United States v. Arthrex, Inc.
594 U. S. ____ (2021) (2021)
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Rule of Law:
For an executive officer's appointment by a department head to be valid as an 'inferior officer' under the Appointments Clause, the officer's work, particularly final adjudicatory decisions, must be subject to direction and supervision by a principal officer. The inability of a principal officer to review and overturn such decisions renders the statutory scheme unconstitutional.
Facts:
- Arthrex, Inc. secured a patent in 2015 for a surgical device used to reattach soft tissue to bone.
- Arthrex subsequently accused Smith & Nephew, Inc. and ArthroCare Corp. (collectively, Smith & Nephew) of infringing its patent.
- In response, Smith & Nephew petitioned the Patent Trial and Appeal Board (PTAB) for an inter partes review, challenging the validity of Arthrex's patent.
- A panel of three Administrative Patent Judges (APJs), who are appointed by the Secretary of Commerce, was assigned to conduct the review.
- The APJ panel issued a final written decision concluding that Arthrex's patent was invalid because a prior invention had anticipated it.
- Under the governing statute, the America Invents Act, this decision by the APJ panel was the final adjudicatory decision of the Executive Branch and was not subject to review or reversal by the Director of the Patent and Trademark Office or any other principal officer.
Procedural Posture:
- Smith & Nephew petitioned the Patent Trial and Appeal Board (PTAB) for inter partes review of a patent held by Arthrex, Inc.
- A PTAB panel comprised of three Administrative Patent Judges (APJs) issued a final written decision finding Arthrex's patent claims to be invalid.
- Arthrex appealed the PTAB's decision to the U.S. Court of Appeals for the Federal Circuit, the intermediate appellate court for patent cases.
- During the appeal, Arthrex argued for the first time that the APJs were unconstitutionally appointed in violation of the Appointments Clause.
- The Federal Circuit held that APJs were principal officers whose appointments were unconstitutional and remedied the violation by severing their statutory tenure protections, making them removable at will. The court then vacated the PTAB decision and remanded for a new hearing.
- The United States, Smith & Nephew, and Arthrex all filed petitions for a writ of certiorari to the U.S. Supreme Court, which were granted.
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Issue:
Does the statutory scheme granting Administrative Patent Judges (APJs) the authority to issue final, unreviewable decisions on patent validity on behalf of the Executive Branch violate the Appointments Clause because APJs are appointed by the Secretary of Commerce rather than by the President with the advice and consent of the Senate?
Opinions:
Majority - Roberts, C.J.
Yes, the statutory scheme violates the Appointments Clause. For an official to be an 'inferior officer' who can be appointed by a department head, they must be 'directed and supervised at some level' by a principal officer appointed by the President and confirmed by the Senate, as established in Edmond v. United States. Although APJs are appointed by the Secretary of Commerce, the statute insulates their final patentability decisions from any review by the Director of the Patent and Trademark Office (a principal officer) or any other executive superior. This lack of review means APJs wield significant, unreviewable executive power, which is characteristic of principal officers, thereby creating a conflict with the Appointments Clause's goal of preserving political accountability through a clear chain of command to the President. The proper remedy is not to invalidate the entire inter partes review system, but to sever the statutory provision (35 U.S.C. § 6(c)) that prevents the Director from reviewing PTAB decisions, thus making APJs' authority subordinate to that of a principal officer.
Dissenting - Thomas, J.
No, the statutory scheme does not violate the Appointments Clause. APJs are classic inferior officers under the framework of Edmond. They are subordinate to at least two levels of principal officers (the Director and the Secretary of Commerce). The Director exercises extensive supervision and control over APJs by deciding whether to institute review, selecting the panel members, promulgating procedural rules, designating certain decisions as precedent, and possessing the authority to convene a special panel to rehear a case. This level of oversight is more than sufficient to render APJs inferior. The majority errs by creating a new, rigid rule that an inferior officer's work is unconstitutional unless a principal officer can single-handedly reverse their every decision, a standard unsupported by precedent or history.
Concurring in part and dissenting in part - Gorsuch, J.
While I agree with the majority that the statutory scheme violates the Appointments Clause by breaking the chain of executive accountability, I dissent from the remedy. The Court should not engage in judicial policymaking by rewriting the statute to grant the Director review power, a choice Congress expressly withheld. The traditional judicial role is to identify the constitutional violation and decline to enforce the statute in the case at hand. Therefore, the proper remedy is to simply set aside the PTAB's decision against Arthrex, leaving it to Congress to decide how to amend the law.
Concurring in the judgment in part and dissenting in part - Breyer, J.
I dissent from the majority's conclusion that there is a constitutional violation, for the reasons stated in Justice Thomas's dissent. The Court's formalistic approach is a mistake and ignores the functional reality that the Director exercises substantial control over APJs. However, given that a majority has found a constitutional violation, I concur with the plurality's chosen remedy. Tailoring the remedy to the specific defect identified—the lack of Director review—is the most appropriate course of action.
Analysis:
This decision refines the Edmond test for inferior officers by emphasizing that meaningful supervision requires a principal officer's power to review the final adjudicatory decisions of their subordinates. It continues a recent trend in separation-of-powers jurisprudence (Seila Law, Free Enterprise Fund) that prioritizes presidential control and accountability over the executive branch. The Court’s choice of a surgical remedy—severing a single statutory limitation rather than invalidating the entire scheme—signals a preference for preserving congressional statutes while curing constitutional defects, which may influence how courts approach such issues in other administrative contexts. This ruling will likely compel Congress to structure future administrative tribunals with a clear chain of review leading to a presidentially appointed, Senate-confirmed officer.
