Patent and invention owners should care.  You should care.

Barely a decade ago, Congress created the Patent Trial and Appeal Board (PTAB) and gave it the power of life and death over patents.  In the years since, the PTAB has done exactly what Congress intended – reduce the cost to challenge and kill patents and reduce the burden that patent protection presents to the infringers among us.  In 2013, the then-chief judge of the Federal Circuit Court of Appeals famously referred to the PTAB as ‘patent death squads.’  The PTAB moderated its murderous ways during the last administration.

When Congress created the PTAB, it created a cadre of Administrative Patent Judges to hear patent challenges and to make decisions.  The PTAB judges are not Federal judges.  Unlike Federal judges, they are not appointed by the President and instead are appointed by the Secretary of Commerce.  Unlike Federal judges, the PTAB judges are not confirmed by the Senate.

But in deciding certain challenges to patents, the PTAB judges are like Federal judges – they decide matters worth millions or billions of dollars and issue the final decision of the U.S. Government.  Their decisions are not reviewed by any other Executive Branch official.  When they kill a patent, they take someone’s valuable property away and give it to the public.  Congress decreed that once appointed, the PTAB judges cannot be fired without good reason, like Federal judges.

Inventors and patent owners cried foul and mounted a last-gasp challenge to the law underpinning the PTAB.  That challenge was recently decided by the Supreme Court in US v Arthrex, Inc. (see our previous article on this case while it was pending). To understand the challenge requires a civics refresher:  

In the U.S. system of government as set out in the Constitution, powerful officials are answerable to the voters.  All the members of the Legislative Branch – the House and Senate – are elected.  The members of the Executive Branch are under the direct control of the elected President.  The Judicial Branch is not elected, but each of the judges and justices is appointed by the elected President and confirmed by the elected Senate.  Certain other non-elected Executive Branch officials (quite a few, actually), known as ‘Principal Officers,’ also require appointment by the President and confirmation by the Senate.  Congress decided that the power wielded by those non-elected officials requires approval on the front end. 

In the Arthrex case, the challengers argued that because of their power, lifetime tenure and lack of oversight, the PTAB judges are ‘Principal Officers’ requiring appointment by the President and consent of the Senate.  The challengers argued that because the PTAB judges are not treated as Principal Officers, their appointment was unconstitutional and decisions made by the PTAB judges are invalid.  The Federal Circuit Court of Appeals agreed that the PTAB Judges were Principal Officers, and struck down the portion of the statute granting them lifetime tenure.  The Federal Circuit did not disturb the decisions made by the PTAB judges and did not address the lack of oversight of the PTAB judges.  Unsatisfied, the challengers petitioned the Supreme Court.

The Supreme Court issued its decision on June 21, 2021.  In the words of an old law professor of mine, the Court “jumped on its horse and rode off in all different directions,” producing a total of four opinions.   A majority (five justices) agreed with the challengers that PTAB judges are Principal Officers because their decisions are not reviewable – there is no elected official ultimately responsible for their decisions.  The remedy selected by four justices, with another three agreeing to the remedy in dissent, is to re-write the statute to provide oversight by the Director of the Patent and Trademark Office, who reports to the Secretary of Commerce, who reports to the President.  

To be clear, there is no oversight of PTAB judges in the statute.  The Supreme Court made that up out of thin air.  Striking down a statute as unconstitutional is different from modifying an unconstitutional statute to make it constitutional.  That’s what the Supreme Court has done here.

The decision of the Court is deeply practical – it preserves the patent system mostly in the way that Congress envisioned it.  However, the Supreme Court’s approach frustrates Congress’ intent in one crucial aspect.  In giving power to the PTAB judges, Congress attempted to insulate the PTAB judges from politics in the same way that Federal judges are insulated from politics.  But, the Court reminds us, elections matter and the Executive Branch is ultimately political in the best sense of responsibility and accountability to the body politic.  When responsibility and accountability fail, appeal still is available from the PTAB to the Federal courts. 

The bottom line?  It’s business as usual at the PTAB, except that the PTAB must give the Director of the Patent and Trademark Office an opportunity to determine whether a rehearing of each inter partes review decision is needed.  Don’t hold your breath.

— Robert Yarbrough, Esq.