Thursday, November 14, 2019

The "Courts, Intellectual Property and the Internet subcommittee" to hold hearing on the CAFC decision in Arthrex

BloombergLaw writes of Congressional response to the Arthrex decision of the CAFC:

A House Judiciary panel will examine a recent Federal Circuit decision that Patent and Trademark Office
administrative judges were unconstitutionally appointed.

The committee’s Courts, Intellectual Property and the Internet subcommittee is planning a Nov. 19
hearing to discuss how the ruling in Arthrex v. Smith & Nephew affects litigants and attorneys filing challenges at the Patent Trial and Appeal Board.


Arthrex “threatens to inject an enormous amount of uncertainty into the patent system,”
U.S. Rep. Hank Johnson (D-Ga.) said in an emailed statement. Johnson has been working with his
Senate Judiciary counterparts to rewrite federal patent eligibility law.

The U.S. Court of Appeals for the Federal Circuit said PTAB judges should have been appointed by the president
and confirmed by the Senate because of the power they had. The Commerce Department secretary has been appointing
the judges since Congress passed a 2011 law that created the administrative patent review process.

The court addressed the issue by severing part of the law barring PTAB judges from being fired without cause.
Johnson questioned that move.

“I am concerned that the Arthrex court’s remedy of removing civil service protections for administrative patent judges means
that there may not be enough transparency into when political pressure may have affected a case, to say nothing of being unfair to the
civil servants who signed up for a different position than they now have,” Johnson said.

The Federal Circuit panel said its ruling only applies to cases where litigants have presented an appointments clause challenge on appeal.
The court ordered a new hearing before a new panel of PTAB judges, in a challenge filed by Smith & Nephew Plc over an Arthrex Inc. patent for a surgical device.


The CAFC wrote in Arthrex on 31 October 2019:

Arthrex, Inc. appeals from the final written decision of
the Patent Trial and Appeal Board holding claims 1, 4, 8,
10–12, 16, 18, and 25–28 of U.S. Patent No. 9,179,907 unpatentable as anticipated.
Arthrex appeals this decision
and contends that the appointment of the Board’s Administrative Patent Judges (“APJs”)
by the Secretary of Commerce, as currently set forth in Title 35, violates the
Appointments Clause, U.S. Const., art. II, § 2, cl. 2. We
agree and conclude that the statute as currently constructed makes the APJs principal officers.
To remedy the violation, we follow the approach set forth by the Supreme
Court in Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010) and followed by
the D.C. Circuit in Intercollegiate Broadcasting System,
Inc. v. Copyright Royalty Board, 684 F.3d 1332 (2012). As
the Supreme Court instructs, “‘[g]enerally speaking, when
confronting a constitutional flaw in a statute, we try to
limit the solution to the problem,’ severing any ‘problematic portions
while leaving the remainder intact.’” Free Enterprise Fund, 561 U.S. at 508 (quoting Ayotte v. Planned
Parenthood of Northern New Eng., 546 U.S. 320, 328–29
(2006)). We conclude that severing the portion of the Patent Act restricting
removal of the APJs is sufficient to render the APJs inferior officers and remedy the constitutional
appointment problem.
As the final written decision on
appeal issued while there was an Appointments Clause violation, we vacate and remand. Following Lucia v. S.E.C.,
138 S. Ct. 2044 (2018), the appropriate course of action is
for this case to be remanded to a new panel of APJs to
which Arthrex is entitled.

Of a waiver issue:

Appellees and the government argue that Arthrex forfeited its
Appointments Clause challenge by not raising the
issue before the Board. Although “[i]t is the general
rule . . . that a federal appellate court does not consider an
issue not passed upon below,” we have discretion to decide
when to deviate from that general rule. Singleton v. Wulff,
428 U.S. 106, 120–21 (1976). The Supreme Court has included Appointments
Clause objections to officers as a
challenge which could be considered on appeal even if not
raised below. Freytag v. Commissioner of Internal Revenue,
501 U.S. 868, 878–79 (1991); Glidden Co. v. Zdanok,
370 U.S. 530, 535–36 (1962).


Because the Secretary continues to have the power to appoint APJs and those APJs continue to decide patentability
in inter partes review, we conclude that it is appropriate for
this court to exercise its discretion to decide the Appointments Clause challenge here.
This is an issue of exceptional importance, and we conclude it is an appropriate use
of our discretion to decide the issue over a challenge of

The big issue:

The issue, therefore, is
whether APJs are “Officers of the United States” and if so,
whether they are inferior officers or principal officers; the
latter requiring appointment by the President as opposed
to the Secretary of Commerce. We hold that in light of the
rights and responsibilities in Title 35, APJs are principal


The only two presidentially-appointed officers
that provide direction to the USPTO are the Secretary of
Commerce and the Director. Neither of those officers individually
nor combined exercises sufficient direction and supervision over APJs to render them inferior officers.


Having considered the issues presented, we conclude
that APJs are principal officers. The lack of any presidentially-appointed officer who can review, vacate, or correct
decisions by the APJs combined with the limited removal
power lead us to conclude, like our sister circuit in Intercollegiate, which dealt with the similarly situated CRJs, that
these are principal officers. While the Director does exercise oversight authority that guides the APJs procedurally
and substantively, and even if he has the authority to dedesignate an APJ from inter partes reviews, we conclude
that the control and supervision of the APJs is not sufficient to render them inferior officers. The lack of control
over APJ decisions does not allow the President to ensure
the laws are faithfully executed because “he cannot oversee
the faithfulness of the officers who execute them.” Free Enterprise Fund, 561 U.S. at 484. These factors, considered
together, confirm that APJs are principal officers under Title 35 as currently constituted.

Separately, from Blawgsearch on 14 November 2019:


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