Arthrex back at SCT: Does Director Review Require a Director?

by Dennis Crouch

Arthrex, Inc. v. Smith & Nephew (Supreme Court 2022)

The Supreme Court issued a major opinion in this case back in 2021, holding  that the IPR scheme was unconstitutional because it placed administrative patent judges in the role of entering final decisions that were unreviewable by any superior executive officer.  United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021).  The Court’s solution was to add a layer of review by the USPTO Director who has gone through the process of Presidential appointment and Senate confirmation. Id.  This is a process that we now call “director review.”  The point of this whole process created at our nation’s founding was an attempt to hold the President politically accountable for the actions of the administration.

Back on remand, the USPTO faced a slight problem. Director Iancu had resigned and President Biden had not yet nominated a successor or even an acting-director authorized by the Federal Vacancies Reform Act (“FVRA”).  Rather, then Commissioner for Patents Drew Hirshfeld stepped in to perform the duties of the USPTO Director but without any Presidential imprimatur.  As a reminder, the Commissioner is not nominated by the President nor confirmed by the Senate. Rather, the Commissioner is appointed by the Secretary of Commerce (just like the PTAB judges). Hirshfeld reviewed the PTAB’s Arthrex decision, and denied the petition for director review.

Now the case is headed back to the Supreme Court with Arthrex arguing that, just like the PTAB judges, Hirshfeld lacked authority to speak for the agency at this level.

Despite this Court’s instructions, Arthrex was not able to seek review by any presidentially appointed, Senate-confirmed principal officer. Nor was Arthrex able to seek review even by an Acting Director. The Director’s position was vacant, and the President had not appointed an Acting Director pursuant to the FVRA. Instead, Arthrex’s petition was denied by the Commissioner for Patents, an inferior officer appointed by the Secretary of Commerce, who purported to exercise the Director’s powers under an internal PTO organization plan. As a result, this case now presents a new important question of federal law: whether the Commissioner’s exercise of authority was consistent with the FVRA.

Arthrex motion for extension.  Arthrex has asked for a 60-day extension for filing its opining petition.  That petition has been granted and so the brief is due Jan 8, 2023.

Jeffrey Lamken (MoloLamken) is representing the patentee.

27 thoughts on “Arthrex back at SCT: Does Director Review Require a Director?

  1. 6

    ” The point of this whole process created at our nation’s founding was an attempt to hold the President politically accountable for the actions of the administration.”

    I don’t think it was created at the founding. Remember, they’d thrown off all feuds from land titles, creating allodial. At the time of founding, there was no PTAB which negated patent rights, such would be unthinkable at that time. It could never be sold to the people, where the gov would have an ability to strip rights from the people.

    What’s at consideration is the evolution of common law from swift v tyson, changed by Erie RR, and each of those involved the admiralty upon the land aspect. Title 5 USC didn’t exist at the founding, and the question might be, how much of 5 USC would the founders have tossed out the window ?

  2. 5

    Jeffrey Lamkin is having quite a day today. He won an appeal for Uniloc today in Uniloc v. Google. He convinced the SCOTUS to take cert. this morning in Amgen v. Sanofi. He is truly the seventh son of a seventh son. The patentee chose well in retaining his representation here.

  3. 4

    Of note,

    Reviewing the “Acting” part in relation to an obvious choice of an Executive Branch administrative agency NOT to comply with that law regarding transitions (and therein, ANY and all even temporary “performing the duties of“), the choice of the Biden administration must be contrasted with an earlier “temporary” transition that DID comply with that SAME law of the Federal Vacancies Reform Act:

    link to patentlyo.com

    And yes, this was the SAME Hirschfeld.

    As to this site NOT covering the decision supplied by Paul (see
    link to casetext.com ), one can easily surmise that the case was NOT covered because doing so would certainly brought up direct comments on the details of how badly that decision was ‘reasoned.’

  4. 3

    When Congress Congresses . . . Agencies gonna agency.

    Drew did the best he — anyone — could do under these circumstances.

  5. 2

    I don’t approve of the phrasing that Hirshfeld “stepped in” to this role. It sounds like he did so on his own violition.

    In reality, the Biden administration tacitly appointed him to the “performing the duties of” role as a way to circumvent the FVRA. At a minimum, we should not use language that glosses over their wrongdoing.

    1. 2.1

      In a prior thread, Prof. Crouch ‘touched’ upon your comment with a “Hirschfeld was nominated by ‘them’…”

      No answer was provided when I sought clarity as to just whom this ‘them’ was.

    2. 2.2

      I agree with Benjamin.

    3. 2.3

      Your assertion of “wrongdoing” here was expressly denied by the Fed. Cir. in their decision cited at 1.4 below, and that is the law unless the Sup. Ct. takes up that decision and reverses it.

      1. 2.3.1

        Acknowledging that I’m a non-lawyer and I haven’t actually read about this terribly thoroughly, I don’t think the opinion settles the validity of Hirshfeld’s status. I’m happy to update though if someone explains why I’m completely wrong.

        The CAFC says that Hirshfeld’s 268 day tenure as of him acting on this request was fine in view of a similar 309 day tenure in a 1898 case. They fall over themselves to say that the 1898 case is aligned with the FVRA because 5 USC 3345 provides conditions for an acting official to perform duties “temporarily in an acting capacity.”

        What they don’t address is how the FVRA, which didn’t exist in 1898, through 3 USC 3346 limits the tenure of these acting officials to 210 days.

        In the end, Hirshfeld was “performing the duties…” for 645 days prior to the nomination of Vidal. While he was certainly “temporary”, he had been in the chair too long for the FVRA when he decided Arthrex’s request.

        I honestly care much less about the Arthrex situation specifically than I do about the administration ignore the law and letting Hirshfeld run the place for three times as long as is legal for their convenience. While I am generally a fan of the Biden administration, this appears to be a flagrant endrun around the FVRA. I disapproved when Trump pulled this stuff, and I disapprove of when Biden pulls it too.

        1. 2.3.1.1

          I am generally a fan of the Biden administration…

          Good for you. I wish that I could get there. So far, the best that I can say about the present administration is that it is better than the previous administration—which is a very low bar to clear.

          We appear to be sleepwalking toward a Biden/Trump rematch. That cannot end well for America (although there are various degrees of bad outcomes that can emerge from such a set-up).

          1. 2.3.1.1.1

            That you think this not worse than the prior only exhibits your Sprint Left bias.

            Other than ‘mean tweets,’ how in the world is the current state “better off?”

            And let’s preemptively throw away Malcolm’s one-bucket, as I am not a Trumper, nor have I ever voted for him.

            1. 2.3.1.1.1.1

              The Trump Admin was a flagrant disregard of law on all levels. Trump was so much worse than “mean tweets”. Trump was and remains a fundamental threat to American Democracy and the lackeys and lickspittles who imitate him are so much worse because the majority of them should know better.

              1. 2.3.1.1.1.1.1

                … on “ALL” levels…?

                Please put aside the Main Stream Media propaganda kool-aid and provide four examples of this “all”

                (I can easily provide at least four areas, both specific and general, in which this country is FAR worse off)

            2. 2.3.1.1.1.2

              Hey Rhonda, that thing I wrote about patent specs needing to include less, where you’d levied the judgement I was “close”… the issue hinges on the interpretation of what constitutes “undue experimentation”… my position is that since so much more info is generally available to persons of OSIA (ordinary skill in art) now than in the past. So, more Judicial Commentary is warranted by the evolving situation of times. To avoid minor arguments, I can only suggest that a whole longshitton of activity which would have in the past been considered as being undue, is no longer undue. The righteous way would be I’d expect to see some judicial opining on the topic, but, I see the laws of the sea creeping on the land so much, it would take an American-minded judge to even consider speaking above their breath on the matter,,,,, perhaps…. 🙂 I think we’ll see something on this topic, its inevitable.

            1. 2.3.1.1.2.1

              WOW — talk about strawmen and logical fallacies…

          2. 2.3.1.1.3

            “I am generally a fan of the Biden administration…”

            I’d want to see some articulable reasoning for such a statement. Unfortunately, I don’t think any is possible, so…. case dismissed for frivolity, and…. sanctions ! $8 !!

  6. 1

    Arthrex “Headed back to the Sup. Ct.” ? Highly unlikely

    1. 1.1

      It is always safer to bet against cert, but this is the sort of issue (separation of powers particulars) that the SCOTUS really seems to enjoy. I agree with “unlikely” (all cert petitions are “unlikely”), but I balk at “highly.” I would not be surprised to see them take cert on this one.

    2. 1.2

      I take “Now the case is headed back to the Supreme Court” to mean only that Arthrex is now on the clock to file a cert petition. The case would then be “at the Supreme Court,” and maybe it’ll go to the merits docket and maybe not.

      Interestingly, the extension motion leaves open the possibility that Arthrex won’t file after all. The petition says this at the beginning: “The additional time is necessary to permit Arthrex to fully evaluate whether to file a petition for a writ of certiorari and, if a determination to file is made, to see to the petition’s preparation and filing,” and then something similar at the very end.

    3. 1.3

      A previously noted major law firm’s analysis of this “appointments clause” part of the subject Fed. Cir Arthrex decision on remand from the Sup. Ct.* [which was not ever discussed on this blog] said: “First, the Federal Circuit concluded that Arthrex reinforced long-settled Supreme Court precedent that an inferior officer [like Commissioner for Patents Drew Hirshfeld] could exercise a principal officer’s authority constitutionally on a temporary basis without violating the Appointments Clause. Second, the FVRA provides a statutory framework for the exercise of a principal officer’s duties under certain circumstances … However, the Federal Circuit explained that the FVRA narrowly governs only those duties of an officer that are statutorily non-delegable (i.e., .. required to be exercised personally by the officer). According to the Court, such provisions did not apply here because nothing demonstrated that the PTO Director’s newly created authority to review IPR decisions was non-delegable.”
      Another blog noted that: “This .. practically speaking, had to be resolved this way. To decide otherwise would throw the entire administrative state into chaos. Agencies can’t simply stop working until Congress gets around to appointing leaders some 18 months after a change in presidential administrations.”
      *Arthrex, Inc. v. Smith & Nephew, Inc., 35 F.4th 1328 (Fed. Cir. 2022). The court denied rehearing and rehearing en banc on August 11, 2022.
      The Supreme court is not in the habit of taking up the same issue it had already been faced with so recently [and decided on a different basis].
      Last but not least, this issue is not applicable to any future IPR decisions, due to the Sup. Ct. Arthrex and PTO fixes. Nor any other IPR decisions other that the very few that had ever requested Director review but did not get and did not timely appeal.
      So, are cert odds here really better than the usual 1 in 300?

      1. 1.3.1

        In this instance, it was a democratic president who neglected to fill an office, leading to this situation. That, however, is an unusual state of affairs. As everyone will remember, Pres. Trump was famous for leaving appointments open and using “acting” personnel to drive forward his policies. This case, in other words, presents an opportunity for the Court to clear the way for this sort of action in the next Trump administration without it looking quite so obviously political.

        1. 1.3.1.1

          “This case, in other words, presents an opportunity for the Court to clear the way for this sort of action in the next Trump administration without it looking quite so obviously political.”

          . . . and this is why SCOTUS will take the case.

          Good call Dozens.

          1. 1.3.1.1.1

            Even funnier.

        2. 1.3.1.2

          “This case, in other words, presents an opportunity for the Court to clear the way for this sort of action in the next Trump administration without it looking quite so obviously political.”

          Funny.

      2. 1.3.2

        “As previously noted”

        Paul’s renditions are NOT accurate portrayals of the law at point.

        This has been pointed out numerous times by both myself and Davey Boundy.

        It’s as if Paul has a vested interest here…

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