Nos. 19-1434 & 19-1452
`
`IN THE
`Supreme Court of the United States
`————
`UNITED STATES OF AMERICA,
`Petitioner,
`
`
`
`v.
`ARTHREX, INC.; SMITH & NEPHEW, INC.;
`AND ARTHROCARE CORP.,
`
`
`Respondents.
`————
`SMITH & NEPHEW, INC.,
`AND ARTHROCARE CORP.,
`Petitioners,
`
`v.
`ARTHREX, INC.,
`AND UNITED STATES OF AMERICA,
`
`
`
`Respondents.
`————
`On Petitions for Writs of Certiorari
`to the United States Court of Appeals
`for the Federal Circuit
`————
`MEMORANDUM IN RESPONSE
`FOR RESPONDENT ARTHREX, INC.
`————
`JEFFREY A. LAMKEN
`Counsel of Record
`ROBERT K. KRY
`JAMES A. BARTA
`MOLOLAMKEN LLP
`The Watergate, Suite 500
`600 New Hampshire Ave., N.W.
`Washington, D.C. 20037
`(202) 556-2000
`jlamken@mololamken.com
`Counsel for Respondent Arthrex, Inc.
`(Additional Counsel Listed on Inside Cover)
`(cid:58)(cid:44)(cid:47)(cid:54)(cid:50)(cid:49)(cid:16)(cid:40)(cid:51)(cid:40)(cid:54)(cid:3)(cid:51)(cid:53)(cid:44)(cid:49)(cid:55)(cid:44)(cid:49)(cid:42)(cid:3)(cid:38)(cid:50)(cid:17)(cid:15)(cid:3)(cid:44)(cid:49)(cid:38)(cid:17)(cid:3)(cid:3)(cid:3)(cid:177)(cid:3)(cid:3)(cid:3)(cid:11)(cid:21)(cid:19)(cid:21)(cid:12)(cid:3)(cid:26)(cid:27)(cid:28)(cid:16)(cid:19)(cid:19)(cid:28)(cid:25)(cid:3)(cid:3)(cid:3)(cid:177)(cid:3)(cid:3)(cid:3)(cid:58)(cid:36)(cid:54)(cid:43)(cid:44)(cid:49)(cid:42)(cid:55)(cid:50)(cid:49)(cid:15)(cid:3)(cid:39)(cid:17)(cid:38)(cid:17)(cid:3)(cid:21)(cid:19)(cid:19)(cid:19)(cid:21)(cid:3)
`
`
`
`
`
`
`
`
`
`(cid:3)
`
`(cid:3)
`
`JORDAN A. RICE
`MOLOLAMKEN LLP
`300 North LaSalle Street
`Chicago, IL 60654
`(312) 450-6700
`
`
`
`
`
`

`

`ANTHONY P. CHO
`DAVID J. GASKEY
`JESSICA E. FLEETHAM
`DAVID L. ATALLAH
`CARLSON, GASKEY & OLDS, P.C.
`400 West Maple Road, Suite 350
`Birmingham, MI 48009
`(248) 988-8360
`
`
`
`CHARLES W. SABER
`SALVATORE P. TAMBURO
`BLANK ROME LLP
`1825 Eye Street, N.W.
`Washington, D.C. 20006
`(202) 420-2200
`
`JOHN W. SCHMIEDING
`TREVOR ARNOLD
`ARTHREX, INC.
`1370 Creekside Blvd.
`Naples, FL 34108
`(239) 643-5553
`
`Counsel for Respondent Arthrex, Inc.
`
`

`

`QUESTIONS PRESENTED
`The Appointments Clause requires principal officers
`to be appointed by the President with the advice and
`consent of the Senate, but permits inferior officers to be
`appointed by department heads. U.S. Const. art. II, § 2.
`In the decision below, the court of appeals held that the
`Patent Office’s administrative patent judges (“APJs”) are
`principal officers who are not appointed in the manner
`that provision requires. APJs issue final decisions on
`behalf of the agency that are not reviewable by any
`superior executive officer. And they are removable from
`office only under a restrictive for-cause standard.
`The questions presented are:
`1. Whether the court of appeals correctly held that
`APJs are principal officers, where they issue final deci-
`sions that are not reviewable by any superior executive
`officer and are removable from office only for cause.
`2. Whether the court of appeals correctly held that
`Arthrex timely raised its Appointments Clause challenge
`for the first time in the court of appeals, where the
`agency had no authority to adjudicate the claim; and if
`not, whether the court of appeals permissibly held that it
`had discretion to consider the claim regardless.
`
`
`
`
`(i)
`
`

`

`ii
`CORPORATE DISCLOSURE STATEMENT
`Pursuant to this Court’s Rule 29.6, respondent Arthrex,
`Inc., states that it has no parent corporation and that no
`publicly held company owns 10% or more of its stock.
`
`
`
`
`

`

`TABLE OF CONTENTS
`
`Statement ......................................................................
`I.(cid:3) Statutory Background ....................................
`II.(cid:3) Procceedings Below ........................................
`A.(cid:3) Arthrex’s ’907 Patent ...............................
`B.(cid:3) The Inter Partes Review .........................
`C.(cid:3) The Federal Circuit’s Decision ..............
`Argument ......................................................................
`I.(cid:3) The Federal Circuit’s Appointments
`Clause Ruling Is an Important Question
`That Warrants Review ...................................
`A.(cid:3) The Constitutional Question Is
`Important ..................................................
`B.(cid:3) The Court Correctly Held That
`APJs Are Principal Officers ...................
`1.(cid:3) No Principal Executive Officer
`Has Authority To Review APJ
`Decisions ............................................
`2.(cid:3) The Statute Sharply Restricts
`Removal ..............................................
`3.(cid:3) The Director’s Other
`Supervisory Powers Do Not
`Make Up for the Absence of
`Review and the Restrictions
`on Removal ........................................
`C.(cid:3) The Court Should Not Defer to the
`Political Branches’ Classification
`of APJs .......................................................
`II.(cid:3) Arthrex Timely Raised Its Appointments
`Clause Challenge .............................................
`
`Page
`3
`3
`5
`5
`5
`6
`10
`
`11
`
`11
`
`12
`
`13
`
`16
`
`19
`
`22
`
`23
`
`(iii)
`
`

`

`iv
`TABLE OF CONTENTS—Continued
`
`Page
`
`A.(cid:3) Raising the Challenge in the
`Patent Office Would Have
`Been Futile ................................................
`B.(cid:3) The Court of Appeals Did Not
`Abuse Its Discretion in Reaching
`the Challenge ............................................
`Conclusion .....................................................................
`
`
`23
`
`30
`33
`
`

`

`v
`TABLE OF AUTHORITIES
`
` Page(s)
`
`17
`
`21
`
`13
`27
`
`32
`19
`
`CASES
`Abrams v. Soc. Sec. Admin.,
`703 F.3d 538 (Fed. Cir. 2012) ...........................
`In re Alappat, 33 F.3d 1526
`(Fed. Cir. 1994) (en banc) .................................
`Ass’n of Am. R.Rs. v. U.S. Dep’t of Transp.,
`821 F.3d 19 (D.C. Cir. 2016) .............................
`Auer v. Robbins, 519 U.S. 452 (1997) ...................
`In re Boloro Glob. Ltd., No. 19-2349,
`2020 WL 3781201 (Fed. Cir. July 7, 2020) .......
`Bowsher v. Synar, 478 U.S. 714 (1986) ................
`Brown v. Dep’t of Navy, 229 F.3d 1356
`(Fed. Cir. 2000) ............................................. 3, 8, 17
`Butz v. Economou, 438 U.S. 478 (1978) ...............
`21
`Ciena Corp. v. Oyster Optics, LLC,
`958 F.3d 1157 (Fed. Cir. 2020) .........................
`Clarian Health W., LLC v. Hargan,
`878 F.3d 346 (D.C. Cir. 2017) ...........................
`Cont’l Air Lines, Inc. v. Dep’t of Transp.,
`843 F.2d 1444 (D.C. Cir. 1988) .........................
`Cooper Techs. Co. v. Dudas, 536 F.3d 1330
`(Fed. Cir. 2008) ...................................................
`Cuozzo Speed Techs., LLC v. Lee,
`28
`136 S. Ct. 2131 (2016) .........................................
`In re DBC, 545 F.3d 1373 (Fed. Cir. 2008) ..... 7, 25, 26
`Dep’t of Transp. v. Ass’n of Am. R.Rs.,
`575 U.S. 43 (2015) ...............................................
`Edmond v. United States,
`520 U.S. 651 (1997) ....................................... 7, 12, 13
`
`33
`
`21
`
`24
`
`21
`
`13
`
`

`

`vi
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`20
`
`Elgin v. Dep’t of Treasury,
`567 U.S. 1 (2012) .............................................. 24, 29
`Facebook, Inc. v. Windy City Innovations,
`LLC, 953 F.3d 1313 (Fed. Cir. 2020) ...............
`Free Enter. Fund v. Pub. Co. Accounting
`Oversight Bd., 561 U.S. 477 (2010) ............ passim
`Frey v. Dep’t of Labor, 359 F.3d 1355
`17
`(Fed. Cir. 2004) ...................................................
`Freytag v. Comm’r, 501 U.S. 868 (1991) ........ passim
`Glidden Co. v. Zdanok, 370 U.S. 530 (1962) .........
`30
`Johnson v. Robison, 415 U.S. 361 (1974) .............
`24
`Jones Bros., Inc. v. Sec’y of Labor,
`898 F.3d 669 (6th Cir. 2018) ..............................
`Joseph v. United States, 135 S. Ct. 705 (2014) .....
`King v. Frazier, 77 F.3d 1361
`17
`(Fed. Cir. 1996) ...................................................
`Lucia v. SEC, 138 S. Ct. 2044 (2018) .............. passim
`Maricopa County v. Lopez-Valenzuela,
`11
`135 S. Ct. 428 (2014) ...........................................
`McCarthy v. Madigan, 503 U.S. 140 (1992) ...... 23, 24
`New York v. United States,
`505 U.S. 144 (1992) .............................................
`Nguyen v. Dep’t of Homeland Sec.,
`737 F.3d 711 (Fed. Cir. 2013) ...........................
`Nguyen v. United States, 539 U.S. 69 (2003) .......
`NLRB v. Noel Canning, 573 U.S. 513 (2014) .......
`Polaris Innovations Ltd. v. Kingston Tech.
`Co., 792 F. App’x 820 (Fed. Cir. 2020) ....... 3, 11, 33
`
`17
`30
`22
`
`24
`25
`
`22
`
`

`

`vii
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`28
`
`20
`
`In re Power Integrations, Inc.,
`899 F.3d 1316 (Fed. Cir. 2018) .........................
`RadLAX Gateway Hotel, LLC v.
`Amalgamated Bank, 566 U.S. 639 (2012) .......
`Seila Law LLC v. Consumer Fin. Prot.
`Bureau, No. 19-7 (June 29, 2020).................. 16, 17
`Shalala v. Ill. Council on Long Term Care,
`Inc., 529 U.S. 1 (2000) ........................................
`Shoaf v. Dep’t of Agric., 260 F.3d 1336
`(Fed. Cir. 2001) ................................................ 18, 19
`Thryv, Inc. v. Click-To-Call Techs., LP,
`140 S. Ct. 1367 (2020) .........................................
`Thunder Basin Coal Co. v. Reich,
`510 U.S. 200 (1994) .......................................... 24, 27
`Tokyo Kikai Seisakusho, Ltd. v. United
`States, 529 F.3d 1352 (Fed. Cir. 2008) ............
`United States v. Giordano,
`416 U.S. 505 (1974) .............................................
`United States v. Kebodeaux,
`570 U.S. 387 (2013) .............................................
`Utica Packing Co. v. Block,
`781 F.2d 71 (6th Cir. 1986) ................................
`Weinberger v. Salfi, 422 U.S. 749 (1975) .............
`Wood v. Milyard, 566 U.S. 463 (2012) .................
`CONSTITUTIONAL PROVISIONS
`U.S. Const. art. II, § 2 ....................................... passim
`U.S. Const. art. III .................................................
`30
`U.S. Const. amend. V ........................................... 8, 21
`
`21
`24
`31
`
`24
`
`28
`
`21
`
`20
`
`11
`
`

`

`viii
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`STATUTES AND REGULATIONS
`Patent Act:
`35 U.S.C. § 3(a)-(b) ........................................... 4, 26
`35 U.S.C. § 3(c) ....................................................
`3
`35 U.S.C. § 6 ........................................................
`20
`35 U.S.C. § 6(a) ............................................. 3, 4, 26
`35 U.S.C. § 6(b) ...................................................
`4
`35 U.S.C. § 6(b)(1)-(3) ........................................
`4
`35 U.S.C. § 6(c) ......................................... 4, 5, 14, 26
`35 U.S.C. § 141 .................................................. 5, 14
`35 U.S.C. § 143 ....................................................
`14
`35 U.S.C. § 311 ....................................................
`4
`35 U.S.C. § 314(a) ............................................. 4, 28
`35 U.S.C. § 314(d) ....................................... 4, 27, 28
`35 U.S.C. § 316 ....................................................
`20
`35 U.S.C. § 316(a) ............................................. 5, 21
`35 U.S.C. § 318 ....................................................
`20
`35 U.S.C. § 318(a) ...............................................
`5
`35 U.S.C. § 319 ....................................................
`5
`5 U.S.C. § 7513(a) .............................................. passim
`5 U.S.C. § 7513(b)-(d) ............................................ 4, 18
`5 U.S.C. § 7543(a) ....................................................
`18
`12 U.S.C. § 5491(c)(3) ..............................................
`16
`26 U.S.C. § 7443A(c) ................................................
`15
`Act of May 28, 1796, ch. 37, 1 Stat. 478 ................
`15
`§ 3, 1 Stat. at 479 .................................................
`15
`§ 8, 1 Stat. at 480 .................................................
`15
`§ 9, 1 Stat. at 481 .................................................
`15
`Act of Mar. 2, 1861, ch. 88, § 2,
`12 Stat. 246, 246 ................................................ 3, 22
`
`

`

`ix
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`15
`
`23
`
`18
`
`Administrative Procedure Act, Pub. L.
`No. 79-404, 60 Stat. 237 (1946) ...................... 17, 21
`Pub. L. No. 93-601, § 1,
`88 Stat. 1956, 1956 (1975) ................................ 3, 22
`Pub. L. No. 99-514, § 1556,
`100 Stat. 2085, 2754 (1986) ................................
`Pub. L. No. 106-113, app. I, § 4717,
`113 Stat. 1501A-521, 1501A-580 (1999) ...........
`Leahy-Smith America Invents Act, Pub. L.
`No. 112-29, 125 Stat. 284 (2011) .......................
`§ 6(a), 125 Stat. at 299 ...................................
`§ 6(d), 125 Stat. at 305 ...................................
`§ 18, 125 Stat. at 329 ......................................
`17 C.F.R. § 201.155(b) .............................................
`17 C.F.R. § 201.360(d) .............................................
`37 C.F.R. § 42.4(a) ...................................................
`LEGISLATIVE MATERIALS
`S. Rep. No. 95-969 (1978) .......................................
`EXECUTIVE AND ADMINISTRATIVE
`MATERIALS
`83 Fed. Reg. 29,312 (June 22, 2018) .....................
`Officers of the United States Within the
`Meaning of the Appointments Clause,
`31 Op. O.L.C. 73 (2007) ......................................
`Patent Trial & Appeal Board,
`Standard Operating Procedure 2
`(10th rev. Sept. 20, 2018) ..................................
`Apple Inc. v. Uniloc Lux. S.A.,
`No. IPR2018-00456, 2019 WL 3470767
`(P.T.A.B. July 31, 2019) .....................................
`
`4
`4
`4
`4
`15
`15
`5
`
`18
`
`15
`
`14
`
`25
`
`

`

`x
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`25
`
`25
`
`25
`
`25
`
`HTC Corp. v. Uniloc 2017 LLC,
`No. IPR2018-01631, 2019 WL 343813
`(P.T.A.B. Jan. 25, 2019) .................................. 24, 25
`Intel Corp. v. VLSI Tech. LLC,
`No. IPR2018-01661, 2019 WL 994657
`(P.T.A.B. Mar. 1, 2019) ......................................
`Miami Int’l Holdings, Inc. v. Nasdaq, Inc.,
`No. CBM2018-00030, 2019 WL 4896642
`(P.T.A.B. Oct. 3, 2019) .......................................
`Quest USA Corp. v. PopSockets, LLC,
`No. IPR2018-00497, 2019 WL 3799344
`(P.T.A.B. Aug. 12, 2019) ....................................
`Samsung Elecs. Am., Inc. v. Uniloc Lux.,
`S.A., No. IPR2018-01664, 2019 WL
`1097250 (P.T.A.B. Mar. 8, 2019) .......................
`St. Jude Med., LLC v. Snyders Heart Valve
`LLC, No. IPR2018-00109, 2019 WL
`1978348 (P.T.A.B. May 2, 2019) .......................
`Unified Patents Inc. v. Fall Line Patents,
`LLC, No. IPR2019-00610, 2019 WL
`3729476 (P.T.A.B. Aug. 7, 2019) .......................
`Unified Patents Inc. v. MOAEC Techs., LLC,
`No. IPR2018-01758, 2019 WL 1752807
`(P.T.A.B. Apr. 17, 2019) ....................................
`ZTE (USA) Inc. v. Fundamental Innovation
`Sys. Int’l LLC, No. IPR2018-00425, 2019
`WL 2866003 (P.T.A.B. July 2, 2019) ................
`OTHER AUTHORITIES
`Gov’t Br. in Free Enter. Fund v. Pub. Co.
`Accounting Oversight Bd., No. 08-861
`(Oct. 13, 2009) .....................................................
`
`25
`
`25
`
`25
`
`25
`
`29
`
`

`

`xi
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`Patent Trial & Appeal Board, Trial Statistics
`(June 2020) ..........................................................
`The People Problem, Gov’t Exec.,
`Jan. 21, 2015, https://bit.ly/3fJT1XB ...............
`U.S. Patent & Trademark Office,
`Reexamination Operational Statistics
`(Dec. 2019), https://bit.ly/3iNeMbc ..................
`
`32
`
`18
`
`32
`
`
`
`

`

`IN THE
`Supreme Court of the United States
`————
`NO. 19-1434
`UNITED STATES OF AMERICA,
`Petitioner,
`
`
`
`
`
`
`
`v.
`ARTHREX, INC.; SMITH & NEPHEW, INC.;
`AND ARTHROCARE CORP.,
`
`
`Respondents.
`————
`NO. 19-1452
`SMITH & NEPHEW, INC.,
`AND ARTHROCARE CORP.,
`Petitioners,
`
`
`
`
`
`v.
`ARTHREX, INC.,
`AND UNITED STATES OF AMERICA,
`
`
`
`Respondents.
`————
`On Petitions for Writs of Certiorari
` to the United States Court of Appeals
`for the Federal Circuit
`————
`MEMORANDUM IN RESPONSE
`FOR RESPONDENT ARTHREX, INC.
`————
`The court of appeals correctly held that administrative
`patent judges (“APJs”) are principal officers who are not
`appointed in the manner the Appointments Clause re-
`quires—by the President with the advice and consent of
`the Senate. Smith & Nephew insists that “this Court has
`
`
`

`

`2
`repeatedly recognized that first-line administrative adju-
`dicators are ‘inferior’ Officers.” S&N Pet. 1. The prob-
`lem, of course, is that APJs are not just the first-line
`adjudicators but also the last-line adjudicators within the
`Executive Branch. No superior executive officer has
`authority to review their decisions. APJs purport to speak
`for the Executive Branch and to deliver that Branch’s
`final word. Neither Smith & Nephew nor the govern-
`ment cites a single case where this Court has held that an
`administrative judge was a mere inferior officer even
`though his decisions were totally unreviewable by any
`superior executive officer.
`The sharp restrictions on removal only aggravate the
`problem and confirm that APJs are principal officers.
`APJs are subject to the same for-cause removal standard
`that governs other federal civil servants. That restrictive
`standard significantly limits removal power as a mecha-
`nism of control.
`While the court of appeals correctly found a constitu-
`tional violation, Arthrex agrees that the decision presents
`an important question that warrants review. The court
`held a provision of federal law unconstitutional as applied
`to a significant category of federal officers. Moreover,
`the Federal Circuit’s attempt to remedy the violation, by
`severing APJs’ tenure protections, raises its own serious
`issues that are the subject of Arthrex’s petition in No. 19-
`1458. Those remedial questions are closely related to the
`underlying constitutional question. It would not make
`sense to review one without the other.
`The government also seeks this Court’s review of
`whether Arthrex was required to raise its Appointments
`Clause challenge sooner. That argument is meritless.
`Arthrex timely raised its claim in the first forum capable
`of adjudicating it, and the court had discretion to reach
`
`
`
`

`

`3
`the claim regardless. Nonetheless, if the Court believes
`the issue is worthy of review, Arthrex agrees that it
`should grant review in both this case and Polaris Innova-
`tions Ltd. v. Kingston Technology Co., 792 F. App’x 820
`(Fed. Cir. 2020), to address all relevant questions.
`STATEMENT
`I.(cid:3) STATUTORY BACKGROUND
`Under the Appointments Clause, officers of the United
`States must be appointed by the President with the
`advice and consent of the Senate. U.S. Const. art. II, § 2.
`Congress, however, can “vest the Appointment of such
`inferior Officers, as they think proper, in the President
`alone, in the Courts of Law, or in the Heads of Depart-
`ments.” Ibid. This case concerns the application of the
`Appointments Clause to the Patent Office’s administra-
`tive patent judges.
`The position of administrative patent judge, formerly
`known as “examiner-in-chief,” was created in 1861. Act of
`Mar. 2, 1861, ch. 88, §2, 12 Stat. 246, 246. For 114 years,
`those officers were appointed in the traditional manner
`for principal officers—“by the President, by and with the
`advice and consent of the Senate.” Ibid. In 1975, how-
`ever, Congress transferred appointment authority to the
`Secretary of Commerce, where it resides today. Pub. L.
`No. 93-601, § 1, 88 Stat. 1956, 1956 (1975); 35 U.S.C.
`§ 6(a); Pet. in No. 19-1458, at 4.
`By statute, APJs have the same tenure protections as
`other federal civil servants. 35 U.S.C. § 3(c). Those pro-
`tections permit removal or other adverse employment
`actions “only for such cause as will promote the efficiency
`of the service,” 5 U.S.C. § 7513(a), a standard that re-
`quires “misconduct * * * likely to have an adverse impact
`on the agency’s performance of its functions,” Brown v.
`
`
`
`

`

`4
`Dep’t of Navy, 229 F.3d 1356, 1358 (Fed. Cir. 2000), cert.
`denied, 533 U.S. 949 (2001). APJs also have broad pro-
`cedural protections in connection with any adverse em-
`ployment action, including 30 days’ notice, an opportunity
`to respond, a right to counsel, and a right to appeal to the
`Merit Systems Protection Board. 5 U.S.C. § 7513(b)-(d).
`The Patent Office currently has about 260 APJs, who
`serve on the Patent Trial and Appeal Board along with
`the Patent Office’s Director, Deputy Director, and two
`Commissioners. 35 U.S.C. § 6(a)-(b); Gov’t C.A. Reh’g
`Pet. 4. The Director is the only Board member appointed
`by the President and confirmed by the Senate. 35 U.S.C.
`§§ 3(a)-(b), 6(a). The Board presides over cases in panels,
`which must include “at least 3 members * * * who shall
`be designated by the Director.” Id. § 6(c).
`The Board conducts three types of adjudicative pro-
`ceedings that Congress created in 2011 to reconsider pre-
`viously issued patents: inter partes reviews, post-grant
`reviews, and covered business method reviews. Leahy-
`Smith America Invents Act, Pub. L. No. 112-29, §§ 6(a),
`6(d), 18, 125 Stat. 284, 299, 305, 329 (2011). It also
`decides ex parte appeals from denials of patent applica-
`tions, appeals from ex parte reexaminations of patents,
`and derivation proceedings to resolve disputes over
`inventorship. 35 U.S.C. § 6(b)(1)-(3).
`This case involves an inter partes review. Any person
`can petition for inter partes review of a previously issued
`patent on the ground that the invention was anticipated
`or obvious in light of a prior-art patent or printed pub-
`lication. 35 U.S.C. § 311. The Director may institute
`review if he finds a “reasonable likelihood” the petitioner
`will prevail. Id. § 314(a). The Director’s decision whether
`to institute review is “final and nonappealable.” Id.
`§ 314(d). The Director has delegated his institution
`
`
`
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`

`5
`authority to the Board, so in practice, the Board itself
`decides whether to institute review. 37 C.F.R. § 42.4(a).
`The statute calls for an adversarial proceeding in
`which both sides can take discovery, submit evidence and
`briefs, and present oral argument. 35 U.S.C. § 316(a).
`At the end of the proceeding, the Board issues a final
`written decision on the patentability of the claims. Id.
`§ 318(a). The Director cannot review the Board’s deci-
`sion. Instead, the decision is appealable only to the Fed-
`eral Circuit. Id. § 319 (citing 35 U.S.C. § 141). Nor can
`the Director grant rehearing. “Only the Patent Trial and
`Appeal Board may grant rehearings.” Id. § 6(c).
`II.(cid:3) PROCEEDINGS BELOW
`A.(cid:3) Arthrex’s ’907 Patent
`Arthrex is a pioneer in the field of arthroscopy and a
`leading developer of medical devices and procedures for
`orthopedic surgery. This case concerns Arthrex’s U.S.
`Patent No. 9,179,907 (the “ ’907 patent”), which covers a
`novel surgical device for reattaching soft tissue to bone.
`Pet. App. 86a-87a.1
`In 2015, Arthrex sued Smith & Nephew, Inc., and its
`subsidiary ArthroCare Corp. for infringement. Pet. App.
`85a. The jury returned a verdict for Arthrex, finding the
`claims valid and infringed. Ibid. The parties then settled
`the case. Ibid.
`B.(cid:3) The Inter Partes Review
`Smith & Nephew responded to Arthrex’s infringement
`suit by seeking inter partes review. Pet. App. 83a. Rely-
`
`
`1 All citations to “Pet. App.” are to the Government’s appendix in No.
`19-1434. Arthrex’s ’907 patent and the Board’s ruling are described
`in more detail in Arthrex’s petition. See Pet. in No. 19-1458, at 7-10.
`
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`

`6
`ing on many of the same arguments it advanced unsuc-
`cessfully in the infringement litigation, Smith & Nephew
`argued that the Patent Office’s publication of the inven-
`tors’ own original application was prior art that antici-
`pated the ’907 patent. Id. at 93a-94a, 102a n.7; Pet. in No.
`19-1458, at 9. The Patent Trial and Appeal Board agreed
`and held all the challenged claims invalid. Pet. App.
`125a-126a, 128a.
`C.(cid:3) The Federal Circuit’s Decision
`The court of appeals vacated and remanded. Pet. App.
`1a-33a. On appeal, Arthrex challenged the Board’s pat-
`entability ruling. Arthrex C.A. Br. 32-59. It also argued
`that the APJs who presided over its case were appointed
`in violation of the Appointments Clause. Id. at 59-66.
`The court reached only the constitutional claim.
`1. The court of appeals rejected the argument that it
`could not address Arthrex’s Appointments Clause claim
`because Arthrex did not challenge the APJs’ appoint-
`ments before the APJs themselves. Pet. App. 4a-6a. The
`court explained that it had discretion to address the
`challenge regardless. In Freytag v. Commissioner, 501
`U.S. 868 (1991), the court noted, this Court exercised its
`discretion to address an Appointments Clause claim
`raised for the first time on appeal. Pet. App. 4a. The
`reasons this Court cited were also present here. “[T]his
`case implicates the important structural interests and
`separation of powers concerns protected by the Appoint-
`ments Clause.” Id. at 4a-5a. And “[t]imely resolution is
`critical to providing certainty to rights holders and com-
`petitors alike.” Id. at 5a.
`The court also relied on futility principles. Because
`Arthrex’s claim was a constitutional challenge to the
`Board’s enabling statute, “the Board could not have cor-
`rected the problem.” Pet. App. 5a. That fact distin-
`
`
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`

`7
`guished this case from In re DBC, 545 F.3d 1373 (Fed.
`Cir. 2008), cert. denied, 558 U.S. 816 (2009), where the
`Board “could have corrected the * * * infirmity” if “the
`issue had been raised before [it].” Pet. App. 5a.
`2. Turning to the merits of the Appointments Clause
`claim, the court held that APJs are principal officers who
`must be appointed by the President and confirmed by the
`Senate. Under Edmond v. United States, 520 U.S. 651
`(1997), it explained, “ ‘inferior officers’ are officers whose
`work is directed and supervised at some level by others
`who were appointed by Presidential nomination with
`the advice and consent of the Senate.” Pet. App. 9a
`(quoting 520 U.S. at 663). Edmond emphasizes three
`factors that distinguish principal from inferior officers:
`“(1) whether [a presidentially] appointed official has the
`power to review and reverse the officers’ decision; (2) the
`level of supervision and oversight an appointed official
`has over the officers; and (3) the appointed official’s
`power to remove the officers.” Ibid.
`The first factor, review authority, pointed to principal
`officer status. No principal executive officer has author-
`ity to review APJ decisions—parties can only appeal to
`the Federal Circuit or seek rehearing by the Board itself.
`Pet. App. 9a-10a. Although the Patent Office’s Director
`is a member of the Board who is appointed by the Pres-
`ident and confirmed by the Senate, all Board panels
`must include at least three members. Id. at 10a. As a
`result, the Director cannot “single-handedly review, nul-
`lify or reverse a final written decision.” Ibid.
`The court rejected the government’s argument that
`the Director has other powers tantamount to review.
`While the Director can intervene on appeal in the Fed-
`eral Circuit, that authority merely enables him to ask the
`court to find error and vacate a decision, not to vacate the
`
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`

`8
`decision himself. Pet. App. 10a-11a. The Director’s power
`to convene a Precedential Opinion Panel to rehear a case
`is not unilateral review authority either; the Director is
`still only one member of the panel. Id. at 11a-12a.
`Finally, the Director’s authority to decide whether to
`institute review is not review of the decisions the Board
`ultimately renders. Id. at 12a-13a.
`On the second factor, supervision and oversight, the
`court explained that the Director can promulgate regula-
`tions and issue policy guidance. Pet. App. 14a. He can
`also decide whether to institute review and designate
`panels. Id. at 14a-15a. In the court’s view, that authority
`favored inferior officer status. Id. at 15a.
`As to the third factor, removal power, the court identi-
`fied significant limitations. The government urged that
`the Director could refuse to assign an APJ to any panels
`or remove him from a panel to which he was assigned.
`Pet. App. 16a. The court doubted that the Director had
`the latter power, observing that no provision authorizes
`him to de-designate a panel member and that doing so
`“could create a Due Process problem.” Id. at 16a-17a &
`n.3. In any case, designation authority was “not nearly as
`powerful as the power to remove from office without
`cause.” Id. at 17a.
`The Secretary’s power to remove APJs from office is
`sharply constrained. The Secretary can remove an APJ
`“only for such cause as will promote the efficiency of the
`service.” Pet. App. 18a (quoting 5 U.S.C. § 7513(a)). That
`standard requires “misconduct [that] is likely to have an
`adverse impact on the agency’s performance of its func-
`tions.” Ibid. (quoting Brown, 229 F.3d at 1358). The
`statute also provides robust procedural protections. Ibid.
`Those restrictions significantly limit the Secretary’s re-
`moval power. Id. at 19a-21a.
`
`
`
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`

`9
`The court also considered other factors, such as APJs’
`indefinite tenure and broad jurisdiction. Pet. App. 21a.
`Considered together, the court held, the relevant factors
`made APJs principal officers. Id. at 22a. As a result, the
`Secretary could not appoint them. Ibid.
`3. In an attempt to remedy the constitutional viola-
`tion, the court severed APJ removal protections. Pet.
`App. 25a-29a. The court opined that Congress “intended
`for the inter partes review system to function” and
`“would have preferred a Board whose members are re-
`movable at will rather than no Board at all.” Id. at 27a.
`The court also deemed its approach sufficient to remedy
`the violation: “[S]evering the restriction on removal of
`APJs renders them inferior rather than principal offi-
`cers,” even though “the Director still does not have
`independent authority to review decisions.” Id. at 28a.
`Because Arthrex’s case was heard by APJs who were
`not properly appointed when they issued their decision—
`before the court of appeals severed their tenure protec-
`tions—the court ordered a new hearing before a different
`panel of APJs under Lucia v. SEC, 138 S. Ct. 2044 (2018).
`Pet. App. 29a-33a. The court rejected the government’s
`argument that Lucia did not apply because Arthrex raised
`its challenge too late. Ibid. Because “the Board was not
`capable of providing any meaningful relief to this type
`of Constitutional challenge,” it would have been “futile
`for Arthrex to have made the challenge there.” Id. at
`30a. The Court therefore “agree[d] with Arthrex that its
`Appointments Clause challenge was properly and timely
`raised before the first body capable of providing it with
`the relief sought.” Id. at 31a.
`4. The government and Smith & Nephew sought re-
`hearing en banc. Arthrex did too, urging that the court’s
`remedy was contrary to congressional intent and did
`
`
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`

`10
`not cure the Appointments Clause violation. Arthrex
`C.A. Reh’g Pet. 6-17. The court of appeals denied all
`three petitions. Pet. App. 229a-295a.
`5. The government and Smith & Nephew both filed
`petitions for writs of certiorari. Nos. 19-1434, 19-1452.
`Arthrex responds to those petitions here. Meanwhile,
`Arthrex filed its own petition seeking review of the
`remedial ruling. No. 19-1458. As that petition explains,
`the court’s severance remedy is contrary to congressional
`intent. Congress clearly meant APJs to have the tenure
`protections it has long considered essential to independ-
`ent and impartial adjudication. Pet. in No. 19-1458, at 16-
`24. In addition, the remedy is insufficient to cure the
`problem. Even without tenure protections, APJs still
`issue decisions that are not reviewable by any superior
`executive officer. That authority alone makes them prin-
`cipal officers. Id. at 25-33.
`ARGUMENT
`The court of appeals correctly held that APJs are prin-
`cipal officers. Nonetheless, Arthrex agrees with the gov-
`ernment and Smith & Nephew that the Court should
`grant review of that holding. The court of appeals held a
`provision of federal law unconstitutional as applied to
`a