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§ I. Patent Cases
Arthrex, Inc. v. Smith & Nephew, Inc., 35 F.4th 1328 (Fed. Cir. 2022)
Facts: This case concerns whether the Commissioner for Patents has constitutional authority to decide petitions for rehearing regarding inter partes review (“IPR”) of a patent, which are normally decided only by the Director.
In 2015, Arthrex sued Smith & Nephew (“S&N”) alleging patent infringement. S&N petitioned for IPR, arguing that the Arthrex patent was anticipated. The Patent Trial and Appeal Board (“PTAB” or “Board”) of Administrative Patent Judges (“APJs”) instituted an IPR and agreed with S&N. Arthrex appealed the Board’s decision and the Board’s constitutional authority to issue the agency’s final decision. Arthrex argued that the President did not nominate the APJs nor did the Senate confirm them. The constitutional issue reached the Supreme Court in 2021. See United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021). The Supreme Court reviewed the Appointments Clause and agreed that APJs could not issue any “final decision binding the Executive Branch.” The Supreme Court remedied this by allowing parties to request rehearing of board decisions by the Patent Office’s Acting Director.
On remand, Arthrex requested a rehearing, but the office of the Director was vacant. The rehearing decision thus fell to the Deputy Director, which was also vacant. Under an Agency Organization order, third in line is the Commissioner. The Commissioner denied Arthrex’s rehearing request and ordered that the Board decision be made final. Arthrex appealed to the Federal Circuit.
Held: The Commissioner has the authority to act as the Director and decide whether the Board will issue a rehearing under the Appointments Clause, Federal Vacancies Reform Act, and the Constitution’s separation of powers.
Reasoning: The Federal Circuit explained that under the Appointments Clause, Congress has the authority to vest appointment power in the Heads of Departments. Congress empowered the Secretary of Commerce to appoint the Commissioner of Patents, which the Federal Circuit found to fall within the Appointments Clause.
Arthrex argued that the Commissioner did not have the authority to issue a …
