August 31, 2021

In United States v. Arthrex, Inc., 141 S. Ct. 1970 (June 21, 2021), the Supreme Court split on whether the appointment of Administrative Patent Judges (“APJs”) by the Secretary of Commerce violates the Appointments Clause of the U.S. Constitution.  A majority of the Court concluded that Congress intended APJs to be appointed as inferior officers. Id. at 1979-80.  Turning to whether the manner in which they are appointed violates the Appointments Clause, the majority considered, among other things, the framework of PTAB trials (particularly IPRs), the avenues and procedures for review of final decisions, and whether the responsibilities and authority of APJs in PTAB trials aligns with their role as inferior officers. Id. at 1977-78, 1980-86.  The majority held that the current system violates the Appointments Clause because the nature of the APJs’ responsibilities, especially their authority to render a final decision on behalf of the United States without any review by their nominal superior or any other principal officer in the Executive Branch, is inconsistent with their status as inferior officers. Id.

The Court also divided on the appropriate remedy to cure the constitutional violation.  A majority declined Arthrex’s invitation to hold IPRs unconstitutional. Id. at 1986.  The majority instead determined that “the structure of the PTO and the governing constitutional principles chart a clear course: Decisions by APJs must be subject to review by the Director.” Id.  The majority examined 35 U.S.C. § 6(c) (which establishes that certain types of proceedings, including IPRs, be heard by 3-member panels of the PTAB and that only the PTAB can grant rehearing), and held that this section “is unenforceable as applied to the Director insofar as it prevents the Director from reviewing the decisions of the PTAB on his own. The Director may engage in such review and reach his own decision.” Id. at 1987.  The majority clarified that its decision does not address “the Director's supervision over other types of adjudications conducted by the PTAB, such as the examination process for which the Director has claimed unilateral authority to issue a patent.” Id.

Shortly after this decision issued, the PTO began to implement informal guidance on how the agency generally intends to proceed. See, for instance, the PTO’s webpage USPTO implementation of an interim Director review process following Arthrex.  The first two post-Arthrex reviews handled by the interim Director were denied.  See https://www.uspto.gov/subscription-center/2021/uspto-issues-first-director-review-decisions.