Polaris Concurrence Explains Why Arthrex Was Wrong, But Signals Federal Circuit Won’t Fix It

Today’s Federal Circuit decision in Polaris v. Kingston had an unsurprising outcome—in line with last year’s Arthrex decision, the PTAB’s determination was remanded back to the PTO for review in line with Arthrex.  But while the decision was brief, the concurrence—authored by Judge Hughes and joined by Judge Wallach—was not.  It explains, in detail, just why Judge Moore’s decision in Arthrex was fundamentally flawed.

Arthrex

The main issue in Arthrex was simple—are the PTAB’s Administrative Patent Judges (APJs) constitutionally appointed?  APJs are appointed by the Secretary of Commerce without Senate confirmation.  If they’re what are called “principal officers”, the lack of confirmation is an Appointments Clause problem.

And that’s exactly what Judge Moore’s opinion found.  She decided that APJs are principal officers, in large part because the Director of the PTO (a Senate-confirmed principal officer) can’t directly review their work.  In order to remedy this, the Arthrex opinion removed APJs’ civil service employment protections.

Polaris

In today’s Polaris concurrence, Judge Hughes explains why that’s wrong.  In particular, the Director “may issue binding policy guidance, institute and reconsider institution of an inter partes review, select APJs to preside over an instituted inter partes review, single-handedly designate or de-designate any final written decision as precedential, and convene a panel of three or more members of his choosing to consider rehearing any Board decision.”

Judge Hughes goes on to explain the importance of these factors, and in particular of the Director’s ability to select APJs to preside over a review and to convene panels of the Director’s own choosing to rehear Board decisions.  Judge Moore said that wasn’t important because “the Director has only one vote out of at least three,” ignoring the critical importance of the ability to select who appears on that panel.  If you can pick your judges, you can generally pick the outcome—especially if you’re also, formally, the judge’s boss.

Judge Hughes also criticizes the Arthrex decision’s narrow and rule-bound view of what the Supreme Court said signaled a principal, as opposed to inferior, officer—a frequent problem with the Federal Circuit, which generally favors bright-line rules over the more flexible and broader standards that the Supreme Court imposes when it reviews Federal Circuit decisions.  Instead of focusing on direct review authority, Judge Hughes would look at the holistic ability of the Director—by regulation, supervision, authority to set precedent, and authority to set and convene a review panel—to monitor and address the decisions made by APJs.

But at the end of the day, Judge Hughes acknowledged that he’s bound by the panel decision and concurred in the remand.

Moving Forward

Given this remand, as well as several others in recent days, it seems likely that the Federal Circuit won’t take the Arthrex case to en banc review—even though both parties to the case, as well as many others, have asked them to, and even though at least four judges are on record (between Polaris and the earlier Bedgear concurrence by Judges Dyk and Newman) as believing Arthrex was wrongly decided.  If en banc review was likely, then it seems that the remands would have been held pending review, rather than forcing the PTAB to re-hear a case when they might not have to.

But even if the Federal Circuit won’t re-hear it, that’s not the end.  The Supreme Court heard an Appointments Clause case quite recently, where they clarified the distinction between officer and employee—they might well see this as a chance to clarify the distinction between principal and inferior officers.

And whether the Court decides to hear it or not, Congress could act.  The House Judiciary Committee held a hearing on Arthrex back in November where every witness agreed that it should be fixed.  And Judge Hughes described a number of fixes that Congress could enact, ranging from “grant[ing] the Director unilateral review over all Board decisions” to “provid[ing] for presidential appointment of all APJs.”  And this problem isn’t going to go away on its own. It’s already spread beyond the PTAB, with the similar trademark judges of the TTAB recently targeted on the same theory.  

A quick, clean fix to this problem isn’t controversial.  Everyone wants to ensure that the administrative judges working for the PTO—both on the PTAB and TTAB—can do their work without either unfair threats to their jobs or uncertainty as to the validity of the work they do.  Congress should pursue such a fix—without making the kinds of disputed changes to patent and trademark law that have disrupted other recent attempts to patent reform.

Joshua Landau

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.