Last week, the U.S. Supreme Court issued an opinion in United States v. Arthrex, Inc., No. 19-1434 (June 21, 2021), holding that decisions issued by Administrative Patent Judges (APJs) of the Patent Trial and Appeal Board (PTAB) must be reviewable by the Director of the Patent and Trademark Office (PTO) to avoid a violation of the Appointments Clause of the Constitution.
The Appointments Clause requires that principal officers be appointed by the President, with advice and consent of the Senate. Inferior officers can be appointed in certain other ways, as allowed by Congress. In 2011, Congress passed the America Invents Act (AIA). The AIA enables the PTAB, through three-member panels of APJs, to rule on the patentability of issued patents. While the PTO Director is appointed by the President, with advice and consent of the Senate, PTAB APJs are appointed by the Secretary of Commerce. Under Section 6(c) of the AIA, decisions of the PTAB APJs were not reviewable by the Secretary or the PTO Director.
In 2015, Arthrex was granted a surgical device patent, which it later asserted against Smith & Nephew, Inc. and ArthroCare Corp. In an inter partes review before the PTAB, Arthrex’s patent claims were found unpatentable. Arthrex appealed to the Federal Circuit, “argu[ing] that the APJs were principal officers (requiring presidential appointment) and therefore that their appointment by the Secretary of Commerce was unconstitutional.” The Government intervened, defending the procedure. Because the APJ decisions could not be reviewed by the Secretary of Commerce or the PTO Director, the Federal Circuit agreed that, under the AIA as written, the PTAB’s APJs were principal officers. In an effort to preserve the constitutionality of the AIA, the Federal Circuit judicially modified the statute to provide that “APJs [were] removable at will by the Secretary.”
The Supreme Court granted certiorari to consider the constitutionality of the PTAB’s structure. Noting that inferior officers must be “directed and supervised at some level by others who were appointed by Presidential nomination,” the Court agreed with the Federal Circuit that, under the AIA as written, the PTAB APJs lacked the required supervision to satisfy the Appointments Clause. The Court, however, did not agree with the Federal Circuit’s remedy. Instead, the Court held that, to satisfy the Appointments Clause, the PTO Director must have authority to review final PTAB decisions, and that Section 6(c) of the AIA cannot constitutionally be enforced to prevent such review.
This blog post was co-authored by Joe Dubis & Zachary Zadow