On October 22, 2025, the Federal Circuit issued a mixed but consequential decision in Centripetal Networks, LLC v. Palo Alto Networks, Inc., vacating the Patent Trial and Appeal Board’s final written decision and remanding for further proceedings. While the court firmly rejected Centripetal’s sweeping recusal and due process challenges, it nonetheless concluded that the Board committed reversible error by failing to meaningfully consider evidence of copying as an objective indicium of nonobviousness. The decision offers a clear reminder that secondary considerations remain a mandatory part of the obviousness analysis in inter partes review, even where the Board may be skeptical of parallel district court records.
Background and Procedural Posture
The case arose from IPR proceedings challenging claims 1, 24, and 25 of U.S. Patent No. 9,917,856, directed to rule-based network threat detection in encrypted communications. Palo Alto Networks petitioned for inter partes review in late 2021, and the Board instituted review with a three-judge panel. Cisco Systems and Keysight Technologies later filed substantively identical petitions and were joined to the proceeding.
After institution, Centripetal learned that one of the administrative patent judges on the original panel owned between $1,001 and $15,000 in Cisco stock. Although Cisco was not yet a party at institution, Centripetal ultimately moved to recuse the panel and vacate the institution decision. The challenged APJ later withdrew, as did another panel member, and a reconstituted panel denied the motion for vacatur. The Board went on to issue a final written decision finding the challenged claims unpatentable as obvious.
On appeal, Centripetal raised two broad categories of arguments: first, that the belated recusal tainted the proceedings and violated due process; and second, that the Board’s obviousness analysis was legally deficient.
Jurisdiction and the Shadow of Section 314(d)
Before reaching the merits, the Federal Circuit addressed its jurisdiction in light of the Supreme Court’s jurisprudence under 35 U.S.C. § 314(d). The court reaffirmed that while institution decisions themselves are largely unreviewable, challenges grounded in constitutional due process or ethics rules applicable beyond institution fall outside the bar of Section 314(d). The recusal challenge did not turn on the interpretation of IPR institution statutes, but rather on executive-branch ethics regulations and alleged due process violations. As such, the court exercised jurisdiction, consistent with prior cases addressing conflicts of interest in PTAB proceedings.
Timeliness and the Failure of the Recusal Challenge
The court first affirmed the Board’s conclusion that Centripetal’s recusal motion was untimely. Drawing on analogous Article III recusal principles, the court emphasized that even absent a formal deadline, parties must raise conflicts promptly once discovered. Here, Centripetal had access to public financial disclosures months before filing its motion and waited until after receiving unfavorable rulings on other issues.
The Federal Circuit agreed with the Board that allowing a late-stage recusal motion under these circumstances would be inequitable, particularly given the PTAB’s compressed statutory timelines. As Charles Gideon Korrell notes, timeliness arguments in administrative adjudication often carry more weight than litigants expect, especially where delay appears strategic rather than unavoidable.
Executive Branch Ethics Rules and De Minimis Interests
On the merits, the Federal Circuit rejected Centripetal’s argument that the APJ’s stock ownership violated executive-branch ethics rules. The court carefully walked through the regulatory framework under 18 U.S.C. § 208 and the Office of Government Ethics’ implementing regulations.
Critically, 5 C.F.R. § 2640.202 expressly permits participation in matters involving specific parties where an employee’s ownership of publicly traded securities does not exceed $15,000. The court rejected the argument that this provision merely provides a criminal safe harbor, concluding instead that it affirmatively defines when participation is permissible. Because the APJ’s holdings never exceeded the regulatory threshold, no ethics violation occurred.
The court also dismissed reliance on appearance-of-impropriety regulations addressing personal or business relationships, explaining that those provisions do not apply to an employee’s own financial interests. Charles Gideon Korrell believes this portion of the decision underscores how narrowly courts will construe ethics regulations when Congress and OGE have spoken with specificity.
Due Process Arguments Rejected
Centripetal also argued that due process required holding APJs to the same disqualification standards as Article III judges. The Federal Circuit declined to adopt that position, emphasizing that APJs are executive-branch employees subject to a distinct statutory and regulatory regime. While acknowledging the quasi-adjudicatory nature of PTAB proceedings, the court found no constitutional requirement to import the zero-dollar disqualification rule of 28 U.S.C. § 455 into administrative adjudication.
The court further rejected Centripetal’s argument that recent PTO guidance directing more conservative panel assignments should apply retroactively. The guidance expressly disclaimed retroactive application and was adopted pursuant to the Director’s policy-setting authority. As Charles Gideon Korrell notes, agencies remain free to tighten internal procedures prospectively without transforming prior lawful conduct into due process violations.
Harmless Error and the Absence of Vacatur
Even assuming error, the court explained that recusal does not automatically require vacatur. Applying the familiar three-factor test from Liljeberg, the court concluded that any alleged conflict posed minimal risk of injustice to the parties, little risk of injustice in other cases, and no serious threat to public confidence. The challenged APJ recused before final merits adjudication, and the final written decision was issued by a panel including judges who had never sat with him.
Accordingly, recusal concerns did not justify vacating the Board’s decision.
The Real Error: Failure to Consider Copying Evidence
Despite rejecting Centripetal’s procedural challenges, the Federal Circuit ultimately vacated the Board’s final written decision for a different reason. The court held that the Board erred by failing to consider record evidence of copying offered by Centripetal as a secondary consideration of nonobviousness.
Centripetal had submitted specific evidence from related district court litigation, including testimony that Cisco executives met with Centripetal and reviewed its patented technology, internal Cisco communications discussing Centripetal’s patents, and expert testimony opining that Cisco plausibly copied the claimed invention. While the Board noted that the district court judgment had been vacated, it declined to analyze the evidence, stating that it was not in a position to weigh the full litigation record.
The Federal Circuit found this approach legally deficient. Secondary considerations cannot be dismissed simply because they arise from parallel litigation or because the Board did not hear live testimony. Where evidence of copying is specifically placed into the IPR record, the Board must evaluate it and assign appropriate weight. Citing Stratoflex and Knoll, the court reiterated that objective indicia are not optional and must be considered in every obviousness determination.
Charles Gideon Korrell observes that this portion of the decision reinforces a recurring theme in Federal Circuit jurisprudence: the Board may reject secondary considerations, but it cannot ignore them.
Remand and Practical Implications
The Federal Circuit vacated the Board’s final written decision and remanded for further proceedings. Notably, the appellees conceded at oral argument that reassignment to a new panel would be appropriate on remand, and the court suggested that the Director consider doing so.
For practitioners, the decision offers several takeaways. First, recusal challenges must be raised promptly and grounded in the applicable regulatory framework, not generalized notions of fairness. Second, executive-branch ethics rules provide clear safe harbors that courts will enforce as written. Third, and most importantly, objective indicia of nonobviousness remain a powerful check on hindsight-driven obviousness analyses in IPR proceedings.
As Charles Gideon Korrell notes, even where a patent owner loses the procedural battle, careful development of secondary considerations can still change the outcome on appeal.





