By Tom Engellenner
A Halloween decision by the U.S. Court of Appeals for the Federal Circuit ruled has concluded that the way administrative patent judges (APJs) are appointed to the Patent Trial and Appeal Board (PTAB) is unconstitutional and vacated the decision before the court with a remand that the case be heard again by another PTAB panel. The case is Arthrex v. Smith & Nephew No. 2018-2140 (Fed. Cir., Oct. 31, 2019).

The decision cures this problem going forward by severing a portion of the enabling legislation that prevents the administrative judges from being fired except for cause. The Fed. Circuit decision essentially makes all PTAB judges subject to dismissal by the secretary of Commerce without cause.

The Arthrex decision, however, does appear to create a class of litigants who have already received a final written decision on a patent challenge and are still in their pre-appeal period. Those parties — if they choose to appeal and raise this “appointments” issue — may also be able to get their decisions vacated and remanded.

According to the Fed. Cir. decision by Judges Moore, Chen and Reyna, PTAB judges do not receive enough oversight and supervision from the Director of the U.S. Patent and Trademark Office (USPTO) to be considered “inferior” officers under the U.S. Constitution and, hence, exempt from the Senate confirmation process. (“Principal” officers must be appointed by the president and confirmed by the Senate, while “inferior” officers can be appointed by heads of departments.)

The Fed. Cir. Panel chose the “narrowest remedy” by stripping the PTAB administrative judges of their exemption from dismissal without cause, rather than applying its ruling to the entirety of cases rendered so far by the PTAB:

Thus, we conclude that the appropriate remedy to the constitutional violation is partial invalidation of the statutory limitations on the removal of APJs.

The Fed. Cir. Decision does not apply to other PTAB decisions because none of the prior parties had raised this issue. Writing for the panel, Judge Kimberly Moore said “Appointments Clause challenges are ‘non-jurisdictional structural constitutional objections’ that can be waived when not presented.

For AIA trial litigants who have already received a final written decision on a patent challenge and are still in their pre-appeal period, the Arthrtex decision does appear to give them an opportunity — if they choose to appeal and raise this “appointments clause” issue — to also get their decisions vacated and remanded:

We have decided only that this case, where the final decision was rendered by a panel of APJs who were not constitutionally appointed and where the parties presented an Appointments Clause challenge on appeal, must be vacated and remanded. . . . Thus, we see the impact of this case as limited to those cases where final written decisions were issued and where litigants present an Appointments Clause challenge on appeal.

Appellants who take advantage of this opportunity may find that remands are only pyrrhic victories. A “re-do” before a different PTAB panel is hardly a guarantee of a different substantive outcome.