United States v. Arthrex, Inc. - 141 S. Ct. 1970 (2021)

Rule:

The unreviewable authority wielded by Administrative Patent Judges during inter partes review is incompatible with their appointment by the Secretary of Commerce to an inferior office. Only an officer properly appointed to a principal office may issue a final decision binding the Executive Branch.

Facts:

Administrative Patent Judges (APJs) conduct adversarial proceedings for challenging the validity of an existing patent before the Patent Trial and Appeal Board (PTAB). During such proceedings, the PTAB sits in panels of at least three of its members, who are predominantly APJs. 35 U. S. C. §§6(a), (c). The Secretary of Commerce appoints all members of the PTAB--including 200-plus APJs--except for the Director, who is nominated by the President and confirmed by the Senate. §§3(b)(1), (b)(2)(A), 6(a). After Smith & Nephew, Inc., and ArthroCare Corp. (collectively, Smith & Nephew) petitioned for inter partes review of a patent secured by Arthrex, Inc., three APJs concluded that the patent was invalid. On appeal to the Federal Circuit, Arthrex claimed that the structure of the PTAB violated the Appointments Clause, which specifies how the President may appoint officers to assist in carrying out his responsibilities. Art. II, §2, cl. 2. Arthrex argued that the APJs were principal officers who must be appointed by the President with the advice and consent of the Senate, and that their appointment by the Secretary of Commerce was therefore unconstitutional. The Federal Circuit held that the APJs were principal officers whose appointments were unconstitutional because neither the Secretary nor Director can review their decisions or remove them at will. To remedy this constitutional violation, the Federal Circuit invalidated the APJs' tenure protections, making them removable at will by the Secretary.

Issue:

Is the authority of APJs to issue decisions on behalf of the Executive Branch consistent with the Appointments Clause of the Constitution?

Answer:

No.

Conclusion:

The court held that PTAB, which decided whether an invention met patentability standards on review from primary examiners' decisions, was inconsistent with the Appointments Clause, U.S. Const. art. II, § 2, cl. 2, because APJs wielded unreviewable authority during inter partes review. Only a properly appointed officer could issue a final decision binding the Executive Branch, and APJs had the power to render a final decision on behalf of the U.S. without review by their nominal superior or any other principal officer of the Executive Branch. Furthermore, under the Appointments Clause, the exercise of executive power by inferior officers had to be subjected to the direction and supervision of an officer nominated by the President and confirmed by the Senate.