by Dennis Crouch
We have a more complete post coming on Monday, but wanted to highlight Arthrex v. Smith & Nephew (Fed. Cir. 2019). In Arthrex, the Federal Circuit held that the PTAB Judge (APJ) appointments process “violates the Appointments Clause, U.S. Const., art. II, § 2, cl. 2.” In particular, the court held that APJs are “principal officers” and thus require appointment by the President rather than merely the Secretary of Commerce. The court cited and relied upon Prof. John Duffy’s paper that started this whole process: John F. Duffy, Are Administrative Patent Judges Constitutional?, 2007 Patently–O Patent L.J. 21, 25 (2007) (concluding that administrative patent judges are officers as opposed to mere employees).
In the case, the court also provided a remedy — invalidating a portion of the statute that limited the PTO’s ability to remove APJs from the board. By making removal easier, the PTAB Judges are then re-classified as inferior officers — and thus were properly appointed.
This ruling is incorrect and should be overturned.
The patent examiners issue and sometimes deny patent claims are not constitutionally appointed. This is just an extension of the patent issuing process. All of the PTAB rulings, and examiner decisions, can be reviewed by a Federal Court which is constitutionally appointed. The PTAB and the the PTO are not the final word in these decisions, the Federal Courts are.
Incidentally, folks are only paying attention to the implications of this case for IPRs, but the relevance extends further. Nothing about the infirmity here was unique to the IPR/PGR system. The whole BPAI has been out of order since 1975. Anything that the BPAI’s successor (the PTAB) has touched in the years since is similarly tainted, according to this decision.
In other words, if you lost an ex parte appeal and want to pay to go up to the CAFC, you should be able to get your PTAB appeal thrown out and re-assigned to a new PTAB panel. Same for an adverse interference/derivation outcome. As long as your time to notice an appeal has not run, you can purchase a do-over if you like.
Under our Constitution, the CAFC doesn’t have the legal authority to crystal ball mind-read what they believe Congress would want.
The PTAB death squad must fall.
Mr. Director: You know what you must do.
All PTAB trials must be cancelled. No new ones must be instituted.
The reign of terror on American innovation by the PTAB must end.
Your view appears to replace one tyrant (the Judiciary with its Emperor’s New Clothes) for another (the Executive not implementing what the Legislature has set forth).
No thank you.
Let’s get this right — with the right Means.
Pardon Potential rePost…
Another point on the topic of the decision (its impact) from the other thread (in reply to LR):
Interestingly, the fix of changing factor 3 is applied only going forward (kicking the immediate case back for a rehearing under a new panel).
This can mean that ALL PTAB decisions prior to this October 31 decision and still within the window of appealing the PTAB decision are impacted.
A few dozen? Perhaps, I do not know what the pipeline looks like in regards to how far back one may go for PTAB decisions that still could be appealed.
Perhaps a different question could be: is it malpractice to NOT file an appeal wherever possible** on PTAB decisions pre-October 31?
** wherever possible means by BOTH sides (whichever side was a loser below), back to the date at which time the ability to file an appeal has lapsed.
Mind you, ALL PTAB decisions (not just the ones that the patentee lost) may be affected since the loss in every case can cite to Arthrex for a second bite with a new panel.
A comment in reply to Night Writer on the other thread is repeated here:
It is interesting that the court here entertained other options and explained why those other options were less palatable.
Notwithstanding the explanations, I am not buying their bottom line of “we have not rewritten structural law” though.
If indeed the change is “minimal” to obtain effect, it is still a change that must be seen for what it is. The court projecting that Congress would have so chosen is still a projection of Congressional action. The court – not Congress – has rewritten the law here.
It’s worth noting in contrast to the Duffy paper, Congress there reinstituted appointment by the Secretary of Commerce (as a correction).
Compliments of mike over at IPWatchdog (in regards to Amendment No. 11 offered by Congressman Watt as designee of Congresswoman Waters):
link to congress.gov
Bottom line: the AIA has severability.
…the manner in which the amendment was withdrawn cannot be said to be Congress rejecting the amendment.
Wouldn’t the proper remedy be to severe and nullify Chapters 31 and 32 (IPR and PGR)? First to file, pro bono, etc. would remain good law.
I didn’t go to law school but have read books and stuff that say only Congress can change the law, not the courts. Surely not inferior courts.
And it would allow Congress to deal with the nightmare of unintended consequences of the PTAB so inventors can again participate. Why not take the opportunity to go back to the drawing board?
Basically, the more law you read the more you learn that judges don’t really apply the law but make it up as they go along. Your suggestion may be correct, but Moore would never do that as it would be too radical. She would take too much flak for it.
Josh,
In a word, no, that would not be a proper remedy.
The court actually discusses a number of options in its opinion, and tries for the least intrusive one.
As I note elsewhere though, even this “least intrusive” still suffers from the court actually making a substantive change in law (and statutory patent law at that).
Further, there ARE areas of law that lend themselves to varying degrees of judge-made law (known generally as Common Law).
Most often, Common Law is a gap filler for interpretations in which the underlying law is either muddled or missing an element. Sometimes, Common Law is an actual re-write. This latter aspect is known by the denigration of “legislating from the bench” (while both items are actually “legislating from the bench,” it is only the second aspect that earns scorn as being improper and having the Judicial Branch over-reach its proper role when it wants a certain Ends that Congress has the power/authority/responsibility to dictate.
Wouldn’t the proper remedy be to severe and nullify Chapters 31 and 32 (IPR and PGR)?
Why? It is not Chapters 31 & 32 of the AIA that created the problem. The problem—according to the Arthrex opinion (slip op. at 20)—was created back in 1975 when 35 U.S.C. § 3 was amended to do away with presidential appointment. No one had noticed this constitutional infirmity until the AIA raised the PTAB’s profile, but the infirmity had been there all along since 1975. Merely doing away with AIA Chapters 31 & 32 would not actually fix the problem.
Still and all, if you think that the remedy that the CAFC fashioned here seems somewhat off-kilter, I am inclined to agree with you. I am with Night Writer in supposing that this case will see further levels of appellate review. I would be surprised if those further levels leave the remedy applied by this panel in place.
No one?
Did you not see the Duffy article (and the subsequent change by Congress to put nominations back to including the Secretary of Commerce?
An interesting note in the walk through the comments of yesterday:
“It shouldn’t matter, of course, that i have personal knowledge of which I speak. I suggest at the next PTAB dog and pony show you ask the Chief APJ whether APJs have Title 5 protections. He’ll know what the asker is asking, even if the asker does not.”
Says our shifting historical pseudonym’ed friend at link to patentlyo.com
So we know that Shifty is not an attorney.
We had previously surmised that he was an examiner.
But now seeing “personal knowledge” in the PTAB arena AND not being an attorney, perhaps Shifty is simply an aide to a PTAB judge….
Would explain a lot.
Good grief, what a Constitutional hot mess CAFC and SCOTUS are making in bending over backwards to preserve that privy court AKA, the PTAB.
Back in the good old days – 30 years ago?- the test for the Constitutionality of an Administrative court – would have begun with a look to the statute to see how “judge like” the office – such as 6 year appointments, non-removability, procedures of the body, review, etc., etc. and then a compare and contrast with long standing “courts” like Tax Court, Court of Federal claims, etc. So now we have CAFC “preserving” an admin court by making it’s Officer’s less “judge like”, i.e., making the Officers removable (reassignable) “at will” and then rationalizing that was what Congress “would want” in it’s creation of the Officers of PTAB. IMHO, that is just surmise and conjecture by CAFC. So now we have the APJ’s clearly under the “Unitary Executive” with any pretense of “judge like” functions or protections even further removed. In other words, the President himself can obviate a final judgment of an Art III court, because in the nature of the “right” granted by a US patent is a 7th Amendment right to invoke the judicial power of the Art III courts to vindicate that “right” and seek legal damages. In other words, a massive expansion of Executive powers and a complete surrender by the Judiciary of “finality” and rendering it’s “judgments” merely advisory. To be sure, yet another Constitutional anomaly created by Oil States. A patent system governed by the well heeled and politically connected. A favor factory where Caesar’s wife must be above suspicion.
You may note that THIS Executive Branch power expansion has been met with utter silence from the number one critic of the Chief of the Executive Branch (and his well worn theme of ‘grifters’).
There must be a lack of clear “this is bad for patentees” flavor to induce such silence.
Yep. Giving the ‘light bringer’ more power . . . good. Giving the next guy that same?? – Run for the hills! The sky is falling down!
Is not an inherent conclusion from Arthrex v. Smith & Nephew that when an APJ is working an IPR but then the next day is on an ex parte application or reexamination appeal, and then later back on another IPR, that he or she is bizarrely flipping between being a “superior officer” and an “inferior officer” under this decision?
Paul, doesn’t the holding demote the APJ to an ‘inferior officer’ so there is no flipping between the two.
Yes, by this decision, if it holds up, sua sponte removing civil service job protection from ALL APJs, even though the MAJORITY of APJs work only on ex parte appeals and did not deserve this significant job deterioration.
BTW, the present system [before this case] for selecting new PTO APJs is quite rigorous. I have heard of several experienced patent attorneys who had applied, filled out extensive paperwork, or even made it to final interviews, but did not make the cut, apparently because they did not have sufficient prior PTAB appeals experience or direct litigation experience?
P.S. I doubt if all Fed. Cir. judges would know that, since I distinctly remember several years ago a Fed. Cir. decision implying that not all APJs were attorneys was quickly withdrawn and corrected.
Paul, what do you mean “sua sponte?” Wasn’t that the issue on appeal: – the violation of the Appointments Clause? To be sure, if you mean the CAFC holding – let’s just strike the protection portion (the non-removal “judge like”provisions) – to create a results oriented solution -> deem the APJ’s as “inferior officers” ergo all good under the appointments clause, then yeah . . . I agree Sua Sponte. My assumption being there is license to re-write statutory schemes under Robert’s Obama Care ruling. It’s dangerous, Unconstitutional, usurping and based on pure conjecture and surmise by the CAFC. See my comment above and respond, if you can.
Asked on the other thread, but repeated here (as you voice concern for “significant job deterioration” here as well):
PFM: ““will the APJs themselves be able to sue to maintain their civil service job protection the Fed. Cir. has sua sponte removed here?””
Under what legal theory do you see the APJs so filing suit? Against whom?
Paul,
How is the ex parte or reexamination work indicative of being a “superior officer?”
Not sure that I agree with the premise of the question, Paul. As I read the opinion, all APJs—both those hearing IPRs and those hearing prosecution appeals—were previously superior officers (improperly) and now all of them are (properly) inferior officers. There is no implication of flipping back and forth, either before or after the AIA’s advent.
Paul @ 9 (or anyone): So are you saying that APJs work both on IPRs and ex parte apps; that they don’t just handle IPRs (and CBMs and PGRs)?
If not — or if some of the APJs do both but others don’t — this court ruling can’t mean that different APJs are/were superior while others are/were inferior — can it?
Is there a way to identify those APJs who have been on ex parte panels and IPR / CBM / PGR panels?
Does — could this ruling only apply to APJs who’ve NOT ever been panelists on ex parte panels?
Ex parte folks have the same right — under the same case timing the CAFC has here laid out — to obtain a new panel, don’t they?
This whole situation is one big constitutional mess.
A mess Congress needs to fix immediately.
Ideally by eliminating the unconstitutional PTAB entirely.
CustoMedia and UniLoc provide the first follow-on results from yesterday’s Arthrex decision.
Seems like an odd result. Athrex says that all prior PTAB panels are unconstitutional so there must be a remand to have a constitutional panel decide the petition. Then CustoMedia says: you waived the constitutional challenge by failing to raise it in opening brief (which was several months before Arthrex stated that the prior IPR panels are unconstitutional). On top of that, Arthrex cites to the Glidden opinion where SCOTUS addressed an appointments constitutional challenge that was raised for the first time in supplement SCOTUS briefing.
Credit here to Mike with some good points (repeated by yours truly).
Sorry though Mike, your post was held up in the processing and never made it into the comments until well after the interest in conversation moved on.
Looks like waiver will be the next hot topic.
NPtC,
How do you see waiver being at issue?
Are you suggesting that the court’s view of waiver is not correct? It does seem odd to say that a Constitutional right (to have proper application of the Appointments Clause) be subject to a timing requirement, but is it that odd? As I re-read the court’s discussion (particularly at pages 4-5), words like “structural,” “fundamental,” and “exceptionally important” stick out.
The discussion in the case seems to focus on waiver merely between bringing up the point below at the board versus first at appeal level (quite different from the follow-on case of Customedia – see link provided by Greg above).
However, the court in Customedia relies Anthrex at slip op page 29 (through Freytag).
A quick review of Freytag seems to indicate the opposite treatment would have been appropriate in Customedia>:
This Court in the past, however, has exercised its discretion to consider nonjurisdictional claims that had not been raised below. See Grosso v. United States, 390 U. S. 62, 390 U. S. 71-72 (1968); Glidden Co. v. Zdanok, 370 U. S. 530, 370 U. S. 535-536 (1962); Hormel v. Helvering, 312 U. S. 552, 312 U. S. 556-560 (1941). Glidden expressly included Appointments Clause objections to judicial officers in the category of nonjurisdictional structural
Page 501 U. S. 879
constitutional objections that could be considered on appeal whether or not they were ruled upon below (emphasis added):
“And in Lamar v. United States, 241 U. S. 103, 241 U. S. 117-118, the claim that an intercircuit assignment . . . usurped the presidential appointing power under Art. II, § 2, was heard here and determined upon its merits, despite the fact that it had not been raised in the District Court or in the Court of Appeals or even in this Court until the filing of a supplemental brief upon a second request for review.” Glidden, 370 U.S. at 370 U. S. 536 (Harlan, J., announcing the judgment of the Court).
… I will note that the Customedia decision(s) are Per Curiam as well as note that they appear to follow an improper (at most “persuasive” line of reasoning NOT in accord with Glidden – the line appears to use a 6th and 10th Circuit (and at least the 10th Circuit announces its non-precedential nature) — Island Creak Coal and Turner Bros — that piggybacks off of Supreme Court dicta (from the concurrence of Scalia in Freytag).
A review of the docket sheet shows a motion for leave to file a supplemental brief was also filed before the order denying the motion to vacate/remand.
I think you are on to something at page 29 of Judge Moore’s opinion in Arthrex. Her opinion says:
“Appointments Clause chal- lenges are “nonjurisdictional structural constitutional ob- jections” that can be waived when not presented. Freytag, 501 U.S. at 878–79.”
But when you go to look at the cite she provided from Freytag, it says, as you have noted:
——————————————————————-
The Commissioner correctly notes that petitioners gave their consent to trial before the Special Trial Judge. This Court in the past, however, has exercised its discretion to consider nonjurisdictional claims that had not been raised below. See Grosso v. United States, 390 U. S. 62, 71-72 (1968); Glidden Co. v. Zdanok, 370 U. S. 530, 535-536 (1962); Hormel v. Helvering, 312 U. S. 552, 556-560 (1941). Glidden expressly included Appointments Clause objections to judicial officers in the category of nonjurisdictional structural 879*879 constitutional objections that could be considered on appeal whether or not they were ruled upon below:
“And in Lamar v. United States, 241 U. S. 103, 117-118, the claim that an intercircuit assignment . . . usurped the presidential appointing power under Art. II, § 2, was heard here and determined upon its merits, despite the fact that it had not been raised in the District Court or in the Court of Appeals or even in this Court until the filing of a supplemental brief upon a second request for review.” Glidden, 370 U. S., at 536 (Harlan, J., announcing the judgment of the Court).
———————————————————
That’s the best authority she can come up with for why waiver should be imposed on those cases where the constitutionality argument was not first raised in an appellant’s opening brief and that are still pending before the court?
Sorry, I was attributing too much specificity to Judge Moore’s waiver statement in Arthrex. All she said in Arthrex was that the constitutionality argument could be waived, if not presented. (Oddly, her best authority was from Freytag, where multiple cases chose not to apply waiver).
The panel in Customedia is on pretty weak ground with its PRECEDENTIAL, one-paragraph analysis that relies on 6th and 10th Circuit cases and doesn’t address the leniency that the Supreme Court in Freytag encouraged (see above).
Questions of waiver are so thoroughly entrusted to the discretion of the reviewing court that I doubt that there will be much use in contesting dismissals for waiver. That will mostly prove a case of throwing good money after bad.
I posted this on another thread, but it definitely should be here. I’m curious if anyone thinks having a political appointee involved in any way is a good thing?
It will be interesting to see how this plays out because now the PTAB judges will be subject to political pressure from a political appointee. I would expect to see lots of lobbying from big companies directed at the Sec of Commerce or at the President to appoint a Sec of Commerce that will be friendly to big corporate interests. It would only take firing one or two judges who make a politically unpopular decision to ensure that all of the others get the message. I guess an unbiased review is going the way of the dodo.
The Director of the PTO already serves at the pleasure of the president. It is this politically-accountable director who has been staffing the PTAB all along. If political actors want to distort the patent system, they could already do so—even before yesterday’s decision—and have been able to do so since the dawn of the republic. I am skeptical, then, that this decision about the PTAB is going to lead to any more lobbying or otherwise political shenanigans than one sees already.
Greg,
You miss the obvious alleviating factor that (prior to this decision), once appointed, the pressure was off.
As you yourself have noted, the new ramifications for the APJs are substantial.
DVan the PTAB can already be 3 political appointees see 35 USC 6 section (a):
(a) In General.—
There shall be in the Office a Patent Trial and Appeal Board. The Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative patent judges shall constitute the Patent Trial and Appeal Board. The administrative patent judges shall be persons of competent legal knowledge and scientific ability who are appointed by the Secretary, in consultation with the Director. Any reference in any Federal law, Executive order, rule, regulation, or delegation of authority, or any document of or pertaining to the Board of Patent Appeals and Interferences is deemed to refer to the Patent Trial and Appeal Board.
I noticed a comment of mine in rebuttal to Greg’s point here has not cleared the Count Filter, so let me repeat it (at least in essence):
link to patentlyo.com
It seems dubious to claim no big deal here (in the face of ‘political’ and yet claim high impact (on a personal level to the APJ) on the other thread.
Which is it?
Well DVan @ 7; should your concern prove accurate, thank goodness for American innovation that we’ve got the patent-supporting Iancu and leadership at the Patent Office helm … instead of Lee and her patent-hating henchmen.
LOL
So much “patent h@te”! To the tune of … a million granted patents?
You engage in a fallacy of comparing apples and oranges with a comparison of amount of patent grants with any discussion of the strength of those grants (or the ease of revocation after grant).
It is rather a strawman to turn and say “look at the enormous number of grants – there must not be any real problems with the system.”
Yes that is a strawman that you just created.
Good grief you are such a f-/—ng d-psh-t.
Your Accuse Others meme is noted.
anon —
Your memory is correct, insofar as a severability amendment was tentatively offered but never made it vary far. (offered by Rep. Sheila Jackson-Lee, and it was either withdrawn or failed in Rules Committee. I don’t remember the details).
You are incorrect that that has any meaning. Amendments that fail do not create the inference you suppose. It’s only changes to adopted language that create that kind of inference.
David
You are incorrect that that has any meaning.
This is, of course, quite correct. It seems strange that one should even need to explain as much to a putative lawyer.
Severability turns on whether “the statute will function in a manner consistent with the intent of Congress.” Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685 (1987) (emphasis omitted).
Note that the quote is not “consistent with the legislation as finally written.”
putative lawyer indeed.
I have found it enlightening to take a trip down memory lane with some of the provided hyperlinks.
Not only does such a trip provide the cogent (and full) position — that is, my position — that Greg’s case law cites here support, they also uncover gems like:
link to patentlyo.com
(and while David recants just a few comments below, note that the full legal question bears well on the position that I advanced (and far too quickly attempted to be dismissed)).
Also, in view of David’s recollections of there being such an animal as an amendment to include severability — something that I have NOT found — I would add a link to a prior post that indicates that such an amendment being dismissed in the process of the final words of Congress does NOT mean that such has no effect on the will of Congress:
link to patentlyo.com
Also an interesting find – back in the day when Greg still at least tried to keep an open mind – his characterizations of a Constitutional challenge and the severability position were extreme (and extremely wrong):
link to patentlyo.com
Dave,
Not seeing it at: link to rules.house.gov
Well, this case puts the last nail in the coffin of the (loopy from the outset) AIA Titanic theory. As the CAFC explains (slip op. at 25)
Well, what do you know? Alaska Airlines really does govern this analysis. Who (except anyone who even halfwise paid attention in con law) could ever have foreseen this outcome?
Who could ever have foreseen that this issue would be governed by Alaska Airlines?
“ Severability turns on whether “the statute will function in a manner consistent with the intent of Congress.” Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685 (1987) (emphasis omitted).”
For all of your mischaracterization of “loopy,” you kind of forget the pinnacle of my position was directly tied to the very point of law that you so kindly provide (that the will of Congress was made directly manifest with the refuting of an amendment FOR severability — and I did not continue that position when I could not find the record that I had thought was there).
So in a way, Greg, you actually vouch for that very thing that you want to call “loopy.”
Does the AIA say that if a portion is found unconstitional that all of it is invalidated?
Definitely not.
No, and it is rare statute that would have an UNseverability clause. Nor was an express severability clause in a statute ever an essential requirement for providing severability in an unconstitutional decision where severability is appropriate.
All true Paul – and yet post 2.1.1 (among others here today from yours truly) remains ALSO true.
Exactly. There is such a thing called a “severability clause” in the law of statutory construction. There is also such a thing called an “inseverability clause.”
Voting down a severability amendment ≠ passing an inseverability amendment.
“Voting down a severability amendment ≠ passing an inseverability amendment.”
Cite please.
A comment to Pro Say still hung up in a “George Carlin” filter, provides much more meat to those bones.
I had propositioned that an amendment directly providing FOR severability had been rejected.
I stopped setting forth that specific item when I could not find the defeated amendment in the AIA Congressional records.
HAD that amendment BEEN there (been found), Greg’s provision of case law would have verified the very thing that he wishes to characterize as “loopy.”
Of course, with his own personal selective filters, he will remain blissfully unaware that he is – in essence – supporting my view.
Good lord you are a piece of work.
Coming from you, Malcolm, that is high praise.
So, thank you.
Malcolm, how about these “pieces of work:”
link to patentlyo.com
link to patentlyo.com
At the end of the day as to the “glub glub glub” discussion, I may not have been correct – but such would not have been so for my being in LEGAL error. The legal proposition that I had put forth was not only cogent, but legally correct. On the other hand, YOUR views (and I just grabbed two recent ones) are entirely legally Incorrect, and are not based on anything cogent. They are ONLY based on the “Malcolm feels like” rule of law” (if even you can call it that just to make a comparison to the actual Rule of Law).
Good call Greg.
Without debating the decision on appointment, the remedy seems flawed. The Court removed 300 APJ’s employment rights clearly granted by 35 USC 3(c) just to correct an error in another statute. If they are going to re-write a statute why not the one that is flawed? Grant the Director the right to overrule a final decision.
It is one thing to excise a portion of the statute. It is quite another to insert a provision never enacted. I agree that the remedy seems flawed, but I do not see that the alternative that you are proposing is any less flawed. Honestly, I cannot think of a less flawed alternative than the one that the CAFC enacted, although I certainly agree that this situation seems flawed.
Is “excising a portion of a statute” (mind you, this “excising” is ONLY in regards tot certain individuals, and has NOT actually been excised from the pertinent law), really any different than a President’s line item veto when reworking a Congressional budget by striking through particular provisions that the President may not want funded?