An Avalanche of FWD Do-Overs Imminent?

Back in June I explained the latest constitutional challenge to AIA Trial Proceedings under the Appointments Clause of the U.S. Constitution. In a nutshell, the argument is that PTAB Administrative Patent Judges (APJ) are “superior officers” delivering the final word of the government in PTAB trial proceedings. And that, as such, APJ actions are unconstitutional since they are not political appointees confirmed by the U.S. Senate — as the Appointments Clause requires.

That argument found its way to the Federal Circuit earlier this month in Arthrex Inc. v. Smith & Nephew, Inc. At oral argument, the Court probed the Director’s ability to remove APJs, and seemed concerned that this deficiency was enough to violate the Appointments Clause. An Order issued last week for additional briefing appears to reinforce the expectation that the Court will find the APJs functioning in violation of the Appointments Clause.

Last week’s Order (here) seemingly previews the ultimate determination by seeking additional briefing on the remedy:

" Should the Court conclude that there was an Appointments Clause violation, based on a conclusion that PTAB Judges are principal officers that are not properly appointed, but that a portion of the Patent Act may be severed and excised to cure the constitutional infirmity, should the case then be vacated and remanded for a new hearing before the Board pursuant to Lucia v. SEC, 138 S. Ct. 2044 (2018)?

The severing, as explained at oral argument, would likely be to read out Title V employment protections from 35 U.S.C. § 3(c) such that APJs could be removed without cause. As explained at oral argument, there is well-established precedent to “scratch out” aspects of statutes that lead to a constitutional infirmity under the Appointments Clause. Removing this protection, would appear bring a proper balance of control/supervision of APJs, at least enough to render them “inferior officers” under the Appointments Clause precedent. (sorry APJs, perhaps temporary until another fix can be derived that passes muster)

Which raises the question, “What does this mean for practitioners?”

First, the PTAB is not shutting down. But, just like after the SAS decision, it might be messy for awhile. As the request for additional briefing appears to suggest, the Appointment Clause infirmity can be temporarily addressed by scratching out an offending provision until a permanent statutory fix can be passed into law. But what does this mean for cases with FWDs under the older version of the statute, and not yet through appeal? Well, in the Lucia decision referenced in last week’s Order, a statutory fix was passed into law while the case was pending at the Supreme Court. As a result Lucia was remanded back to the SEC so that a different judge could decide it. In Arthrex, the statute has yet to be corrected, so it may be less clear whether a remand is appropriate (hence the request for additional briefing.)

Once the Arthrex decision is issued (and if it goes as expected) FWDs issued under the former version of the statute that timely raise the Appointment Clause issue will likely be remanded for decision by a different APJ, or set of APJs. The result is a probably a re-work of 4-6 months worth of FWDs for the agency.

Scott A. McKeown is an author of the Patents Post Grant