On October 31, 2019, a Federal Circuit panel issued Arthrex, Inc. v. Smith & Nephew, Inc., holding that administrative patent judges (APJs) of the Patent Trial and Appeal Board (PTAB) were unconstitutionally-appointed principal officers. To remedy the deficiency, the court severed statutory removal protections as applied to APJs to make them at-will employees and therefore properly-appointed inferior officers. The court remanded the case for a "new hearing" before a "new panel of APJs."1 The court also noted that it views "the impact of this case as limited to those cases where final written decisions were issued and where litigants present an Appointments Clause challenge on appeal."
Shortly following the issuance of the decision, the court issued precedential orders dismissing motions for remand because the issue was not timely raised in the appellant's opening briefs. See Customedia Technologies, LLC v. Dish Network Corp., Nos. 18-2239 & 19-1001 (Fed. Cir. Nov. 1, 2019) ("Customedia did not raise any semblance of an Appointments Clause challenge in its opening briefs or raise this challenge in a motion filed prior to its opening briefs."). The court also remanded a case in which the issue had been timely raised. See Uniloc 2017 LLC v. Facebook, Inc., No. 18-2251 (Fed. Cir. Nov. 1, 2019) (non-precedential). In the week following the Arthrex decision, Federal Circuit panels have not discussed the Appointments Clause issue in any oral argument where the issue was not raised in the opening briefs.
Thus, the effect of Arthrex varies greatly depending on the current disposition of one's case. We will discuss each of these possibilities in turn.
Scenario A: Appeal without timely Appointments Clause challenge
As in Customedia, in an appeal where neither party has raised an Appointments Clause challenge after their first brief, the Federal Circuit has consistently found the issue waived. A belated motion to remand will likely be summarily dismissed.
Scenario B: Appeal with timely Appointments Clause challenge
Although there are relatively few of such cases, the disposition of these cases is not entirely consistent. The court has issued remand orders in Uniloc and another case Bedgear, LLC v. Fredman Bros. Furniture Co., Inc., No. 18-2082 (Fed. Cir. Nov. 7, 2019), with the latter order also containing a concurrence from Judge Dyk and Judge Newman disagreeing that the remand remedy in Arthrex was required. However, in Polaris Innovations Ltd. v. Kingston Tech. Co. Inc., Nos. 18-1768 & 18-1831 (Fed. Cir. Nov. 8, 2019), a panel of Judges Reyna, Wallach, and Hughes asked the parties and the United States as intervenor to file supplemental briefing, with a particular focus on the proper remedy, perhaps indicating further dissension to the Arthrex decision.
Furthermore, where it has successfully intervened to address Appointments Clause challenges, the United States has asked the court to hold those cases in abeyance to allow the parties in Arthrex (including the United States) to consider whether to file for rehearing en banc.
Scenario C: Final Written Decision (FWD) without rehearing request
In Arthrex, the court found the Appointments Clause challenge timely raised even though it was first raised in Appellant's opening brief. For those cases where a Final Written Decision (FWD) has issued and the board has denied a rehearing request (or the time to request one has passed), including cases early enough on appeal where briefs have not yet been filed, the parties will have an opportunity to raise an Appointments Clause challenge and ask for remand before a new panel.
If an en banc rehearing is requested in Arthrex (or any other case with an issued remand order), it is likely that any remand order will also be asked to be reheard en banc before a mandate issues. Thus, raising an Appointments Clause challenge may end up delaying the disposition of one's case until the Arthrex decision is fully appealed, including before the Supreme Court.
Scenario D: Pre-Arthrex Final Written Decision with time to request rehearing
Although an FWD in this scenario would have been issued by unconstitutionally-appointed APJs, the immediate effect of Arthrex was to make those same APJs constitutionally-appointed inferior officers. Thus, it is possible that the disposition of a rehearing request, including a denial of a rehearing request, would be considered a final decision by the PTAB before a properly-appointed panel of APJs. Parties in this situation may be able to avoid Appointments Clause challenges by strategically requesting a rehearing in order to receive a constitutionally-proper final decision.
Scenario E: No Final Written Decision or Post-Arthrex Final Written Decision
Since after Arthrex all current APJs are once again constitutionally-appointed inferior officers, there is no Appointments Clause issue with any FWD issued after Arthrex.
Conclusion
For those dealing with pre-Arthrex Final Written Decisions where an Appointments Clause challenge can be timely raised, both appellants and appellees have a number of issues to consider before requesting remand before a new panel, including the immediate effect of the Arthrex decision on APJs, the Federal Circuit's desire to limit its effect, and the possibility that it will be reheard en banc before any mandate to remand issues.
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.
1 It is not clear whether this includes a new oral argument or not.
