United States v. Arthrex, Inc.

United States v. Arthrex, decided June 21st, 2021. The Chief Justice, writing for the Court, held that the Administrative Patent Judges of the Patent Trial and Appeal Board wielded unreviewable executive power that was incompatible with their appointment as inferior officers — a violation of the Appointments Clause. The remedy was to sever the statutory bar so that the Director of the Patent and Trademark Office can review their decisions. Five to four on the merits; seven to two on the remedy. Here's the brief.

The Patent Trial and Appeal Board is an executive adjudicatory body within the PTO, established by the America Invents Act. It sits in panels drawn largely from more than two hundred Administrative Patent Judges, whom the Secretary of Commerce appoints. In inter partes review, those panels reconsider whether an already-issued patent is valid — and their final written decision is the last word on validity within the Executive Branch.

Arthrex owned a patent on a surgical device for reattaching soft tissue to bone. Smith and Nephew petitioned for inter partes review, and a three-judge panel concluded that the patent was invalid. On appeal to the Federal Circuit, Arthrex argued for the first time that the Board's structure violated the Appointments Clause: the judges, it said, were principal officers, yet the Secretary had appointed them as though they were inferior.

The Federal Circuit agreed that the judges were principal officers. To cure the defect, it invalidated their statutory protection against removal, making them removable at will. That satisfied no one, and the Court granted cert.

The question presented was whether the authority of the Board's judges to issue decisions on behalf of the Executive Branch is consistent with the Appointments Clause.

The Clause draws a line. Principal officers must be appointed by the President with the Senate's advice and consent; only inferior officers may be vested elsewhere — in the President alone, the courts of law, or the heads of departments.

The governing test came from the 1997 decision in Edmond v. United States. An inferior officer is one whose work is directed and supervised at some level by a presidentially nominated, Senate-confirmed superior. What was decisive in Edmond was that the officers there had no power to render a final decision on behalf of the United States unless other executive officers permitted it. The Administrative Patent Judges, by contrast, had exactly that power.

The Court held that the judges' unreviewable authority could not be squared with inferior-officer status.

The reasoning turned on one structural fact: no superior executive officer could review a Board decision. The Director wields many tools — he sets the judges' pay, decides whether to institute review, and picks the panel — but the statute allows only the Board itself to grant rehearing.

So the last word on a patent's validity rested with officers whom no principal officer could countermand — and for whose decisions the President could not be held to account. History reinforced the point: adequate supervision has long meant that a principal officer can review an inferior officer's decisions.

The Court was careful about its limits. It did not set an exclusive criterion for distinguishing principal from inferior officers, and it addressed only supervision in the context of adjudication.

The Court then fractured over the remedy. Justice Gorsuch joined the merits but would have granted Arthrex full relief rather than rewrite the statute. Justice Thomas dissented — joined by Justices Breyer, Sotomayor, and Kagan as to the merits — and would have held the judges inferior officers all along. Justice Breyer, with Justices Sotomayor and Kagan, disagreed on the merits but concurred in the judgment on the remedy.

The remedy was severance. Rather than dismantle inter partes review, the Court held that section 6(c) could not be enforced to the extent it barred the Director from reviewing the judges' decisions. Restoring that chain of command cured the defect. The Court vacated the Federal Circuit's judgment and remanded to the Acting Director to decide whether to rehear the petition. Arthrex stands for the principle that an inferior officer's adjudicatory decisions must remain subject to review by a principal officer.

United States v. Arthrex, Inc., 594 U.S. 1, decided June 21st, 2021. I'm John Goodhue. Thanks for watching.