Category Archives: Constitutionality

NO ARTHREX DO-OVER FOR PETITIONERS DENIED AIA TRIALS

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. Continue reading →

2019 PTAB Year in Review – Part I: FEDERAL CIRCUIT APPEAL DECISIONS

By Tom Engellenner
The Federal Circuit heard a steady stream of cases from the Patent Trial and Appeal Board (PTAB) in 2019 as appeals of PTAB final written decisions seem to have become de rigueur.  PTAB appeals are now the largest single component of the Federal Circuit docket with over 600 appeals docketed in FY2019 – almost double the number of appeals that the Federal Circuit received from District Court patent decisions.

Perhaps the most noteworthy Federal Circuit decision of 2019 came in Arthrex v. Smith & Nephew No. 2018-2140 (Fed. Cir. Oct. 31, 2019) where a Federal Circuit panel ruled that the way administrative patent judges (APJs) are appointed to the PTAB was unconstitutional and vacated the decision with a remand that the case be heard again by another PTAB panel.  The decision purportedly 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 Arthrex decision appears to give everyone similarly situated the right to request a remand and rehearing before a different panel.  About 100 or less pending appeals appear to fall in this category.

On December 16, all of the parties to the Arthrex case sought en banc reconsideration of the case.  Smith & Nephew and the USPTO’s solicitor general argued that the appointments clause issue and, hence, unconstitutionality was wrongly decided by the Arthrex panel because APJ’s were not “superior officers” (requiring Senate confirmation).  Arthrex and the government argued that the Director of the USPTO has sufficient control over the PTAB judges, pointing out that the Director can assign APJs to particular matters, remove them from cases, and over-rule institution decisions by issuing sua sponte dismissals.  Arthrex’s en banc rehearing petition, on the other hand, argued that the decision didn’t go far enough and the proper remedy should have been to throw out all decisions rendered in AIA trials so far.  A decision on the en banc rehearing request is unlikely to made until February 2020. If the rehearing petition is granted, an actual en banc decision may not come until 2021.

Another noteworthy Federal Circuit decision came in June, 2019 in Regents of University of Minnesota v. LSI Corporation, No. 18-1559 (Fed. Cir. 2019), where the Federal Circuit made it clear that sovereign immunity does not apply to patent challenges brought pursuant to the 2011 America Invents Act (AIA), regardless of whether the immunity claim is raised by a Native American tribe or a state university trying to avoid patent adjudication. Continue reading →

TRICK OR TREAT: PTAB JUDGE APPOINTMENTS ARE UNCONSTITUTIONAL

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. Continue reading →