The Supreme Court’s decision in United States v. Arthrex Inc. has limited impact on the structure of the Patent Trial and Appeal Board (PTAB) and the appointment of Administrative Patent Judges (APJs) due to the Courts’ narrow remedy and proposed fix of adding a layer of Director review.  The case, decided in June 2021, addressed the constitutional status of APJs and the implications for the PTAB’s decision-making process. This blog post provides an overview of the case and its potential impact on patent law and administrative law.

Background of the Case

The case originated from a dispute between Arthrex Inc. and Smith & Nephew Inc. over a patent related to a surgical device. Arthrex sued Smith & Nephew for patent infringement, and Smith & Nephew challenged the validity of the patent by filing a petition for inter partes review (IPR) with the PTAB. The PTAB invalidated Arthrex’s patent, prompting Arthrex to appeal to the Court of Appeals for the Federal Circuit.

Key Issues

The main issue before the Supreme Court was whether the appointment of APJs to the PTAB violated the Appointments Clause of the Constitution. The Appointments Clause requires that principal officers of the United States be appointed by the President with the advice and consent of the Senate. APJs are appointed by the Secretary of Commerce, which raised concerns about their status as principal officers.

Supreme Court’s Decision

In a 5-4 decision, the Supreme Court held that the current structure of the PTAB, which allows APJs to be appointed by the Secretary of Commerce without Senate confirmation, violated the Appointments Clause. The Court found that APJs are “principal officers” who exercise significant authority in the name of the United States and, therefore, must be appointed by the President or a department head.

Impact of the Decision

The decision in Arthrex raises questions about the validity of decisions made by the PTAB prior to the Court’s decision.  However, in determining a remedy, the Court took a narrowly tailored approach, invalidating only a part of 35 U.S.C. §6, which stated that only the PTAB may grant rehearings.  The Court then proposed the remedy by stripping the removal protection of the PTAB judges and giving the USPTO Director the power to review the proceedings stating that “decisions by APJs must be subject to review by the Director…and upon review, [the Director] may issue decisions himself on behalf of the Board.”

The Court’s decision requires the PTO to create a permanent procedure for the Director’s review of inter partes review decisions. In the meantime, the USPTO has issued interim procedures for Director review. In this procedure, a director review can be initiated sua sponte by the Director or it can be requested by a party to the PTAB proceeding. Parties may request the Director review of a final written decision in an inter partes review or a post-grant review. 

There is no indication that the Court’s narrow remedy will cause much change or affect previous decisions by the PTAB. As a result of having an added layer of Director review, the Arthrex decision is likely to increase the average time that PTAB would take for final disposition as to the validity of a patent in post-grant proceedings.  

Resources:

United States v. Arthrex, Inc. https://www.supremecourt.gov/opinions/20pdf/19-1434_ancf.pdf

Arthrex Q&As https://www.uspto.gov/patents/patent-trial-and-appeal-board/procedures/arthrex-qas