Industry Reacts to the Supreme Court’s Arthrex Ruling: Chaos Averted – or Just Delayed?

By IPWatchdog
June 21, 2021

“This decision presents the right opportunity for Congress to consider how best to restructure the Patent Trial and Appeal Board to ensure it fulfills its essential function—invalidating low-quality patents which should have never been issued—and is a fair, equitable, and impartial forum for all inventors, especially small and medium enterprises and independent inventors.” – Statement of Senator Thom Tillis

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The Supreme Court issued a split 5-4 decision earlier today, in which a plurality of the Court agreed with the U.S. Court of Appeals for the Federal Circuit (CAFC) that the structure of the Patent Trial and Appeal Board (PTAB) under the America Invents Act (AIA) has resulted in Administrative Patent Judges (APJs) being unconstitutionally appointed principal officers, but took a different approach than the CAFC to fixing the problem. Some were surprised by the conservative Court’s choice to sever the statute and ultimately hand the United States Patent and Trademark Office (USPTO) Director—a political appointee—power to review final decisions, though it was not surprising that they attempted to fashion a solution that would preserve the PTAB and inter partes review (IPR) system. Justice Gorsuch, in his partial dissent, said that he would have identified the constitutional violation, explained his reasoning, and simply “set aside” the PTAB decision at issue. Instead, said Gorsuch, “Effectively, the Court subtracts statutory powers from one set of executive officials and adds them to another.”

While the decision is not likely to have any immediate impact, it does raise questions about implications down the line, including how the USPTO and its new Director will address the ruling. Below, industry stakeholders consider what the Court did (and did not do) and provide their take on this highly anticipated holding.

Imron Aly, Schiff Hardin

Bottom line: IPRs are saved by allowing the PTO Director to review PTAB decisions…. From a legal or academic point of view, this is fascinating because the Justices were clearly struggling with where to draw the line once finding the statute unconstitutional: does it mean throwing out the whole IPR system and kicking the issue back to Congress, or can the courts fix it themselves? The case has broader implications on that point and much to discuss. For the issue presented, and from a practical point of view, Justice Roberts here essentially tacked on the ability for the Director to review PTAB decisions as an appropriate and sufficient fix.

Brent Babcock, Womble Bond Dickinson

The most readily apparent implication is that a new Director-level review will probably be made available for all PTAB proceedings involving “petitions for inter partes review” (id. at 22), and presumably for PGRs and legacy CBMs, too. The Court specifically declined to address other PTAB proceedings, such as ex parte appeals, reexamination appeals, and interferences. Id. While Precedential Opinion Panel (“POP”) review is currently available for final written decisions from PTAB trials – and the Director is a member of that Panel – the SCOTUS majority deemed such review constitutionally inadequate. Id. at 11-12. And while not explicitly discussed in the decision, a request for review by the POP requires a showing that the decision of the three-APJ panel presents “issues of exceptional importance to the Patent Trial and Appeal Board”. This often-difficult-to-establish threshold showing (only four POP decisions to date (id.)) should be unnecessary in any future review by the Director. Thus, a top-level review by the Director – perhaps following a decision from the panel on any request for rehearing – would withstand Constitutional scrutiny. And while the Director often delegates his or her authority for the USPTO’s handling of decisions on many matters, such as petitions (see, e.g., 37 C.F.R. § 1.181(g)), such a deferential practice would likely be more fraught with peril for the review of PTAB trial decisions.

Erik Belt, McCarter & English

Nobody in patent circles seriously expected that the Supreme Court would invalidate the whole regime of inter partes reviews (IPRs) and other post-grant proceedings pending before the Patent Trial and Appeal Board (PTAB). Doing so would have thrown away nearly 10 years of PTAB rulings upholding or invalidating patents. That would have been chaos. Instead, the Court created chaos of a different sort. The Court held that the PTAB, as currently structured, violates the Appointments Clause of the Constitution because the PTAB judges who decide IPRs are effectively unsupervised. To remedy that problem, the Court held that the PTAB could be saved by allowing the USPTO Director to review PTAB decisions by way of rehearing. Formerly, the same PTAB judges who decided the IPR or other post-grant proceeding would decide whether to grant or deny rehearing. Of course, only a minuscule number of decisions were ever changed by way of rehearing, and, as such, rehearings were rarely requested.

Under the Court’s Constitutional fix, disappointed parties in IPRs will now have more incentive to file petitions for rehearing, hoping that the Director will view the case differently. Rehearings, however, will extend the time it takes to decide whether the challenged patent is valid or not. Even after a rehearing, there could still be an appeal to the Court of Appeals for the Federal Circuit. As a result, what was originally conceived as a relatively quick and inexpensive way to confirm or invalidate a patent will now be longer and more expensive.

Peter J. Brann, Brann & Isaacson

The Supreme Court giveth and the Supreme Court taketh away. After the majority apparently elevated administrative patent judges to the ethereal heights of ambassadors, cabinet officers, and other principal officers, quoting Hamilton, Jefferson, and Madison, the plurality and most of the dissent brought them back to ground by simply making APJ decisions subject to review by the PTO Director. It is hard to believe that unless the PTO Director now is going to spend all of his or her time reviewing APJ decisions that this decision will make much practical difference. Or, as Peggy Lee famously asked: “Is that all there is?”

Case Collard, Dorsey & Whitney

This limited remedy preserves the IPR process as we know it, but adds a new wrinkle, allowing APJ decisions to be reviewed by the Director prior to appeal to the Federal Circuit. Patent challengers will be pleased with the result that keeps the PTAB’s IPR process in their toolbox. There is some concern that by allowing a political appointee to oversee the decisions, it could inject an element of politics that had previously been absent.

Drew DeVoogd, Mintz

The Court’s holding today is consistent with the view of many observers and practitioners. But the remedy the Court ordered is fairly mild given the constitutional violation: a remand to the Acting Director for a determination whether a rehearing is appropriate. This can’t be considered the desired outcome for patent owners who were hoping for ruling that would improve the opportunities to preserve their patents being challenged at the PTAB. In the unlikely event that a rehearing is ordered, Arthrex doesn’t even ensure a new panel of PTAB judges. The Court clearly could have gone further with respect to the remedy, but this may be the result of pragmatism in view of administrative burden limiting the vindication of patent holders’ rights. At the end of the day, this is a decision that will likely change little in regard to existing rulings by the PTAB.

Jeremy C. DoerreJeremy Doerre, Tillman Wright, PLLC

Arthrex could be characterized as a case where the Court had to find the least bad option from among some truly terrible ones. Taking down the entire post-grant trial regime was never really on the table, and creating hundreds of new advice-and-consent positions would have been a huge ask.

Accordingly, Arthrex was always likely to end with the same ultimate result: with the Director having the ability to control the outcome of Board proceedings. The government tried to convince the Court that the Director already had this ability, urging that “the Director, by handpicking (and, if necessary, re-picking) Board members, can indirectly influence the course of inter partes review.” Op. at 12. Rather than blessing this behind-the-curtain exercise of control over the Board, the Court held that such a scheme “is not the solution[;] [i]t is the problem.” Op. at 12.

The Court’s decision to grant the Director explicit review authority is a win for transparency and due process, as it allows the Director to review decisions in the open, obviating any need to influence decisions in other more problematic ways. It is also a win for the decisional independence of administrative patent judges, as the Director can leave a panel to reach its own decision, and then review the decision under his own authority.

Teague Donahey, Holland & Hart

That SCOTUS would find the current PTAB procedures unconstitutional under the Appointments Clause was no surprise. As Justice Gorsuch put it, “The real question here concern[ed] what to do about it.” And what was interesting about the severability remedy adopted by five justices as to Part III was that it, in effect, amended the relevant statutory provisions to make PTAB decisions subject to review by the PTO Director, which solved the constitutional problem. One might have expected a conservative-led majority to be more hesitant to adopt this severance approach, which Justice Gorsuch criticized as “seemingly confer[ring] legislative power to the Judiciary—endowing [the courts] with the authority to make a raw policy choice between competing lawful options.” But the justices were pragmatic, apparently more concerned with ensuring that the PTAB system is saved.

Matthew DowdMatt Dowd, Dowd Scheffel PLLC

King Pyrrhus once defeated the Roman army in third century B.C., but he observed, “If I achieve such a victory again, I shall return to Epirus without any soldier.” And so it seems today we have another such Pyrrhic victory, with the Supreme Court’s Arthrex decision. While Arthrex, Inc. can claim legal victory with its constitutional argument, the Supreme Court authorized a remedy that may make this long-drawn-out battle all for naught. What is next?

The PTAB and the Federal Circuit may well have to address the structural bias challenge raised in New Vision Gaming v. SG Gaming, Inc., No. 20-1399 (Fed. Cir. May 13, 2021). New Vision Gaming identified an important problem with the way the PTAB is funded and operated, and how that unique system creates the appearance of structural financial bias. New Vision achieved a successful remand before the Federal Circuit in view of Arthrex, and the decision today will likely require the PTAB to confront New Vision’s structural due process argument. A recent analysis by Ron Katznelson lends further support to concerns about structural bias. As New Vision’s counsel, I was pleased to see other patent owners (such as Mobility Workx and Cellspin Soft) reiterate New Vision’s due process arguments. More should do so at the PTAB, with Arthrex now decided.

Innovators must continue to advocate for meaningful change. If PTAB cancellations are here to stay, the process must improve if we want to restore confidence in the system and increase U.S. innovation certainty.

Don FalkDonald Falk, Mayer Brown

The practical significance of this decision most likely will be seen in other settings. For existing PTAB decisions, the Court’s novel remedy—giving the PTO Director a power of rehearing that Congress and the President explicitly withheld—probably means that the results of very few, if any, PTAB decisions will change. And the present or a future Congress may well step in to restructure the duties and status of administrative patent judges. But the Court’s keen scrutiny of the functions and powers of this particular class of executive officers, along with its innovative remedy for a separation-of-powers violation, may pave the way for robust judicial intervention into other nontraditional regulatory and adjudicative schemes.

Robert GreenspoonRobert Greenspoon, Flachsbart & Greenspoon, LLC

It is always a monumental task to get the “Least Dangerous Branch” to look into the abyss to unwind an entrenched Congressional scheme. And we need that high wall. Article III judges are not elected, and do not represent the people as such. I offer kudos to the courageous advocates who kept up the constitutional fight, and to the bold jurists who overcame profound reluctance to grade a co-equal branch poorly in this rarest of cases where our nation needed them to step in.

But today’s remedy? I was incredulous before about the Federal Circuit’s APJ-tenure-deprival remedy. I told my friends (and victims at cocktail parties who would listen) that no one ever complained to me that the PTAB wasn’t political enough. I just cannot understand why our highest court would turn that dial up to the max, intentionally and open-eyed handing trillions (yes, trillions) of dollars of decision-making authority to one nonelected individual—the USPTO Director (worse still, a career officer temporarily filling that empty seat). Is there any precedent for this in our entire nation’s history? Justice Gorsuch’s partial dissent could not have stated it better.

David Hoyle, B.E. Technology

At long last, in today’s Arthrex decision the Supreme Court has taken its first step in the right direction. For over 15 years now we have seen far too many under-reaching or counter-productive decisions from the Court. Today, instead of decisively rendering a conclusion once and for all so everyone can move on with their careers, they have reached the conclusion: “PTAB Judges are unconstitutional.” [emphasis added] But then, the court quickly kicked the can down the road for another day on the whole of the America Invents Act, which is not only bad law, but unconstitutional law, designed by Big Tech to defenestrate so many of its competitors.

Justice Gorsuch gets it when he said “Early American courts did not presume a power to ‘sever’ and excise portions of stat­utes in response to constitutional violations. Instead, when the application of a statute violated the Constitution, courts simply declined to enforce the statute in the case or contro­versy at hand.”

He then finishes with this: “(Today’s decision) does not begin to fix the revolving door or any of the other due process problems [emphasis added] Oil States ignored. No doubt, challenges involving those aspects of the IPR process will come. When they do, I hope this Court will come to recognize what was evident for so much of our history—that the process due someone with a vested property right in a patent is a proceeding before a neu­tral and independent judge.”

As many as 5,000 patents – the lifeblood for startups that could become the backbone of our future – have already been destroyed by this unconstitutional scheme. It is time for the Federal Circuit and the Supreme Court to fully engage.

B.E. Technology welcomes today’s decision as a step in the right direction, but, together with so many other unconstitutionally crippled startups, we are still unduly burdened with this unceasing effort to restore due process for all inventors and their most prized offspring. Patents!

Jennifer Kurcz, BakerHostetler

Arthrex holds that the unreviewable executive power exercised by Administrative Patent Judges (APJs) in inter partes review is unconstitutional…. To remedy this constitutional defect with the AIA, the plurality opinion severed the AIA statute and divested APJs of final authority over decisions while providing that power to the Director. It is expected that the USPTO will swiftly move to create a process to enable parties to petition the Director to hear appeals to APJ rulings.

Randy LandreneauRandy Landreneau, US Inventor

Let’s just say goodbye to whatever idealistic thoughts any of us have held onto regarding this once great nation. It was bad enough that SCOTUS decided that an American citizen with what was considered a property right for 200 years could have that property right eliminated by an administrative court lacking a jury and the level of due process required for any other type of property. But now, they’ve put a nail in the coffin. SCOTUS has ruled that all that has to be done to make the PTAB “judges” inferior officers and Constitutional is to give the Director of the USPTO the authority to overrule their decisions. We’re talking about a political appointee, a position heavily influenced by the largest entities that support a campaign. These large entities have been proven to be against the types of disruptive competition that effective patent rights support. It is inconceivable that our Supreme Court would so easily hand such ultimate power over the future of American innovation and those individuals who have been such a key part of the success of America to the entities that have an obvious opposing vested interest.

Charles R. Macedo, Amster, Rothstein & Ebenstein, LLP

Today, a splintered Supreme Court recognized that the PTAB APJs are and should be considered “inferior officers”, except to the extent that a final written decision in an IPR remains unreviewable by a principal officer. Thus, a slim majority (Roberts, Ch.J., Alito, Gorsuch, Kavanaugh and Barrett) was troubled by the inability under Section 6(c) for the Director to directly review a final written decision by the PTAB. Based on this conclusion, a different and unusual confederation of the Justices (Roberts, Ch. J., Alito, Kavanaugh, Barrett, and Breyer, Kagan and Sotomayor, on this key last point) agreed to sever the restriction on the Director’s review. Under today’s holdings, the PTAB and inter partes review proceedings will continue to proceed. It will be interesting to see how the new Director, when one is appointed, takes on this role of adjudication and final review. In the meantime, the PTAB APJ saga will no doubt continue to linger.

T.J. Mantooth, Hall Estill

The decision muddies the waters because the Court merely required oversight of [APJs] to be possible, which allows decision makers to sometimes, always, or never be reviewed by an official appointed by the President and approved by the Senate in accordance with the Appointments Clause.

Patent validity, prior to this decision, could not be overturned by the USPTO Director. The Director could move an APJ on future cases, but couldn’t directly review and influence an existing IPR. After this decision, the Director at least is required to have an opportunity to review and influence the decision of an IPR. As a result, we may have two layers of IPR decision making, with the APJs and the USPTO Director, but that dual layer arrangement is not required.

Burman York (Bud) Mathis IIIBud Mathis

The Supreme Court majority believes that APJs are principle officers, but that striking Title 35 U.S.C. § 6(C) such that the USPTO Director has the option to review PTAB decisions demotes APJs to inferior officers. The Supreme Court minority believes that APJs are inferior officers. The dividing issue appears to be whether APJs are “directed and supervised at some level by others who were appointed by presidential nomination with the Senate’s advice and consent.” Edmond v. United States, 520 U. S. 651, 663 (1997). I’m not convinced that the PTAB is presently “supervised” within the meaning of Edmond, and I’m not convinced striking § 6(C) will provide the adult leadership the PTAB desperately needs. What I am convinced about is, if the majority is correct in their assessment that APJs are principals so long as § 6(C) is enforceable, the minority is correct in that the Arthrex decision must be set aside. “[T]he ‘appropriate’ remedy for an adjudication tainted with an appointments violation is a new ‘hearing before a properly appointed’ official.” Thomas, J. dissent slip op. at p. 16.

William H. Milliken, Sterne, Kessler, Goldstein & Fox

Practically speaking, the primary effect of this decision will be to require that the Director have the opportunity to review PTAB decisions before they become final. The Court was clear, however, that the Director “need not review every decision by the PTAB”—he need only be able to do so. Accordingly, we do not expect this decision to cause a major disruption to the current post-grant proceeding regime. It is possible that the Office will in the near future issue guidance concerning the mechanics of this new layer of potential review.

Brad Olson, Barnes & Thornburg

The tea leaves of Arthrex are now clearly legible and the Court went much further than I had anticipated after oral argument. The Arthrex opinion lulls one into a sense that this opinion will be somewhat routine, but like Haydn’s Surprise Symphony (No. 94), your attention is about to become quite focused. The Chief Justice first leads us through the historical executive branch authority of the Patent Office and its various patent review board iterations from onset to present day. The opinion makes short work of the Federal Circuit’s lower decision in the Arthrex lineage where the Federal Circuit reached the correct legal conclusion on the violation of the Appointments Clause, but found a doctrinaire way to maintain the status quo for APJs by merely limiting their tenure among other administrative corrective measures. The Arthrex opinion clearly signals what is about to happen when you come upon the statement “[t]he chain of command runs not from the Director to his subordinates, but from the APJs to the Director.” The Court abseils to judicial bedrock where it uses Marbury v. Madison to ground its reasoning that, in effect, the time of “the unreviewable authority wielded by APJs during inter partes review . . .” has come to an end. Further averring such unreviewable authority “. . . is incompatible with their [APJ] appointment by the Secretary to an inferior office.” As 35 U.S.C. § 6(c) is now unenforceable to the extent that it prevents the Director from reviewing inter partes review decisions or reaching their own countermanding decisions, other than an increase in workload for the Director, we will likely see corrective bills to § 6 et seq. on the horizon soon.

Eugene Perez, Birch, Stewart, Kolasch & Birch

The SCOTUS decision will not have an impact as in previous decisions coming from the Federal Circuit, such as Thrv v. Click-To-Call Tech (2020), Alice Corp. (2014), or Festo (2002). It is more of a “slap on the Federal Circuit wrist” regarding the remedy provision, with “business as usual” for the PTAB. One of the arguments from the government is that the Director can intervene in the rehearing process to reverse the Board decision, whether is it by stacking the original panel or assigning an entirely new panel of APJs. Id. at 11. However, the majority deemed this to the problem, rather than the solution, since the Director is still not taking responsibility for the final decision on patentability. Id. at 11. However, the solution by SCOTUS of “[t]he Director accordingly may review final PTAB decisions and, upon review, may issue decisions himself” (Id. at 21) cannot possibly result in significant changes. Each IPR involves a detailed record full of briefs and deposition transcripts, and an understanding of the technology and prior art. It is hard to imagine understanding computer software in one case, and then monoclonal antibodies in another. How does the Director decide to review a case where the lead APJ has a track record of a high kill rate of patents, versus a case where the declaratory evidence was not given proper weight? And given the number of final written decisions, it is hard to imagine Arthrex changing the day to day reality, which may disappoint patent owners.

George Quillin , Foley and Lardner

Remarkably, the Chief Justice steered a course least upsetting to the Board’s workload.  That is, having found a constitutional defect, the remedy could have been what Arthrex urged – reverse the Federal Circuit’s severance remedy and allow Congress to choose a remedy. That would have cast a pall over hundreds of recently decided and existing inter partes reviews (IPRs). Or the remedy could have been what the government urged – affirm the Federal Circuit’s severance remedy. That would have meant that hundreds of previously decided and timely challenged IPRs would have to be reheard by a fresh panel of administrative patent judges. Instead, the Court’s remedy requires only that the Director have the discretion to decide whether or not he will rehear any of the IPRs.  The cynic can imagine a busy bureaucrat’s easy choice on such a decision.

Karen Sebaski, Holwell Shuster & Goldberg LLP

In the words of Chief Justice Breyer, writing for the majority: “In all the ways that matter to the parties who appear before the PTAB, the buck stops with the APJs, not with the Secretary or Director.” In Arthrex, the Federal Circuit had concluded that APJs have been acting as principal officers that must be (but were not) appointed by the President and confirmed by the Senate. As expected, the conundrum of what to do about their “significant authority” was at the heart of the High Court’s decision. The Federal Circuit’s fix, removing employment protections, was rejected. Instead, in a part joined by four justices, the majority found that the “clear course” was to sever the relevant statute “insofar as it prevents the Director from reviewing the decisions of the PTAB on his own” and to permit the Director to review final PTAB decisions and, upon review, issue decisions himself. Given its potential to broadly impact the PTAB and all of its decisions, Arthrex has been closely watched. Indeed, “[b]illions of dollars can turn on a Board decision.”

Richard Samp, New Civil Liberties AllianceRichard Samp, New Civil Liberties Alliance

Today’s decision affirms important separation-of-powers principles embedded in the Constitution. Article II’s Appointments Clause requires that principal officers of the United States must be appointed by the President with the advice and consent of the President. The Court properly held that because patent law grants Administrative Patent Judges unreviewable authority to invalidate patents, they are “principal officers”– and thus that the law violated the Appointments Clause by circumventing the advice-and-consent requirement.

Jonathan Stroud, Unified Patents

The decision isn’t unexpected, but it is blessedly reasonable. Two things stand out about it (and Court’s narrow fix, which garnered 7 votes): one is just how isolated and extreme Justice Gorsuch has so quickly become in his views on patents (and his inability to sway any other Justices); the other is just how much attention was paid by the Chief to the practical implications of the ruling, down to explaining how the remand should be handled. That is both unexpected and welcome to a patent bar that is used to dealing with the fallout from less than crystal-clear pronouncements from the high Court.

Statement of Senator Thom Tillis (R-NC)

The Arthrex decision demonstrates why it is important that the Biden Administration select a USPTO Director who respects and supports strong intellectual property rights and is committed to continuing the reforms of the past Administration. This decision presents the right opportunity for Congress to consider how best to restructure the Patent Trial and Appeal Board to ensure it fulfills its essential function—invalidating low-quality patents which should have never been issued—and is a fair, equitable, and impartial forum for all inventors, especially small and medium enterprises and independent inventors. I look forward to modernizing the PTAB and to working through these issues with my colleagues on a bipartisan basis.

Kennth Weatherwax

Kenneth Weatherwax and Bridget Smith, Lowenstein & Weatherwax LLP

The Court’s splintered decision leaves many questions to be explicitly answered. For example: Which aggrieved patent owners (or other parties) in other cases, on appeal and otherwise, may seek relief based on this decision? What procedures must apply to satisfy the Constitution? Can the Director delegate the decision? Can the Acting Director, who is not himself subject to Senate confirmation, even constitutionally make such a decision? And: are IPRs still vulnerable to other unconstitutionality challenges? Time will tell.

Statement of US Inventor

Today the Supreme Court ruled in Arthrex v. Smith & Nephew that the administrative patent judges (APJs) who have invalidated thousands of patents under the 2011 America Invents Act did so in violation of the Constitution. The Court then proceeded to “forgive” this violation by re-writing the law.

Today, it was the conservatives who are guilty of judicial activism. Chief Justice Roberts was joined by Justices Alito, Kavanaugh, and Barrett in the decision to re-write the law by granting to the Director of the USPTO review authority which Congress declined to do.

Most importantly, this gives the USPTO Director – a political appointee – immense arbitrary power to decide who owns the rights to intellectual property valued in the trillions of dollars. Every election huge corporations and wealthy donors are seeking to get their friends appointed to this position, and block the rights of ordinary citizens and small businesses who seek to competed fairly with their ideas.

It is impossible for the Director to review the thousands of decisions that rob inventors of our hard-earned rights. Under this remedy – which is no remedy at all – the Director will only have capacity to review a handful of the erroneous and biased decisions. Certainly it will not be under-resourced inventors who benefit under this holding, but rather the wealthiest and most politically connected corporations.

The U.S. patent system used to be a gold standard that offered equal opportunity to ordinary citizens to compete in the marketplace based on the merit of their ideas. Today’s decision marks another in a string of decisions by the U.S. Supreme Court that has flipped our patent system upside down. Today only mega-wealthy corporations with massive political influence can participate in the patent system, which no longer has any connection to inventing – or as the Constitution says “promoting progress in the science and useful arts”.

Our only advocate was Justice Gorsuch, who cited the amicus briefs of the inventors while lamenting the damage done to innovation and the rule of law by Congress and his colleagues.

Janelle D. Waack, Bass, Berry & Sims PLC

Despite the divergence and abundance of opinions, the holding was fairly clean – to give the USPTO Director power to directly review PTAB decisions adjudicating petitions for inter partes review. The decision could have upended the PTAB review of U.S. patents and the hundreds of administrative judges who decide those cases as the Court found a Constitutional dilemma in the way that APJs are appointed by the Secretary of Commerce instead of by the U.S. President with confirmation by the Senate. But instead of scrapping IPRs, the Court maintained a workable patent system. APJs no longer have unreviewable authority in issuing decisions and the USPTO Director is tasked with reviewing those decisions.

What remains to be seen is the exact process by which the Director will review PTAB decisions. This additional authority also places more importance on the selection of the next USPTO Director. The Arthrex decision will hopefully encourage sound, impartial decisions on the merits without bringing politics into the mix.

William Yeatman, Robert A. Levy Center for Constitutional Studies, Cato Institute

 The holding will have profound ramifications for multiple agencies with in-house courts that are structured like the PTAB, such as adjudicative regimes operated by Health & Human Services, the Labor Department, and the Agriculture Department. Almost certainly, these agencies (or Congress) will have to rethink how they conduct adjudications. Thus, parts I & II of the opinion provide further evidence that reining in the administrative state is a priority for this Court, and Chief Justice Roberts, in particular.

Still, the Court’s remedy—essentially rewriting the statute to create as narrow a remedy as possible—leaves much to be desired. Questions regarding agency design are best left to Congress. Regarding the remedy, the Court should’ve followed Justice Gorsuch’s partial dissent—which cited Cato’s amicus brief—and refused to enforce an unconstitutional statute, thereby forcing Congress’s hand.

 

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  1. mike June 21, 2021 7:09 pm

    In light of finding something contrary to Constitution’s Appointment Clause, this SCOTUS opinion in Arthrex flies in the face of, and foregoes the power vested to Congress pursuant to, the Constitution’s Patent Clause.

    In order to ignore the unconstitutional appointment problem, what SCOTUS says matters is not the power for the Director to remove an APJ (CAFC’s remedy), but the Director’s ability to review PTAB decisions. The Director’s power to remove an APJ would threaten a judge’s independence, but the Director’s ability to review a decision does not. So SCOTUS goes with that. Their intent? To somehow demote APJs as inferior officers to solve the problem of them being unconstitutionally appointed. Yes. The SCOTUS agrees with the CAFC that the APJs were unconstitutionally appointed.

    But what about the People’s voice? Well, the Senate need not approve the appointment here — Congress and the People have no say in the matter. So chalk up a win for the Executive Branch, flying directly in the face of the powers granted to CONGRESS by the Constitution — which is supposed to be the law of the land. Congress did NOT give the Director this new ability to review PTAB decisions. SCOTUS did. So, we have another Executive Branch win, and Congress and the People are yet again removed from the legislative process that the Constitution ONLY GAVE TO CONGRESS to create.

    The Constitution says “The Congress shall have power…to promote the Progress of Science and useful Arts”. Who has this power? Congress. The Constitution does NOT give this power to the Executive Branch nor the Judicial Branch.

    Does the clarification SCOTUS provided in Henry Schein stating that the judiciary cannot write law no longer matter in SCOTUS’ own judicial activism in Arthrex? What do the People do when SCOTUS ignores the Constitution and their own previous opinions?

    Results like this is what happens when the government creates, and desperately tries to preserve, a kangaroo court called the PTAB.

    It is yet another sad day for inventors and inventor rights, as the People’s voice was ignored here in these new powers granted to the USPTO Director by the judiciary.

  2. Pro Say June 21, 2021 7:58 pm

    Given the Director’s now unlimited overlord power and authority to overturn all PTAB trial decisions, the 100’s of patent owners who’ve been in “Arthrex limbo” should (while concurrently protecting their CAFC appeal right, of course) immediately file appeals of their decisions . . . directly with the Director.

    As should everyone else who is — or as a result of a forthcoming decision becomes — unhappy with their PTAB decision.

    That Arthrex light at the end of the tunnel?

    Turns out it’s actually a speeding train.

  3. Michael Cicero June 21, 2021 9:16 pm

    The majority opinion did a head-fake here. By ending its opening paragraph with the sentence “Billions of dollars can turn on a Board decision,” the Court instills a belief in the reader that its discussion would lead to a remedy that actually has some teeth. Alas, that did not happen. Billions of dollars will continue to turn on a Board decision, albeit with some yet-undisclosed (maybe illusory) level of review by the Director.

  4. Anonymous June 21, 2021 10:09 pm

    The Director should exercise his discretion and deny all IPR institutions until Congress can inform the judiciary of its intent, not the other way around. That’s the way to truly be accountable to the people. Congress – accountable to the people – must determine patent policy, not SCOTUS.

    Sen. Tillis is correct that there is a need for “a fair, equitable, and impartial forum for all inventors, especially small and medium enterprises and independent inventors.”

    That forum is an Article III court, with a jury. Exercising a constitutional right to invent ought not require waiver of a constitutional right to trial by jury.

  5. JPTOS-EIC June 21, 2021 11:03 pm

    I would like to solicit from all of the above commentators and readers of this post – including additional leading practitioners, law professors, judges, law students, IP professionals and more – articles about their takes on Arthrex in an upcoming issue of the Journal of the Patent & Trademark Office Society to be entitled “The Arthrex Issue.” You may directly submit to editor@jptos.org or on Scholastica at http://jptos.scholasticahq.com – questions can also be sent to the above email as well.

  6. Patent Investor June 22, 2021 12:00 am

    Finding: The patent holder was the victim of an unconstitutionally appointed panel.

    Remedy: Uphold the Directors “right” to review.

    Simply unbelievable, except that it is totally believable.

    Michael Cicero, I think Roberts is talking about all the dollars we never see when judicial “decisions” go against logical conclusion (like Arthrex, for example).

  7. Night Writer June 22, 2021 6:19 am

    I predicted this exact result including the change to section 6(c) here in the comments.

    I think it kind of stinks what the Scotus did because had they said that it was unconstitutional then the Congress would have been forced to amend the process and one possibility (the most obvious one) would have been the escape to DC that is already in 145 for other appeals.

    Or another option would have been to create an appeals board above the PTAB appointed by the director.

    I agree with Thomas and B above that the best remedy would have been this:
    “[T]he ‘appropriate’ remedy for an adjudication tainted with an appointments violation is a new ‘hearing before a properly appointed’ official.” Thomas, J. dissent slip op. at p. 16.

  8. AAA JJ June 22, 2021 9:58 am

    Where’s the uproar about “legislating from the bench” from the usual crew?

  9. Anon June 22, 2021 11:55 am

    AAA JJ,

    Maybe pay attention, eh?

  10. TFCFM June 22, 2021 12:29 pm

    It seems to me that the decision was 8-1 that APJ’s either

    a) should be (plurality opinion)

    or

    b) are (Breyer and Thomas dissents)

    “inferior officers,” and that creation of a theoretical ‘paper right’ for the PTO Director to review APJ findings is the least-offensive way of papering over whatever theoretical difference might exist between views “a” and “b”.

  11. B June 22, 2021 12:48 pm

    @ Night Writer “I agree with Thomas and B above that the best remedy . . . ”

    Thank you Night.

    Personally, I thought that your previous comments — summed up by Mr. Doerre’s statement that “Taking down the entire post-grant trial regime was never really on the table, and creating hundreds of new advice-and-consent positions would have been a huge ask” was the big truth behind the SCOTUS decision.

    I also predict that Director review will be illusory.

    That said, Judge Moore’s decision was perfectly consistent with Edmond v. United States, 520 U. S. 651 (1997). The Supreme Court moved the goal posts.

  12. B June 22, 2021 12:54 pm

    @ AAA JJ “Where’s the uproar about “legislating from the bench” from the usual crew?”

    I have no problem of the Supreme Court striking down an unconstitutional statutory provision. Others can disagree with my position, but striking down unconstitutional law has been part of the SCOTUS job description since Marbury v. Madison.

    Alice-Mayo there were no constitutional issues to justify that POS fantasy

  13. Night Writer June 22, 2021 1:26 pm

    @ B The main advantage of just holding it unconstitutional would have been that Congress would have had to do something immediately and my guess is that it would have added rights to the patentee. Maybe they would have used it to make the patentee’s situation worse.

    @10 TFCFM Not really. They were held not to be inferior officers under the current statute and then a remedy had to be found.

    I think what people don’t get is that CJ Roberts wants to keep patent cases as much as possible out of the DCs.

  14. Anon June 22, 2021 1:50 pm

    There is a world of legal difference between the notions of “should be” and “are” – as any attorney should readily grasp.

    The Dissent view ALSO yields a different remedy – and that is no small matter in and of itself.

  15. Anon June 22, 2021 1:57 pm

    B,

    I do NOT have a problem with the Court striking down.

    I DO have a problem with what happens AFTER the striking down.

    As I have noted, one does not cure a Constitutional defect issue be creating a separate Constitutional defect issue.

  16. AAA JJ June 22, 2021 4:45 pm

    “I have no problem of the Supreme Court striking down an unconstitutional statutory provision.”

    Is that what they did? Or did they rewrite section 6(c)? Somebody who posts here frequently likes to remind all of us that it is Congress that is supposed to write the law.

  17. B June 22, 2021 5:55 pm

    @ Anon “I do NOT have a problem with the Court striking down. . . . ”

    I never said you did, and I never believed you did. If I inadvertently suggested anything to the contrary, I apologize.

    You’re confusing me with AAA JJ.

  18. Anon June 22, 2021 6:12 pm

    B,

    LOL – apologies for any confusion, as my post was not meant to incriminate you, and was meant to offer a contrast — to that very same AAA JJ.

    It seems (without him actually making a stand), that he thinks that violating the Separation of Powers is an “A OK” thing.

    Or perhaps it is only with these Ends (and he might flip his gourd if other Ends, like Conservative Political Right Ends) are rewritten by the Supremes…

    What are the chances that he would not be so blasé if that were to happen?

  19. bart June 24, 2021 11:32 am

    @Jonathan Stroud:
    You said one thing that stands out is just how extreme Justice Gorsuch has so quickly become in his views on patents. Care to elaborate what is so “extreme” about his views? Has he presented anything fictional? Just curious if you can back up your position with facts.

  20. Anon June 24, 2021 1:41 pm

    bart,

    It may be “extreme” to not join in with the rest of the town in admiring the Emperor’s splendid new clothes (as he parades by buck naked).

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