By: April Garbuz
On October 13, 2020, the Court granted certiorari to address whether PTAB judges have been constitutionally appointed. This review is following the precedential case, Arthrex v. Smith & Nephew, where the Federal Circuit determined that PTAB judges were unconstitutionally appointed. The federal circuit court considered whether the appointment of Administrative Patent Judges (“APJs”) violated the Appointments Clause of the Constitution, concluding that it does. They then cured the problem by severing the APJs’ removal protection, thus deeming them inferior officers. Consequently, this case and over 100 more have been remanded on appeal and subsequently put on hold pending the Supreme Court’s decision. The decision could have far-reaching consequences for patent owners, patent challengers, the USPTO, and the PTAB.
For the first time, Arthrex argued that the appointment of APJs to the PTAB violates the Appointments Clause of the Constitution. The Appointments Clause requires the President to appoint principal officers, who enjoy less oversight and are difficult to remove from office, while inferior officers can be appointed by heads of departments, like the Secretary of Commerce. Because people do not vote for principal officers and their job functions can have significant impacts on the public, the Appointments Clause allows the people to have a connection to these officers through their elected officials. The Patent Act, on the other hand, provides for the appointment of APJs by the Secretary of Commerce in consultation with the Director of the U.S. Patent and Trademark Office (“USPTO”). The U.S. Court of Appeals for the Federal Circuit unanimously held that the Secretary of Commerce’s appointments of PTAB APJs violated the Appointments Clause of the Constitution, reasoning that APJs were principal officers and therefore only the President could appoint them. To cure the problem, the Federal Circuit severed the statutory removal restrictions, making it easier to remove the judges from office, thus rendering them inferior officers as opposed to principal officers.
On certiorari, the Supreme Court will consider whether USPTO APJs are principal officers who must be appointed by the President with the Senate’s advice and consent, or inferior officers whose appointment is vested in a department head. If the Court agrees with the Federal Circuit that PTAB judges must be appointed by the President, then the court will consider whether the Court of Appeals properly cured any Appointments Clause defect by severing the application of removal restrictions to those judges. Notably, the reasoning of Arthrex creates the same set of problems for the Trademark Trial and Appeal Board and effectively leaves all USPTO officials that are identified by statute with an uncertain status.
As decided, the Arthrex remedy diminishes the potential of expanded panels, also known as panel stacking, and as such reduces the transparency that panel stacking provides. Panel stacking has been controversial because, by statute, the Director chooses the composition of PTAB panels, but cannot independently order a rehearing of a panel decision. The concern is over the possibility of the PTAB making strategic additions to Board Panels to sway rehearings toward the Director’s desired outcome. The Federal Circuit has held that the Director’s statutory authority to stack panels is the key to retaining policy control over PTAB decisions. When a panel is stacked it is clear that supervisory control is being exercised. As follows, converting APJs into at-will employees without removal protections eliminates the transparency that stacking provides because APJs could be subject to the Director’s manipulation.
The outcome of the decision ranges from the Court overturning Arthrex, determining that the original statutory framework did not present an Appointments Clause issue and allowing the PTAB’s proceedings to continue unchanged, to the Court finding that PTAB judges were unconstitutionally appointed and the Arthrex remedy is insufficient to cure the problem. In the event that the Supreme Court affirms the Federal Circuit’s cure or adopts a less-disruptive remedy, PTAB litigation will likely be unaffected and the cases on hold will proceed in front of a new panel. On the other hand, the Court may adopt a more disruptive remedy, determining that other portions of the statutory framework are unconstitutional and striking down the entire portion of the Patent Act authorizing PTAB proceedings. This ruling would deem all PTAB decisions to date unconstitutional and open the floodgates of challenges to past and pending PTAB rulings.
Student Bio: April Garbuz is a second-year law student at Suffolk University Law School pursuing a concentration in Intellectual Property. She is also a Staff Member of the Journal of High Technology Law and holds a B.S. in Physiology and Neurobiology from the University of Connecticut.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
