A Guide to Arthrex: Activity Heats Up in Petitions Pending with Supreme Court

The Supreme Court is currently considering several pleas to review the holding in Arthrex v. Smith & Nephew I and Arthrex v. Smith & Nephew II in the form of four petitions for writs of certiorari: U.S. v Arthrex, No. 19-1434, Smith & Nephew v. Arthrex, No. 19-1452, Arthrex v. Smith & Nephew, No. 19-1458, and Arthrex v. Smith & Nephew, No. 19-1204.  Recently, there has been an uptick in activity in the various cases, with Arthrex most recently filing response briefs in two cases and amicus brief filed by Askeladden LLC and the New York Intellectual Property Law Association (NYIPLA) in U.S. v Arthrex.

U.S. v Arthrex

On June 25, 2020, the United States filed a petition for a writ of certiorari seeking review of the decisions in Arthrex and Polaris Innovations Ltd. v. Kingston Technology Co., Inc., No. 2018-1831, 792 Fed. App’x. 820 (Fed. Cir. 2020). The U.S. asked the Supreme Court to consider:

1) Whether APJs are principal officers or inferior officers (the U.S. asserted that APJs are constitutionally appointed inferior officers), and

2) whether the CAFC erred by reaching the Appointments Clause issue when the issue was forfeited because it was not raised before the PTAB (the U.S. argued that the CAFC incorrectly excused the forfeiture).

On July 23, respondents Smith & Nephew, Inc, et al. (S&N) filed a brief jointly in case Nos. 19-1434, 19-1458. On July 24, Arthrex submitted a Memorandum in Response. Shortly thereafter, on July 29, Askeladden L.L.C. weighed in with an Amicus brief, which is detailed here. In the Respondent’s brief, S&N asserted that the Court should grant the petitions for writs of certiorari and consolidate case Nos. 19-1434, 19-1452, 19-1458, noting that “[b]ecause the underlying Appointments Clause issue will grow no better developed than it is now, the government’s … question presented clearly warrants review by this Court at this time.”

Arthrex’s Memorandum in Response, which was filed jointly in case Nos. 19-1434 & 19-1452, emphasized that the CAFC was correct in holding that APJs are principal officers who were not appointed in the manner the Appointments Clause requires, especially since no superior executive officer has the authority to review APJs’ decisions. However, Arthrex agreed that review of the case by the Court is important because, by way of the Arthrex holding, the CAFC held a provision of federal law unconstitutional as applied to a significant category of federal officers and the CAFC’s “attempt to remedy the violation, by severing APJs’ tenure protections, raises its own serious issues that are the subject of Arthrex’s petition in No. 19-1458.”

In addition to the Askeladden brief linked above, the New York Intellectual Property Law Association has also filed a brief supporting the U.S. petition.

Smith and Nephew v. Arthrex

S&N were petitioners in proceedings before the Patent Trial and Appeal Board (PTAB) and appellees before the U.S. Court of Appeals for the Federal Circuit (CAFC), while Arthrex, Inc. was the patent owner in proceedings before the PTAB and the appellant before the CAFC and the United States was an intervenor before the CAFC.  On June 25, S&N filed a petition asking the Court to consider the question of whether “administrative patent judges are ‘principal’ or ‘inferior’ Officers of the United States within the meaning of the Appointments Clause.” In the petition, S&N asserted that the Supreme Court has consistently held that administrative adjudicators are Officers of the United States under the Appointments Clause, i.e. inferior officers, who may be appointed by a Head of Department, but the CAFC erroneously held that APJs are “principal” Officers, who must be nominated by the President and confirmed by the Senate; thus, the mode of appointing administrative patent judges was unconstitutional.

On July 22, the U.S. filed a memorandum as a respondent in each of case Nos. 19-1452, 19-1458, and 19-1459 (Polaris). The U.S. pointed out that several related cases all seek review of judgments and issues related to the Arthrex decision; thus, the U.S. urged the Court to “consolidate the cases and realign the parties for purposes of briefing and argument.”  The U.S. set forth three questions that, in its view, represent the issues presented in of each of the pending cases:

1. Whether, for purposes of the Appointments Clause, U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges of the U.S. Patent and Trademark Office 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[;]
2. Whether, if administrative patent judges are principal officers, the court of appeals properly cured any Appointments Clause defect in the current statutory scheme prospectively by severing the application of 5 U.S.C. 7513(a) to those judges [; and]
3. Whether the court of appeals in Arthrex erred by adjudicating an Appointments Clause challenge that had not been presented to the agency.”

As described above, Arthrex filed a Memorandum in Response on July 24 jointly in case Nos. 19-1434 & 19-1452, wherein Arthrex opined that the CAFC did not err in holding that APJs are principal officers who are not appointed in the manner the Appointments Clause requires, but noted that the decision presented an important question that warrants review by the Court.

Arthrex v. Smith & Nephew, No. 19-1458

On July 6, Arthrex filed a petition asking the Court to review the questions:

1) Whether the CAFC’s “severance remedy is consistent with congressional intent, where Congress has long considered tenure protections essential to secure the independence and impartiality of administrative judges”; and

2) whether the CAFC “correctly held that the elimination of APJ tenure protections was sufficient to render APJs inferior officers, even though their decisions still are not reviewable by any principal executive officer.”

Arthrex urged the Court to grant the petition because the severability of APJs’ tenure is an important issue and by “dramatically understating the importance of tenure protections necessary to ensure impartiality and independence, the [CAFC’s] decision undermines the integrity of the AIA review schemes and threatens the fairness of agency adjudication generally.”

Arthrex also noted the CAFC’s ruling “that removal authority is sufficient even without any superior officer able to reverse or modify APJ decisions” raises constitutional issues and warrants the Court’s review.

The U.S.’s respondent’s memorandum and respondent S&N’s brief are discussed above.

Arthrex v. Smith & Nephew, No. 19-1204

On April 6, Arthrex asked the Court to consider the questions:

1.) whether “the retroactive application of inter partes review to patents that were applied for before the America Invents Act violates the Fifth Amendment”; and

2.) whether “a court of appeals can invoke forfeiture principles to refuse to address a constitutional claim in a pending appeal despite an intervening change in law.” In particular, Arthrex challenged the constitutionality of applying IPR retroactively, as the issue was left open in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC.  The petition also presented “a constitutional challenge to the appointment of [APJs] who adjudicate inter partes reviews.

On June 8, the U.S. filed a respondent’s brief in opposition asserting that Arthrex’s petition should be denied because Arthrex’s questions lacked merit and did not warrant review by the Court. The U.S. noted that “even with respect to patents that were not only applied for but actually issued before the AIA’s enactment, the use of the AIA’s inter partes review procedures does not constitute a retroactive application of that law.” The U.S. also stated that “[a] statute does not operate ‘retrospectively’ merely because it is applied in a case arising from conduct antedating the statute’s enactment, … or upsets expectations based in prior law.” The U.S. explained that the relevant question was “whether the new provision attaches new legal consequences to events completed before its enactment,” and in the U.S.’s opinion, there were no new legal consequences attached here.

On June 9, S&N filed a respondent’s brief in opposition submitting that the petition for a writ of certiorari should be denied. S&N reasoned, in part, that “the question actually ‘left open’ in Oil States—is of no moment to petitioner, since its own patent issued long after the AIA was enacted.” S&N also noted that the Supreme Court has explained that a “statute does not operate ‘retrospectively’ merely because it is applied in a case arising from conduct antedating the statute’s enactment, or upsets expectations based in prior law. Rather, the court must ask whether the new provision attaches new legal consequences to events completed before its enactment.”

Arthrex filed a reply on June 19, further emphasizing that the Court should use this case to consider the question of whether Congress can apply inter partes review retroactively to patents that predate the America Invents Act.

It’s Up to You, SCOTUS

As noted in the NYIPLA’s amicus brief, “as of November 2019, over 10,000 trials in post-grant proceedings had been held by the PTAB.” Since the CAFC has denied rehearing and “no other court of appeals would have jurisdiction,” the fate of these PTAB trials is in the hands of SCOTUS.