On March 23, 2020, a fractured Federal Circuit issued a precedential order denying rehearing en banc in Arthrex, Inc. v. Smith & Nephew, Inc., No. 2018-2140. On October 31, 2019, a three-judge Federal Circuit panel before Judges Moore, Reyna, and Chen issued a unanimous decision finding that Administrative Patent Judges (APJs) of the Patent Trial and Appeal Board (PTAB) were "superior" officers that were not constitutionally appointed under the Appointments Clause. Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019) ("Arthrex"). The panel reasoned that because the director of the Patent and Trademark Office (USPTO) lacked power to directly review final written decisions from APJs or authority to remove APJs without cause, the director did not possess sufficient control over APJs for APJs to be considered "inferior" officers. To remedy the issue, the panel held that the requirement that APJs could only be removed for cause would be severed from the statute, making APJs removable by the director for any or no reason and therefore inferior officers. Finally, the panel remanded the case to the PTAB, determining that "a new panel of APJs must be designated and a new hearing granted" now that the constitutionality issue had been remedied by the severance. Arthrex, 941 F.3d at 1340.

Post-Arthrex, the Federal Circuit limited the applicability of the decision to cases where the patent owner raised an Appointments Clause challenge prior to, or in, its opening brief. See, Customedia Technologies, LLC v. Dish Network Corp., Nos. 18-2239 & 19-1001 (Fed. Cir. Nov. 1, 2019). A subsequent non-precedential decision determined that a Petitioner who selected the USPTO as their forum had waived an Appointments Clause challenge against an adverse PTAB decision finding the challenged claims not unpatentable. Ciena Corp. v. Oyster Optics, LLC, No. 2019-2117 (Fed. Cir. Jan. 28, 2020).

While today's decision was issued per curiam, there were five opinions accompanying the order with concurrences from Judges Moore, O'Malley, Reyna, and Chen and dissents from Judges Dyk, Newman, Wallach, and Hughes. None of these opinions garnered a majority of the judges on the en banc court and none of the opinions creates any law for the Federal Circuit.

• Judge Moore's concurrence, joined by Judges O'Malley, Reyna, and Chen, largely reiterated the reasoning from the underlying panel decision while focusing on the certainty, narrowness, and reasonableness of the remedy of severing APJ removal protections. Judge Moore argued that the universe of PTAB decisions subject to an Arthrex remand is limited to 81 PTAB decisions and that 37 of them have already been vacated and remanded under Arthrex. Slip op. at 6 n.4. Judge Moore also reasoned that the remands "are narrow in scope and will not necessitate anything like a full-blown process," and that "the USPTO is not required to reopen the record or permit new briefing." Slip op. at 7. Judge Moore also criticized Judge Dyk's proposal to stay PTAB proceedings until Congress could act, opining that such a proposal would be disruptive.
• Judge O'Malley's concurrence, joined by Judges Moore and Reyna, addressed the issue of whether the severability of removal protections could be applied retroactively to PTAB decisions prior to Arthrex, opining that they could not because "judicial severance of one portion of an unconstitutional statute is, by necessity, only applicable prospectively." Slip op. at 4 n.2.
• Judge Dyk dissented, joined by Judge Newman, Judge Wallach, and, partially, Judge Hughes, opining that severance of APJ removal protections was a "draconian remedy" and that, instead, Congress and the USPTO should first have an opportunity to "devise a less disruptive remedy." The dissent opined that the remedy should be retroactively applied to earlier cases, and further raised doubt as to whether APJs are truly superior officers since they lack authority to issue policy and are reviewed by an Article III court.
• Judge Hughes's dissent, joined by Judge Wallach, opined that APJs are in fact inferior officers and that, in any case, severance would be inconsistent with Congressional intent. Judge Hughes explained in detail the various powers the director holds for supervising APJs, including the director's power to designate decisions as precedential, the director's unreviewable power to institute inter partes review, and the director's ability to decide which APJs (including himself) will hear the instituted case.
• Finally, Judge Wallach, writing alone, also opined that the director has sufficient control over APJs, echoing the reasons of Judge Hughes.

Given the Federal Circuit's finding that the USPTO's APJs have been unconstitutionally appointed and the en banc court's questions relating to the proper scope of relief, it is likely that Supreme Court review will be sought. Both of the parties or the U.S. government could petition the Supreme Court for a writ of certiorari. Recently, the Supreme Court has granted Appointments clause review in several cases. See, e.g., Lucia v. S.E.C., 138 S. Ct. 2044 (2018); Financial Oversight and Management Board for Puerto Rico v. Aurelius Investment, LLC, No. 18-1334 (Petition for writ of certiorari granted June 20, 2019); Seila Law LLC v. Consumer Financial Protection Bureau, No. 19-7 (Petition for writ of certiorari granted October 18, 2019). If Judge Moore is correct that an Arthrex remand provides only temporary respite for a limited set of Patent Owners who obtain a short remand of temporary scope, it may be that all such cases are resolved before the Supreme Court has a chance to resolve the Federal Circuit's fractured opinion.

For more information about the Arthrex decision or any related matter, please contact any member of the post-grant review practice at Wilson Sonsini Goodrich & Rosati.