On October 13, 2020, the US Supreme Court agreed to address the issue of the constitutionality of the Patent Trial and Appeal Board (PTAB) under the America Invents Act (AIA). The Supreme Court will review the Federal Circuit Court of Appeals decision in the case known as Arthrex.
Thousands of PTAB decisions may be at stake in the eight years or so since the AEOI came into force, depending on how the Supreme Court rules the Federal Circuit’s decision. At least a number of pending PTAB cases that have been suspended pending this appeal will remain on hold for a while.
The Supreme Court has issued certiorari in three now consolidated appeals. The Supreme Court will consider two questions as presented by the government:
- Whether for the purposes of the Appointment Clause US Const. Art. II, § 2, Cl. 2, U.S. Patent and Trademark Office administrative patent judges are senior officials appointed by the President with the advice and approval of the Senate, or “inferior officials” whom Congress has permitted a division chief to appoint.
- Regardless of whether administrative patent judges are senior officials, the appeals court prospectively corrected a bug in the appeal clause of the current legal system by severing the application of 5 USC 7513 (a) to those judges.
The Federal Circuit responded to Question 1 by stating that Administrative Patent Judges (APJs) in the PTAB are senior officials because they cannot be terminated in the normal course of the process. The Federal Circuit found the AEI provision creating APJs unconstitutional because APJs are not appointed by the President with the advice and approval of the Senate.
The Federal Circuit addressed the constitutionality issue by invalidating part of the AIA in order to turn the APJ into inferior officials. With this legislative change, the USPTO director can terminate APJs.
There are several ways the Supreme Court can rule on these consolidated appeals:
1) Confirm, which means that the Federal Circuit’s decision and resolution on questions 1 and 2 were correct;
2) Conversely with the statement that the statute is correct as written;
3) Conversely, stating that the Federal Circuit’s revision of the Statute was wrong, even though the Federal Circuit correctly found the clause to be unconstitutional.
a) The Supreme Court could replace its own revision. or
b) The Supreme Court could arrest the Federal Circuit and order it to revise the Statute otherwise.
4) Conversely, in this situation, it is inappropriate for a court to rewrite a statute in order to maintain its constitutionality and leave the final solution to Congress, which passed the AEOI.
5) Overturn the Federal Circuit’s decision and initiate further proceedings to consider alternative solutions.
Of these, option 4) is the least likely, as it would throw the entire PTAB structure into chaos, which not only regulates patent procedures after grant but also patent complaints within the USPTO. Waiting for Congress to resolve the problem would keep the entire patent system in suspension.
Option 1) and option 3) a) appear the most likely, as both would resolve the situation the fastest.
Option 2) is unlikely as there appears to be a contradiction in the creation of the AEOI between the way APJs are appointed (as inferior officials) and the way they are treated (as senior officials).
Options 3) b) and 5) are unlikely as the Supreme Court would likely provide an alternative rather than leaving it to the Federal Circuit to come up with another solution.
The current lack of a full number of Supreme Court judges could also interestingly change the outcome as the ninth Justice could break a 4-4 tie which would otherwise result in a confirmation of the Federal Circuit’s decision.
 The Supreme Court denied certiorari in relation to the Government’s Question 3: Whether the Arthrex Court of Appeal made a mistake in ruling a avoidance clause challenge that was not submitted to the agency.