'Under a Cloud of Doubt': Patent Practices Pivot Following the Federal Circuit's 'Arthrex' Decision
PTAB practices have been "morphing almost on a daily basis" since the appellate court started weighing in on the PTO's Appointments Clause problem for its 275 administrative patent judges.
December 20, 2019 at 10:00 AM
7 minute read
In a way, it was hiding in plain sight.
Twice in the last 10 years, the U.S. Supreme Court has invalidated the appointment of administrative law judges, first to the Public Company Accounting Oversight Board in 2010, and then to the Securities and Exchange Commission in 2018. While at the D.C. Circuit, Judge Brett Kavanaugh spotted the same problem with the librarian of Congress' copyright royalty judges in 2009.
But when the U.S. Court of Appeals for the Federal Circuit ruled Oct. 31 that the U.S. Patent and Trademark Office's 275 administrative patent judges suffer from the same infirmity, it still caused massive shock waves. And they're reverberating through the patent bar, academia and in Congress.
"I think it's fairly clear that the constitutional structure is under a cloud of doubt right now," University of Virginia law professor John Duffy told a hastily convened panel of the House Judiciary's subcommittee on courts, intellectual property and the internet Nov. 19. Duffy warned that without a congressional fix, that cloud will linger over the Patent Trial and Appeal Board for at least another year or two.
For patent litigators whose practice includes the PTAB, the law has been "morphing almost on a daily basis," said Baker Botts partner Sarah Guske.
If it stands, the decision of Judge Kimberly Moore of the U.S. Court of Appeals for the Federal Circuit in Arthrex v. Smith & Nephew will require the PTAB to rehear 150 to 200 cases. But at least a couple of Federal Circuit judges have already signaled disagreement with Moore's approach. The Justice Department has said it will ask the court to reconsider en banc, and it's anyone's guess what the Supreme Court might do if it reviews the case.
Among the many decisions facing patent lawyers right now is whether to challenge the legitimacy of PTAB judges, whom they're currently appearing before, in order to ensure that they've preserved the appointments issue depending on how the law shakes out.
"It creates an odd situation," Guske said. Practitioners would be arguing that the judges aren't even authorized to decide whether they can decide. Aside from potentially antagonizing the judges, briefing the Appointments Clause issue eats into the limited words available to address patent validity, she said.
The Federal Circuit has already ruled that for cases that are on appeal, appellants have forfeited the issue if they didn't raise it in their opening appellate briefs.
The goal of Arthrex and the Supreme Court decisions that preceded it is to establish more political accountability for administrative judges. The PTAB judges, who preside over patent validity trials pursuant to the America Invents Act and hear appeals from rejected patent applicants, are classified as inferior officers and are therefore appointed by the secretary of commerce. Moore wrote that because of the power and autonomy conferred on PTAB judges, they are principal officers who must be appointed by the president and confirmed by the Senate.
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