941 F.3d 1320
Fed. Cir.2019Background:
- Arthrex, Inc. appealed a PTAB final written decision cancelling claims of U.S. Patent No. 9,179,907 after an inter partes review (IPR) conducted by a three-APJ panel.
- Administrative Patent Judges (APJs) are appointed by the Secretary of Commerce (in consultation with the USPTO Director) under 35 U.S.C. § 6(a); the Director is presidentially appointed and Senate-confirmed.
- APJs conduct trial‑like proceedings: oversee discovery, hear oral argument, apply evidentiary rules, and issue final written decisions that determine patentability and can result in claim cancellation.
- Arthrex challenged on appeal that APJs were unconstitutionally appointed under the Appointments Clause because they are principal officers, not inferior officers.
- The government and appellees argued waiver and defended the current appointment/removal framework and Director oversight as sufficient; the court nevertheless exercised discretion to reach the Appointments Clause claim.
- The Federal Circuit found the APJs were principal officers, severed the statutory removal protections as applied to APJs, vacated the PTAB decision, and remanded for a new hearing before a properly constituted panel.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver | Arthrex: claim timely raised on appeal; raising below would be futile because PTAB couldn't remedy constitutional defect | Appellees/Govt: Arthrex forfeited by not raising at PTAB; DBC counsels restraint | Court exercised discretion and heard the claim; not barred by waiver because PTAB could not have provided relief |
| Officer status (Officer vs. employee) | APJs exercise significant authority (trials, factfinding, final decisions) so are Officers of the United States | Govt did not dispute officer status | APJs are Officers of the United States |
| Principal vs. inferior officer | APJs issue final agency decisions without meaningful review by presidentially-appointed officers and have limited removal exposure, so are principal officers | Govt: Director has supervisory tools (policy, regs, panel designation, Precedential Opinion Panel) and Title 5 removal constraints create control | APJs are principal officers because lack of adequate executive review and limited removal power outweigh supervisory tools |
| Remedy / Severability | Arthrex: require remedy (vacate/remand; cure via making APJs removable at will or other fixes) | Govt: various remedies (construe Title 5 differently, sever three-member requirement, or sever Title 5 as applied) | Court severed application of Title 5 removal protections to APJs (narrowest cure), vacated the PTAB decision, and remanded for a new hearing before a new APJ panel per Lucia |
Key Cases Cited
- Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 561 U.S. 477 (2010) (severance of removal restrictions can cure Appointments Clause defects)
- Lucia v. SEC, 138 S. Ct. 2044 (2018) (when adjudicator was unconstitutionally appointed, remedy is vacatur and new hearing before properly appointed adjudicator)
- Freytag v. Commissioner, 501 U.S. 868 (1991) (Appointments Clause challenges may be considered on appeal even if not raised below)
- Edmond v. United States, 520 U.S. 651 (1997) (framework for distinguishing principal vs. inferior officers—review, supervision, removal)
- Buckley v. Valeo, 424 U.S. 1 (1976) (Officer of the United States defined by exercise of significant authority under U.S. law)
- Intercollegiate Broad. Sys. v. Copyright Royalty Bd., 684 F.3d 1332 (D.C. Cir. 2012) (analogous severance of removal limits for Copyright Royalty Judges)
- Masias v. Sec’y of Health & Human Servs., 634 F.3d 1283 (Fed. Cir. 2011) (special masters held inferior officers where their decisions were subject to review by Article I court)