Federal Circuit Holds APJs Are Principal Officers

By Kevin E. Noonan and James L. Lovsin --

Today in Arthrex, Inc. v. Smith & Nephew, Inc., a three-judge panel of the Federal Circuit held that the way the U.S. Patent and Trademark Office has appointed administrative patent judges at the Patent Trial and Appeal Board violates the Appointments Clause of the Constitution (Art. II, sec. 2, cl. 2), in an opinion by Judge Moore, joined by Judges Reyna and Chen.  According to the opinion, because APJs are principal officers they must be nominated by the President and confirmed by the Senate.  Although the opinion provides a remedy (having Congress abrogate the portion of the Patent Act restricting removal of the APJs), the legitimacy of the PTAB to render decisions in the meantime has been abrogated by the Court, and the effect on (1) pending PTAB proceedings, (2) pending appeals of PTAB decisions at the Federal Circuit and the Supreme Court, and (3) the thousands of judgments by the PTAB since passage of the Leary-Smith America Invents Act is uncertain.  District court litigation stayed in favor of a PTAB proceeding may also be impacted.

This decision will be the subject of a future post.

Comments

[skeptical]

The decision touches upon at least four factors in deciding between inferior and principal officer levels:
1 - Power of Review - prior to binding final decision (seen as indicating principal status)
2 - Supervision (seen as indicating inferior status)
3 - Removal Power (CHANGED to pivot from principal to inferior status)**
4 - Other (the case of Edmond provides: subject to removal by the Attorney General, performed limited duties, had limited jurisdiction, and had a limited tenure.*** The court then adds a "1975 factor," but one has to wonder if that has any force (given the subsequent changes).

What other factors may there be?

** This part of the decision is the most critical - and the most confusing, as it sidesteps the "I can appoint, therefore I can dis-appoint (at any time) argument."

*** interesting that this factor is stated to lean against inferior status, but is not counted in the math (2 to 1) by the court - with their change being a "minimal change" to effect the swing from principal to inferior status.

Aside from the fact that the court has indeed legislated from the bench and rewritten the structural law (even as they claim not to have done so), the math of the given factors (excluding the odd "1975 factor"), yields a change of 1-3 in favor of "inferior" to a TIE of 2-2.