This past Monday, June 21, the Supreme Court decided United States v. Arthrex, Inc., Smith & Nephew, Inc. v. Arthrex, Inc., and Arthrex, Inc. v. Smith & Nephew, Inc. By a vote of five to four, the Court concluded that the statutory authority conferred upon the Patent Trial and Appeal Board to issue final decisions on behalf of the Executive Branch in inter partes review proceedings violates the Constitution’s Appointments Clause because the PTAB’s Administrative Patent Judges are not nominated by the President and confirmed by the Senate. Given this violation, the Court voted seven to two to sever the unconstitutional portion of the patent statute, giving the Director of the Patent and Trademark Office, who is nominated by the President and confirmed by the Senate, the power to review the PTAB’s decisions. Here is a summary of the Court’s opinions.
Chief Justice Roberts authored the controlling opinion. Justices Alito, Gorsuch, Kavanaugh, and Barrett joined the parts of his opinion finding a violation of the Appointments Clause. Justice Gorsuch wrote an opinion concurring in part and dissenting in part, in which he agreed with Chief Justice Roberts with respect to the constitutional violation but disagreed with the Court’s remedy. Justice Breyer authored an opinion, joined by Justices Sotomayor and Kagan, also concurring in part and dissenting in part. These Justices, however, disagreed with the majority’s holding relating to the constitutional violation but agreed with the Court’s remedy. Notably, while they agreed with the Court’s remedy, they did not join the portion of the opinion of Chief Justice Roberts addressing the remedy. Justice Thomas authored an opinion dissenting on both issues.
Chief Justice Roberts began his opinion by discussing the history of the patent system, moving from the creation of the Patent Board by the First Congress to the establishment of the PTAB. He then discussed the PTAB’s structure before providing a brief overview of the facts of the three cases at issue. He set up the rest of his opinion by highlighting the two questions to be decided in these consolidated cases: “whether the PTAB’s structure is consistent with the Appointments Clause, and the appropriate remedy if it is not.”
To begin his analysis of the alleged Appointments Clause violation, Chief Justice Roberts briefly discussed the structure of the Executive Branch and then moved to an analysis of the authority of APJs. Chief Justice Roberts concluded that the appropriate analysis is laid out in Edmond v. United States. There, he explained, the test for whether an officer is an inferior officer is “‘whether he has a superior’ other than the President,” meaning that “[a]n inferior officer must be ‘directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate.’”
Chief Justice Roberts found that “no principal officer at any level within the Executive Branch ‘direct[s] and supervise[s]’ the work of APJs in that regard,” but rather “APJs have the ‘power to render a final decision on behalf of the United States’ without any such review by their nominal superior or any other principal officer in the Executive Branch.” This power, coupled with the fact that APJs are not nominated by the President and confirmed by the Senate, led Chief Justice Roberts and the Court to conclude that there is a constitutional violation under the Appointments Clause. The opinion explains “that the unreviewable authority wielded by APJs during inter partes review is incompatible with their appointment by the Secretary to an inferior office.”
In light of the constitutional violation, Chief Justice Roberts proceeded to determine the appropriate remedy. He explained that, “[i]n general, ‘when confronting a constitutional flaw in a statute, we try to limit the solution to the problem’ by disregarding the ‘problematic portions while leaving the remainder intact.'” When determining which statutory provisions are inappropriate, he explained, the Court must “give ‘full effect’ to the Constitution and to whatever portions of the statute are ‘not repugnant’ to the Constitution.”
Here, he concluded that a portion of the patent statute “is unenforceable as applied to the Director insofar as it prevents the Director from reviewing the decisions of the PTAB on his own.” He explained that by invalidated the provision in question “[t]he Director may engage in such review and reach his own decision.” In short, by giving the Director, who is nominated by the President and confirmed by the Senate, the authority to review and set aside decisions of the PTAB, the constitutional problem is eliminated. Notably, however, Chief Justice Roberts indicated the scope of the Court’s remedy is limited, because “this suit concerns only the Director’s ability to supervise APJs in adjudicating petitions for inter partes review.”
Chief Justice Roberts summed up his opinion as follows:
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.
As mentioned, Justice Gorsuch, concurring in part and dissenting in part, agreed with the majority’s finding of a constitutional violation but not its remedy. Notably, Justice Gorsuch highlighted his view the the current problem relates to the Court’s previous decision to allow patent rights to be adjudicated outside of Article III courts:
I continue to think this Court’s recent decision in Oil States—upsetting this traditional understanding and allowing officials in the Executive Branch to “cancel” already-issued patents—departed from the Constitution’s separation of powers. But it would be an even greater departure to permit those officials to withdraw a vested property right while accountable to no one within the Executive Branch.
In his discussion relating to the available remedy–the point on which he disagreed with the majority in this case–Justice Gorsuch did not agree with the Court’s use of the doctrine of severability. He explained that, “[w]hile the Court’s merits analysis ensures that executive power properly resides in the Executive Branch, its severability analysis seemingly confers legislative power to the Judiciary—endowing us with the authority to make a raw policy choice between competing lawful options.” He argued that, “[w]ithout some direction from Congress, this problem cannot be resolved as a matter of statutory interpretation,” but rather must be a policy choice.
As mentioned, Justice Breyer also wrote an opinion concurring in part and dissenting in part, but instead of supported the Court’s analysis of a constitutional violation he supported the Court’s remedy.
In his discussion of the alleged constitutional violation, Justice Breyer argued that “the Court should interpret the Appointments Clause as granting Congress a degree of leeway to establish and empower federal offices.” In his view, nothing “in the Constitution describes the degree of control that a superior officer must exercise over the decisions of an inferior officer.” He argued for judicial deference, stating that “the Constitution grants to Congress the ‘authority to create both categories of offices—those the President must fill with the Senate’s concurrence and “inferior” ones.'” Any judicial deference, he claimed, “should prove sufficient to validate the statutes here” because “the provisions at issue fall well within Article I’s grant to Congress of the patent power.” Justice Breyer also stressed Congress’s intent, finding it to be “unusually clear in this suit, as there is strong evidence that Congress designed the current structure specifically to address constitutional concerns.”
Lastly, Justice Thomas authored a dissenting opinion disagreeing the Court as to the constitutional violation and the remedy. He suggested the fact “[t[hat both the Federal Circuit and this Court would take so much care to ensure that administrative patent judges, appointed as inferior officers, would remain inferior officers” indicates that “perhaps they were inferior officers to begin with.” He wrote:
There can be no dispute that administrative patent judges are, in fact, inferior: They are lower in rank to at least two different officers. As part of the Board, they serve in the Patent and Trademark Office, run by a Director “responsible for providing policy direction and management supervision for the Office and for the issuance of patents and the registration of trademarks.” As a comparison to the facts in Edmond illustrates, the Director and Secretary [of Commerce] are also functionally superior because they supervise and direct the work administrative patent judges perform.
Regarding the Court’s remedy, Justice Thomas argues that it “underscores that [the majority] is ambivalent about the idea of administrative patent judges actually being principal officers.”
In concluding his dissenting opinion, Justice Thomas wrote:
A tricky Congress could allow the Executive to sneak a powerful, Cabinet-level-like officer past the Senate by merely giving him a low rank. Maybe. But this seems like an odd case to address that concern. And, even if this suit did raise the issue, the Court should be hesitant to enforce its view of the Constitution’s spirit at the cost of its text.