In a split decision, the United States Supreme Court ruled on June 21, 2021, in United States v. Arthrex, that administrative patent judges (APJs) are not constitutionally permitted to wield “unreviewable authority” during inter partes review (IPR) proceedings.
Specifically, the Supreme Court held that 35 U.S.C. Section 6 (c), the statutory basis establishing that the power to grant IPR rehearings is solely within the Patent Trial and Appeal Board (PTAB), “is unenforceable as applied to the Director.” In other words, any decision made by a panel of APJs during an IPR proceeding must be reviewable by the director of the United States Patent and Trademark Office (USPTO).
As discussed in a prior alert, the Court of Appeals for the Federal Circuit previously found that all sitting APJs were unconstitutionally appointed because, in part, APJs “exercise significant authority pursuant to laws of the United States.” The Federal Circuit relied on the Appointments Clause, under which all “principal officers” must be appointed by the president with the advice and consent of the Senate. Inferior officers, however, may be appointed by the president, the courts, or by “Heads of Departments,” such as the secretary of commerce. As all sitting APJs were appointed by the secretary of commerce, the Federal Circuit concluded that APJ appointments would be constitutional only if APJs properly qualify as inferior officers.
To rectify this constitutional violation, the Federal Circuit struck down tenure protections of the APJs, rendering APJs removeable by the secretary of commerce. This decision, in the words of Chief Justice Roberts, “satisfied no one.” An en banc rehearing before the Federal Circuit was requested and denied, after which the decision was appealed to the Supreme Court. The court vacated and remanded.
In rendering its decision, the Supreme Court paid particular attention to Edmond v. United States, a 1997 Supreme Court decision testing the constitutionality of judges in the Coast Guard’s Court of Criminal Appeals and appointed by the secretary of transportation. In Edmond, the court explained, “whether one is an ‘inferior’ officer depends on whether he has a superior” other than the president. Particularly, an inferior officer must be “directed and supervised” by a principal officer properly appointed by the president and confirmed by the Senate.
The Coast Guard judges at issue in Edmond were ultimately found to be properly classified inferior officers. In making this determination, the court found that the judge advocate general, who was appointed by the president and confirmed by the Senate, could remove the Coast Guard judges without cause and could review the merits of those judges’ decisions.
In contrast to the Coast Guard judges in Edmond, the APJs at issue in Arthrex had “unreviewable authority” and any decisions by APJs made in an IPR were not subject to review by the director and, in fact, were entirely unreviewable by the director. While the court conceded that the director had some control in, for example, deciding which APJs should hear a particular IPR, this indirect manner of control would nevertheless result in “unchecked executive power by an officer buried many layers beneath the President.”
To rectify the “unreviewable authority” wielded by the APJs, the court held that the director must have the discretion to review IPR decisions made by APJs. While the director is not required to review each APJ holding, the director must have the ability to reach his or her own decision and, if necessary, reverse decisions of APJs. Of particular note, the decision of the court only impacts APJ decisions with respect to IPRs and not to other APJ decisions as may be made in other proceedings.
After Arthrex, parties dissatisfied with a result of an IPR proceeding may seek to overturn the decision by requesting review by the director of the USPTO. On June 29, 2021, the USPTO issued guidance outlining interim procedures for requesting such review. As of this writing, parties to a PTAB proceeding may request rehearing by concurrently (1) “entering a Request for Rehearing by the Director into PTAB E2E” and (2) “submitting a notification” of that filing to a special email inbox at Director_PTABDecision_Review@uspto.gov, copying all counsel involved with the IPR proceeding.