This morning the Federal Circuit issued a precedential order denying en banc rehearing in Arthrex, Inc. v. Smith & Nephew, Inc., a nonprecedential opinion in a Veterans case, and a Rule 36 judgment. Here is the text of the order and the introductions to the opinions.
Arthrex, Inc. v. Smith & Nephew, Inc. (Precedential Order)
Petitions for rehearing en banc were filed by appellant Arthrex, Inc.; appellees Smith & Nephew, Inc. and Arthrocare Corp.; and intervenor United States. Responses to the petitions were invited by the court and filed by all three parties. Two motions for leave to file amici curiae briefs were filed and granted by the court. The petitions for rehearing, responses, and amici curiae briefs were first referred to the panel that heard the appeals, and thereafter to the circuit judges who are in regular active service. A poll was requested, taken, and failed.
Upon consideration thereof,
IT IS ORDERED THAT:
1) The petitions for panel rehearing are denied.
2) The petitions for rehearing en banc are denied.
3) The mandate of the court will issue on March 30, 2020.
MOORE, Circuit Judge, with whom O’MALLEY, REYNA, and CHEN, Circuit Judges, join, concurring in the denial of the petitions for rehearing en banc.
I concur in the court’s decision to deny the petitions for rehearing en banc as rehearing would only create unnecessary uncertainty and disruption. The Arthrex panel followed Supreme Court precedent to conclude that the administrative patent judges (APJs) of the USPTO’s Patent Trial and Appeal Board were improperly appointed principal officers. It further followed the Supreme Court’s direction by severing a portion of the statute to solve that constitutional problem while preserving the remainder of the statute and minimizing disruption to the inter partes review system Congress created. The panel’s curative severance and subsequent decisions from this court have limited the now constitutionally composed Board’s burden of addressing cases on remand. I see no merit to the alternative courses laid out by the dissents. I agree with the government that we are not free to affirm despite the constitutional infirmity. Finally, I do not agree with Judge Dyk that we ought to propose a USPTO restructuring of our making and stay all proceedings (presumably this and other inter partes review appeals) while both Congress and the USPTO consider Judge Dyk’s legislative proposal. If Congress prefers an alternate solution to that adopted by this court, it is free to legislate, and in the meantime, the Board’s APJs are constitutionally appointed and inter partes reviews may proceed according to Congress’ initial intent.
O’MALLEY, Circuit Judge, with whom MOORE and REYNA, Circuit Judges, join, concurring in the denial of the petitions for rehearing en banc.
I join Judge Moore’s concurrence in full. I agree that the panel correctly concluded that, under the Supreme Court’s Appointments Clause jurisprudence, Administrative Patent Judges (“APJs”) are principal officers who were not properly appointed to their adjudicative positions. I also agree that, rather than invalidate the entirety of the America Invents Act (“AIA”), Congress would prefer to preserve the patent review scheme it created under that Act. In severing from the AIA the application of the removal restrictions in 5 U.S.C. § 7513 (“Title 5”) to APJs, the panel hewed closely to the principles guiding judicial severance: refraining from rewriting the statute or invalidating more of it than was absolutely necessary. See R.R. Ret. Bd. v. Alton R.R. Co., 295 U.S. 330, 362 (1935); Helman v. Dep’t of Veterans Affairs, 856 F.3d 920, 930 (Fed. Cir. 2017). While I agree with Judge Dyk and Judge Hughes that Title 5’s protections for government employees are both important and long-standing, I do not believe Congress would conclude that those protections outweigh the importance of keeping the remainder of the AIA intact—a statute it debated and refined over a period of more than six years.
I write separately to address one issue: the suggestion in Judge Dyk’s dissent that the court’s decision to sever the application of Title 5’s removal protections from the remainder of the AIA retroactively renders all prior APJ decisions constitutional, thereby obviating the need for panel rehearings in any cases decided under the AIA. Respectfully, that suggestion confuses the remedy the panel deemed appropriate in this case with the constitutional fix it deemed necessary to allow APJs to render future decisions in proceedings under the AIA.
DYK, Circuit Judge, with whom NEWMAN and WALLACH, Circuit Judges join, and with whom HUGHES, Circuit Judge, joins as to Part I.A, dissenting from the denial of rehearing en banc.
I respectfully dissent from the court’s decision not to rehear this case en banc.
The panel here holds that the appointment of Administrative Patent Judges (“APJs”), when conducted in accordance with the America Invents Act (“AIA”), would be unconstitutional if those APJs were protected by the removal provisions of Title 5. The panel avoids this result by severing the Title 5 removal provisions as applied to APJs, and thereby “render[ing] the APJs inferior officers and remedy[ing] the constitutional appointment problem.” Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320, 1325 (Fed. Cir. 2019).
As discussed in Part I, I conclude that even if the panel were correct that the present structure of IPR proceedings violates the Appointments Clause, the draconian remedy chosen by the panel—invalidation of the Title 5 removal protections for APJs—rewrites the statute contrary to Congressional intent. That remedy should not be invoked without giving Congress and the United States Patent and Trademark Office (“PTO”) itself the opportunity to devise a less disruptive remedy. In Part II, I conclude that even if the Title 5 remedy were adopted, this would not require invalidation of preexisting Board decisions. In Part III, I address the question of whether APJs are principal officers.
HUGHES, Circuit Judge, with whom WALLACH, Circuit Judge, joins, dissenting from the denial of the petitions for rehearing en banc.
I respectfully dissent from the court’s decision declining to rehear this appeal en banc. I believe that, viewed in light of the Director’s significant control over the activities of the Patent Trial and Appeal Board and Administrative Patent Judges, APJs are inferior officers already properly appointed by the Secretary of Commerce. And even if APJs are properly considered principal officers, I have grave doubts about the remedy the Arthrex panel applied to fix their appointment. In the face of an unconstitutional statute, our role is to determine whether severance of the unconstitutional portion would be consistent with Congress’s intent. Given the federal employment protections APJs and their predecessors have enjoyed for more than three decades, and the overall goal of the America Invents Act, I do not think Congress would have divested APJs of their Title 5 removal protections to cure any alleged constitutional defect in their appointment. As Judge Dyk suggests in his dissent, which I join as to Part I.A, I agree that Congress should be given the opportunity to craft the appropriate fix. Dyk Op. at 6.
WALLACH, Circuit Judge, dissenting from denial of a petition for rehearing en banc.
I write to express my disagreement with the merits of the decision in Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019). Given the significant direction to and supervision of an administrative patent judge (“APJ”) of the U.S. Patent and Trademark Office’s (“USPTO”) Patent Trial and Appeal Board (“PTAB”) by the USPTO Director, an APJ constitutes an inferior officer properly appointed by the Secretary of Commerce. Specifically, the Director’s ability to select a panel’s members, to designate a panel’s decision as precedential, and to de-designate precedential opinions gives the Director significant authority over the APJs and preserves the political accountability of the USPTO. This framework strongly supports the contention that APJs are inferior officers. I respectfully disagree with the Arthrex decision.
Harris v. Wilkie (Nonprecedential)
Appellant Norman A. Harris appeals a decision of the U.S. Court of Appeals for Veterans Claims (“Veterans Court”), affirming the Board of Veterans’ Appeals’ (“Board”) denial of entitlement to an effective date before July 29, 2002, for the award of service-connected disability benefits for Mr. Harris’s skin condition. Harris v. Wilkie, No. 17-3923, 2019 WL 1995773, at *3–4 (Vet. App. May 7, 2019). Because we lack jurisdiction, we dismiss.