Notice & Comment

The Supreme Court Decides to Hear Arthrex Case to Consider Appointments Clause Challenge to Administrative Patent Judges

Today the Supreme Court granted cert to review the Federal Circuit’s decision in Arthrex Inc. v. Smith & Nephew Inc. The Court limited review to two of the questions presented:

  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.
  1. 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.

For reasons I’ve blogged about before, I’m not surprised that the Court decided to hear this Appointments Clause challenge to administrative patent judges at the U.S. Patent and Trademark Office. But I hope Congress will fix the issue before the Court has to weigh in.

In The New World of Agency Adjudication, Melissa Wasserman and I flagged this as a potential constitutional issue — i.e., that the agency head does not have final decisionmaking authority over decisions from Patent Trial and Appeal Board (PTAB). As we explored in that article, the PTAB is an outlier in that sense, so this constitutional challenge is narrow and only affects administrative adjudication systems where the agency head lacks final decisionmaking authority — a very, very small subset of adjudicative systems.

If I had to make a prediction, I think the Supreme Court will agree with the Federal Circuit’s formalist approach to the Appointments Clause issue. But I have no confidence they will agree that the remedy (to make the administrative patent judges removable at will) cures the constitutional defect. Perhaps more importantly, that remedy, as a policy matter, is awful. It increases constitutional tensions in agency adjudication between the decisional independence of administrative judges and the political control of agency adjudication. I’ve written more about those constitutional tensions here.

Ultimately, I hope the Supreme Court doesn’t have to figure out the remedy. Congress should act. And the legislative fix is simple: amend the Patent Act to give the agency head final decisionmaking authority and reinstate the modest tenure protections. I’m not alone in recommending that. In August, the ABA House of Delegates adopted Resolution 108A, which was co-sponsored by the ABA Section of Administrative Law and Regulatory Practice. Resolution 108A urges Congress to make this legislative fix (though it is more flexible than I would recommend on how to how to structure the legislation):

RESOLVED, That the American Bar Association urges Congress to enact legislation authorizing one or more principal officers, who are appointed by the President and confirmed by the Senate, to review decisions of the Patent Trial and Appeal Board (PTAB) determining the patentability of any claim reviewed by the PTAB before such decisions become final decisions of the U.S. Patent and Trademark Office (USPTO), and that the legislation should also restore Title 5 removal protections for Administrative Patent Judges (APJs) of the PTAB.

Of course, lurking in the background is a much larger constitutional challenge: whether administrative judges must be removable at will by the agency head. In Flemming v. USDA, No. 17-1246, the D.C. Circuit is presently considering that issue, which would have dramatic implications for agency adjudications across the federal regulatory state. This case, by contrast, presents a constitutional question much narrower in reach — and one that Congress could easily address in legislation that should garner bipartisan support.