United States Supreme Court Decision in Arthrex Finds a Constitutional Remedy for the Structure of the Patent Trial and Appeal Board in Post Grant Patent Challenges

June 25, 2021

By: Lawrence P. Cogswell III, Ph.D. and Keith J. Wood

  • Decision addresses uncertainty about whether post-grant patent challenges are constitutional.
  • With this ruling, many expect that the USPTO will create a formal procedure by which parties can request a review of decisions in post-grant proceedings by the Director of the USPTO.

Earlier this week, the Supreme Court of the United States issued its long-anticipated ruling in Arthrex v. Smith & Nephew, holding that judges of the Patent Trial and Appeals Board (PTAB) are constitutionally appointed and validly issuing decisions in post-grant proceedings such as inter partes reviews (IPRs).

The dispute started after Arthrex sought to overturn a PTAB decision invalidating its patent, arguing that PTAB judges functioned as “principal”—rather than “inferior”—officers of the United States without having satisfied the Constitutional appointment requirements for such officers.  The Federal Circuit agreed that PTAB judges were principal officers, noting that Congress had prevented the Director of the United States Patent and Trademark Office (USPTO) from removing them at will or reviewing their decisions.  

To remedy prospectively the constitutional infirmity, the Federal Circuit stripped PTAB judges of job tenure to force them into the “inferior” officer category, rendering irrelevant the manner of their appointment.  The Federal Circuit then ordered a new hearing for Arthrex before a now constitutionally compliant, if less job secure, panel of PTAB judges.  The Federal Circuit decision, however, left in doubt the finality of hundreds of other IPRs decided by the PTAB.

The case was brought up to the Supreme Court, which, in its recent decision, took a different tack from the Federal Circuit. The Supreme Court retrospectively held unenforceable the portion of a statute purporting to block the Director of the USPTO from reviewing PTAB decisions.  By so doing, the Supreme Court could treat PTAB judges as having always been properly appointed inferior officers, and PTAB decisions as having always been rendered by validly appointed judges.  The only issue, according to the Supreme Court, is that the Director has not yet been given the opportunity to exercise review authority over PTAB decisions.  Arthrex’s case was therefore remanded to the Acting USPTO Director to decide whether to rehear its Petition.

The Supreme Court did not require a hearing before a new panel of judges of the PTAB, finding that the problem was the restraint on the review authority of the Director, not the manner in which the judges are appointed.  Nor did the Supreme Court find the PTAB, as a whole, unconstitutional.

As a result of the Arthrex decision, many expect that the USPTO will create a formal procedure by which parties can request a review of decisions in post-grant proceedings by the Director of the USPTO.

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June 25, 2021

By: Lawrence P. Cogswell III, Ph.D. and Keith J. Wood

  • Decision addresses uncertainty about whether post-grant patent challenges are constitutional.
  • With this ruling, many expect that the USPTO will create a formal procedure by which parties can request a review of decisions in post-grant proceedings by the Director of the USPTO.

Earlier this week, the Supreme Court of the United States issued its long-anticipated ruling in Arthrex v. Smith & Nephew, holding that judges of the Patent Trial and Appeals Board (PTAB) are constitutionally appointed and validly issuing decisions in post-grant proceedings such as inter partes reviews (IPRs).

The dispute started after Arthrex sought to overturn a PTAB decision invalidating its patent, arguing that PTAB judges functioned as “principal”—rather than “inferior”—officers of the United States without having satisfied the Constitutional appointment requirements for such officers.  The Federal Circuit agreed that PTAB judges were principal officers, noting that Congress had prevented the Director of the United States Patent and Trademark Office (USPTO) from removing them at will or reviewing their decisions.  

To remedy prospectively the constitutional infirmity, the Federal Circuit stripped PTAB judges of job tenure to force them into the “inferior” officer category, rendering irrelevant the manner of their appointment.  The Federal Circuit then ordered a new hearing for Arthrex before a now constitutionally compliant, if less job secure, panel of PTAB judges.  The Federal Circuit decision, however, left in doubt the finality of hundreds of other IPRs decided by the PTAB.

The case was brought up to the Supreme Court, which, in its recent decision, took a different tack from the Federal Circuit. The Supreme Court retrospectively held unenforceable the portion of a statute purporting to block the Director of the USPTO from reviewing PTAB decisions.  By so doing, the Supreme Court could treat PTAB judges as having always been properly appointed inferior officers, and PTAB decisions as having always been rendered by validly appointed judges.  The only issue, according to the Supreme Court, is that the Director has not yet been given the opportunity to exercise review authority over PTAB decisions.  Arthrex’s case was therefore remanded to the Acting USPTO Director to decide whether to rehear its Petition.

The Supreme Court did not require a hearing before a new panel of judges of the PTAB, finding that the problem was the restraint on the review authority of the Director, not the manner in which the judges are appointed.  Nor did the Supreme Court find the PTAB, as a whole, unconstitutional.

As a result of the Arthrex decision, many expect that the USPTO will create a formal procedure by which parties can request a review of decisions in post-grant proceedings by the Director of the USPTO.

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