U.S. Rep. Hank Johnson. (Photo by John Disney/ALM Media.)

The House Subcommittee on Courts, Intellectual Property, and the Internet took a sober and thoughtful look Tuesday into a U.S. Court of Appeals for the Federal Circuit decision that found the U.S. Patent and Trademark Office's administrative judges are not constitutionally appointed.

The panel heard testimony that Congress can fix the problem relatively easily. But at least one subcommittee member raised the possibility that other perceived problems with the Patent Trial and Appeal Board, established by the 2011 America Invents Act to hear administrative challenges to patent validity, would also have to be addressed.

Arthrex v. Smith & Nephew held that PTAB judges are principal officers of the United States who must be appointed by the president and confirmed by the Senate. But the Federal Circuit solved the problem by construing the Patent Act to give the PTO director the power to terminate the PTAB's judges at will. That makes them inferior officers, which means they can continue issuing decisions going forward. About 150 cases pending appeal will have to be reheard by a different panel of PTAB judges.

On Tuesday, a panel of intellectual property experts told the House subcommittee that Congress can enact a permanent fix that would leave in place the administrative patent judges' civil service protections. Duke University School of Law professor and former PTO policy adviser Arti Rai said it could be as simple as adding a single sentence to the AIA. "The director shall have a right of review" of PTAB decisions, which also would make APJs inferior officers, she said.

Others floated the idea of making the PTAB's chief judge a Senate-confirmed position and letting him or her review all final written decisions. Or have the Senate confirm both the chief judge and the commissioner of patents, and let them and the director review decisions, just as they do now as the PTAB's Precedential Opinion Panel.

University of Virginia law professor John Duffy, Judiciary Chairman Jerrold Nadler, D-New York, and Subcommittee Chairman Hank Johnson, D-Georgia, all suggested this would be preferable to the Federal Circuit fix. "I find it inconsistent with the idea of creating an adjudicatory body to have judges who have no job security," Johnson said. "It goes against the idea of providing independent, impartial justice if a judge is thinking about his or her livelihood while also weighing the facts of a case."

But some members of the House and Senate IP subcommittees hold long-standing criticisms of how the PTAB operates. The present need to redo hundreds of final written decisions—to say nothing of the possibility that the U.S. Supreme Court could go further and shut the whole thing down—provides them a unique leverage point.

At least, that seemed to be some of the subtext behind a few comments from members and witnesses.

"Beyond constitutional deficiencies, are there amendments to AIA that Congress should consider to ensure PTAB proceedings are fair to both parties?" the committee's ranking member, Martha Roby, R-Alabama, asked.

Yes, said George Washington University law professor John Whealan. To begin with, there's the problem that inter partes reviews haven't worked the way Congress envisioned. "To my knowledge, almost no one thought there would be 1,400 IPRs per year, that there would be 260 APJs, that so many claims would be invalidated, and that the estoppel provision would be so weak," Whealan said.

The simplest fix, he said, would be to raise the standard for proving invalidity to clear and convincing evidence, since IPRs have turned out to be more like a validity challenge than a reexamination. That's the same standard required in district courts, and so would make district court validity decisions binding on the PTAB.

Roby was looking for more than that. "Should companies be allowed to bring multiple challenges to the same patent," either directly or through member organizations that are designed to invalidate patents, she asked.

"When you have new laws, people figure out ways around them," Whealan said. "You should investigate how people are going around them, and investigate tighter estoppel."

However it decides to proceed, time is of the essence, University of Virginia's Duffy emphasized. "It's fairly clear that the constitutional structure is under a cloud of doubt right now," said Duffy, who once spotted a different PTAB appointments problem that led to a congressional fix.

Robert Armitage, the former Eli Lilly general counsel, said the Federal Circuit could buy some time if it adopts en banc Judge Timothy Dyk's recent concurring opinion that proposes to fix the appointments problem retroactively.

"One of the last things I do before I go to bed each night is hope that Judge Dyk is correct," Armitage said. "Because if we get an en banc ruling that he is correct, nothing bad happens until the Supreme Court does something different, and that gives you all the time to have a permanent fix along the lines I think we've been discussing."

Even if Congress does give the PTO director the unilateral right to overturn PTAB decisions they don't like, there's still the possibility that that poses a due process problem.

It's not all that different from the PTAB's original mechanism for controlling decisions, which was by "stacking" panels with judges who agreed with the director's position. Chief Justice John Roberts and others brought that up during oral argument in last year's Oil States v. Greene's Energy. "I think the chief justice was extremely frosty about whether this was constitutional or not," Duffy said. "That shows the awkwardness of the current system."