Arthrex v. Smith & Nephew

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In Arthrex, Inc. v. Smith & Nephew, Inc., No. 2018-2140, 2019 U.S. App. LEXIS 32613 (Fed. Cir. Oct. 31, 2019), the U.S. Court of Appeals for the Federal Circuit held that the appointment of the Patent and Trial Appeal Board (PTAB)'s Administrative Patent Judges ("APJs") by the Secretary of Commerce, pursuant to Title 35, violates the Appointments Clause, U.S. Const., art. II, § 2, cl. 2.

The Appointments Clause in Article II of the U.S. Constitution generally requires that high-level officials of the United States be appointed only by the President, and only be confirmed by the approval of the Senate. Yet PTAB judges are legally and politically unaccountable to the president or the public as they have repeatedly invalidated patents, usually at the request of large corporations who are stealing inventors' work.

The Court held that the statute as currently constructed makes the APJs principal officers. But rather than invalidate the statute, the Court severed the unconstitutional provision:

To remedy the violation, we follow the approach set forth by the Supreme Court in Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477, 130 S. Ct. 3138, 177 L. Ed. 2d 706 (2010) and followed by the D.C. Circuit in Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board, 684 F.3d 1332, 401 U.S. App. D.C. 407 (2012). As the Supreme Court instructs, "'[g]enerally speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to the problem,' severing any 'problematic portions while leaving the remainder intact.'" Free Enterprise Fund, 561 U.S. at 508 (quoting Ayotte v. Planned Parenthood of Northern New Eng., 546 U.S. 320, 328-29, 126 S. Ct. 961, 163 L. Ed. 2d 812 (2006)). We conclude that severing the portion of the Patent Act restricting removal of the APJs is sufficient to render the APJs inferior officers and remedy the constitutional appointment problem. As the final written decision on appeal issued while there was an Appointments Clause violation, we vacate and remand. Following Lucia v. S.E.C., 138 S. Ct. 2044, 201 L. Ed. 2d 464 (2018), the appropriate course of action is for this case to be remanded to a new panel of APJs to which Arthrex is entitled.

Arthrex, Inc. v. Smith & Nephew, Inc., No. 2018-2140, 2019 U.S. App. LEXIS 32613, at *1-2 (Fed. Cir. Oct. 31, 2019).