Friday, May 27, 2022

More Arthrex!

The outcome:

Arthrex, Inc. appeals a Patent Trial and Appeal Board final written decision finding claims 1, 4, 8, 10–12, 16, 18, and 25–28 of U.S. Patent No. 9,179,907 unpatentable as anticipated. It also challenges a decision by the Commissioner for Patents denying Arthrex’s request for the Director of the Patent and Trademark Office (PTO) to review the Board’s decision and grant rehearing. We affirm.

And remember

Arthrex appealed. It primarily challenged the Board’s decision on the merits, but it also argued that the Board lacked constitutional authority to issue the agency’s final decision. Arthrex reasoned that the Board could not issue final decisions because its Administrative Patent Judges (APJs) were not nominated by the President and confirmed by the Senate, as the Appointments Clause requires for principal officers. We agreed with Arthrex’s constitutional challenge and held that the appropriate remedy was to (1) sever the statutory limitations on the removal of APJs and (2) remand for rehearing by a new panel of APJs. Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320, 1338, 1340 (Fed. Cir. 2019). We did not reach the merits of the Board’s decision.

The Supreme Court vacated and remanded. United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021) (Arthrex). It agreed that because APJs are appointed by the Secretary of Commerce, rather than the President with the advice and consent of the Senate, they could not issue any “final decision binding the Executive Branch.” Id. at 1985. The Court held, however, that the appropriate remedy was to (1) exempt the Director from 35 U.S.C. § 6(c), which precludes anyone but the Board from granting rehearing of a Board decision, and (2) “remand to the Acting Director for him to decide whether to rehear” the case. Id. at 1987.

What was happening after remand?

On remand, Arthrex requested “rehearing by the Director.” Smith & Nephew, Inc. v. Arthrex, Inc., IPR2017- 00275, Paper 39 at 1 (P.T.A.B. Aug. 27, 2021). The office of the Director was, however, vacant. As was the office of Deputy Director, which is “vested with the authority to act in the capacity of the Director in the event of [his] absence or incapacity.” 35 U.S.C. § 3(b)(1). The responsibility of addressing Arthrex’s request thus fell to the Commissioner under a standing directive known as Agency Organization Order 45-1.

The CAFC went back to 1898:

Although an inferior officer generally cannot issue a final agency decision, he may perform the functions and duties of an absent PAS officer on a temporary, acting basis. United States v. Eaton is instructive. 169 U.S. 331 (1898). After falling ill, the consul general to Siam, Sempronius Boyd, a PAS officer, unilaterally appointed Lewis Eaton, then a missionary, to the position of vice consul general. Id. at 331–32. Mr. Boyd then took a leave of absence, returning to his home in Missouri, where he later died. Id. at 332–33. In the period between Mr. Boyd’s departure and his replacement’s arrival, Mr. Eaton was required by law to “temporarily . . . fill the place[ ] of consul[ ] general,” which he did. Id. at 336 (quoting Revised Statutes § 1674). The government, however, refused to pay Mr. Eaton for his services. It argued that Congress violated the Appointments Clause by authorizing the President to promulgate the consular regulations Mr. Boyd invoked to appoint Mr. Eaton. See id. at 343.

This case is indistinguishable from Eaton.


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