from the United States Patent and Trademark Office, Patent
Trial and Appeal Board in No. IPR2017-00275.
Anthony P. Cho, Carlson, Gaskey & Olds, PC, Birmingham,
MI, argued for appellant. Also represented by David Louis
Atallah, David J. Gaskey, JessicaE Zilberberg.
Charles T. Steenburg, Wolf, Greenfield & Sacks, PC,
Boston, MA, argued for appellees. Also represented by Richard
Giunta, Turhan Sarwar; Michael N. Rader, New York, NY.
Melissa N. Patterson, Appellate Staff, Civil Division, United
States Department of Justice, Washington, DC, argued for
intervenor. Also represented by Courtney Dixon, Scott R.
McIntosh, Joseph H. Hunt; Sarah E. Craven, Thomas W. Krause,
Joseph Matal, Farheena Yasmeen Rasheed, Office of the
Solicitor, United States Patent and Trademark Office,
Moore, Reyna, and Chen, Circuit Judges.
Inc. appeals from the final written decision of the Patent
Trial and Appeal Board holding claims 1, 4, 8, 10-12, 16, 18,
and 25-28 of U.S. Patent No. 9, 179, 907 un-patentable as
anticipated. Arthrex appeals this decision and contends that
the appointment of the Board's Administrative Patent
Judges ("APJs") by the Secretary of Commerce, as
currently set forth in Title 35, violates the Appointments
Clause, U.S. Const., art. II, § 2, cl. 2. We agree and
conclude that the statute as currently constructed makes the
APJs principal officers. To remedy the violation, we follow
the approach set forth by the Supreme Court in Free
Enterprise Fund v. Public Company Accounting Oversight
Board, 561 U.S. 477 (2010) and followed by the D.C.
Circuit in Intercollegiate Broadcasting System, Inc. v.
Copyright Royalty Board, 684 F.3d 1332 (2012). As the
Supreme Court instructs, "'[g]enerally speaking,
when confronting a constitutional flaw in a statute, we try
to limit the solution to the problem,' severing any
'problematic portions while leaving the remainder
intact.'" Free Enterprise Fund, 561 U.S. at
508 (quoting Ayotte v. Planned Parenthood of Northern New
Eng., 546 U.S. 320, 328-29 (2006)). We conclude that
severing the portion of the Patent Act restricting removal of
the APJs is sufficient to render the APJs inferior officers
and remedy the constitutional appointment problem. As the
final written decision on appeal issued while there was an
Appointments Clause violation, we vacate and remand.
Following Lucia v. S.E.C., 138 S.Ct. 2044 (2018),
the appropriate course of action is for this case to be
remanded to a new panel of APJs to which Arthrex is entitled.
owns the '907 patent, which is directed to a knotless
suture securing assembly. Smith & Nephew, Inc. and
Arthrocare Corp. (collectively "Petitioners" or
"Appellees") filed a petition requesting inter
partes review of claims 1, 4, 8, 10-12, 16, 18, and
25-28 of the '907 patent.
partes review is a "'hybrid proceeding'
with 'adju-dicatory characteristics' similar to court
proceedings." Saint Regis Mohawk Tribe v. Mylan
Pharms., 896 F.3d 1322, 1326 (Fed. Cir. 2018). After a
petitioner files a petition requesting that the Board
consider the patentability of issued patent claims, the
Director of the United States Patent and Trademark Office
("USPTO") determines whether to institute an
inter partes review proceeding. 35 U.S.C. §
A three-judge panel of Board members then conducts the
instituted inter partes review. Id. §
316(c). If an instituted review is not dismissed
before the conclusion of the proceedings, the Board issues a
final written decision determining the patentability of
challenged claims. Id. § 318(a). Once the time
for appeal of the decision expires or any appeal has been
terminated, the Director issues and publishes a certificate
canceling any claim of the patent finally determined to be
unpatentable. Id. § 318(b).
inter partes review of the '907 patent was heard
by a three-judge panel consisting of three APJs. The Board
instituted review and after briefing and trial, the Board
issued a final written decision finding the claims
unpatenta-ble as anticipated. J.A. 12, 14, 42.
and the government argue that Arthrex forfeited its
Appointments Clause challenge by not raising the issue before
the Board. Although "[i]t is the general rule . . . that
a federal appellate court does not consider an issue not
passed upon below," we have discretion to decide when to
deviate from that general rule. Singleton v. Wulff,
428 U.S. 106, 120-21 (1976). The Supreme Court has included
Appointments Clause objections to officers as a challenge
which could be considered on appeal even if not raised below.
Freytag v. Commissioner of Internal Revenue, 501
U.S. 868, 878-79 (1991); Glidden Co. v. Zdanok, 370
U.S. 530, 535-36 (1962).
Freytag, the Supreme Court exercised its discretion
to decide an Appointments Clause challenge despite
petitioners' failure to raise a timely objection at
trial. 501 U.S. at 878-79. In fact, the Court reached the
issue despite the fact that it had not been raised until the
Court explained that the structural and political roots of
the separation of powers concept are embedded in the
Appointments Clause. It concluded that the case was one of
the "rare cases in which we should exercise our
discretion to hear petitioners' challenge to the
constitutional authority." Id. at 879. We
believe that this case, like Freytag, is one of
those exceptional cases that warrants consideration despite
Arthrex's failure to raise its Appointments Clause
challenge before the Board. Like Freytag, this case
implicates the important structural interests and separation
of powers concerns protected by the Appointments Clause.
Separation of powers is "a fundamental constitutional
safeguard" and an "exceptionally important"
consideration in the context of inter partes review
proceedings. Cascades Projection LLC v. Epson America,
Inc., 864 F.3d 1309, 1322 (Fed. Cir. 2017) (Reyna, J.,
dissenting from denial of petition for hearing en banc). The
issue presented today has a wide-ranging effect on property
rights and the nation's economy. Timely resolution is
critical to providing certainty to rights holders and
competitors alike who rely upon the inter partes
review scheme to resolve concerns over patent rights.
and the government argue that like In re DBC we
should decline to address the Appointments Clause challenge
as waived. DBC recognized that the court retains
discretion to reach issues raised for the first time on
appeal, but declined to do so in that case. 545 F.3d 1373,
1380 (Fed. Cir. 2008). The court predicated its decision on
the fact that if the issue had been raised before the Board,
it could have corrected the Constitutional infirmity because
there were Secretary appointed APJs and that Congress had
taken "remedial action" redelegating the power of
appointment to the Secretary of Commerce in an attempt to
"eliminat[e] the issue of unconstitutional appointments
going forward." Id. at 1380. As the court
noted, "the Secretary, acting under the new statute, has
reappointed the administrative patent judges involved in
at 1381. Not only had Congress taken remedial action to
address the constitutionality issue, the Secretary had
already been implementing those remedies limiting the impact.
Id. No such remedial action has been taken in this
case and the Board could not have corrected the problem.
Because the Secretary continues to have the power to appoint
APJs and those APJs continue to decide patentability in
inter partes review, we conclude that it is
appropriate for this court to exercise its discretion to
decide the Appointments Clause challenge here. This is an
issue of exceptional importance, and we conclude it is an
appropriate use of our discretion to decide the issue over a
challenge of waiver.
argues that the APJs who presided over this inter
partes review were not constitutionally appointed. It
argues the APJs were principal officers who must be, but were
not, appointed by the President with the advice and consent
of the Senate.
Appointments Clause of Article II provides:
[The President] . . . shall nominate, and by and with the
Advice and Consent of the Senate, shall appoint Ambassadors,
other public Ministers and Consuls, Judges of the supreme
Court, and all other Officers of the United States, whose
Appointments are not herein otherwise provided for, and which
shall be established by Law: but the Congress may by Law vest
the Appointment of such inferior Officers, as ...