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

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

Opinion

 [*1331]  Moore, Chief Judge.

Arthrex, Inc. appeals a Patent Trial [**2]  and Appeal Board final written decision finding claims 1, 4, 8, 10-12, 16, 18, and 25-28 of U.S. Patent No. 9,179,907 unpatentable as anticipated. It also challenges a decision by the Commissioner for Patents denying Arthrex's request for the Director of the Patent and Trademark Office (PTO) to review the Board's decision and grant rehearing. We affirm.

 [*1332]  Background

In 2015, Arthrex sued Smith & Nephew, Inc. and ArthroCare Corp. (collectively, S&N) in the United States District Court for the Eastern District of Texas, alleging infringement of the '907 patent. Shortly before trial, S&N petitioned the Board for inter partes review (IPR), arguing certain claims of the '907 patent were anticipated. The Board instituted IPR and ultimately found that prior art anticipated claims 1, 4, 8, 10-12, 16, 18, and 25-28. Smith & Nephew, Inc. v. Arthrex, Inc., IPR2017-00275, 2018 Pat. App. LEXIS 7285, 2018 WL 2084866, at *1 (P.T.A.B. May 2, 2018).

Arthrex appealed. It primarily challenged the Board's decision on the merits, but it also argued that the Board lacked constitutional authority to issue the agency's final decision. Arthrex reasoned that the Board could not issue final decisions because its Administrative Patent Judges (APJs) were not nominated by the President and confirmed by the Senate, as the Appointments Clause requires for principal officers. We agreed with Arthrex's constitutional [**3]  challenge and held that the appropriate remedy was to (1) sever the statutory limitations on the removal of APJs and (2) remand for rehearing by a new panel of APJs. Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320, 1338, 1340 (Fed. Cir. 2019). We did not reach the merits of the Board's decision.

The Supreme Court vacated and remanded. United States v. Arthrex, Inc., 141 S. Ct. 1970, 210 L. Ed. 2d 268 (2021) (Arthrex). It agreed that because APJs are appointed by the Secretary of Commerce, rather than the President with the advice and consent of the Senate, they could not issue any "final decision binding the Executive Branch." Id. at 1985. The Court held, however, that the appropriate remedy was to (1) exempt the Director from 35 U.S.C. § 6(c), which precludes anyone but the Board from granting rehearing of a Board decision, and (2) "remand to the Acting Director for him to decide whether to rehear" the case. Id. at 1987.

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