United States v. Arthrex, Inc.
Case Overview
The Supreme Court confronted whether the Patent Trial and Appeal Board's Administrative Patent Judges, appointed by the Secretary of Commerce without Senate confirmation, exercise such significant authority that they must be principal officers under the Appointments Clause, and if so, whether the constitutional remedy is to sever the for-cause removal restriction rather than invalidate the entire inter partes review system.
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The Facts
Arthrex, Inc. was sued by Smith & Nephew for patent infringement. In inter partes review before the PTAB, the Administrative Patent Judges who decided the case were appointed by the Secretary of Commerce without Senate confirmation, and their decisions were not reviewable by an Article II officer of the United States. Arthrex challenged this structure as a violation of the Appointments Clause, arguing APJs exercise the authority of principal officers who must be confirmed by the Senate.
The Application
The Appointments Clause violation arose from the APJs' constitutional insulation: appointed without Senate confirmation and shielded from review by any principal officer, they exercised significant decisional authority that the Edmond standard reserves for principal officers only. Severing the statutory restriction on the Director's review authority remedied this defect by making the PTO Director, a Senate-confirmed principal officer, the supervisor with final authority over APJ decisions. This surgical intervention transformed APJs into inferior officers subordinate to executive oversight, preserving inter partes review while satisfying Article II's accountability requirements.
The Conclusion
Decided June 21, 2021. The Court held 5-4 that APJs were unconstitutionally insulated from executive review, but the majority remedied the defect by severing the restriction that barred the Director from unilaterally reviewing APJ decisions, making APJs inferior officers who report to a principal officer. The inter partes review system was preserved.
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