Featured / Supreme Court Activity

This morning the Supreme Court agreed with the Federal Circuit that the statutory authority given to the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board violates the Appointments Clause. The Supreme Court, however, disagreed with the Federal Circuit as to the appropriate remedy given this violation. According to the Supreme Court, both the constitutional violation and the appropriate remedy relate to the lack of statutory authority for the Director of the USPTO, a principal officer of the United States nominated by the President and confirmed by the Senate, to decide whether to grant rehearing with respect to the underlying inter partes review proceeding. Here is a brief summary of the Court’s holding in United States v. Arthrex, Inc.; Arthrex, Inc. v. Smith & Nephew, Inc.; and Smith & Nephew, Inc. v. Arthrex, Inc., along with language from the Court’s controlling opinion.

As mentioned, the Supreme Court agreed with the Federal Circuit that the authority Congress gave to the PTAB violates the Appointments Clause. The Court identified the problem as the lack of authority under the statute for the Director (as mentioned, a principal officer of the United States) to review decisions of the PTAB, given that the PTAB includes Administrative Patent Judges who are not nominated by the President and confirmed by the Senate. “In sum,” Chief Justice Roberts explained, “we hold that [the statute] is unenforceable as applied to the Director insofar as it prevents the Director from reviewing the decisions of the PTAB on his own.”

The Court, however, disagreed with the Federal Circuit concerning the appropriate remedy. The Federal Circuit’s remedy eliminated job protections provided by statute to APJs and remanded the case for new hearings with judges not provided these job protections. The Supreme Court instead remanded the case to the USPTO Director (currently, the acting Director) for the Director, who again as mentioned is a principal officer of the United States, to determine whether to rehear the case. As explained by Chief Justice Roberts, “[w]e . . . conclude that the appropriate remedy is a remand to the Acting Director for him to decide whether to rehear the petition filed by Smith & Nephew.” This approach effectively matched the constitutional violation with the remedy.

Notably the Court fractured both with respect to the question of constitutional violation and the question of remedy. Chief Justice Roberts authored the Court’s controlling opinion. Justices Alito, Gorsuch, Kavanaugh, and Barrett joined the first two parts of that opinion, which addressed the constitutional violation. Justices Breyer, Sotomayor, and Kagan provided the necessary support for the Court’s remedy, even though they disagreed with the Court’s holding regarding any constitutional violation and did not join the part of Chief Justice Roberts’ opinion regarding the remedy.

Here is the introduction and conclusion to Chief Justice Roberts’ opinion. We will provide a more complete opinion summary later this week.

The validity of a patent previously issued by the Patent and Trademark Office can be challenged before the Patent Trial and Appeal Board, an executive tribunal within the PTO. The Board, composed largely of Administrative Patent Judges appointed by the Secretary of Commerce, has the final word within the Executive Branch on the validity of a challenged patent. Billions of dollars can turn on a Board decision.

Under the Constitution, “[t]he executive Power” is vested in the President, who has the responsibility to “take Care that the Laws be faithfully executed.” Art. II, §1, cl. 1; §3. The Appointments Clause provides that he may be assisted in carrying out that responsibility by officers nominated by him and confirmed by the Senate, as well as by other officers not appointed in that manner but whose work, we have held, must be directed and supervised by an officer who has been. §2, cl. 2. The question presented is whether the authority of the Board to issue decisions on behalf of the Executive Branch is consistent with these constitutional provisions.

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Today, we reaffirm and apply the rule from Edmond that the exercise of executive power by inferior officers must at some level be subject to the direction and supervision of an officer nominated by the President and confirmed by the Senate. The Constitution therefore forbids the enforcement of statutory restrictions on the Director that insulate the decisions of APJs from his direction and supervision. To be clear, the Director need not review every decision of the PTAB. What matters is that the Director have the discretion to review decisions rendered by APJs. In this way, the President remains responsible for the exercise of executive power—and through him, the exercise of executive power remains accountable to the people. The judgment of the United States Court of Appeals for the Federal Circuit is vacated, and the cases are remanded for further proceedings consistent with this opinion.