October 31, 2019
Federal Circuit Gives the PTAB an Inferiority Complex
In Arthrex, Inc. v. Smith & Nephew, Inc., [2018-2140](October 31, 2019), the Federal Circuit vacated and remanded the Final Written Decision of the PTAB in IPR2017-00275 because the decision was issued while there was an Appointments Clause Violation.
The Board held that claims 1, 4, 8, 10–12, 16, 18, and 25–28 of Arthrex’s U.S. Patent No. 9,179,907 were unpatentable as anticipated. Arthrex appealed, contending that the appointment of the Board’s Administrative Patent Judges (APJs) by the Secretary of Commerce — as currently set forth in Title 35 — violates the Appointments Clause of the constitution (Art. II, § 2, cl. 2). The Federal Circuit agreed, concluding that the statute as currently constructed improperly makes the APJs principal officers.
More specifically, Arthrex argued that the APJs who presided over its Inter Partes Review were not constitutionally appointed — they were principal officers who must be, but were not, appointed by the President with the advice and consent of the Senate. The issue was whether the APJs were in fact “Officers of the United States” and if so, whether they are inferior officers or principal officers. The Federal Circuit held that in light of the rights and responsibilities in Title 35, APJs were principal officers.
The Federal Circuit, under cover of Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010) determined that the solution was to sever the problematic portions of the patent act, while leaving remaining provisions intact. The Federal Circuit thus severed the portion of the Patent Act restricting removal of the APJs, thereby rendering the APJs inferior officers and solving the constitutional appointment problem.