By: Gene M. Garner II, Partner
In a June 21, 2021 opinion in United States v. Arthrex, Inc., et al., Smith & Nephew, Inc., et al. v. Arthrex, Inc., et al., and Arthrex, Inc. v Smith & Nephew, Inc., et al., 594 U.S. __(2021), on Writs of Certiorari to the United States Court of Appeals for the Federal Circuit, the United States Supreme Court (“the Court”) held that the “unreviewable authority wielded by” Administrative Patent Judges (APJs) during inter partes review at the United States Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB) is “incompatible with their appointment by the Secretary of Commerce to an inferior office”.
That is, APJs are appointed by the Secretary of Commerce yet hold the final authority within the Executive Branch to determine validity of an existing U.S. patent. Prior to the instant decision, there was no mechanism in place to review PTAB inter partes review decisions by a “principal officer” of the Executive Branch appointed by the President and confirmed by the Senate. Therefore, the Court concluded that the such lack of review within the Executive Branch of inter partes review decisions by APJs at the PTAB is inconsistent with the Appointments Clause of the Constitution.
In turning to a solution, the Court concluded that “a tailored approach is the appropriate one” and decided to leave the majority of the statute (35 USC §6) which created the PTAB in place. In doing so, the Court held that the portion of the statute (35 USC §6(c)) that determines the membership of the PTAB “is unenforceable as applied to the Director” of the USPTO “insofar as it prevents the Director from reviewing the decisions of the PTAB on his own”.
The Court relied on its prior decision in Edmond v. United States, 520 U.S. 651, to reach its conclusion that “the exercise of executive power by inferior officers must at some level be subject to the direction and supervision of an officer nominated by the President and confirmed by the Senate. The Constitution therefore forbids the enforcement of statutory restrictions on the Director that insulate the decisions of APJs from his direction and supervision”. The Court also asserted that what matters is that the Director has the discretion to review decisions rendered by the APJs rather than review every decision of the PTAB.
Lastly, the Court vacated the judgment of the United States Court of Appeals for the Federal Circuit and remanded the cases for further proceedings consistent with the Court’s opinion.