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Arthrex appealed a decision of the Patent Trial and Appeals Board (PTAB) contending 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 of the U.S. Constitution, arguing the APJs exercise the type of authority that renders them principal officers of the United States who must be appointed by the President, with the advice and consent of the Senate. Arthrex, Inc. v. Smith & Nephew, Inc., 2019 BL 418700, Fed. Cir., No. 2018-2140, 10/31/19.

The Court of Appeals for the Federal Circuit, in a decision authored by Judge Kimberly Moore, agreed with Arthrex, and concluded that the statute as currently constructed makes the APJs principal officers. The Court first rejected a waiver challenge, stating that it is an appropriate exercise of its discretion to decide the Appointments Clause challenge, noting it is an issue of exceptional importance.  To remedy the constitutional violation, the CAFC severed the portion of the Patent Act restricting removal of the APJs, which renders the APJs inferior officers and remedies the appointment problem, following 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). 

The Court also vacated the Board’s decision and ordered the case to be remanded to a new three-judge panel of APJs for rehearing.