On June 21, 2021, the United States Supreme Court (“Court”) issued a decision in United States v. Arthrex, Inc. on the issue of whether the administrative patent judges (“APJ”) of the Patent Trial and Appeal Board (“PTAB”) in the United States Patent and Trademark Office (“USPTO”) hold power that follows the requirements of the Appointments Clause in Article II of the U.S. Constitution. In short, the Court found they did not, but left questions unanswered as to the application of this ruling. United States v. Arthrex, Inc., No. 19-1434, 2021 WL 2519433, at *4 (U.S. June 21, 2021).
Arthrex, Inc. is a developer of medical devices and procedures for orthopedic surgery who holds a surgical device patent: U.S. Patent No. 9,179,907. Arthrex alleged that Smith & Nephew, Inc. and ArthroCare Corp. infringed on this patent, and an inter partes review at the USPTO was initiated. The APJs forming the panel ultimately concluded that Arthrex’s patent was invalid, and Arthrex appealed, raising argument related to the Constitutionality of the APJs under the Appointments Clause of the Constitution. Id at *7.
The Appointments Clause states that:
“[The President] shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.” Art. II, §2, cl. 2.
APJs are appointed by the Secretary of Commerce, whereas the Director of PTAB is nominated by the President and confirmed by the Senate. 35 U.S.C.A. § 6(a) (West 2012). In the majority opinion, the Court held the “unreviewable authority wielded by APJs during inter-partes review is incompatible with their appointment by the Secretary to an inferior office.” United States v. Arthrex, Inc., at *13. Because APJs exercise their authority autonomously, with the sort of independence that only a properly nominated principal officer should hold, the Court determined their power exceeded the allowable scope. To resolve the dispute, the Court issued the instruction that PTAB decisions by APJs will be “subject to review by the Director.” Id at *14. This 7-2 ruling on the remedy gives the Director, who is confirmed by the Senate, the ability to unilaterally reexamine and overturn decisions of the APJs.
While this ruling is clear on its face, its application in the day-to-day operations is still unclear. Ultimately, the Director will not be reviewing every rendered decision of the PTAB, however, the Director will have the capacity to directly review decisions rendered by the APJs. United States v. Arthrex, Inc., at *15, *16. Following the decision, on June 29, 2021, the USPTO announced a new procedure where a party may request Director review of a final written decision in an inter partes review or post-grant review by simultaneously filing a request for rehearing and submitting a notification of that request to a designated email,
https://www.uspto.gov/about-us/news-updates/uspto-issues-information-implementation-supreme-courts-decision-us-v-arthrex. This request must be filed within 30 days of the PTAB final decision, pursuant to 37 C.F.R. 42.71(d) and the Director will evaluate the request under 37 C.F.R. 90.3(b). Currently, the USPTO will not be charging a fee for a Request for Rehearing. See Arthrex Q&As (June 29, 2021), https://www.uspto.gov/patents/patent-trial-and-appeal-board/procedures/arthrex-qas. As with all new processes, we can expect additional discussion in the legal community regarding the scope of the Director’s power as well as more information and updates to be revealed regarding the procedure for Director review in the near future.