Will the Supreme Court Keep Kicking the Can or Stop It by Addressing Arthrex?

On April 6, Arthrex, Inc. filed a petition for certiorari in the U.S. Supreme Court on two discrete patent issues. Notably, one of the issues raised in Arthrex’s April 6 petition is likely to prove especially compelling to the Supreme Court, and may well tilt the balance for it being granted, as it provides an inroad to a constitutional Appointments Clause issue that is central to several other petitions by various parties on the same issue. Arthrex is widely anticipated to file another petition for certiorari on this issue stemming from the Court of Appeals for the Federal Circuit’s recent denial of a rehearing en banc in Arthrex v. Smith & Nephew wherein the main issue had been the Federal Circuit’s ruling that Patent Trial and Appeal Board (PTAB) judges were indeed unconstitutionally appointed under the America Invents Act (AIA), but that the Federal Circuit’s field expedient blue penciling of the underlying statutes corrected any constitutional flaws nunc pro tunc. See “The IP Bar Weighs in on CAFC Denial of Arthrex Rehearing.”

Revisiting Oil States

In Arthrex’s April 6 petition, the first question presented raised the issue of statutory retroactivity by a Federal Circuit opinion in August 2019 upholding the PTAB invalidation of an Arthrex patent on a surgical suture. See Arthrex Petition for Cert., pgs. 13. Arthrex’s first question focused on the constitutionality of the Federal Circuit retroactively applying inter partes review (IPR) to patents that were applied for pre-AIA, and either issued before the AIA was enacted, as was the parallel case involving Celgene (Celgene Corp. v. Peter, No. 19-1074 (Petition for Certiorari filed February 26, 2019), or that of Arthrex’s patent, which had been disclosed to the public prior to the AIA but was granted after the AIA was enacted. Arthrex’s argument in its petition regarding the first question is grounded on the basis of a denial of substantive due process under the Fifth Amendment due to the heightened risk of shortening patent terms caused by retroactively applying the inter partes review (IPR) process to patents that were applied for without the benefit of knowing how they would likely be scrutinized under the IPR process. This was the issue left expressly unresolved by the Supreme Court in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, 138 S. Ct. 1365, 1379 (2018). Arthrex argues in its petition that the time is nigh for the Supreme Court to grant review to both Celgene and Arthrex on the issue of retroactively applying IPRs to pre-AIA filed patents. It remains to be seen if the Supreme Court accepts this invitation to revisit Oil States.

Forfeiture

However, a more compelling issue in the April 6 petition is presented by Arthrex’s second question involving a separate Federal Circuit opinion in October 2019 also involving Arthrex. In that case, Arthrex had argued that that PTAB judges are not constitutionally appointed under the Appointments Clause to the U.S. Constitution. See Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019) (“Arthrex ’907”), reh’g denied (Mar. 23, 2020) (Federal Circuit held that Patent Trial and Appeal Board judges are unconstitutionally appointed but the Federal Circuit’s editing of the underlying statutes providing for weakened tenure of PTAB judges corrected such constitutional flaws). Arthrex argued in its April 6 petition that the Arthrex `907 reasoning should also apply to the underlying matter, as it had timely brought the Arthrex `907 decision to the attention of the underlying judicial panel handling the present matter via a filed letter of citation. The Federal Circuit panel for the present matter declined to apply the Arthrex `907 holding, reasoning that Arthrex had not argued that issue in its opening brief—a classic “forfeiture” occurred that could not be corrected by subsequent measures. Arthrex argued in its April 6 petition that the forfeiture rule should not apply in the present matter where there has been an intervening change of law while an appeal is pending. Arthrex concluded its arguments in its April 6 petition that the Supreme Court should grant review in this case to decide whether the intervening change of law in Arthrex ’907 should apply to all such cases pending on appeal. Arthrex further argued in the alternative that the Court may elect to pass on  this case in view of evaluating the anticipated petitions from other parties facing the same issue, as well as waiting to address the merits of the likely petition for certiorari from Arthrex directly stemming from the Arthrex `907 decision itself. The April 6 Petition cites four recent Federal Circuit decisions in which the same issues of the Appointments Clause and how PTAB judges are appointed were not addressed under the Federal Circuit’s application of the forfeiture rule.

Time to Pick Up the Can

In conclusion, regardless of whether the Supreme Court grants certiorari on the Arthrex April 6 petition or stays same pending granting petitions from other parties or Arthrex, the time for kicking the can down the road is rapidly coming to a close. The Supreme Court will eventually have the right petition before it, without the safe harbor of the forfeiture rule applied by the Federal Circuit, and will have to squarely address the merits head on of the Appointments Clause and how PTAB judges were and are appointed. Anything other than a wholesale adoption by the Supreme Court of the Federal Circuit’s reasoning and corrective blue-penciling in the Arthrex `907 decision will undoubtedly cause a profound change in PTAB jurisprudence.

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