Askeladden Brief Asks SCOTUS to Grant U.S. Government’s Petition to Reconsider Whether PTAB APJs Are Principal Officers Under the Appointments Clause

Editor’s note: the authors filed the amicus brief discussed below. There are presently a number of SCOTUS petitions relating to the Arthrex decision pending. IPWatchdog will have a full report on the latest in these cases in the coming days.

On July 29, Askeladden LLC filed an amicus brief in support of the U.S. Government’s combined petition for a writ of certiorari in U.S. v. Arthrex, Inc., No. 19-1434.

In particular, Askeladden asks the Supreme Court to accept the petition and address the threshold question raised by the U.S. Government: whether, for purposes of the Appointments Clause, U.S. Const. art. II, § 2, Cl. 2, administrative patent judges (APJs) of the Patent Trial and Appeals Board (PTAB) of the U.S. Patent and Trademark Office (USPTO) are “principal officers” who must be appointed by the President with the Senate’s advice and consent, or “inferior officers” whose appointment Congress has permissibly vested in a department head.

Further, the petition seeks to challenge the holding in Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019), declaring that “the statute [Title 35, “the Patent Act”] as currently constructed makes the APJs principal officers” and thus means that APJs were appointed in violation of the Appointments Clause of the U.S. Constitution, U.S. Const. art. II, § 2, cl. 2. See 941 F.3d at 1325. Since then, the Federal Circuit in over 100 cases, including Polaris Innovations Ltd. v. Kingston Tech. Co., 792 F. App’x 820 (Fed. Cir. 2020) (per curiam), has continued to apply Arthrex I to summarily vacate, reverse, and remand final written decisions of the PTAB APJs in inter partes reviews (“IPRs”) issued on or before October 31, 2020.

Cherry Picked Facts

Arthrex I’s conclusion that the PTAB APJs are “principal” officers was wrong. While this Court’s precedent makes clear that PTAB APJs are “officers” of the U.S. since they “exercise significant authority,” none of the decisions of this Court relied upon in Arthrex I found an administrative judge to be a “principal” officer. Rather, each of this Court’s decisions cited merely held that the official in question was an “inferior” officer.

The touchstone of whether an officer is a “principal” officer rather than an “inferior officer” is whether the officer’s “work is directed and supervised at some level by others who were appointed by presidential nomination with the advice and consent of the Senate.”  Edmond v. United States, 520 U.S. 651, 663 (1997). Rather than follow Edmond’s admonition that “[o]ur cases have not set forth an exclusive criterion for distinguishing between principal and inferior officers for Appointment Clause purposes,” Arthrex I cherry-picked the factors from Edmond to establish a three-factor test to be tallied and mechanically applied. This is clear error and needs to be addressed by this Court.

The Court Must Provide Clarity

As a result of the erroneous determination by the Arthrex panel that APJs were unconstitutionally appointed prior to October 31, 2020, havoc and confusion have occurred, resulting in the summary vacation and unnecessary remand for rehearing of over 100 otherwise unassailable final written PTAB decisions, the waste of valuable party and court resources in litigating collateral issues with respect to the Appointments Clause and waiver issues, instead of focusing on the merits of the actual disputes between the parties, and now the questioning of other actions taken by the PTAB APJs in their roles in non-IPR proceedings.

Because the lower court invalidated an Act of Congress, it is important for this Court to ensure that this significant outcome was the correct one. This is especially true in a case like this one, which impacts a large number of stakeholders and a large part of the nation’s economy.

The Court Should Seize this Opportunity to Prevent Further Harm

In the first instance, it would be best for this Court to address the first question presented by the Government and confirm that APJs of the PTAB are merely “inferior officers” of the United States and thus were constitutionally appointed. Therefore, severance of Title 5 “without cause” rights is not necessary, the prior decisions can be reinstated, and any appeals to the Federal Circuit can be properly reviewed on the merits.

Despite the fact that one-third of the Federal Circuit’s bench believes that Arthrex I was wrongly decided, there will be no more debate in the lower courts on this issue, as the Federal Circuit denied requests for rehearing by all parties to the proceeding. In addition, waiting for another case to present the question will cause untold harm to the PTAB as an institution, its over 250 APJs, the parties practicing before the PTAB, and the present and potentially future litigants who will need to address the delay in determining the fate of the over 100 patents involved in the remand decisions. Further, Congress has been stymied by Arthrex I due to the lack of guidance from the full Federal Circuit or this Court as to the proper way to resolve the problem.

Charles R. Macedo is principal counsel and David P. Goldberg and Chandler Sturm are additional counsel for Askeladden on the brief.

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