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Arthrex, Inc. v. Smith & Nephew, Inc.

United States Court of Appeals for the Federal Circuit

October 31, 2019, Decided

2018-2140

Opinion

 [*1325]  MOORE, Circuit Judge.

Arthrex, Inc. appeals from the final written decision of the Patent Trial and Appeal Board holding claims 1, 4, 8, 10-12, 16, 18, and 25-28 of U.S. Patent No. 9,179,907 unpatentable as anticipated. Arthrex appeals this decision and contends that the appointment of the Board's Administrative Patent Judges ("APJs") [**2]  by the Secretary of Commerce, as currently set forth in Title 35, violates the Appointments Clause, U.S. Const., art. II, § 2, cl. 2. We agree and conclude that the statute as currently constructed makes the APJs principal officers. To remedy the violation, we follow the approach set forth by the Supreme Court in Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477, 130 S. Ct. 3138, 177 L. Ed. 2d 706 (2010) and followed by the D.C. Circuit in Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board, 684 F.3d 1332, 401 U.S. App. D.C. 407 (2012). As the Supreme Court instructs, ] "'[g]enerally speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to the problem,' severing any 'problematic portions while leaving the remainder intact.'" Free Enterprise Fund, 561 U.S. at 508 (quoting Ayotte v. Planned Parenthood of Northern New Eng., 546 U.S. 320, 328-29, 126 S. Ct. 961, 163 L. Ed. 2d 812 (2006)). We conclude that severing the portion of the Patent Act restricting removal of the APJs is sufficient to render the APJs inferior officers and remedy the constitutional appointment problem. As the final written decision on appeal issued while there was an Appointments Clause violation, we vacate and remand. Following Lucia v. S.E.C., 138 S. Ct. 2044, 201 L. Ed. 2d 464 (2018), the appropriate course of action is for this case to be remanded to a new panel of APJs to which Arthrex is entitled.

Background

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941 F.3d 1320 *; 2019 U.S. App. LEXIS 32613 **; 2019 U.S.P.Q.2D (BNA) 418700; 2019 WL 5616010

ARTHREX, INC., Appellant v. SMITH & NEPHEW, INC., ARTHROCARE CORP., Appellees, UNITED STATES, Intervenor

Subsequent History: Rehearing denied by, En banc, Rehearing denied by Arthrex, Inc. v. Smith & Nephew, Inc., 2020 U.S. App. LEXIS 9026 (Fed. Cir., Mar. 23, 2020)

Prior History:  [**1] Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2017-00275.

Smith & Nephew, Inc. v. Arthrex, Inc., 2018 Pat. App. LEXIS 7285 (P.T.A.B., May 2, 2018)

Disposition: VACATED AND REMANDED.

CORE TERMS

appointed, inter partes, removal, patent, decisions, severing, inferior officer, argues, member of the board, written decision, principal officer, supervision, vacate, power to remove, designate, executive branch, limitations, protections, invalidate, Appeals, cases, rehear, constitutionally infirm, special master, presidentially-appointed, precedential, restrictions, factors, powers, rights

Governments, Legislation, Severability, Civil Procedure, Appeals, Reviewability of Lower Court Decisions, Constitutional Law, The Presidency, Appointment of Officials, Business & Corporate Compliance, US Patent & Trademark Office Proceedings, Patent Law, US Patent & Trademark Office Proceedings, Separation of Powers, Federal Government, Employees & Officials, Administrative Law, Agency Adjudication, Presiding Officers, Administrative Law Judges, Patent Law, Jurisdiction & Review, Agency Adjudication