United States v. Arthrex, Inc., et al.; United States v. Polaris Innovations, Ltd., et al.; Smith & Nephew, Inc. and ArthroCare Corp. v. Arthrex, Inc. and United States

Washington, D.C., June 21, 2021 (GLOBE NEWSWIRE) -- Today, in a win against the Administrative State, a divided Supreme Court ruled that administrative patent judges (APJs) have either been exceeding their proper authority or else have been appointed improperly. If granted unreviewable authority to invalidate existing patents, then APJs are “principal officers” who must be appointed by the President with the Senate’s advice and consent. APJs had previously been appointed by the U.S. Secretary of Commerce in violation of the Appointments Clause of the U.S. Constitution. In 2011 the America Invents Act (AIA) shifted adjudication of important property rights from the judiciary to bureaucrats not directly answerable to elected officials. Today’s decision restores accountability and oversight to the Patent Trial and Appeal Board (PTAB) and re-affirms that Article II of the Constitution grants the President sole authority to direct Executive Branch operations.

Smith & Nephew, Inc. challenged the validity of a patent held by Arthrex, Inc. A three-APJ panel held that the challenged claims of the patent were invalid. The PTAB, acting through panels consisting of three APJs, routinely issues decisions invalidating previously issued patents. Supreme Court precedent previously established that federal officers are principal officers when they are authorized to issue adjudicative decisions that are not reviewable by any superior officer within the Executive Branch. APJ decisions cannot be reviewed by a superior in the Executive Branch—only by other APJs. So, the New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, filed an amicus brief, arguing that because APJs are appointed by the Secretary of Commerce and not the President, the PTAB’s structure violated the Appointments Clause.

The Court’s opinion, written by Chief Justice Roberts, vacated the judgment of the U.S. Court of Appeals for the Federal Circuit. The Court held that APJs were not appointed to their positions in the manner Article II of the Constitution requires. The Court fixed the constitutional problem by striking a provision of the law that barred the Director of the Patent and Trademark Office from reviewing decisions issued by APJs. By striking that portion of the AIA, the Court “solved” the problem, as APJs are no longer principal officers because they no longer possess unreviewable authority to invalidate patents.

The Appointments Clause is more than a matter of etiquette or protocol; it provides a significant structural safeguard in the constitutional scheme. Today’s decision ensures that the final decision on whether to invalidate a patent can only be made by someone directly under the President’s control and someone who has been appointed to their position in accordance with Article II of the Constitution.

NCLA released the following statements:

“Today’s decision affirms important separation-of-powers principles imbedded in the Constitution. Article II’s Appointments Clause requires that principal officers of the United States must be appointed by the President with the advice and consent of the Senate. The Court properly held that because patent law grants Administrative Patent Judges unreviewable authority to invalidate patents, they are “principal officers”—and thus the law violated the Appointments Clause by circumventing the advice-and-consent requirement.”
— Rich Samp, Senior Litigation Counsel, NCLA

“In today’s decision, the Court underlines once again that Congress cannot empower inferior federal officers to make significant decisions that bind the Executive Branch while also shielding those decisions—and those officers—from review. NCLA is pleased that the Court has taken another step toward making executive officials more accountable to the President and the people.”
— Jared McClain, Litigation Counsel, NCLA

For more information visit the case page here.

ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.

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CONTACT: Judy Pino New Civil Liberties Alliance 202-869-5218 judy.pino@ncla.legal