In re Boloro Global Ltd. (Fed. Cir. 2020)

McDonnell Boehnen Hulbert & Berghoff LLP

McDonnell Boehnen Hulbert & Berghoff LLP

[co-author: Alexa Giralamo*, Law Student]

Federal Circuit Extends Arthrex to Patent Prosecution

This week, the Federal Circuit extended its holding in Arthrex, Inc. v. Smith & Nephew, Inc., that administrative patent judges ("APJs") were improperly appointed in violation of the Appointments Clause, to ex parte proceedings in In re Boloro Global Limited.

Under Article II, Section 2, Clause 2 of the Constitution, Congress has the authority to vest power in the President or in the Heads of Departments to appoint inferior officers, but must retain its power for principal officers. The Supreme Court considers certain hallmark factors of inferior officer status, including removability by a principal officer. In Arthrex, in the context of IPR proceedings, the Federal Circuit severed a portion of Title 35 to give the PTO Director, a principal officer, the power to fire APJs without cause, explaining that such authority would create the necessary oversight to consider APJs inferior officers. The Court denied petitions for rehearing en banc in March.

In Boloro, the patent applicant appealed to the Federal Circuit the Board’s judgment rejecting its patent applications and filed a pre-brief motion to vacate and remand, citing Arthrex and VirnetX Inc. v. Cisco Sys., Inc., 958 F.3d 1333 (Fed. Cir. 2020) (applying the Arthrex holding in the context of inter partes reexamination). In opposing the motion, the PTO argued that Arthrex and VirnetX do not apply to ex parte appeals to the Board because the PTO Director has complete control over patent examination. The Court, however, granted the motion, explaining that it saw no principled reason to depart from Arthrex and VirnetX. After all, APJs deciding ex parte appeals were appointed the same way as APJs deciding IPRs and inter partes reexaminations.

It will be interesting to see how the Federal Circuit and the PTO handle the application of Arthrex to ex parte appeals in the near term. IPRs are time-limited in a way that ex parte proceedings are not. Since Arthrex was decided, the Federal Circuit has vacated and remanded many IPR judgments to the Board. In response, the Board issued a general order in May holding all impacted matters in abeyance until the Supreme Court resolves a petition for certiorari on Arthrex. Last month, both the IPR petitioner, Smith & Nephew, and the PTO filed cert. petitions with the Supreme Court.

The Board's judgment in Boloro issued before the date that the Federal Circuit in Arthrex severed a portion of the AIA to remedy the Appointments Clause violation. It is unlikely that the Federal Circuit would apply Arthrex to Board judgments in ex parte appeals that issued after Arthrex was decided because the Court in Arthrex ruled that it corrected the appointments issue at that time. The Court has also held that normal rules of waiver and forfeiture apply to Appointment Clause challenges in IPRs and is likely to do so as well for ex parte appeals.

Nevertheless, patent applicants should still carefully consider the impact of Arthrex and Boloro to their ex parte appeals in the event that the Supreme Court grants certiorari on whether APJs were properly appointed. If the Supreme Court concludes that there is a violation of the Appointments Clause and affirms the Federal Circuit in that respect, the Court could conclude that the remedy for that violation is different than what the Federal Circuit did in Arthrex putting into question all actions by the Board.

In re Boloro Global Ltd. (Fed. Cir. 2020)
Panel: Circuit Judges Lourie, Dyk, and Reyna
Opinion by Circuit Judge Dyk

* Ms. Giralamo is a student at The UIC John Marshall Law School, focusing her studies on Intellectual Property Law. She currently serves as the Articles Editor for the UIC JMLS Review of Intellectual Property Law Journal and is a summer associate at McDonnell Boehnen Hulbert & Berghoff LLP. Before attending law school, Alexa obtained her B.S. in Mechanical Engineering, accompanied by a minor in Aerospace Engineering, from Santa Clara University.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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