By Tom Engellenner
Petitioners in administrative patent challenges under the America Invents Act (AIA) that are denied a trial are not entitled to an Arthrex do-over according to a recent Federal Circuit panel holding in United Fire Protection v. Engineered Corrosion Solutions, Appeal No. 2020-1272 (Fed. Cir. May 19, 2020).

Late last year we reported on the Federal Circuit’s Arthrex decision that send shock waves through the IP community by holding that the way administrative patent judges (APJs) were appointed to the Patent Trial and Appeal Board (PTAB) pursuant to the AIA was unconstitutional.  Arthrex v. Smith & Nephew, No. 2018-2140 (Fed. Cir., Oct. 31, 2019).

The Arthrex decision devised a cure for this problem going forward by severing a portion of the enabling AIA legislation that prevents the administrative judges from being fired except for cause. The Federal Circuit’s Arthrex  decision essentially made all PTAB judges subject to dismissal by the secretary of Commerce without cause.  The Federal Circuit panel then remanded the Arthrex case back to the PTAB for a rehearing before a different panel of judges that had been cleansed by severing their job security.

The Arthrex decision create a class of litigants who, like Arthrex, had already received a final written decision on a patent challenge but were still in their pre-appeal period. Those parties — if they chose to appeal and raise the “appointments” issue — would also allowed to get their decisions vacated and remanded.

But the Arthrex decision also cut-off another class of litigants whose cases had not yet reached a PTAB final written decision.  Because the problem was “fixed” by taking away the job security of the PTAB judges, the judges would be deemed properly appointed after the Arthrex ruling and their decisions going forward would no longer be unconstitutional.

Following the Arthrex decision, the Federal Circuit expanded the class of litigants entitled to a remand and rehearing of their cases to include patent owners who lost appeals at the PTAB in inter partes reexamination, and ex parte reexamination proceeding during the pre-Arthrex window of time.  (See, Virnetx Inc. v. Cisco Systems, Inc., Appeal No. 2019-1671 (Fed. Cir., May 13, 2020 – inter partes reexamination) and In re JHO Intellectual Property Holdings LLC, Appeal No. 2019-2330 (Fed. Cir. June 18, 2020 – ex parte appeals)).

It remains to be seen whether the Anthrex decision will also apply to patent applicants who lost appeals of examiner rejections at the PTAB during the pre-Arthrex time window.  This issue is being argued in In re: Boloro Global Ltd., Appeal No.1209-2349.

However, the Federal Circuit has refused to extend the Arthrex remedy to petitioners who have undergone a trial and lost, reasoning that petitioners who affirmatively seek trial – and get it – have essentially waived any right to challenge the PTAB decision.

The problem with [Petitioner’s] request is that, unlike the patent owner in Arthrex, [Petitioner] requested that the [PTAB] adjudicate its petition. It, thus, affirmatively sought a ruling from the Board, regardless of how they were appointed. [Petitioner] was content to have the assigned Board judges adjudicate its invalidity challenges until the Board ruled against it. Under those circumstances, we find that [Petitioner] has forfeited its Appointments Clause challenge.

See, Ciena Corp. v. Oyster Optics, Appeal No. 2019-2117 (Fed. Cir. May 5, 2020).

The decision last month in the United Fire Protection case, denying an Arthrex do-over to petitioners that are denied an AIA trial, is less about the scope of the Arthrex remedy and more about the Federal Circuit’s jurisdiction to hear appeals of institution decisions at all.  Citing 35 U.S.C. §314(d) and the recent Supreme Court decision in Thryv, Inc. v. Click-to-Call Technologies, 590 U.S. ___ (April 20, 2020), the Federal Circuit panel held:

The statutory scheme that governs judicial review of IPRs clearly differentiates between the [PTAB’s] final written decision on patentability after institution, which is appealable; and the Director’s discretionary determination whether to decline review, which is “final and nonappealable.”

A request by Smith and Nephew and the USPTO to have an en banc review of Arthrex decision by the full Federal Circuit bench was denied on March 23, 2020 in an 8-4 vote.  All of the parties are now seeking review by the U.S. Supreme Court.  Smith & Nephew and the USPTO are again arguing that PTAB judges are inferior officers of the U.S. government who did not need Senate confirmation and, hence, were constitutionally appointed in the first place.

Arthrex, on the other hand, is expected to argue to the Supreme Court that the Federal Circuit decision didn’t go far enough and removing the judge’s job security doesn’t solve the problem.  The solution, according to Arthrex’s other filings, is that the entire AIA administrative patent challenge scheme should be struck down and for Congress to rewrite the law.

Meanwhile, the USPTO has put all Arthrex remands on hold pending the possible Supreme Court review.  On May 4, 2020, PTAB Chief Judge Scott Boalick issued a general order stating “to avoid burdening the office and the parties until all appellate rights have been exhausted,” the board is holding all cases remanded under Arthrex “in administrative abeyance until the Supreme Court acts on a petition for certiorari or the time for filing such petitions expires.”