All final written decisions in inter partes reviews (IPRs) suffer from a constitutional defect according to a recent decision of the Federal Circuit Court of Appeals. The decision suggests that the constitutional problem may allow a party dissatisfied with a final written decision that is eligible for appeal to ask the Appellate Court to vacate the decision and remand the IPR for further consideration by a new panel of the Patent Trial and Appeal Board.

In Arthrex v. Smith & Nephew, et al., the Appellate Court reviewed the Patent Office Director’s statutory authority to review decisions by the Board’s Administrative Patent Judges (APJs), to supervise them, and to remove them. It determined that the APJs are independent of the Director in key respects. Accordingly, the Appellate Court held that the APJs qualify as “principal officers” of the United States, who must be appointed by the President with the advice and consent of the Senate under the Appointments Clause of the U.S. Constitution. The fact that APJs have been appointed by the Secretary of Commerce creates a constitutional problem both with APJs and with their unconstitutionally rendered decisions. The Appellate Court found a remedy for both constitutional problems.

The Appellate Court addressed the unconstitutionality of the APJ appointments by striking out a statutory limitation of the Secretary’s ability to remove APJs. The Court thereby changed APJs from principal officers into inferior officers. The existing APJ appointments are constitutionally valid for inferior officers. The Court observed that “[a]lthough the Director still does not have independent authority to review decisions rendered by APJs, his provision of policy and regulation to guide the outcomes of those decisions, coupled with the power of removal by the Secretary without cause provides significant constraint on issued decisions.”

The Appellate Court addressed the unconstitutionally rendered IPR decision by vacating the final written decision and remanded the IPR for further proceedings. The Court found that a new panel of APJs must consider the IPR on remand. It stated that: “the remedy is not to vacate and remand for the same Board judges to rubberstamp their earlier unconstitutionally rendered decision.” The Court observed that its decision was limited to “cases where final written decisions were issued and where litigants present an Appointments Clause challenge on appeal.”

Although the right to a remedy may be waived, it may now be possible for a party dissatisfied with a recent final written decision issued “while there was an Appointments Clause violation” to ask the Appellate Court to have the decision vacated and the IPR remanded for further consideration by a new panel of APJs. While the decision expressly limits the scope of its impact to recently issued final written decisions in IPRs, parties may nonetheless find challenges to the constitutionality of other recently issued Board decisions appropriate in view of its reasoning.

[View source.]