## Facts

- Congress created the Patent Trial and Appeal Board (PTAB) within the U.S. Patent and Trademark Office (PTO) to conduct inter partes review (IPR) and issue a final written decision on whether challenged patent claims remain valid under current patentability requirements.
- The PTO is headed by the Director of the PTO (Director), a Senate-confirmed principal officer.
- The PTAB is staffed in part by Administrative Patent Judges (APJs), whom Congress authorized the Secretary of Commerce (Secretary) to appoint, describing APJs as inferior officers.
- The Director could select which APJs sat on a given PTAB panel and could order rehearings, but no Senate-confirmed officer had authority to review and reverse a panel’s final written decision in an IPR.
- Smith & Nephew petitioned for IPR of a patent owned by Arthrex, Inc.
- A three-APJ PTAB panel issued a final written decision concluding the challenged claims were unpatentable, which had the effect of canceling those claims.
- Arthrex appealed to the U.S. Court of Appeals for the Federal Circuit, arguing that APJs exercised authority of principal officers because their decisions were final within the Executive Branch, yet they were appointed by the Secretary rather than by the President with Senate confirmation.
- The Federal Circuit agreed an Appointments Clause violation existed and attempted to fix it by severing APJs’ statutory tenure protections, making them removable at will.
- The Supreme Court granted certiorari in consolidated cases to decide whether the statutory scheme violated the Appointments Clause and what remedy was proper.

## Issues

1. Whether APJs who issue final written decisions in IPR, without review by a Senate-confirmed official, exercise authority incompatible with their appointment as inferior officers by the Secretary of Commerce.
2. If the statutory scheme violates the Appointments Clause, what remedy is required—severing APJs’ tenure protections, or instead granting the PTO Director authority to review and issue the final decision on behalf of the Executive Branch.

## Decision

- The Court held that APJs’ authority to issue final, unreviewable decisions in IPR is incompatible with their appointment by the Secretary to an inferior office.
- The Court concluded the constitutional problem is the absence of review by a principal officer of the Executive Branch over APJs’ final written decisions.
- The Court rejected the Federal Circuit’s remedial approach that focused on removal protections as the fix.
- As a remedy, the Court construed the Patent Act to require that the PTO Director have authority to review PTAB final written decisions in IPR and to issue the final decision for the Executive Branch.
- The Court vacated the judgment below and remanded for further proceedings consistent with Director review.

## Legal Principles

- An officer is “inferior” for Appointments Clause purposes only if the officer’s work is directed and supervised by a superior officer appointed by the President with Senate consent.
- Executive adjudications that bind the agency must remain subject to review by a Senate-confirmed principal officer when Congress assigns the initial decision to appointed officials who are not principal officers.
- Structural controls such as case assignment, institution authority, rulemaking, and rehearing procedures may provide supervision, but they do not substitute for the power to review and reverse the final decision in a specific case.
- When a statute creates an Appointments Clause defect, courts may apply severability and statutory-construction tools to preserve the adjudicatory system while ensuring that a principal officer can take responsibility for the final agency action.
- In the IPR context, the necessary Article II supervision is satisfied when the PTO Director can review PTAB final written decisions and issue the final decision on behalf of the Executive Branch.

## Conclusion

United States v. Arthrex held that APJs could not constitutionally issue final, unreviewable IPR decisions while being appointed as inferior officers by the Secretary of Commerce. The Court addressed the defect by requiring that the Senate-confirmed PTO Director have authority to review PTAB final written decisions and issue the final agency decision, then vacated and remanded for proceedings consistent with that remedy.


United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021)