United States v. Arthrex, Inc.
594 U.S. 1
SCOTUS2021Background
- The Patent Trial and Appeal Board (PTAB) is an adjudicatory body within the Patent and Trademark Office (PTO); panels of at least three members (usually Administrative Patent Judges, APJs) hear inter partes review (IPR) petitions that can cancel issued patent claims. 35 U.S.C. §§6, 311, 318.
- APJs are appointed by the Secretary of Commerce (not the President with Senate confirmation); the PTO Director is a Presidential appointee confirmed by the Senate and has broad supervisory and policy powers over the PTO but §6(c) provides that “only the PTAB may grant rehearings.”
- Smith & Nephew petitioned for IPR on an Arthrex patent; a three‑APJ panel cancelled claims; Arthrex raised an Appointments Clause challenge on appeal to the Federal Circuit.
- The Federal Circuit held APJs were principal officers and remedied the violation by prospectively stripping APJs’ for‑cause removal protections (making them removable at will).
- The Supreme Court vacated and remanded: it held that APJs exercise unreviewable executive power inconsistent with their appointment as inferior officers and that the constitutional defect is cured by allowing the Director to review final PTAB decisions; remand ordered to the Acting Director to decide whether to rehear the petition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether APJs, appointed by the Secretary, are principal officers under the Appointments Clause | Arthrex: APJs exercise final executive power (their PTAB decisions bind the Executive) so they are principal officers and require Presidential appointment with Senate advice/consent | Government/Smith & Nephew: APJs are inferior because the Director/Secretary exercise meaningful control (institution discretion, panel designation, administrative oversight); Federal Circuit remedy (remove for cause restriction) cures problem | Court: APJs wield unreviewable executive authority incompatible with inferior‑officer appointment; the lack of executive review is decisive (Edmond test applied) |
| Whether the Director’s lack of authority to review PTAB final decisions violates Article II accountability | Arthrex: insulation of PTAB final decisions relieves President/Director of responsibility; chain of command broken | Gov.: Director can indirectly influence outcomes (stack panels, designate APJs, institute/de‑institute proceedings); judicial review is available | Court: indirect influence and judicial review do not supply the required Article II supervision; Director must be able to review final PTAB decisions |
| Appropriate remedy for the constitutional defect | Arthrex: invalidate the IPR proceeding and require new hearing before properly appointed officers | Government: prospectively remove APJs’ for‑cause protections (as Federal Circuit did) or other cures | Court: Sever §6(c) only insofar as it prevents Director review; permit the Director to review and issue decisions on behalf of the Board; remand to Director to decide whether to rehear; no automatic new APJ panel required |
| Whether appeal to the Federal Circuit substitutes for executive supervision | Arthrex: no—judicial review is not a substitute for Article II political accountability | Government: Federal Circuit review and other checks are adequate supervision | Court: Federal Circuit review is not the substitute for supervision by a Presidentially‑appointed, Senate‑confirmed officer |
Key Cases Cited
- Edmond v. United States, 520 U.S. 651 (1997) (inferior‑officer test: must be "directed and supervised at some level" by Presidential appointees)
- Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 561 U.S. 477 (2010) (political accountability and unitary executive concerns in removal/selection rules)
- Seila Law LLC v. Consumer Fin. Prot. Bd., 591 U.S. _ (2020) (limits on for‑cause removal protections and executive removal power)
- Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 584 U.S. _ (2018) (IPR adjudicates public rights; PTAB cancellations of patents are executive actions)
- Buckley v. Valeo, 424 U.S. 1 (1976) (officers vs. employees; "significant authority" threshold)
- Lucia v. SEC, 585 U.S. _ (2018) (ALJs and officer status; remedy for improper appointment)
- Freytag v. Commissioner, 501 U.S. 868 (1991) (examples of inferior officers appointed by non‑Presidential actors and conditions of review)