Court Explores Potential Outcomes in Arthrex

As I have discussed previously, Arthrex is more of an academic exercise for constitutional and administrative law nerds scholars than anything else.  Today’s oral argument has done nothing to disabuse me of that notion.  While it is a fool’s errand to speculate at a SCOTUS outcome based on oral arguments, I am the perfect man for the job 🙂

First, it is clear to me that the Court is certainly not going to declare the PTAB unconstitutional in its entirety.  Indeed, any overreach in this case would very likely result in collateral damage to myriad executive agencies that include adjudicating officers.  The Court stressed that it typically looks for a “clear solution” or narrow holding in such cases.  To this end, the Court appears to be contemplating that the Director’s ability to guide policy— which must be followed by individual judges in arriving at a decision in very narrow and fact specific cases—may be enough oversight to render APJs as inferior officers.  At least when coupled with other powers of review and supervisions under the Court’s totality of circumstances test. (enunciated in Edmond v. U.S.)

To the extent the Court were to find that the final decisions of the PTAB were of the nature of a principal officer, the Court seems likely to sever portions of §6(c) of the America Invents Act (AIA) that relate to rehearings (i.e., the constitutionally offending provision), and that would require the Director to sit on a panel with other APJs for purposes of rehearing, as follows:

‘(c) 3-MEMBER PANELS.—Each appeal, derivation proceeding, post-grant review, and inter partes review shall be heard by at least 3 members of the Patent Trial and Appeal Board, who shall be designated by the Director. Only the Patent Trial and Appeal Board may grant rehearings

As explored during the argument, with the statute edited as above, an unsatisfied party would have a constitutional right to Director review under the Appointments Clause to provide the final decision of the agency.

If the Court were to sever portions of the statute as presented above, the PTAB cases that raised this Appointments Clause issue prior to such a decision would then have a right to seek Director review.  But, this Appointments Clause fight was never about the availability of Director review, instead it is just an effort to pull down the PTAB system.

Even with a Director review, I wouldn’t expect the Director to commonly reverse PTAB decisions absent some rare abuse of discretion by the assigned panel, or glaring deficiency.