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The key question the justices will determine is whether the appointment of the administrative patent judges (APJs) of the Patent Trial and Appeal Board (PTAB) was unconstitutional.
To answer this, the court will have to decide if judges are classed as principal or ‘inferior’ officers. If the PTAB judges are found to be principal, the court will address whether the appointment of the board violates the Appointments Clause of the US Constitution.
After hearing the first oral arguments, the court seems to be convinced that the PTAB judges can be classed as ‘principal’ officers, but are not in violation of the Appointments Clause, lawyers told WIPR.
Edmond v United States
The court heard how a prior ruling by Justice Scalia in Edmond v United States is important to the dispute, according to Malcolm Stewart, deputy solicitor general for the Department of Justice, arguing for the US government.
The 1997 decision saw the Supreme Court rule that the appointment of the civilian judges of the Coast Guard Court of Criminal Appeals was invalid due to the Appointments Clause.
Stewart said that the power of the APJs exceeded those of the precedent in Edmond, meaning the previous case was of controlling importance to the proceedings. Overall, the justices seemed to agree, but with caveats.
Brad Lane, partner at Brinks Gilson & Lione, told WIPR: “Several Justices appeared to question whether the ‘amorphous’ test established by Edmond was still appropriate to determine whether a particular statutory regime for adjudicatory officers (which in this case were the APJs under the America Invents Act (AIA)) satisfied the Appointments Clause of the US Constitution.”
Inferior or principal?
The court seems split on whether APJs can be classed as principal or inferior officers but the majority of justices seem to view the officers as principal. The majority also appeared to disagree with Arthrex’s argument that the APJs violated the Appointments Clause.
“Multiple Justices reminded Arthrex that the court’s preference is to blue pencil or ‘blueline’ a statute by severing and invalidating a portion of the statute to bring it in line with the Constitution,” said Lane.
“Several Justices appeared to accept the government’s argument that it was a sufficient remedy to sever the statutory requirement that a rehearing be before the PTAB.”
Arthrex calls on Congress
Jeffrey Lamken, appellate attorney at MoloLamken, on behalf of Arthrex, highlighted the lack of accountability and authority of the APJs, calling for Congress to solve the problem.
“No superior in the executive has authority to review their decisions, to overturn their exercise of government authority. Accountability suffers,” Lamken told the court.
“How to fix the statute is for Congress. Solutions point in opposite directions. Congress might want APJs to be presidentially appointed and Senate confirmed... they might want to grant the director express panel authority, which is how they fixed problems with the Trademark Trials and Appeals Board (TTAB) last year. But this court cannot pencil in those solutions," he added.
Morgan Lewis partner William Peterson said of the first hearing: “One possibility—suggested by several justices—would be to hold that the Constitution requires the director of the USPTO to have the authority to engage in unilateral review of inter partes review decisions. Because such review would be discretionary, it might have a relatively minimal effect on the current operations of the system.”
Finnegan partner Cory Bell said many justices seemed to be “drawing distinctions” between supervision of policy setting activities and how the policy is applied in each case.
“If supervision at the case level is required, there seemed to be agreement that it could be fixed by striking part of the statute. But it was not clear if they would be willing to do so,” commented Bell.
Lane, meanwhile, said he believed that Arthrex may have a Pyrrhic victory on its hands.
“Although it may get the court to agree that APJs are principal officers under the current AIA statutory regime, so that APJs are unconstitutional, Arthrex appeared to fail to ‘cross the Rubicon’ in Justice Alito’s terms (although a phrase applied to a different issue), to persuade the Justices to have inter partes review of patents deemed unconstitutional.”
The full recording of the hearing can be found here.
Last week WIPR Patents Live panellists discussed how the future of PTAB could be dependent on the Arthrex ruling.
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US Supreme Court, Arthrex, patent litigation, APJs, PTAB, AIA, USPTO, inter partes review, Finnegan