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Stocks, recusal, and copycats: ‘No problem’ on APJ conflict

The US Court of Appeals for the Federal Circuit found that an administrative patent judge’s (APJ) recusal in an inter partes review (IPR) based on ownership of stock in one of the defendant’s corporations in an amount below the statutory monetary threshold was not erroneous but remanded the case for further consideration of the copying evidence. Centripetal Networks, LLC v. Palo Alto Networks, Inc., Case No. 23-2027 (Fed. Cir. Oct. 22, 2025) (Moore, Hughes, Cunningham, JJ.)

Palo Alto Networks petitioned for IPR of Centripetal’s patent. The assigned three-member Patent Trial & Appeal Board panel instituted an IPR proceeding on the petition. Cisco sought joinder to the then-pending petition. Centripetal requested rehearing of the institution decision by either the Precedential Opinion Panel or the Board panel. The Precedential Opinion Panel denied the request.

In September 2022, Centripetal learned that a member of the Board panel owned stock in Cisco. However, Centripetal did not move for recusal until December 30, 2022, when it sought recusal of the entire panel and vacatur of the institution decision.

In January 2023, the Board panel denied Centripetal’s rehearing request and granted Cisco’s joinder motion. Nevertheless, two of the three members of the panel withdrew to narrow the issues before the Board. The reconstituted panel then denied Centripetal’s motion for vacatur and held that the recusal motion was untimely, because Centripetal had been aware of the potential conflict since September 2022.

In May 2023, the Board found certain claims of Centripetal’s patent to be unpatentable as obvious. Centripetal appealed to the Federal Circuit, arguing that the Board’s decision should be vacated because the allegedly conflicted APJ recused himself only after institution and because the Board failed to address Centripetal’s copying arguments.

The Federal Circuit determined that it had jurisdiction to hear the appeal, noting that the case turned on the interpretation of ethics rules and was not the first instance in which the Court reviewed a conflict-of-interest challenge involving an institution decision. The Court concluded that the Board did not abuse its discretion in determining that Centripetal’s recusal motion was untimely, as Centripetal had been aware of the potential conflict for three months before its filing.

The Federal Circuit also addressed the substance of the recusal motion and explained that the APJ’s stock holding in Cisco was less than the statutory $15,000 threshold at all times. Although Centripetal argued that different statutory provisions applied to APJs, the Court concluded that those provisions did not govern a federal employee’s personal financial holdings. Under the applicable statute, which requires recusal only when an employee owns more than $15,000 in a party, the Court found that the APJ was not required to recuse himself.

The Federal Circuit further found that Centripetal’s due process rights were not violated. The Court explained that ethics rules for Article III judges do not apply to administrative proceedings before APJs. The Court further noted that a recent (USPTO) memorandum directing the Board to avoid empaneling judges with any stock ownership in a party was not [...]

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Moving to Recuse? Too Little, Too Late

The US Court of Appeals for the Federal Circuit ruled that waiting until well after an adverse summary judgment motion to move for a district court judge’s recusal is untimely and moot, especially where an appeal from the adverse decision is already filed and where the recusal motion is based on public information. Cellspin Soft, Inc. v. Fitbit LLC, et al., Case No. 22-1526 (Fed Cir. Nov. 1, 2024) (Taranto, Prost, Reyna, JJ.) (nonprecedential).

Cellspin filed a complaint for patent infringement against Fitbit and others in October 2017. In February 2021, Fitbit amended its corporate disclosure statement to reflect the completion of its acquisition by Google (an indirect subsidiary of Alphabet). Almost a year later, in January 2022, Fitbit and the other defendants moved for summary judgment of noninfringement in their respective cases, and in June 2022, the district court granted summary judgment.

Months later, in January 2023, after the grant of summary judgment and the filing of notices of appeal from that grant, Cellspin filed a motion to recuse the district court judge based on the judge’s mutual fund investments that were likely to invest in Google. The consulting firm for which the judge’s husband worked also sold Google services, but the judge’s spouse did not do work for Google. The district court denied the motion on the merits as untimely and because the district court lacked authority to vacate the summary judgment that was already on appeal.

Applying Ninth Circuit law and reviewing for abuse of discretion, the Federal Circuit found that Cellspin’s behavior in waiting until well after it had lost on summary judgment, and almost two years after Google’s acquisition of Fitbit became final, “raises obvious concerns of lack of equity and strategic misuse of recusal.” The sources Fitbit cited for the judge’s spouse and the activities of the spouse’s employer were also public well before the summary judgment motion was granted, as were the judge’s financial disclosures.

While there is no specific time limit for seeking recusal, the Federal Circuit (citing its 1989 decision in Polaroid v. Eastman Kodak) noted that “timeliness is a well-established consideration in application of the [recusal] statute. In deciding motions to vacate orders issued by an allegedly disqualified judge, the courts have used ‘untimely’ as a synonym for ‘unfair’ when the circumstances, like those present here, are such that a grant of the motion would produce a result inequitable, unjust, and unfair.”

The Federal Circuit also noted that the risk of injustice to the parties from denying vacatur would also be essentially nonexistent here because the Federal Circuit’s concurrent holding on the summary judgment appeal against other defendants had preclusive effect, resolving Cellspin’s infringement assertions against Fitbit as well.

Practice Note: Any motion for recusal should be promptly filed when grounds for the motion become apparent.