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Government Arguments Potentially Open Constitutional Can of Worms Regarding PTAB Appointments

June 08, 2021

In response to arguments made by the US government in an appeal pending before the US Supreme Court, members of Congress requested an investigation into the adequacy of due process afforded to Patent Trial and Appeal Board litigants, in particular the amount of supervision and arbitrary control exercised by the director of the US Patent and Trademark Office over PTAB decisionmaking. This request stemmed from the government’s attempts to reverse the Federal Circuit’s prior determination that the director lacked sufficient supervision and control over administrative patent judges to render them “inferior officers” not subject to Senate confirmation.

In Arthrex, Inc. v. Smith & Nephew, Inc., the US Court of Appeals for the Federal Circuit found administrative patent judges (APJs) for the Patent Trial and Appeal Board (PTAB) to be “primary officers” of the United States such that their appointment was unconstitutional in the absence of Senate confirmation.[1] Specifically, it determined that the director of the US Patent and Trademark Office (USPTO) lacked sufficient (1) review power, (2) supervision and control, or (3) removal power over APJs to render them “inferior officers” that would not be subject to Senate confirmation.[2] The Federal Circuit nevertheless preserved the broader statute by severing only the removal restrictions for APJs, thus expanding the director’s removal power and rendering APJs “inferior officers.”[3]

Arthrex and the US government have cross-appealed in a pending case before the Supreme Court of the United States: the government seeks a determination that the USPTO director had sufficient supervision and control over APJs to render them “inferior officers” (such that severance is unnecessary), whereas Arthrex seeks to overturn the determination that severing removal restrictions would resolve the constitutional defect.

The government’s arguments describing the extent of the director’s purported supervision and control powers over APJs, however, has caused congressional concern over the adequacy of due process afforded to litigants before the PTAB. In a June 3 letter, members of the House Subcommittee on Courts, Intellectual Property, and the Internet explained:

[T]he government’s position is that APJs are instead “inferior officers” who do not require Senate confirmation because they are subject to significant oversight and control by the Director of the USPTO, who is a Senate-confirmed political appointee. The government argues that this control includes, for example, the ability of the Director to dictate the outcome of PTAB cases by controlling which APJs decide which cases (i.e., APJs who will decide each case as the Director wishes) and by providing policy directives that APJs are obligated to follow.

If the government’s arguments are accurate, PTAB cases may have been decided based on factors outside of the evidentiary record and public legal authority (e.g., statutes, regulations, court precedents) available to the parties.[4]

 

In Congress’s view, the “possibility” that the director has the power to decide cases based on such external factors “raises potential due process concerns” that “would be inconsistent with the intent of Congress in enacting the [American Invents Act].”[5] Accordingly, these members asked the Government Accountability Office (GAO)—which performs investigations and auditing on behalf of Congress—to review certain aspects of PTAB decisionmaking and panel selection as they relate to the director’s involvement.[6]

The letter raises another question about the constitutionality of PTAB appointments. Assuming the Supreme Court finds APJs to be “inferior officers” as the government urges, this may raise a due process issue for future litigants to leverage. For example, if the GAO investigation determines that the director has influenced PTAB decisions based on factors outside the evidentiary record and legal authority (or is capable of doing so), that exercise of power would seemingly imply that PTAB decisions are, to a certain extent, subject to the director’s arbitrary judgment.

Alternatively, the Supreme Court’s consideration of whether to find APJs “inferior officers” in Arthrex could be influenced by the perceived likelihood of this due process issue: the Court may be hesitant to find the director has expansive control over APJs if doing so would erode the impartiality of the tribunal itself.

Assuming the Supreme Court does not first address this issue while deciding Arthrex this term, the GAO’s investigation, if any, will likely shed light on whether these due process concerns are real or merely a theoretical concern. We will monitor and follow up on this issue as further developments are made.

CONTACTS

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the authors, Michael T. Sikora (Chicago) and Dion M. Bregman (Silicon Valley), or any of the following lawyers from Morgan Lewis’s post-grant proceedings team:

Boston
Joshua M. Dalton

Century City
Andrew V. Devkar

Chicago
Jason C. White

Houston
C. Erik Hawes
Rick L. Rambo

Philadelphia
Louis W. Beardell, Jr.

San Francisco
Brent A. Hawkins

Silicon Valley
Andrew J. Gray IV
Ahren C. Hsu-Hoffman
Michael J. Lyons

Washington, DC
Jeffrey G. Killian, Ph.D.
Robert Smyth, Ph.D.



[1] 941 F.3d 1320 (Fed. Cir. 2019).

[2] See id. at 1329-34.

[3] Id. at 1335-38.

[4] House Subcommittee on Courts, Intellectual Property, and the Internet, Letter at 1 (June 3, 2021) (emphasis added).

[5] Id. at 1-2.

[6] Id. at 2.