Hi, and welcome back to a new year of Legal Geek. I survived a nasty holiday bug that took my voice away with coughing fits, but I'm back and ready to roll with 2020 vision.
This week, we review a massive appeals court case decided a few weeks ago on whether all Administrative Patent Judges at the Patent Office, or APJ's, are appointed in an unconstitutional manner.
When the U.S. reformed its patent laws a few years ago, one of the biggest changes was the creation of a more robust challenge system for invalidating patents. These Inter Parties Review proceedings are heard before 3 judge panels from the Patent Trial and Appeal Board, which is made up of APJ's who are currently appointed to those positions by the Secretary of Commerce and the Patent Office Director rather than the President. The inventive legal challenge made by the loser of one of these patent challenges was that APJ's are not properly appointed under the rules of the Constitution, therefore making their decisions invalid.
The potential was there for possibly undermining 6 years of these proceedings that have invalidated many patents. Hence why this case was a big deal. The Federal Circuit tackled this question and carved out a way for APJ's to still be constitutional without undermining the validity of the patent owner's challenge in this particular instance.
Under the appointments clause of the constitution, the President appoints all officers of the United States that are not inferior officers. So if APJ's are principal officers, then they cannot be appointed by the Secretary of Commerce. The appeals court first confirmed that APJ's are Officers of the United States because they clearly exercise significant authority pursuant to the laws of the U.S. in conducting trials and issuing final written decisions on validity of U.S. Patents. Then the question turned to whether APJ's are principal or inferior officers.
The court used a Supreme Court precedent that defined an inferior officer as one whose work is directed and supervised at some level by others appointed by Presidential nomination and consent of the Senate. The Court applied a 3 factor test for this, looking for review power, supervisory power, and removal power of the closest appointed officer, that being the USPTO Director. First, the court reviewed whether the Director had power to review or overturn final written decisions of APJ's, and the Court concluded the Director did not have such review power. The Court also determined that the Director had sufficient supervisory powers over the APJ's, but no power to remove such judges from judicial service other than for cause. Thus, 2 of the 3 factors favored APJ's being principal officers, which makes their current appointment not done by the President and Senate unconstitutional.
To avoid a quagmire where the entire Patent Trial and Appeal Board is thrown into chaos with all re-appointments to be done by a single President, the Court then modified the patent law to remove the restrictions on removing patent judges to push a second factor in favor of them being inferior officers. In other words, they made the patent law constitutional again by making the Director have full removal power at will over Administrative Patent Judges. The patent owner who challenged this patent review would thus be granted a new IPR trial in front a new panel of APJ's that are now properly inferior officers, but this did not cause upheaval of all prior decisions or remove the process for patent reviews.
What will be interesting to see is whether the USPTO Director actually wields this removal power more to take out APJ's who are overly biased for or against patents. Or if the issue is handled in the future by using Presidential appointments for such judges.
The Bottom Line is: this argument against constitutionality of appointments of all administrative patent judges was a "Hail Mary" of sorts, but sometimes those long shots work. It remains to be seen if this will create any substantive change for how the Patent Trial and Appeal Board works. But this is the front line of many battles over IP in America, and so it's vital that the process works properly under the Constitution and all other laws.
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