A weekly summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit and the opinions designated precedential or informative by the Patent Trial and Appeal Board.
Arthrex, Inc. v. Smith & Nephew, Inc., et al., No. 2018-2140 (Fed. Cir. (PTAB) May 27, 2022). Opinion by Moore, joined by Reyna and Chen.
Last year, the Supreme Court held in United States v. Arthrex that Administrative Patent Judges in IPR proceedings could not issue any “final decision binding the Executive Branch.” The Court remanded “to the Acting Director for him to decide whether to rehear” the decision by the Patent Trial and Appeal Board finding certain claims of Arthrex’s patent invalid as anticipated.
On remand, Arthrex requested rehearing by the Director, but the office of both the Director and the Deputy Director were vacant, leaving the decision to the Commissioner for Patents. The Commissioner then denied rehearing and ordered that the Board’s decision “is the final decision of the agency.”
Arthrex appealed, arguing that the Commissioner’s exercise of the Director’s authority to decide rehearing petitions violated the Appointments Clause, the Federal Vacancies Reform Act (FVRA), and the Constitution’s separation of powers. The Federal Circuit disagreed.
First, the Federal Circuit held that the Commissioner was acting as an inferior officer, and “although an inferior officer generally cannot issue a final agency decision, he may perform the functions and duties of an absent [Presidentially-appointed, Senate-confirmed (PAS)] officer on a temporary, acting basis.” Here, the Commissioner “was merely performing the functions and duties of the Director in the limited period between the former Director’s departure and the current Director’s arrival.” The Federal Circuit analyzed Supreme Court precedent holding that “the Appointments Clause allows an inferior officer to temporarily wield the powers of an absent PAS officer,” and ruled that Arthrex’s case “is indistinguishable from” that precedent.
Second, the Federal Circuit distinguished the FVRA. Arthrex argued that the FVRA precluded the Commissioner from ruling on Arthrex’s rehearing request and deprived the Commissioner’s decision of any force or effect. The Federal Circuit disagreed because the FVRA “applies only to non-delegable duties,” and here, “deciding rehearing requests is a delegable duty.” Thus, the FVRA did not apply.
Third, the Federal Circuit disagreed with Arthrex’s position that by exercising the Director’s authority, the Commissioner violated the Constitution’s separation of powers. The court ruled that “this argument has no merit.”
Finally, after upholding the Commissioner’s order denying rehearing, the Federal Circuit turned to the merits of the IPR. The Federal Circuit affirmed the Board’s decision (finding the challenged claims anticipated) because it was supported by substantial evidence.