Unconstitutional Appointment of Patent Death Squad

Abstract

Can legal scholarship change the law? Apparently so—a recent exemplar appears in United States v. Arthrex, one of the three IP decisions handed down near the end of the 2020 term. In this deeply fractured Supreme Court decision—with different majorities for the merits and the remedy—five justices held that PTAB judges, who are appointed as inferior Officers under the Appointments Clause and have traditionally wielded “unreviewable authority” during IPR to cancel patents, have unconstitutionally acted as principal Officers, and should therefore have been nominated by the President and confirmed by the Senate. To remedy such an Appointments Clause violation, seven justices voted to judicially convert these principal Officers to inferior Officers by allowing the USPTO Director to discretionarily review the PTAB’s IPR decisions.Consequently, Arthrex has expanded the Director’s power to review the PTAB’s IPR cases and reach her own decisions. As Justice Gorsuch’s dissent suggested, the new power creates risk that the Director, as a political appointee, may be politically motivated—or perceived as politically motivated—to cancel patents that carry with them significant financial or social consequences. This puts more pressure on the currently unfilled Director post in the Biden Administration. It is not difficult to imagine lobbying campaigns aimed to influence the Director’s decision. Recent examples of patents at potential risk include those related to COVID vaccines. Not to put too fine a point on it, patents have become less free of political influence than they might have been in the past, as patents are certainly political. Arthrex sends a strong message that patent adjudication is not special in the administrative state and reaffirms the long-observed pattern of no patent exceptionalism in the justices’ eyes.More broadly, this case has provided a clear roadmap for Congress to rethink current regulatory regimes and design adjudicative regimes in the future: outside of patent law, Arthrex’s ruling may upend a handful of adjudicative agencies with internal administrative-law bodies that have final decision-making authority like the PTAB, such as the Department of Health and Human Services, the Department of Labor, and the Social Security Administration. Under Arthrex, those administrative law judges are, like APJs, appointed as inferior Officers, but unconstitutionally acting as principal Officers. These apparent Duffy Defects may lead to future constitutional challenges based on the Appointments Clause (as well as the Vesting Clause), including those unresolved by Arthrex. Ideas, after all, have consequences, and those originated in law reviews can indeed later change the law.