Constitutionality of Administrative Patent Judges

The Federal Circuit has issued two recent Arthrex-related orders of note.

In Arthrex, the Federal Circuit held that the appointment process for PTAB judges (Administrative Patent Judges) violates the Appointments Clause of Article II of the U.S. Constitution.  According to the court, these Judges are “principal officers” and thus must be appointed by the President of the United States (rather than merely the head of the Commerce Dep’t).  I explained in a prior post that the court also “issued a cy-près ruling in an attempt to limit the upset” caused by invalidating the appointments of all these judges.  “In particular, the court invalidated a portion of the statute that limited the PTO’s ability to remove APJs from the board. According to the court, that change was enough to reclassify the PTAB Judges as inferior officers that do not need presidential appointment.”  That decision is now up for en banc rehearing — with three separate petitions filed.

Principal Officers: Three En Banc Petitions in Arthrex v. Smith & Nephew

Impact on Ex Parte Examination: In the pending case of In re: Boloro Global Limited, Appeal No. 19-2349 (Fed. Cir. 2020), the Federal Circuit has ordered the USPTO to explain the impact of Arthrex on ex parte patent examination cases:

Within 14 days from the date of filing of this order, the Director [of the USPTO] is directed to submit a supplemental response, not to exceed 20 pages, addressing whether Arthrex should be extended to ex parte examination cases. Boloro’s reply to that supplemental response, which is not to exceed 10 pages, is due within seven days thereafter.

Order of February 5, 2020.

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Polaris Innovations Ltd. v. Kingston Tech. Co., Inc., 2018-1831, 2020 WL 504974 (Fed. Cir. Jan. 31, 2020) is parallel to Arthrex and the Federal Circuit vacated the PTAB IPR decision and “remanded to the Board for proceedings consistent with this court’s decision in Arthrex.”  The interesting aspect of the decision the concurring opinion by Judge Hughes and joined by Judge Wallach.  The pair concluded that they were bound by the prior panel decision in Arthrex, but “disagree with the merits” of the holding.  The opinion explains (1) PTAB judges should be seen as inferior officers and (2) if principal officers, the Arthrex panel’s solution is highly questionable.

I believe that viewed in light of the Director’s significant control over the activities of the [PTAB] and Administrative Patent Judges, APJs are inferior officers already properly appointed by the Secretary of Commerce. But if APJs are properly considered principal officers, I have grave doubts about the remedy Arthrex applied to fix their unconstitutional appointment. In the face of an unconstitutional statute, our role is to determine whether severance of the unconstitutional portion would be consistent with Congress’s intent. Given the federal employment protections APJs and their predecessors have enjoyed for more than three decades, I find no legislative intent to divest APJs of their Title 5 removal protections to cure any alleged constitutional defect. … But, given the high standard for finding non-severability, I cannot say that the Arthrex panel’s remedy was improper.


8 thoughts on “Constitutionality of Administrative Patent Judges

  1. 4

    Emphasis need be on:

    “In particular, the court invalidated a portion of the statute that limited the PTO’s ability to remove APJs from the board. According to the court, that change was enough to reclassify the PTAB Judges as inferior officers that do not need presidential appointment.”

    The argument here is that THIS action by the judicial branch is ultra vires Because it is the judicial branch rewriting actual law. That the judicial branch — deciding on its own — that this rewrite would be what Congress “really wanted” is part of the problem.

    Our judicial branch has learned the wrong lessons from the Supreme Court — a Court that has fashioned itself to be above the Constitution.

    It still amazes me that attorneys from most all states** do not understand their oath of office and duty to speak out against the denigration of the Constitution, the propriety therein of Checks and Balances, and the action of having all three branches subservient to the Constitution.

    **of any who have engaged in this point, only the oath of office of the Commonwealth of Massachusetts has been provided that even remotely has an argument for a different duty under the attorney oath of office.

  2. 3

    “Impact on Ex Parte Examination”

    Of course Arthrex encompasses ex parte proceedings.

    That Arthrex concerned an IPR trial case as opposed to an ex parte appeal case is a difference without a distinction.

    The facts that matter are these:

    An APJ is an APJ; a principle officer is a principle officer; an inferior officer is an inferior officer; an APJ panel is an APJ panel; adjudication is adjudication; and the severing of federal employee protections in 35 U.S.C. 3(c) is the severing of federal employee protections in 35 U.S.C. 3(c); all whether the APJs are presiding over a trial or over an ex parte appeal.

    Their status does not change with their function.

    No room for “trial APJs” separate from “ex parte APJs.”

    They all make critically important decisions concerning inventions; and in both cases their decisions are appealable to the CAFC.

    Due to no fault of their own, they were all unconstitutionally appointed.

    And there’s certainly no legal or other basis for APJs to be flip-flopped between principle officers and inferior officers depending on which type of case they’re rendering a decision on.

    Notably, the Court in Arthrex made no such trial / ex parte distinction.

    There are only two choices here: Either none of the APJs are / were principle officers, or they all are / were. Either all APJs were constitutionally appointed, or none of them were.

    Arthrex answered both questions.

  3. 2

    From the write-up:

    The interesting aspect of the decision the concurring opinion by Judge Hughes and joined by Judge Wallach. The pair concluded that they were bound by the prior panel decision in Arthrex, but “disagree with the merits” of the holding.

    Why now? Why here?

    The CAFC has by now shown a long disregard for being bound by prior panel decisions (contributing to the Gordian Knot of 101 juris(mis)prudence.

    Is it only Hughes and Wallach that feel this compunction? Do they only feel it here on this topic?

    This would make a nice academic project.

  4. 1

    Patlex in my view was saved sub silento because of 35 USC 145 – the unconditional right to de novo trial after the board’s ex parte reexamination decision. There one could say that the PTO stood in no greater position than any other patent challenger as to the facts and expert credibility etc. The Constitutional escape valve afforded by de novo trial in no longer available under PTAB and the AIA. So to me – that’s strike one against PTAB. Indeed under the original published decision a ‘substantial new question’ could not be raised on the same already litigates (Art III) grounds. Hence some measure of comity. And certainly the full due process of de novo trial.

    Strike two is comity. Take the classic case of Tax Court. That’s the oldest admin court, real ALJs – appointment for 6 year period, protections against removal, etc, etc. The most judge like of admin judges. The tax court, another dual jurisdiction court, along with the Art III courts (apparently you can chose tax court or an art III court for your tax case), gives very wide berth to the art III courts. Indeed, thru the doctrine of Administrative estoppel as applied by tax court an Art III court decision will be given conclusive effect even across tax years. Each tax year is a new claim and tax court does not give even itself that type of comity. Now contrast that with PTAB – downright hostile to marksman orders or any other conclusive fact or legal determination by the Art III courts. For example, A, B and C references litigated to a finality by an Art III court under 103. You can’t import that judgment on the same exact issue into PTAB (but maybe now you can since pto is now using the Art III court standard of claim construction?). Anyhow ironic that an inferior court to tax court (inferior as to the judge like nature of the ‘judges’) – TPAB is hostile to the Art III court determinations and has really no comity at all. Strike two – in my book.

    Just goes to show how wrongly decided Oil States was in declaring a patent right – under the public rights doctrine (all bets are off as to due process, requirement of Art III jurisdiction, etc). If you want patent reform, have congress flip Oil States.

    1. 1.1

      There’s another factor missing in your write-up:

      The presence and level of the statutory presumption of validity (one of the sticks in the bundle of property rights of a granted patent) that suffers an executive branch Taking AT the institution decision point, prior to the PTAB adjudication on the merits.

      Ask i4i how valuable that particular stick is.

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