BREAKING: SCOTUS says IPRs should be reviewable in Arthrex; hands more power to USPTO director
The US Supreme Court has confirmed that judges for the Patent Trial and Appeal Board (PTAB) act as unconstitutional principal officers, and should therefore have been appointed by the President, in its final ruling in United States v Arthrex.
To resolve this, the Supreme Court said in a majority opinion that inter partes review decisions by PTAB Administrative Patent Judges (APJs) should be reviewable by the US Patent and Trademark Office (USPTO) director.
Chief Justice Roberts wrote the opinion of the court for parts I and II of the decision, concluding that the “unreviewable authority” held by the APJs during inter partes review proceedings is “incompatible with their appointment by the Secretary of Commerce to an inferior office”.
He was joined in this opinion by justices Alito, Barrett, Gorsuch, and Kavanaugh, creating a five-justice majority on parts I and II.
Regarding how to resolve the situation, the court decided that the USPTO director should hold the power to review PTAB decisions in part III.
Roberts said: “The structure of the PTO and the governing constitutional principles chart a clear course: Decisions by APJs must be subject to review by the director. To be clear, the director need not review every decision of the PTAB. What matters is that the director has the discretion to review decisions rendered by APJs.”
The court added: “In this way, the President remains responsible for the exercise of executive power—and through him, the exercise of executive power remains accountable to the people.”
Remedy split
However, the justices were more divided on this, with only Justices Alito, Barrett and Kavanaugh backing part III. Gorsuch filed an opinion concurring in part and dissenting in part. Breyer concurred in the judgment in part and dissented in part, and was joined by Sotomayor and Kagan.
Justice Thomas disagreed with the majority on all parts of the ruling, backing the opinion of Congress that APJ’s were inferior officers.
Thomas said: “The court today draws a new line dividing inferior officers from principal ones. The fact that this line places administrative patent judges on the side of Ambassadors, Supreme Court Justices, and department heads suggests that something is not quite right.”
Breyer, Sotomayor and Kagan backed Thomas in parts I and II.
Background
Following a PTAB ruling that a method of securing soft tissue to a bone was unpatentable, the patent holder Arthrex appealed the decision to the Federal Circuit, calling into question whether the appointment of APJs violated the Appointments Clause.
According to the Appointments Clause, which specifies how the President may appoint officers to assist in carrying out his responsibilities, only the President would be able to appoint principal officers.
The Federal Circuit ruled in 2019 that the appointment and oversight of the APJs was unconstitutional and that they should be classed as ‘principal officers’ and be overseen by the President. To remedy this, the circuit decided to grant the USPTO director the power to remove APJs from office.
This power would constitute sufficient oversight on the part of the USPTO director to render APJs “inferior officers” who do not need to be appointed by the President, said the Federal Circuit.
However, while removing the tenure protections of APJs might solve the problem of constitutionality, the Supreme Court went further, ruling that “review [of APJ decisions] by the Director better reflects the structure of supervision within the PTO and the nature of APJs’ duties”.
Look out for more extended coverage, reaction and analysis on WIPR tomorrow.
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