[co-author: Robby Breetz]

On October 31, 2019 a panel of Federal Circuit Judges issued the Arthrex Inc. v. Smith and Nephew, Inc. opinion finding the appointment of PTAB judges unconstitutional by violating the Appointments Clause.  The panel’s remedy in that case was to judicially modify a statutory provision by which PTAB judges could be removed and remand the Arthrex matter to a new PTAB panel for a new oral hearing and Final Written Decision.  But Federal Circuit stated that it will not entertain Appointments Clause challenges if not raised in the opening briefs.[1]  The Court has vacated and remanded some IPR decisions where a party raised the Appointments Clause challenge in their opening brief.[2]

Certain judges on the Federal Circuit have indicated skepticism of the Arthrex remedy.  Some have opined that remands to a new panel are not necessary.  While other panels have requested additional briefing on the proper remedy.  To slow a rush of Arthrex remands on this live issue at the Court, the Federal Circuit is providing the Government the opportunity to intervene prior to any remand.[3]  If a party challenges the “constitutionality of any Act of Congress affecting the public interest,” then “the court shall certify such fact to the Attorney General, and shall permit the United States to intervene for presentation of evidence.”  28 U.S.C. § 2403.  In accordance with § 2403, the Federal Circuit is certifying notice of these constitutional challenges to the U.S. Attorney General.

The Government responded to certain certification notices by stating it intended to seek rehearing en banc in Arthrex.[4]  In at least four cases, the government motioned the Court to stay the proceedings pending the resolution of the en banc petition or grant an extension to respond.[5]  The Government argued that their decision to intervene would be informed by further Federal Circuit review of the Arthrex decision.  It also stated that it would be inefficient and burdensome for the parties to engage in proceedings relating to the Arthrex decision until the en banc Court decides Arthrex.

Judge Lorrie, acting on behalf of the Court, denied all four requests to stay.  But, in three of these cases, the Court granted an extension of time for the Government to decide whether to intervene.[6]  In the fourth case, The Chamberlin Group, however, the Court found that the party forfeited the Appointments Clause challenge by not including it in their opening brief. [7]  Because there was no longer a constitutional issue, the Court also denied the government’s request for extension of time.[8]

Takeaway

Where a constitutional challenge to the Appointments Clause is presented in opening appellate briefs, the Federal Circuit is denying Government motions to stay the proceedings but is allowing the Government to intervene prior to any further Arthrex remands.  This will prevent a flood of cases back to the PTAB in the near term.

The petitions for rehearing Arthrex en banc are due by December 16, 2019.[9]  The Court will decide whether to hear the en banc review no earlier than December 24, 2019.[10]

With rehearing, further appeal, and Congressional action on the table, this continues to be a fluid issue.  Jones Day will continue to monitor Arthrex and relate decisions for updates.

[1] Customedia Techs., LLC v. DISH Network Corp., No. 2019-1001 (Nov. 1, 2019) (per curiam).

[2] Uniloc 2017 LLC v. Facebook Inc., No. 2018-2251 (October 31, 2019) (non-precedential).

[3] See Vilox Techs., LLC v. Unified Patents Inc., No. 2019-2057 (Nov. 12, 2019).

[4] Mot. of United States to Stay Proceedings or Extend its Time to Respond: The Chamberlin Group, Inc., v. One World Technologies, Inc., CAFC 19-1314, -1315, 37 (Nov. 13, 2019); Vilox Technologies, LLC, v. Unified Patents, Inc., CAFC 19-2057, 24 (Nov. 13, 2019); Stueben Foods, Inc. v. Nestle, USA, Inc., CAFC 20-1082, -1083, 15 (Nov. 13, 2019); Virnetx Inc. v. Cisco Systems, Inc., CAFC 19-1671, 26 (Nov. 18, 2019).

[5] Id.

[6] Order Granting-in-Part and Denying-in-Part United States’ Mot. to Stay or Extend Time to Respond: Vilox Technologies, LLC, v. Unified Patents, Inc., CAFC 19-2057, 24 (Nov. 18, 2019); Stueben Foods, Inc. v. Nestle, USA, Inc., CAFC 20-1082, -1083, 15 (Nov. 18, 2019); Virnetx Inc. v. Cisco Systems, Inc., CAFC 19-1671, 26 (Nov. 18, 2019).

[7] Order Denying United States’ Mot. to Stay or Extend Time to Respond, The Chamberlin Group, Inc., v. One World Technologies, Inc., CAFC 19-1314, -1315, 37 (Nov. 13, 2019).

[8] Id.

[9] Fed. R. App. P. 40(a)(1).

[10] Fed. R. App. P. 41(b).