The Pecuniary Interests of PTAB Judges - Empirical Analysis Relating Bonus Awards to Decisions in AIA Trials

106 Pages Posted: 22 Jun 2021 Last revised: 6 Jul 2021

Date Written: July 5, 2021

Abstract

Unlike Administrative Law Judges presiding over adjudications in administrative tribunals operated by other Federal agencies, Administrative Patent Judges (APJs) at the Patent Trial and Appeals Board (PTAB) of the U.S. Patent Office receive bonus awards of up to 20% of their base salary. This article details the features of the PTAB bonus plan and reports on an empirical analysis of the relationship between the annual bonus awards of individual APJs and the type of decisions they made in the year. The study found that in fiscal year 2016, PTAB judges involved in AIA trials earned a median of more than 14% of their base pay in bonus awards tied to their role as adjudicators. The article discusses case law holding that this substantial fraction per se implicates potential due process violation. In addition to these concerns, APJs appeared to have earned an average bonus of $255 per decision when granting institution, but only an average of $208 per decision when denying institution. They also appeared to have earned an average bonus award of $314 per Final Written Decision when canceling patent claims, but only an average of $2 per Final Written Decision when upholding all patent claims. It is shown that this resulted in an annual average APJ pecuniary bias totaling $5,760 out of an average annual APJ bonus of $21,166. A separate analysis of expanded panel decisions (decisions of panels with 4 or more APJs) revealed that on average, the select few APJs that participated in expanded panel decisions appeared to have been remunerated for decisions made in expanded panels with a “premium” of more than $64 per decision above the bonus they received for just making the decision. This article reveals for the first time in public the existence of a secret extra-panel review committee of the PTAB called the AIA Review Committee (ARC). The ARC receives for review Final Written Decision drafts prior to issuance, reviews and provides comments to the APJ panel through ex-parte communications that are concealed from the parties. Finally this article also discusses the apparent effort of the PTO to mischaracterize and play down the large magnitude of the PTAB bonus awards.

Suggested Citation

Katznelson, Ron D., The Pecuniary Interests of PTAB Judges - Empirical Analysis Relating Bonus Awards to Decisions in AIA Trials (July 5, 2021). Available at SSRN: https://ssrn.com/abstract=3871108 or http://dx.doi.org/10.2139/ssrn.3871108

Ron D. Katznelson (Contact Author)

Bi-Level Technologies ( email )

Encinitas, CA
United States

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