This blog article is a follow-up to our November 1, 2020 blog post, “Will IPRs be Abolished?”
On June 21, 2021, the Supreme Court of the United States issued a ruling in Arthrex v. Smith & Nephew on whether the authority of Administrative Patent Judges (“APJs”) to issue decisions on behalf of the Executive Branch is consistent with the Appointments Clause of the U.S. Constitution.
In a split 5-4 decision, the Court held that the unreviewable authority held by APJs during IPR proceedings results in APJs being unconstitutionally appointed principle officers. Chief Justice Roberts, who wrote the plurality opinion and was joined by Justices Alito, Gorusch, Kavanaugh, and Barrett, applied the Court’s decision in Edmond v. United States, 520 U.S. 651 (1997) to conclude that APJs need to be supervised by the USPTO Director in their decision-making process and work product, where that work product involves adjudicating the public rights of private parties, e.g., the power to issue decisions on patentability.
In the present system, the only possibility for review is through a petition for rehearing under 35 U.S.C. § 6(c), which the Court found inadequate as the provision merely provides for review by the APJs themselves. The Court ultimately remanded the case for the Director to consider whether to rehear the petition.
The Court’s decision contained numerous concurrences and dissents. Chief Justice Roberts, joined by Justices Alito, Kavanaugh, and Barrett, concluded that the remedy was to require decisions by APJs subject to review by the Director, and that 35 U.S.C. § 6(c) is not enforceable insofar as preventing the Director from reviewing final decisions. Justice Gorusch dissented with respect to this remedy, arguing for “traditional remedial principles.”
Justices Thomas, Breyer, Sotomayor, and Kagan dissented with the Court’s opinion, arguing that APJs are inferior officers and were always intended to be inferior officers. Justice Breyer, joined by Justices Sotomayor and Kagan, further wrote a separate opinion concurring in the judgment of the remedy, but dissenting on the Court’s constitutional findings with respect to APJs. Accordingly, there appears to be a 7-2 vote in favor of requiring the Director to have the ability to review PTAB decisions.
The PTAB thus lives to see another day.
1 The Supreme Court in Edmond v. United States held that the Secretary of Transportation’s appointment of judges was valid under the Appointments Clause due to the supervision of the judges’ work by the General Counsel of the Department of Transportation and by the Court of Appeals for the Armed Forces.
2 Each appeal, derivation proceeding, post-grant review, and inter partes review shall be heard by at least 3 members of the Patent Trial and Appeal Board, who shall be designated by the Director. Only the Patent Trial and Appeal Board may grant rehearings.
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