Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Apple Inc. v. Voip-Pal.Com, Inc., No. 18-1456 (Sept. 25, 2020), holding that the plain reading of 37 C.F.R. § 42.12(b) provides the Patent Trial and Appeal Board (the “Board”) with discretion in the issuance of sanctions, and that the Board did not commit an Administrative Procedures Act (“APA”) violation when it issued a sanction not explicitly listed in § 42.12(b).
Apple initiated inter partes review (IPR) proceedings challenging two Voip-Pal patents. During both IPRs, Voip-Pal’s former CEO sent six letters to various parties, copying members of Congress, the President, federal judges, and administrative patent judges at the Board. The letters criticized the IPR system, complained about cancellation rates, and requested judgement in Voip-Pal’s favor. Apple was not sent copies of the letters. After the Board issued a final written decision sustaining the patentability of all challenged claims, Apple moved for sanctions against Voip-Pal based on the ex parte letters sent by its former CEO. Apple alleged the ex parte communications violated its due process rights and APA. Apple sought sanctions in the form of an adverse judgment (i.e., reversing the final written decision of no invalidity of Voip-Pal’s claims), or alternatively vacating the final written decision and assigning a new panel to preside over a new “constitutionally correct” proceeding. A new panel of administrative patent judges presided over the sanctions proceedings and determined that Voip-Pal engaged in sanctionable ex parte communications. The new panel fashioned its own sanctions; namely, that the new panel would preside over Apple’s request for rehearing. The new panel denied Apple’s rehearing request. Apple appealed.
On appeal, Apple argued the Board’s sanctions order violated the APA. Specifically, Apple argued that once sanctionable conduct is found, the Board is required to issue one of the eight authorized sanctions under 37 C.F.R. § 42.12(b), and cannot not fashion its own sanctions. The Federal Circuit disagreed. The Court explained that § 42.12(b) uses the term “include,” which signifies a non-exhaustive list of possible sanctions. The Court held that a plain reading of § 42.12 grants the Board discretion in the issuance of sanctions, and that the Board did not commit an APA violation when it issued a sanction not explicitly listed under § 42.12(b).