CAFC: PTAB Judges Operating in Violation of Appointments Clause

Well, that Escalated Quickly…

On the heels of the supplemental briefing discussed yesterday, the Federal Circuit has already issued its decision in  Arthrex Inc. v. Smith & Nephew, Inc.  The Court has vacated and remanded the decision, ordering  a new hearing before a panel of different APJs, prospectively remedying the issue by severing the problematic aspect of 35 U.S.C. § 3(c).

So, what does this mean for pending appeals?

First, as to the remedy, the Court explained (here):

" [W]e hold that a new panel of APJs must be designated and a new hearing granted. The Supreme Court has explained that when a judge has heard  the case and issued a decision on the merits, he cannot be expected to consider the matter as though he had not adjudicated it before. To cure the constitutional error, an-other ALJ must hold the new hearing. Lucia suggests that the remedy is not to vacate and remand for the same Board judges to rubber-stamp their earlier unconstitutionally rendered decision. Like Lucia, we hold that a new panel of APJs must be designated to hear the inter partes review anew on remand. To be clear, on remand the decision to institute is not suspect; we see no constitutional infirmity in the institution decision as the statute clearly bestows such authority on the Director pursuant to 35 U.S.C. § 314. Finally, we see no error in the new panel proceeding on the existing written record but leave to the Board’s sound discretion whether it should allow additional briefing or reopen the record in any individual case.

(internal citations/quotations omitted)

As to the impact on other cases,  the Court succinctly summed up the effect as follows:

" We have decided only that this case, where the final decision was rendered by a panel of APJs who were not constitutionally appointed and where the parties presented an Appointments Clause challenge on appeal, must be vacated and remanded. Appointments Clause challenges are non-jurisdictional structural constitutional objections that can be waived when not presented.  Thus, we see the impact of this case as limited to those cases where final written decisions were issued and where litigants present an Appointments Clause challenge on appeal.

Although the Court has severed the statute to address the issue, I would expect a technical amendment in the future.  Perhaps Title 5 protections will be restored in favor of another control that would provide the proper balance under the Appointments Clause.

…never a dull moment.