Federal Circuit Declares Structure of Patent Board Unconstitutional

Arthrex Inc., a medical device company, requested inter partes review of its patent for a knotless suture by the Patent Trial and Appeals Board. As many anticipated, the Board found several claims in Arthrex's patent invalid. Arthrex appealed the Board's decision, arguing that the way the APJs are appointed violates the Appointments Clause. The Federal Circuit agreed and provided a fix that could resolve the problem without upending the entire patent appeals system.

The Court's Analysis

Under the current rules, the Board's Administrative Patent Judges (APJs) are appointed by the Secretary of Commerce. However, the Appointments Clause requires "principal officers" to be appointed by the President. First, the Federal Circuit reasoned that APJs are certainly officers (as opposed to employees) because they "exercise significant authority." Then, came the question of whether APJs are inferior officers, and therefore their appointment valid under the Constitution, or principal officers, which would present a constitutional problem.

Employing the three-part test from Edmond v. United States, the panel found that because no other official has the power to single-handedly review the decisions of APJs and they are subject to relatively little oversight, they are principal officers. Therefore, their appointment by the Secretary of Commerce runs contrary to the Appointments Clause.

Limiting the Solution to the Problem

Following Supreme Court guidance, the Federal Circuit concluded that the best way to resolve the constitutional issue was to sever the portion of the Patent Act that restricts the removal of APJs. Removing this provision, the court held, would make APJs "inferior officers," and allow the rest of the Board's structure to remain intact. The court made sure to note that the decision was limited to cases where:

• The board had issued a final written decision, and
• The litigants appealed the constitutionality of APJ appointments

This will hopefully assuage concerns of those who say a broader decision would have opened the floodgates for hundreds of patent applicants looking for a "do-over."

Related Resources:

• Court Rules SEC's ALJ Appointment Process Unconstitutional (FindLaw's Supreme Court)
• Federal Circuit Tunes In to Patent Infringement Suit Involving Sirius XM (FindLaw's Federal Circuit)
• Tribal Sovereignty Can't Protect Patents from Inter Partes Review (FindLaw's Supreme Court)