Posts Tagged: "Arthrex v. Smith and Nephew"

On December 2, eComp Consultants (eComp) filed an amicus brief urging the U.S. Supreme Court to find Administrative Patent Judges (APJs) of the Patent Trial and Appeal Board (PTAB) in U.S. v. Arthrex, Inc., Nos. 19-1434/-1452/-1458. In its brief, eComp argues that the U.S. Supreme Court should reverse the decision of the Federal Circuit and confirm that APJs of the PTAB are merely inferior officers of the United States who were, therefore, constitutionally appointed. eComp’s Amicus Brief clarifies the errors in the Federal Circuit’s decision. 

Last week, an order list issued by the U.S. Supreme Court indicated that the nation’s highest court had granted a pair of petitions for writ of certiorari which were then consolidated into Davis v. Saul. The petition in Davis asks the Supreme Court to determine whether claimants seeking disability benefits or supplemental security income under the Social Security Act (SSA) must exhaust their Appointments Clause challenges with the administrative law judge (ALJ) at the agency in order to obtain judicial review of that challenge in federal court. Given the Appointments Clause challenge to the Patent Trial and Appeal Board (PTAB) proceedings at issue in Arthrex v. Smith & Nephew, many patent practitioners are interested in the Supreme Court’s ultimate decision on whether such challenges can be brought up for the first time on appeal from agency proceedings when parties first claim that constitutional challenge while seeking judicial review in federal courts.

The United States Supreme Court has granted certiorari in three cases involving Arthrex, Inc. focusing on the question of whether the administrative patent judges (APJs) of the Patent Trial and Appeal Board (PTAB) were constitutionally appointed. The Court has consolidated the cases and limited the questions to question one and two in the United States government’s memorandum of July 22 in both Smith & Nephew, Inc., et. al. v. Arthrex, Inc. et. al. and Arthrex, Inc. v. Smith & Nephew, Inc., et. al.

Activity surrounding the requests for the Supreme Court’s review of the holdings in Arthrex v. Smith & Nephew I and Arthrex v. Smith & Nephew II continues to increase. As outlined in “A Guide to Arthrex: Activity Heats Up in Petitions Pending with Supreme Court”, four petitions for writs of certiorari have been filed:  U.S. v Arthrex, No. 19-1434, Smith & Nephew v. Arthrex, No. 19-1452, Arthrex v. Smith & Nephew, No. 19-1458, and Arthrex v. Smith & Nephew, No. 19-1204.  Now, three more amicus briefs have been filed by US Inventor, TiVo and Comcast, and on July 27, an additional consolidated petition for certiorari filed by the U.S. Government and USPTO Director Andrei Iancu asked the Court to review 39 Federal Circuit rulings affected by Arthrex.

In Article 1, Section 8, Clause 8, of our Constitution, the founders were relatively specific. The founders give Congress power to secure “the exclusive Right” to “Authors and Inventors” in the “Writings and Discoveries”. Congress is given  specific direction on how to do it (i.e., “for Limited Times”), and why it should be done (i.e., “To promote the Progress of Science and useful Arts”). Unfortunately, the Leahy-Smith America Invents Act (AIA) of 2011 dramatically changed how the Executive branch implements the Constitutional prerogative.  The AIA transferred power constitutionally allocated to the judicial branch to the executive branch – specifically, to Administrative Patent Judges (APJs) in the USPTO. In the process of implementing the Patent Trial and Appeals Board (PTAB) on which the APJs sit, judicial independence, judicial ethics, rules of evidence, and other protections commonly afforded rights holders in disputes adjudicated by the federal judiciary were sacrificed in the name of expediency.

On July 29, Askeladden LLC filed an amicus brief in support of the U.S. Government’s combined petition for a writ of certiorari in U.S. v. Arthrex, Inc., No. 19-1434. In particular, Askeladden asks the Supreme Court to accept the petition and address the threshold question raised by the U.S. Government: whether, for purposes of the Appointments Clause, U.S. Const. art. II, § 2, Cl. 2, administrative patent judges (APJs) of the Patent Trial and Appeals Board (PTAB) of the U.S. Patent and Trademark Office (USPTO) are “principal officers” who must be appointed by the President with the Senate’s advice and consent, or “inferior officers” whose appointment Congress has permissibly vested in a department head.

On July 7, the U. S. Court of Appeals for the Federal Circuit (CAFC), in In re: Boloro Global Limited, granted a motion by Boloro Global Limited (Boloro) to vacate and remand the decisions of the Patent Trial and Appeal Board (the Board) in three ex parte appeals that affirmed an examiner’s rejection of claims of Boloro’s patent applications. Each of Boloro’s U.S. Patent Applications Nos. 14/222,613, 14/222,615, and 14/222,616 were rejected by the patent examiner as being unpatentable under 35 U.S.C. § 101. On appeal, the Board affirmed the examiner’s rejections and denied rehearing. In August 2019, Boloro appealed the decisions to the CAFC. Subsequently, in October 2019, the CAFC issued a decision in Arthrex, Inc. v. Smith & Nephew, Inc., which was an appeal from an inter partes review, holding that administrative patent judges (APJs) were not constitutionally appointed.  In January 2020, Boloro filed a motion to vacate the Board’s decisions and remand for further proceedings consistent with the CAFC’s decision in Arthrex.

Recently, the U.S. Court of Appeals for the Federal Circuit has issued several rulings defining some of the contours of the impact of its decision last year in Arthrex v. Smith & Nephew, in which the Federal Circuit found that administrative patent judges (APJs) at the Patent Trial and Appeal Board (PTAB) had been unconstitutionally appointed because they were principal officers under the Appointments Clause. The Federal Circuit’s recent decisions show several limits to the impact of Arthrex, which has spurred a large number of PTAB appeals since the Federal Circuit denied a motion to stay issuance of the Arthrex mandate this March, requiring the PTAB to conduct remanded proceedings under the case.

On April 6, Arthrex, Inc. filed a petition for certiorari in the U.S. Supreme Court on two discrete patent issues. Notably, one of the issues raised in Arthrex’s April 6 petition is likely to prove especially compelling to the Supreme Court, and may well tilt the balance for it being granted, as it provides an inroad to a constitutional Appointments Clause issue that is central to several other petitions by various parties on the same issue. Arthrex is widely anticipated to file another petition for certiorari on this issue stemming from the Court of Appeals for the Federal Circuit’s recent denial of a rehearing en banc in Arthrex v. Smith & Nephew wherein the main issue had been the Federal Circuit’s ruling that Patent Trial and Appeal Board (PTAB) judges were indeed unconstitutionally appointed under the America Invents Act (AIA), but that the Federal Circuit’s field expedient blue penciling of the underlying statutes corrected any constitutional flaws nunc pro tunc.

Yesterday, the U.S. Court of Appeals for the Federal Circuit denied rehearing en banc in Arthrex v. Smith & Nephew. Five of the 12 Federal Circuit judges wrote separately to explain their reasons for denying, or dissenting from denial on, rehearing. IPWatchdog Founder and CEO Gene Quinn said the order reveals a chaotic and disorganized court. “This court has horribly failed the industry by refusing to agree on anything,” Quinn said. “For a court that claims to be so overworked that it must dispose of literally half of its docket with one-sentence Rule 36 summary affirmances, spending so much time and energy across 58 pages of completely meaningless analysis and disagreement goes beyond unconscionable.”

The U.S. Court of Appeals for the Federal Circuit has denied rehearing en banc in Arthrex v. Smith & Nephew, a decision that made the Patent Trial and Appeal Board’s (PTAB’s) administrative patent judges (APJs) “inferior officers” under the U.S. Appointments Clause, in order to skirt the problem that they had been unconstitutionally appointed under the America Invents Act. Five of the 12 Federal Circuit judges wrote separately to explain their reasons for denying, or dissenting from denial on, rehearing. Judge Moore wrote to concur with the denial, and Judges O’Malley, Reyna and Chen joined, saying that granting rehearing “would only create unnecessary uncertainty and disruption.” Moore added that the Arthrex panel followed Supreme Court precedent in concluding that APJs were improperly appointed principal officers, and also followed precedent in its solution which severed a portion of the statute “to solve that constitutional problem while preserving the remainder of the statute and minimizing disruption to the inter partes review system Congress created.”

In 2019, the issue of preservation of constitutional arguments before the USPTO, which had basically been dormant for a decade, was abruptly and dramatically revived. Now the subject of whether constitutional arguments generally ought to be preserved before the agency is settled, at least for the time being. Constitutional arguments should ordinarily be preserved before the agency; otherwise those constitutional arguments might be summarily deemed forfeited on appeal.

On December 16, the U.S. Government, Arthrex, Inc., and Smith & Nephew, Inc. each submitted petitions for rehearing and/or rehearing en banc asking the full Federal Circuit to reconsider its October 31 ruling in Arthrex v. Smith & Nephew, Inc, which made Patent Trial and Appeal Board  (PTAB) judges “inferior officers” under the U.S. Appointments Clause, in order to skirt the problem that they had been unconstitutionally appointed under the America Invents Act. Many have criticized the quick-fix approach. The case stems from Arthrex, Inc.’s appeal from the final written decision of the PTAB holding certain claims of its U.S. Patent No. 9,179,907 unpatentable as anticipated. On appeal, Arthrex argued that the appointment of the PTAB’s Administrative Patent Judges (APJs) by the Secretary of Commerce violated the Appointments Clause of the U.S. Constitution. The Court somewhat surprisingly agreed and remedied the problem by simply “severing any ‘problematic portions while leaving the remainder intact,’” as outlined in Free Enterprise Fund v. Public Company Accounting Oversight Board and Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board.

On November 13, the United States Patent and Trademark Office (USPTO) requested the U.S. Court of Appeals for the Federal Circuit suspend all consideration of an appeal from the Patent Trial and Appeal Board (PTAB) that would raise the same issues addressed in Arthrex, Inc. v. Smith and Nephew, Inc., because the Office will seek rehearing en banc in Arthrex. See Stuben Foods, Inc. v. Nestle USA, Inc., No. 20-1082, -1083. As a reminder, on October 31, the Federal Circuit issued an important constitutional decision in Arthrex, which found that the hiring of Administrative Patent Judges (APJs) violated the Appointments Clause of the U.S. Constitution. The Federal Circuit did, however, attempt to provide a gift to the Office by rewriting the section of the statute they found to create the problem, which created the PTAB and the appointment of APJs, and by so doing turned APJs into inferior officers. The solution: APJs were judicially decreed to be employees-at-will in order to save the statute. So, why hasn’t Director Iancu cleaned house at the PTAB? It would seem to be because the USPTO believes Arthrex was wrongly decided.  

Since inventors are rarely allowed to participate in patent discussions in Congress, I would like to submit my testimony here. In Arthrex, the Federal Circuit in effect decided that our rights are subordinate to the government, so the government has the authority to giveth them to us or taketh them away. I would like to remind the Federal Circuit, the Supreme Court, and Congress that you are tasked with the honor, privilege and duty to defend our rights. That is the very basis on which you are employed, and you have no function other than that. Our rights preexist you, supersede you, and come from sources that are above your pay grade. They exist as a matter of our birth. You have no legitimate authority to take those rights just because it is inconvenient for the huge multinational corporations that have to now deal with the illegitimate position of owning our rights because so-called judges unconstitutionally took them from us and gave them to those huge corporations.