. Lee left Google to become the Director
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`of the USPTO’s office in Silicon Valley. In 2014, Ms. Lee was appointed to the agency’s top
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`leadership position as Director of the USPTO—a position she held through June 2017. Upon
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`information and belief, Ms. Lee is currently employed as an executive at Amazon and resides in
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`San Francisco, California.
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`8.
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`Defendant James Donald Smith (“Smith”) is the former Chief Administrative
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`Patent Judge of the PTAB, a position he held from May 2011 through August 2015. Upon
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`information and belief, Mr. Smith currently resides in St. Paul, Minnesota.
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`9.
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`Defendant James T. Moore (“Moore”) is an Administrative Patent Judge who
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`formerly served as Vice-Chief Administrative Patent Judge of the PTAB. Upon information and
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`belief, Mr. Moore currently resides in the Washington, DC area.
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`10.
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`Defendant Sally C. Medley (“Medley”) is an Administrative Patent Judge. Upon
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`information and belief, Ms. Medley resides in Fairfax, Virginia.
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`11.
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`Defendant Lynne E. Pettigrew (“Pettigrew”) is an Administrative Patent Judge.
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`Upon information and belief, Ms. Medley resides in the Washington, DC area.
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`

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`12.
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`Defendant Kalyan K. Deshpande (“Deshpande”) is an Administrative Patent Judge.
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`Upon information and belief, Mr. Deshpande resides in Arlington, Virginia.
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`13.
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`Defendants identified as the various other Unknown Officers are current and former
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`officers, agents, employees, or other representatives of the United States, who are also legally
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`responsible for the wrongs committed against Plaintiffs as described in this Complaint. When
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`Plaintiffs become aware of the true identities of one or more of those Defendants, Plaintiffs will
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`amend this Complaint accordingly, to add or substitute them as properly named Defendants.
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`14.
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`Pursuant to Bivens, all of the aforementioned Defendants are being sued in their
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`individual capacities for personally undertaking, contributing to, and conspiring or otherwise being
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`complicit in the actions that violated Plaintiffs’ constitutional rights, under color of federal law,
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`during their tenure as officers, agents, employees, or representatives of the United States. As a
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`practical matter, however, it is well-documented that the government routinely indemnifies federal
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`officers, agents, and employees from personal liability for claims arising from Bivens actions.1
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`JURISDICTION AND VENUE
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`15.
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`This Court has jurisdiction under U.S. Const. Art. III § 2 because the rights sought
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`to be vindicated herein are secured by the Fifth Amendment of the United States Constitution and
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`give rise to a constitutional cause of action, as authorized by Bivens and its progeny. Jurisdiction
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`is also proper pursuant to 28 U.S.C. § 1331 because the action presents substantial questions of
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`federal law arising under the United States Constitution.
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`16.
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`Venue is proper under 28 U.S.C. § 1391(e)(1) because a substantial part of the
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`property that is the subject of this action was situated in the Western District of Tennessee at all
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`1 See James E. Pfander, Alexander A. Reinert, Joanna C. Schwartz, The Myth of Personal
`Liability: Who Pays When Bivens Claims Succeed, 72 STAN. L. REV. 561 (2020).
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`

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`relevant times described herein, and because a substantial part of the events giving rise to the claim
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`occurred within this judicial district.
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`FACTUAL ALLEGATIONS
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`A. Background
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`17.
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`Since at least 1997, Plaintiffs have been involved in the business of developing and
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`patenting various web-based computer applications and related innovations.
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`18.
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`As background, Mr. Hoyle was working as a computer programmer in the mid-
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`1990s when he observed that Americans were increasingly starting to use computers at home, in
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`addition to the workplace—and needed to access their information regardless of which computer
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`they were using. Mr. Hoyle set out to solve this problem when no one else was dedicating
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`substantial resources to these issues, in part because the industry was primarily concerned with
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`solving the network issue of providing faster internet access.
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`19. Mr. Hoyle wanted to provide his products free-of-charge through advertising
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`revenues and recognized that the internet presented both an opportunity and a technical challenge,
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`in terms of collecting and implementing user-generated data to provide more personalized
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`advertising products via web-based applications.
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`20.
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`In order to capitalize on his ideas, Mr. Hoyle formed B.E. Technology in August
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`1997—and then proceeded to obtain a total of 10 patents directed to these types of personalized
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`web-based technologies, between 1998 and 2014.
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`

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`B. The ’314 Patent and the ’290 Patent
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`21.
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`As is relevant here, Plaintiffs’ patent portfolio includes U.S. Patent No. 6,628,314
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`(“the ’314 patent”) and U.S. Patent No. 6,771,290 (“the ’290 patent”).2
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`22.
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`The parent application that eventually led to the issuance of the ’314 and ’290
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`patents was originally filed on July 17, 1998. And the drawings, history, concepts, and claims
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`presented in that patent application were subsequently made public on or around January 27, 2000.
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`23.
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`The ’314 patent was issued on September 30, 2003, and is directed towards the
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`technical implementation of gathering user-specific data for the purpose of delivering
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`demographically appropriate, location-based, and contextually-targeted advertising products via
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`various web-based applications.
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`24.
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`The ’290 patent was issued on August 3, 2004, and is directed towards the technical
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`implementation of certain user-centric personalization features for internet-based web browsers,
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`including a toolbar providing the user with icons to access programs, files, and search. In return,
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`and upon consent by the user, the toolbar gathered data that was used to deliver targeted advertising
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`products via various web-based applications.
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`25.
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`Shortly thereafter, between late 2006 and 2007, the USPTO rejected several patent
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`applications filed by Google on the grounds that the various targeted web-based advertising
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`technologies described therein had already been patented in the ’314 and ’290 patents held by B.E.
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`Technology. At the time, the Head of Patents and Patent Strategy at Google, was none other than
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`Defendant Michelle Lee, who would go on to become the Director of the USPTO several years
`
`later.
`
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`2 Mr. Hoyle is the inventor and B.E. Technology is the owner-by-assignment of the ’290 and ’314
`patents.
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`

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`26.
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` Rather than amending its applications in order to seek patent protection in a
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`narrower or more distinct invention—as is customary upon receiving an initial rejection from the
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`USPTO—Google simply abandoned all of its patent applications relating to targeted advertising
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`claims that were already covered by the ’314 and ’290 patents held by B.E. Technology.
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`27.
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`The foundational importance of the ’314 and ’290 patents cannot be overstated.
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`Indeed, the ’314 patent has 1,187 citations and the ’290 patent has 1,188 citations,3 acknowledging
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`these patents as “foundational patents” covering innovative targeted online advertising
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`technologies that did not previously exist—and that were subsequently appropriated by various
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`tech-industry giants to monetize their web-based products in the early 2000s.
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`C. The Patent Infringement Actions and Subsequent IPR Proceedings
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`28.
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`In or around January 2007, Mr. Hoyle became aware of the fact that Google, along
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`with several other industry leading technology companies, had continuously implemented various
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`targeted advertising technologies that directly infringed upon the ’314 and ’290 patents—without
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`ever seeking to license, purchase, or otherwise acquire permission from B.E. Technology to utilize
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`the inventions covered by those patents.
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`29.
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`On or around September 7, 2012, B.E. Technology filed patent infringement actions
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`against several well-known technology companies—including Google, Facebook, Microsoft,
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`Samsung, and others—to enforce its rights in the ’314 and the ’290 patents. See, e.g., B.E.
`
`
`3 Citation analysis of patents has been routinely used for several decades to help assess patent
`quality and determine how patents impact the competition and affect the world at large. A greater number
`of forward citations for a given subject (published application or issued patent) may imply its importance
`in a given technical space, its monetary value, its potential for being infringed, or its shared interest by
`others in the technology space. Most patent professionals recognize that a raw count of the number of
`forward citations to a patent can be an indicator of a patent’s value.
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`

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`Technology, LLC v. Google Inc., W.D. Tenn. Case No. 2:12-cv-02830-JPM (filed Sept. 21,
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`2012).4
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`30. Meanwhile, in 2012, Google spent a record $18 million on federal government
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`lobbying efforts, much of which was directed towards intellectual property reform at the USPTO.
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`31.
`
`Around the same time, the USPTO began to implement the Leahy–Smith America
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`Invents Act of 2011 (“AIA”), 35 U.S.C. §§ 100 et seq., which created an ostensibly more efficient
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`adjudicative system for challenging the validity of existing patents through inter partes review
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`(“IPR”) proceedings. 5
`
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`4 See also B.E. Technology, LLC v. Amazon Digital Servs., Inc., W.D. Tenn. Case No. 2:12-cv-
`02767-JPM (filed Sept. 7, 2012); B.E. Technology, LLC v. Facebook, Inc., W.D. Tenn. Case No. 2:12-
`cv-02769 (filed Sept. 7, 2012); B.E. Technology, LLC v. LinkedIn Corporation, W.D. Tenn. Case No.
`2:12-cv-02772 (filed Sept. 7, 2012); B.E. Technology, LLC v. Groupon, Inc., W.D. Tenn. Case No. 2:12-
`cv-02781 (filed Sept. 10, 2012); B.E. Technology, LLC v. Pandora Media, Inc., W.D. Tenn. Case No.
`2:12-cv-02782 (filed Sept. 10, 2012); B.E. Technology, LLC v. Twitter, Inc., W.D. Tenn. Case No. 2:12-
`cv-02783 (filed Sept. 10, 2012); B.E. Technology, LLC v. Barnes & Noble, Inc., W.D. Tenn. Case No.
`2:12-cv-02823 (filed Sept. 21, 2012); B.E. Technology, LLC v. Microsoft Corporation, W.D. Tenn. Case
`No. 2:12-cv-02829 (filed Sept. 21, 2012); B.E. Technology, LLC v. Samsung Electronics America, Inc.,
`W.D. Tenn. Case No. 2:12-cv-02825 (filed Sept. 21, 2012); B.E. Technology, LLC v. Samsung
`Telecommunications America, LLC, W.D. Tenn. Case No. 2:12-cv-02824 (filed Sept. 21, 2012); B.E.
`Technology, LLC v. Sony Computer Entertainment America LLC, W.D. Tenn. Case No. 2:12-cv-02826
`(filed Sept. 21, 2012); B.E. Technology, LLC v. Sony Electronics Inc., W.D. Tenn. Case No. 2:12-cv-
`02828 (filed Sept. 21, 2012); B.E. Technology, LLC v. Sony Mobile Communications (USA) Inc., W.D.
`Tenn. Case No. 2:12-cv-02827 (filed Sept. 21, 2012); B.E. Technology, LLC v. Apple Inc., W.D. Tenn.
`Case No. 2:12-cv-02831 (filed Sept. 22, 2012); B.E. Technology, LLC v. Match.com LLC, W.D. Tenn.
`Case No. 2:12-cv-02834 (filed Sept. 22, 2012); B.E. Technology, LLC v. People Media, Inc., W.D. Tenn.
`Case No. 2:12-cv-02833 (filed Sept. 22, 2012); B.E. Technology, LLC v. Spark Networks, Inc., W.D.
`Tenn. Case No. 2:12-cv-02832 (filed Sept. 22, 2012); B.E. Technology, LLC v. Motorola Mobility
`Holdings LLC, W.D. Tenn. Case No. 2:12-cv-02866 (filed Oct. 2, 2012).
`
`5 See generally Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2133, 2144 (2016) (explaining
`that IPR proceedings impose a less onerous burden of proof for challenging the validity of patents “by a
`preponderance of the evidence,” as compared to federal district courts, where challengers must prove
`invalidity by “clear and convincing evidence.”); accord Oil States Energy Servs., LLC v. Greene’s Energy
`Grp., LLC, 138 S. Ct. 1365, 1371 (2018). Although not particularly relevant here, it should be noted that
`the PTAB also handles various other types of post-grant proceedings, as well as appeals stemming from
`the rejection of patent applications during the examination process.
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`

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`32.
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`The AIA also created the Patent Trial and Appeal Board (“PTAB”) for the purpose
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`of adjudicating such proceedings. The PTAB is staffed by Administrative Patent Judges (“APJs”)
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`who are appointed by the Secretary of Commerce in consultation with the Director of the
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`USPTO—and who are assigned to sit on three-member panels for the purpose of presiding over
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`IPR proceedings.
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`33.
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`Under the AIA system, any party may file a petition seeking to “institute” IPR
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`proceedings before the PTAB, in order to challenge the validity of an existing patent.6 As a
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`practical matter, however, the exorbitant filing fees associated with IPR proceedings generally
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`mean that that vast majority of IPR petitions are filed by large, sophisticated, and deep-pocketed
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`parties—such as tech-industry giants, like Google—against smaller independent inventors, like
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`the Plaintiffs in this case.7
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`34.
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`Upon information and belief, Defendant Lee, who had previously served as
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`Google’s Head of Patents and joined USPTO leadership in 2012, played an instrumental role in
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`the USPTO’s implementation of the PTAB following the passage of the AIA.
`
`35.
`
`Seizing upon this opportunity to short-circuit the patent-infringement litigation,
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`Google and all the other defendants in those actions filed petitions seeking to challenge the validity
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`of the ’314 and the ’290 patents in IPR proceedings—and then moved to stay the district court
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`proceedings until the PTAB had ruled upon the validity of the underlying patents. See B.E. Tech.,
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`LLC v. Amazon Digital Servs., Inc., No. 2:12-cv-02767, 2013 WL 12158571, at *1 (W.D. Tenn.
`
`
`6 The Supreme Court’s decision in Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC,
`138 S. Ct. 1365, 1372 (2018), provides an excellent history and overview of the inter partes review
`system that was implemented pursuant to the AIA.
`
`7 See generally Josh Malone, PTAB Trials Disproportionately Harm Small Businesses, LAW360
`(January 29, 2021), https://www.law360.com/articles/1348182/ptab-trials-disproportionately-harm-small-
`businesses?copied=1.
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`

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`Dec. 6, 2013) (J. McCalla) (granting defendants’ motions to stay the patent infringement actions,
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`pending the resolution of IPR proceedings before the PTAB).
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`36.
`
`The PTAB conducted seven separate IPR proceedings concerning the validity of
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`the ’314 and the ’290 patents, which were all assigned to the same three-judge panel comprised of
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`APJs Sally C. Medley, Kalyan K. Deshpande, and Lynne E. Pettigrew. The panel proceeded to
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`rule against B.E. Technology in each of those cases—ultimately invalidating both patents as either
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`“anticipated by” and/or “obvious,” in light of prior art.8
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`37.
`
`B.E. Technology appealed each of those decisions to the U.S. Court of Appeals for
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`the Federal Circuit,9 which combined all the cases into two consolidated appeals (one for all
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`decisions concerning the ’314 patent, and another for all decisions concerning the ’290 patents)—
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`and then affirmed PTAB’s reasoning in two subsequent unpublished decisions. See B.E. Tech.,
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`LLC v. Sony Mobile Commc’ns (USA) Inc., 657 F. App’x 982 (Fed. Cir. 2016) (Lourie, Chen, and
`
`Stoll, JJ.) (affirming PTAB’s finding that the ’290 patent is invalid); B.E. Tech., LLC v. Google,
`
`Inc., No. 2015-1827, 2016 WL 6803057 (Fed. Cir. Nov. 17, 2016) (Lourie, Chen, and Stoll, JJ.)
`
`(affirming PTAB’s finding that the ’314 patent is invalid).
`
`
`8 See Facebook, Inc., Match.com LLC, People Media, Inc., & Google Inc. v. B.E. Tech., LLC, No.
`IPR2014-00052, 2015 WL 1735098 (P.T.A.B. Mar. 31, 2015); Google, Inc., Match.com LLC, & People
`Media, Inc. v. B.E. Tech., LLC, No. IPR2014-00038, 2015 WL 1735099 (P.T.A.B. Mar. 31, 2015);
`Microsoft Corp. & Google, Inc. v. B.E. Tech., LLC, No. IPR2014-00039, 2015 WL 1735100 (P.T.A.B.
`Mar. 31, 2015); Sony Mobile Commc’ns (USA) Inc. v. B.E. Tech., LLC, No. IPR2014-00029, 2015 WL
`1570821 (P.T.A.B. Apr. 6, 2015); Google, Inc. v. B.E. Tech., LLC, No. IPR2014-00031, 2015 WL
`1570822 (P.T.A.B. Apr. 6, 2015); Microsoft Corp. v. B.E. Tech., LLC, No. IPR2014-00040, 2015 WL
`1570824 (P.T.A.B. Apr. 6, 2015); Samsung Elecs. Am., Inc. v. B.E. Tech., LLC, No. IPR2014-00044,
`2015 WL 1570825 (P.T.A.B. Apr. 6, 2015).
`
`9 Pursuant to 35 U.S.C. § 319, all appeals from PTAB decisions are heard by the U.S. Court of
`Appeals for the Federal Circuit.
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`

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`38.
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`Based upon the limited facts known by B.E. Technology and its counsel at that
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`time, B.E. Technology did not file petitions for a writ of certiorari to the Supreme Court in either
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`case.
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`D. Newly Discovered Evidence Reveals Due Process Violations in Plaintiffs’ IPR
`Proceedings Before the PTAB
`
`39.
`
`Starting in or around late 2017, various news outlets, blogs, and other websites
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`began to publish scandalous revelations about the USPTO’s inner machinations, which raised
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`serious questions about the constitutionality of IPR proceedings before the PTAB.
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`40.
`
`For example, in August 2017, a government attorney for the USPTO admitted that
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`the agency’s leadership routinely engaged in the practice of “stacking” PTAB panels with specific
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`APJs, to ensure that PTAB decisions in IPR proceedings would comport with various unwritten
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`policy objectives, which were not shared with the parties in these proceedings.10
`
`41.
`
`Although this revelation was shocking news to many observers at the time, the
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`USPTO eventually admitted that the Director and Chief Administrative Patent Judge had routinely
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`employed various mechanisms “to indirectly influence” the course of IPR proceedings before the
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`PTAB—such as by “designat[ing] [certain] APJs [that were presumably] predisposed to decide a
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`case in his preferred manner.” United States v. Arthrex, Inc., No. 19-1434, 141 S.Ct. 1970, 2021
`
`WL 2519433 (U.S. June 21, 2021)11
`
`
`10 See Gene Quinn, USPTO Admits to Stacking PTAB Panels to Achieve Desired Outcomes,
`IPWATCHDOG.COM (Aug. 23, 2017), https://www.ipwatchdog.com/2017/08/23/uspto-admits-stacking-
`ptab-panels-achieve-desired-outcomes/id=87206/ (referring to statements made by an attorney
`representing the USPTO during oral arguments in a case before the U.S. Court of Appeals for the Federal
`Circuit).
`
`11 See also, e.g., Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365,
`1381 (2018) (Gorsuch, J., dissenting) (commenting upon the questionable implications of allowing the
`Director to assign specific APJs to certain cases and characterizing such practices as a problematic
`“retreat from the promise of judicial independence.”).
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`

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`42.
`
`In a more recent publication, University of Texas Law Professor John M. Golden
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`further observed that: “[w]ithout a statutory mechanism for central review of PTAB judgments,
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`the …[USPTO] Director and … the Chief Judge of the PTAB … [had] sought to reverse disfavored
`
`PTAB judgments by convening expanded panels of PTAB judges personally selected by the
`
`Director or Chief Judge to consider a request for rehearing—a practice commonly characterized
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`as ‘panel stacking.’” PTO Panel Stacking: Unblessed by the Federal Circuit and Likely Unlawful,
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`104 IOWA L. REV. 2447 (2019).
`
`43.
`
`Thereafter, in or around mid-2020, various news outlets, blogs, and other websites
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`began to publish even more troubling revelations about the details of what appeared to be a highly
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`improper compensation structure for APJs appointed to the PTAB—which included a
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`performance-based bonus component that accounted for a significant portion of APJs’ total annual
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`compensation.
`
`44.
`
`Specifically, Plaintiffs learned that while APJs’ base salaries are supposed to be
`
`subject to a statutory cap,12 the USPTO had implemented a scheme of annual bonus payments,
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`premised upon a points-based system of “decisional units” associated with the various types of
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`work assignments that APJs undertake and complete within each calendar year—alongside various
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`other subjective criteria, such as the “quality” of APJs’ written opinions, their interactions with
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`stakeholders, and their level of support for the PTAB’s mission and leadership.13
`
`
`12 See 35 U.S.C. § 3(b)(6) (“The Director may fix the rate of basic pay for [APJs] … at [a rate]
`not greater than the rate of basic pay payable for level III of the Executive Schedule”).
`
`13 Although it is not entirely clear when or where these details about APJs’ compensation
`structure first began to emerge, most of these revelations seem to have originated, at least in part, with
`documents that were produced by the USPTO in response to a FOIA request filed by US Inventor. See
`Document compilation produced in response to FOIA Request No. F-19-00277, at
`https://usinventor.org/wp-content/uploads/2020/05/FOIA-F-19-00277-2019-11-04-APJ-PAPS.pdf.
`
`

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`45.
`
`By all accounts, this compensation structure—which might otherwise pass muster
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`in some quasi-adjudicative contexts—created particularly problematic incentives in the context of
`
`IPR proceedings, which generate a substantial amount of revenue for the USPTO’s operating
`
`budget.14
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`46.
`
`Importantly, the IPR process begins with the filing of a petition seeking to institute
`
`proceedings, which APJs must decide upon in the first instance—based, in part, on the likelihood
`
`that the petitioner could prevail in demonstrating the invalidity of the subject patent.
`
`47.
`
`And while legislative history of the AIA suggests that Congress intended to elevate
`
`the threshold for challenging the validity of existing patents in IPR proceedings, the compensation
`
`structure that was subsequently implemented by the USPTO provides substantial incentives for
`
`APJs to grant institution—irrespective of the underlying merits in any particular case.
`
`48.
`
`Simply put, the inextricable link between an APJ’s discretionary authority to
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`institute IPR proceedings, and the substantial amount of revenue that those proceedings generate
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`for the agency, gives rise to an impermissibly strong inducement favoring institution, when
`
`combined with various financial incentives for APJs to conform their decisions to the agency
`
`leadership’s policy preferences and mission.
`
`49.
`
`As explained in several recent cases before the U.S. Court of Appeals for the
`
`Federal Circuit, the resulting structural bias towards favoring the institution of IPR proceedings is
`
`
`See also, e.g., Matthew Bultman and Ian Lopez, Big Bonuses for Patent Appeals Judges Raise
`Fairness Questions, BLOOMBERG LAW (Sept. 8, 2020), https://bnanews.bna.com/ip-law/big-bonuses-for-
`patent-appeals-judges-raise-fairness-questions; Press Release: Congressmen Issa, Johnson Call on GAO
`to Investigate PTAB Decision-Making Practices (June 2, 2021), https://issa.house.gov/media/press-
`releases/congressmen-issa-johnson-call-gao-investigate-ptab-decision-making-practices; Britain Eakin,
`Lawmakers Seek Probe Of USPTO Director’s Sway Over PTAB, LAW360 (Jun. 3, 2021),
`https://law360.com/articles/1390697/lawmakers-seek-probe-of-uspto-director-s-sway-over-ptab.
`
`14 The USPTO collects approximately $42,000 in filing fees alone for each IPR proceeding that it
`institutes.
`
`

`

`Case 2:21-cv-02512-JPM-tmp Document 1 Filed 08/09/21 Page 14 of 26 PageID 14
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`itself sufficient to constitute a violation of patent owners’ rights under the Due Process Clause of
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`the Fifth Amendment.15
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`50.
`
`As it turns out, however, this institutional inducement for APJs to grant IPR
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`petitions in the first instance was just the tip of the iceberg.
`
`51.
`
`In addition to undermining APJs’ judicial independence at the institution stage of
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`IPR proceedings, subsequent news articles (based upon documents obtained through a FOIA
`
`request) revealed that USPTO leadership had been effectively manipulating the “performance-
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`based” components of this compensation structure to control and coerce specific adjudicative
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`outcomes by implementing policies that expressly discouraged and penalized the issuance of
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`dissenting opinions.
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`52.
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`For example, in an internal email communication addressed to all APJs, Defendant
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`Moore declared that dissenting and concurring opinions “are not normally efficient mechanisms
`
`for securing the ‘just, speedy, and inexpensive’ resolution” of PTAB cases, and would therefore
`
`no longer be counted towards APJs’ “productivity goals,” absent specific exceptions. 16
`
`
`15 Several recent cases before U.S. Court of Appeals for the Federal Circuit have argued that these
`circumstances violate patent owners’ due process rights in IPR proceedings. See e.g., Appellants’ Brief,
`New Vision Gaming & Dev., Inc. v. SG Gaming, Inc., Case No. 2020-1399 (Dkt. 29), at 29-51 (Fed. Cir.
`June 30, 2020) (citing Tumey v. Ohio, 273 U.S. 510, 532 (1927)); see also Appellants’ Brief, Mobility
`Workx, LLC v. Unified Patents, LLC, Case No. 2020-1441 (Dkt. 21), at 25-48 (same). And while some
`members of the Federal Circuit panel seemed persuaded by the appellants’ presentation at oral argument,
`the court has since ordered the parties to submit further briefing in order to decide whether such cases
`should be remanded on other grounds, in light of the Supreme Court’s recent decision in United States v.
`Arthrex, Inc., No. 19-1434, 2021 WL 2519433 (U.S. June 21, 2021). Thus, it appears unlikely that the
`Federal Circuit will ultimately pass upon the merits of the constitutional arguments raised by appellants in
`these cases.
`
`16 See Gene Quinn, Structural Bias at the PTAB: No Dissent Desired, IPWATCHDOG.COM (Jun. 6,
`2018), https://www.ipwatchdog.com/2018/06/06/structural-bias-ptab-no-dissent-desired/id=94507/.
`
`

`

`Case 2:21-cv-02512-JPM-tmp Document 1 Filed 08/09/21 Page 15 of 26 PageID 15
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`53.
`
`Due to this policy directive against the issuance of dissenting and concurring
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`opinions by APJs, approximately 98% of the merits-based decisions that had been issued by the
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`PTAB as of 2017 were unanimous.17
`
`54.
`
`Thus, while the PTAB was designed by Congress to provide fair and meaningful
`
`administrative adjudications of patent owners’ rights before three-judge panels comprised of
`
`independent and impartial APJs, the reality was that practically all of these cases were being
`
`decided by a single APJ, often hand-selected by the Director of the USPTO in order to achieve a
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`specific pre-determined outcome, regardless of any evidence presented at trial, with the other two
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`APJs merely rubber-stamping the final decision.
`
`55. Moreover, the Director of the USPTO at all times relevant to the IPR proceedings
`
`discussed herein, was none other than Defendant Lee—who had previously served as the Head of
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`Patents and Patent Strategy at Google (i.e., one of the petitioners in the IPR proceedings) prior to
`
`assuming the role of Director. Defendant Lee also went on to become an executive at Amazon
`
`(another petitioner in the IPR proceedings at issue), following her stint at the USPTO.
`
`56.
`
`Upon learning about these facts, Mr. Hoyle began conducting his own research into
`
`the APJs who had presided over the IPR proceedings that resulted in the invalidation of the ’314
`
`and ’290 patents back in 2015. As a result of his own independent research, Mr. Hoyle learned that
`
`all three of those APJs (Deshpande, Medley, and Pettigrew) were known to have a particularly
`
`high propensity towards ruling against patent owners in IPR proceedings as compared to other
`
`PTAB judges.
`
`
`17 See Scott McKeown, Judicial Independence & The PTAB: The Tension Between Judicial
`Independence & Agency Consistency, ROPES & GRAY (Dec. 12, 2017),
`https://www.patentspostgrant.com/judicial-independence-ptab/.
`
`

`

`Case 2:21-cv-02512-JPM-tmp Document 1 Filed 08/09/21 Page 16 of 26 PageID 16
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`57.
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`Specifically, Mr. Hoyle discovered that, as of 2015, APJ Medley had presided over
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`approximately 64 IPR proceedings and had ruled in favor of the petitioners by cancelling the
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`challenged patents in 100% of those proceedings. APJ Deshpande had likewise cancelled the
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`challenged patents in 100% of the IPR proceedings over which he had presided as of 2015. And
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`APJ Pettigrew also had a solid cancellation rate of 97% in all of the IPR proceedings over which
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`she had presided as of 2015.
`
`5