By Nate Andrews, John Marlott, and Dave Maiorana

On Monday, March 23, 2020, the Federal Circuit denied rehearing and rehearing en banc in the Arthrex appeal that found PTAB ALJs to be unconstitutional appointments.   Arthrex, Inc. v. Smith & Nephew, Inc., No. 18-2140, Order Denying Rehearing and Rehearing En Banc, Dkt. 115.  The denial is accompanied by two opinions concurring in the denial and three opinions dissenting from the denial.  Four judges did not join any of the opinions.  The four judges dissenting—who we have heard from before—and the four judges concurring disagree fundamentally on whether APJs were principal officers and whether severing removal protections was a proper fix.

The Practical Impact

This rehearing denial leaves the Arthrex decision in place.

Judge Moore, who authored Arthrex, defended the opinion in a concurrence joined by Judges O’Malley, Reyna, and Chen.  That concurrence explains the practical impact of Arthrex as it stands.  Although Judge Moore’s concurrence does not carry precedential weight, it does restate in a clear way the limits that the court set in Arthrex: “[N]o more than 81 appeals including Arthrex itself can be vacated and remanded.”  Concurrence at 5 (Moore, J., concurring).  This is so, Judge Moore explained, because the court limited the window of Arthrex remands in two ways.  First, after Arthrex on October 31, 2019, “inter partes review decisions going forward were no longer rendered by unconstitutional panels.”  Id.  Second, vacatur and remand are only available for decisions issued before Arthrex where the Appointments Clause challenge was “properly preserved” by a patent owner in or before the opening brief.  IdArthrex applies only to the limited number of potential cases falling in this window—81 cases.  “The window for appeals from Board decisions issued prior to [the Arthrex fix] has closed.”  Id.

Thus, for certain patent owners and petitioners with appeals pending before the PTAB or Federal Circuit, the most practical and substantial impact of Arthrex is vacatur and remand of inter partes review decisions that predated Arthrex.  Beyond that, the true impact is on APJs who now have less protection from termination by the Director of the USPTO.

Ultimately, denying rehearing leaves the Arthrex decision in place unless the Supreme Court takes up the case.  The mandate will issue on March 30, 2020.  A petition to the Supreme Court for a writ of certiorari must be filed by August 20, 2020 under the Court’s extended COVID-19 deadlines.  Until and unless the Supreme Court takes up Arthrex, APJ termination provisions remain as the Arthrex panel left them and at least 81 appeals might be eligible for remand.

The Jones Day PTAB Litigation Blog will continue with further insight and analysis in the coming days.

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John Marlott brings more than 30 years of intellectual property law experience to his role as lead counsel in IP disputes for Jones Day clients. He focuses on high-stakes district court and ITC patent litigation, post-grant patent proceedings before the PTAB, and appeals to the U.S. Court of Appeals for the Federal Circuit.

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