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18 December 2019PatentsRory O'Neill

US government urges Fed Circuit to rethink landmark Arthrex ruling

All sides in the recent Arthrex v Smith & Nephew dispute, including the US government, have urged the US Court of Appeals for the Federal Circuit to review its decision to give the US Patent and Trademark Office (USPTO) director the power to fire patent judges.

In October, a panel of three Federal Circuit judges ruled that Patent Trial and Appeal Board’s (PTAB) administrative patent judges (APJs) were appointed unconstitutionally.

Arthrex, Smith & Nephew and the US government all filed petitions to the court on Monday, December 16 urging the entire bench to rehear the case.

According to the original panel’s ruling, APJs are appointed in violation of the US Constitution’s appointments clause.

APJs are appointed by the secretary of commerce, in line with their traditional status as ‘inferior officers’.

But, because PTAB judges are so powerful and not subject to direct supervision, they should be treated as ‘principal officers’ and their appointments approved at a Senate confirmation vote, the court ruled.

US law holds that ‘principal officers’, the most powerful layer of public officials, must be appointed by the President and confirmed by the Senate.

To solve the problem, the Federal Circuit panel granted the USPTO director the power to remove PTAB judges from office. According to the court, this would constitute sufficient oversight to render APJs as ‘inferior officers’.

In its petition for an en banc rehearing of the case by the entire bench of Federal Circuit judges, the US government argued the original panel had underestimated the power of the USPTO director and gone too far in its remedy.

The USPTO director already had the power not to assign APJs to cases. This effectively amounted to the power to remove them from “judicial assignment”, albeit not federal employment altogether, the government argued.

The government also argued that the director has the power to issue binding policy guidance and order cases to be reheard in line with the new rules.

According to the government’s petition, the Federal Circuit should have refused to hear Arthrex’s appointments clause challenge in the first place as it was raised for the first time on appeal.

In the original decision, the panel ruled that Arthrex’s challenge was timely as it was raised first before the only authority that had the power to remedy the issue.

But the government argues that the court’s decision sets a negative precedent by allowing parties to delay litigation by raising similar challenges on appeal.

Arthrex and Smith & Nephew filed separate petitions for en banc rehearing of the case on the same day.

Arthrex, which lost the original patent dispute at issue, wants its defeat reversed entirely, while Nephew & Smith has backed the government’s argument that there was already sufficient oversight to qualify APJs as inferior officers.

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More on this story

Patents
8 January 2020   The US government “strongly disagrees” with a recent US Court of Appeals for the Federal Circuit finding that the appointment of US Patent and Trademark Office patent review judges was unconstitutional.
Patents
24 March 2020   The US Court of Appeals for the Federal Circuit will leave it to the Supreme Court to review its controversial Arthrex decision that Patent Trial and Appeal Board judges were unconstitutionally appointed.
Patents
29 July 2020   The USPTO wants the country’s Supreme Court to delay dealing with a combined petition challenging almost 40 court judgments until a constitutional snag has been resolved.