throbber
Nos. 19-1434, 19-1452, 19-1458
`
`
`
`IN THE
`pìéêÉãÉ=`çìêí=çÑ=íÜÉ=råáíÉÇ=pí~íÉë=
`
`
`
`
`
`UNITED STATES OF AMERICA,
`
`Petitioner,
`
`v.
`ARTHREX, INC., ET AL.,
`
`
`
`Respondents.
`
`On Writs Of Certiorari
`To The United States Court Of Appeals
`For The Federal Circuit
`
`
`
`OPENING BRIEF
`FOR SMITH & NEPHEW, INC.
`AND ARTHROCARE CORP.
`
`
`
`MARK A. PERRY
`
`
` Counsel of Record
`KELLAM M. CONOVER
`CHARLES T. STEENBURG
`BRIAN A. RICHMAN
`NATHAN R. SPEED
`MAX E. SCHULMAN
`RICHARD F. GIUNTA
`GIBSON, DUNN & CRUTCHER LLP
`WOLF, GREENFIELD & SACKS, P.C.
`1050 Connecticut Avenue, N.W.
`600 Atlantic Avenue
`Washington, D.C. 20036
`Boston, MA 02210
`(202) 955-8500
`(617) 646-8000
`MPerry@gibsondunn.com
`
`
`
`JESSICA A. HUDAK
`MARK J. GORMAN
`GIBSON, DUNN & CRUTCHER LLP
`SMITH & NEPHEW, INC.
`3161 Michelson Drive
`7135 Goodlett Farms Parkway
`Irvine, CA 92612
`Cordova, TN 38016
`(949) 451-3837
`(901) 399-6903
`Counsel for Smith & Nephew, Inc. and ArthroCare Corp.
`
`(Additional captions listed on inside cover.)
`
`
`
`
`
`
`
`
`

`

`
`
`
`
`SMITH & NEPHEW, INC., ET AL.,
`Petitioners,
`
`v.
`ARTHREX, INC., ET AL.,
`
`
`ARTHREX, INC.,
`
`Respondents.
`
`Petitioner,
`
`v.
`SMITH & NEPHEW, INC., ET AL.,
`Respondents.
`
`
`
`
`
`

`

`
`
`QUESTIONS PRESENTED
`1. Whether, for purposes of the Appointments
`Clause, U.S. Const. art. II, § 2, cl. 2, administrative
`patent judges of the U.S. Patent and Trademark Of-
`fice are principal Officers who must be appointed by
`the President with the Senate’s advice and consent, or
`“inferior Officers” whose appointment Congress has
`permissibly vested in a Department head.
`2. Whether, if administrative patent judges are
`principal Officers, the court of appeals properly cured
`any Appointments Clause defect in the current statu-
`tory scheme prospectively by severing the application
`of 5 U.S.C. § 7513(a) to those judges.
`
`
`
`
`
`
`
`

`

`ii
`
`PARTIES TO THE PROCEEDING
`AND RULE 29.6 STATEMENT
`Smith & Nephew, Inc. and ArthroCare Corp. were
`petitioners in proceedings before the Patent Trial and
`Appeal Board and appellees in the court of appeals.
`Arthrex, Inc. was the patent owner in proceedings
`before the Patent Trial and Appeal Board and the
`appellant in the court of appeals.
`The United States of America was an intervenor
`in the court of appeals.
`Pursuant to this Court’s Rule 29.6, Smith &
`Nephew, Inc. and ArthroCare Corp. state that Smith
`& Nephew PLC is their parent corporation and no
`other publicly held corporation owns 10% or more of
`the stock of either Smith & Nephew, Inc. or
`ArthroCare Corp.
`
`
`
`
`
`
`

`

`iii
`
`TABLE OF CONTENTS
`
`Page
`OPINIONS BELOW .................................................... 1
`JURISDICTION .......................................................... 1
`CONSTITUTIONAL AND STATUTORY
`PROVISIONS INVOLVED .................................... 2
`STATEMENT .............................................................. 2
`SUMMARY OF ARGUMENT ................................... 15
`ARGUMENT ............................................................. 18
`I. APJS ARE INFERIOR OFFICERS OF THE
`UNITED STATES .............................................. 19
`A. Inferior Officers Are Directed And
`Supervised At Some Level By
`Another Officer ....................................... 20
`B. APJs Are Directed And Supervised
`By The USPTO Director ........................ 25
`C. The Federal Circuit Erred In Holding
`That APJs Are Principal Officers .......... 29
`1. The Federal Circuit Rewrote
`Edmond ............................................ 30
`2. APJs Would Be Inferior Officers
`Even If Removability And
`Reviewability Were Paramount ...... 33
`3. The Decision Below Calls Into
`Question Other Executive Branch
`Adjudicators ..................................... 38
`D. The Co-Equal Branches Have Always
`Treated APJs And Their
`Predecessors As Inferior Officers .......... 43
`II. THE COURT NEED NOT REACH THE
`SEVERANCE AND REMEDIAL ISSUES ............... 49
`CONCLUSION .......................................................... 50
`
`
`
`
`

`

`iv
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`
`APPENDIX:
`Additional Pertinent Constitutional,
`Statutory, and Regulatory Provisions
`U.S. Const. art. I, § 8, cl. 9 ........................................ 1a
`U.S. Const. art. II, § 2 ............................................... 1a
`U.S. Const. art. III, § 1 .............................................. 2a
`17 U.S.C. § 801 .......................................................... 2a
`17 U.S.C. § 802 .......................................................... 3a
`17 U.S.C. § 803 .......................................................... 5a
`17 U.S.C. § 804 .......................................................... 7a
`26 U.S.C. § 7443A ...................................................... 8a
`28 U.S.C. § 455 .......................................................... 9a
`35 U.S.C. § 315 (2000) ............................................. 12a
`38 U.S.C. § 7101 ...................................................... 14a
`38 U.S.C. § 7101A .................................................... 15a
`38 U.S.C. § 7102 ...................................................... 16a
`38 U.S.C. § 7103 ...................................................... 17a
`38 U.S.C. § 7104 ...................................................... 18a
`38 U.S.C. § 7111 ...................................................... 19a
`38 U.S.C. § 7264 ...................................................... 20a
`38 U.S.C. § 7265 ...................................................... 21a
`42 U.S.C. § 1316 ...................................................... 22a
`37 C.F.R. § 41.52 ..................................................... 24a
`
`
`
`

`

`v
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`37 C.F.R. § 42.71 ..................................................... 25a
`42 C.F.R. § 498.103 ................................................. 26a
`45 C.F.R. § 16.5 ....................................................... 27a
`
`
`
`

`

`vi
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`Cases
`Bedgear, LLC v. Fredman Bros. Furniture Co.,
`783 F. App’x 1029 (Fed. Cir. 2019) ...................... 13
`
`BioDelivery Scis. Int’l, Inc. v.
`Aquestive Therapeutics, Inc.,
`935 F.3d 1362 (Fed. Cir. 2019) ............................ 27
`
`In re Boloro Glob. Ltd.,
`963 F.3d 1380 (Fed. Cir. 2020) ............................ 15
`
`Ciena Corp. v. Oyster Optics, LLC,
`958 F.3d 1157 (Fed. Cir. 2020) ............................ 14
`
`Cobert v. Miller,
`800 F.3d 1340 (Fed. Cir. 2015) ...................... 28, 34
`
`Cohens v. Virginia,
`19 U.S. (6 Wheat.) 264 (1821) .............................. 21
`
`Comm. of Pa., Dep’t of Pub. Welfare v.
`U.S. Dep’t of Health & Human Servs.,
`80 F.3d 796 (3d Cir. 1996) ............................. 41, 42
`
`Cox v. West,
`149 F.3d 1360 (Fed. Cir. 1998) ............................ 41
`
`Cuozzo Speed Techs., LLC v. Lee,
`136 S. Ct. 2131 (2016) .......................................... 46
`
`In re DBC,
`545 F.3d 1373 (Fed. Cir. 2008) ........................ 6, 46
`
`
`
`

`

`vii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Dep’t of Transp. v. Ass’n of Am. R.Rs.,
`575 U.S. 43 (2015) ................................................ 28
`
`Edmond v. United States,
`520 U.S. 651 (1997) ........................... 2, 3, 4, 11, 16,
` 17, 19, 20, 21, 22,
` 23, 24, 26, 28, 29,
` 30, 31, 32, 35, 37,
` 38, 40, 44, 48, 49
`
`Fin. Oversight & Mgmt. Bd. for P.R. v.
`Aurelius Inv., LLC,
`140 S. Ct. 1649 (2020) .......................................... 48
`
`Free Enter. Fund v.
`Pub. Co. Accounting Oversight Bd.,
`561 U.S. 477 (2010) ................ 20, 22, 29, 32, 34, 48
`
`Freytag v. Comm’r,
`501 U.S. 868 (1991) ............................ 17, 24, 33, 36
`
`Gen. Hosp. Corp. v. Sienna Biopharm., Inc.,
`888 F.3d 1368 (Fed. Cir. 2018) .............................. 9
`
`Henderson ex rel. Henderson v. Shinseki,
`562 U.S. 428 (2011) .............................................. 41
`
`Intercollegiate Broad. Sys., Inc. v.
`Copyright Royalty Bd.,
`684 F.3d 1332 (D.C. Cir. 2012) ................ 38, 39, 40
`
`
`
`

`

`viii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`KSR Int’l Co. v. Teleflex Inc.,
`550 U.S. 398 (2007) .............................................. 33
`
`Lucia v. SEC,
`138 S. Ct. 2044 (2018) ............ 13, 25, 31, 34, 36, 48
`
`Martin v. Hunter’s Lessee,
`14 U.S. (1 Wheat.) 304 (1816) .............................. 21
`
`McCulloch v. Maryland,
`17 U.S. (4 Wheat.) 316 (1819) .............................. 32
`
`Medtronic, Inc. v.
`Robert Bosch Healthcare Sys., Inc.,
`839 F.3d 1382 (Fed. Cir. 2016) .................. 7, 27, 38
`
`Morrison v. Olson,
`487 U.S. 654 (1988) .......... 16, 21, 31, 32, 34, 36, 48
`
`N.Y. Tr. Co. v. Eisner,
`256 U.S. 345 (1921) .............................................. 48
`
`NLRB v. Noel Canning,
`573 U.S. 513 (2014) ............................ 17, 43, 48, 49
`
`NLRB v. SW Gen., Inc.,
`137 S. Ct. 929 (2017) ............................................ 20
`
`Oil States Energy Servs., LLC v.
`Greene’s Energy Grp., LLC,
`138 S. Ct. 1365 (2018) ................................ 4, 5, 6, 8
`
`
`
`

`

`ix
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`Polaris Innovations Ltd. v. Kingston Tech. Co.,
`792 F. App’x 820 (Fed. Cir. 2020) ........ 5, 13, 15, 45
`
`Regents of the Univ. of Minn. v. LSI Corp.,
`926 F.3d 1327 (Fed. Cir. 2019) ............................ 28
`
`Return Mail, Inc. v. U.S. Postal Serv.,
`139 S. Ct. 1853 (2019) ............................................ 7
`
`Saint Regis Mohawk Tribe v. Mylan Pharm. Inc.,
`896 F.3d 1322 (Fed. Cir. 2018) ............................ 28
`
`In re Sealed Case,
`838 F.2d 476 (D.C. Cir. 1988) .............................. 48
`
`Seila Law LLC v. CFPB,
`140 S. Ct. 2183 (2020) ................. 17, 19, 22, 32, 34,
` 35, 36, 49
`
`Shenwick v. Dep’t of State,
`92 M.S.P.R. 289 (M.S.P.B. 2002) ........................... 4
`
`Ex parte Siebold,
`100 U.S. 371 (1879) ........................................ 23, 31
`
`SoundExchange, Inc. v. Librarian of Congress,
`571 F.3d 1220 (D.C. Cir. 2009) ............................ 40
`
`Thryv, Inc. v. Click-To-Call Techs., LP,
`140 S. Ct. 1367 (2020) ...................................... 7, 47
`
`
`
`

`

`x
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`United States v. Eaton,
`169 U.S. 331 (1898) .............................................. 23
`
`United States v. Germaine,
`99 U.S. 508 (1879) ...................................... 3, 23, 45
`
`United States v. Mabe,
`33 M.J. 200 (C.M.A. 1991) ................................... 24
`
`United States v. Perkins,
`116 U.S. 483 (1886) .............................................. 34
`
`VirnetX Inc. v. Cisco Sys., Inc.,
`958 F.3d 1333 (Fed. Cir. 2020) ............................ 15
`
`Weiss v. United States,
`510 U.S. 163 (1994) ............................ 24, 34, 47, 48
`
`Statutes
`
`5 U.S.C. § 7513 ................................................ 4, 28, 34
`
`10 U.S.C. § 837 .......................................................... 35
`
`15 U.S.C. § 1501 ........................................................ 28
`
`17 U.S.C. § 801 .......................................................... 39
`
`17 U.S.C. § 802 .................................................... 39, 40
`
`17 U.S.C. § 803 .......................................................... 39
`
`17 U.S.C. § 804 .......................................................... 39
`
`
`
`

`

`xi
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`26 U.S.C. § 7443A ...................................................... 36
`
`28 U.S.C. § 455 .......................................................... 41
`
`35 U.S.C. § 1 ................................................................ 3
`
`35 U.S.C. § 2 ................................................................ 3
`
`35 U.S.C. § 3 ........................................... 3, 4, 8, 12, 25,
` 26, 27, 37, 38
`
`35 U.S.C. § 3 (1975) ................................................... 45
`
`35 U.S.C. § 6 ........................................... 4, 7, 8, 25, 26,
` 28, 35, 46
`
`35 U.S.C. § 6 (2000) ................................................... 46
`
`35 U.S.C. § 134 ............................................................ 5
`
`35 U.S.C. § 135 ............................................................ 6
`
`35 U.S.C. § 311 ............................................ 6, 7, 10, 47
`
`35 U.S.C. § 314 .................................... 7, 16, 25, 26, 38
`
`35 U.S.C. § 315 (2000) ............................................... 46
`
`35 U.S.C. § 316 .................................................. 7, 8, 27
`
`35 U.S.C. § 318 .................................................. 8, 9, 28
`
`35 U.S.C. § 319 ............................................................ 8
`
`
`
`

`

`xii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`35 U.S.C. § 321 ...................................................... 6, 47
`
`38 U.S.C. § 7101 ........................................................ 40
`
`38 U.S.C. § 7101A ................................................ 40, 41
`
`38 U.S.C. § 7102 ........................................................ 41
`
`38 U.S.C. § 7103 ........................................................ 41
`
`38 U.S.C. § 7104 ........................................................ 41
`
`38 U.S.C. § 7111 ........................................................ 41
`
`38 U.S.C. § 7264 ........................................................ 41
`
`38 U.S.C. § 7265 ........................................................ 41
`
`42 U.S.C. § 1316 ........................................................ 42
`
`Act for Establishing an Executive Department,
`ch. 4, 1 Stat. 28 (1789) ......................................... 21
`
`Section 2, 1 Stat. 29 ........................................ 21
`
`
`
`

`

`xiii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Act of July 4, 1836,
`ch. 357, 5 Stat. 117 ..................................... 4, 22, 43
`
`Page(s)
`
`Section 1, 5 Stat. 117 ............................ 4, 22, 43
`
`Section 2, 5 Stat. 118 ............................ 4, 22, 43
`
`Section 7, 5 Stat. 119 .................................. 4, 43
`
`Section 8, 5 Stat. 120 .................................. 4, 43
`
`Act of Mar. 2, 1861,
`ch. 88, 12 Stat. 246 ........................................... 5, 44
`
`Section 2, 12 Stat. 246 ................................ 5, 44
`
`Act of July 8, 1870,
`ch. 230, 16 Stat. 198 ......................................... 5, 44
`
`Section 2, 16 Stat. 198 ................................ 5, 44
`
`Section 10, 16 Stat. 200 .................................... 5
`
`Act of Mar. 2, 1927,
`ch. 273, 44 Stat. 1335 ....................................... 5, 44
`
`Section 3, 44 Stat. 1335 .............................. 5, 44
`
`Act of Aug. 5, 1939,
`ch. 451, 53 Stat. 1212 ....................................... 5, 44
`
`Section 1, 53 Stat. 1212 .............................. 5, 44
`
`
`
`

`

`xiv
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`Section 2, 53 Stat. 1212 .............................. 5, 44
`
`Section 3, 53 Stat. 1212 .............................. 5, 44
`
`Section 4, 53 Stat. 1212 .............................. 5, 44
`
`Act of July 19, 1952,
`Pub. L. No. 82-593, 66 Stat. 792 .......................... 45
`
`Section 3, 66 Stat. 792 .................................... 45
`
`Leahy-Smith America Invents Act,
`Pub. L. No. 112-29,
`125 Stat. 284 (2011) ......................................... 6, 47
`
`Section 3, 125 Stat. 293 .................................... 6
`
`Section 7, 125 Stat. 315 .................................... 6
`
`Section 18, 125 Stat. 329 .................................. 6
`
`Patent Law Amendments Act of 1984,
`Pub. L. No. 98-622,
`98 Stat. 3383 .................................................... 6, 46
`
`Section 201, 98 Stat. 3386 .......................... 6, 46
`
`Section 202, 98 Stat. 3386 .......................... 6, 46
`
`Constitutional Provisions
`
`U.S. Const. art. I, § 8 ................................................. 21
`
`
`
`

`

`xv
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`U.S. Const. art. II, § 2 .......................... 2, 3, 15, 18, 19,
` 22, 23, 31
`
`U.S. Const. art. III, § 1 .............................................. 21
`
`Regulations
`
`37 C.F.R. § 41.52 ....................................................... 38
`
`37 C.F.R. § 42.71 ....................................................... 38
`
`42 C.F.R. § 498.103 ................................................... 42
`
`45 C.F.R. § 16.5 ......................................................... 41
`
`Other Authorities
`
`1 Annals of Cong. ................................................ 19, 22
`
`117 Cong. Rec. S320 (Mar. 16, 1971) ........................ 45
`
`83 Fed. Reg. 29,312 (June 22, 2018) ........................... 4
`
`Administrative Conference of the United States,
`Non-ALJ Adjudicators in Federal Agencies:
`Status, Selection, Oversight, and Removal
`(Sept. 24, 2018) .................................................... 42
`
`In re Alchemy Ventures, Inc.,
`Exchange Act Release No. 70,708,
`2013 WL 6173809 (Oct. 17, 2013) ................. 25, 36
`
`
`
`

`

`xvi
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Arthrex, Inc. v. Smith & Nephew, Inc.,
`No. 15-cv-1756
`(E.D. Tex. filed Nov. 10, 2015) ............................... 9
`
`Arthrex, Inc. v. Vite Techs., Inc.,
`Case IPR2016-00381, Paper 7
`(P.T.A.B. June 23, 2016) ...................................... 10
`
`Arthrex, Inc. v. Vite Techs., Inc.,
`Case IPR2016-00381, Paper 15
`(P.T.A.B. Nov. 7, 2016) ........................................ 10
`
`Bd. of Veterans’ Appeals Annual Report
`Fiscal Year (FY) 2018 .......................................... 41
`
`Jack M. Beermann & Jennifer L. Mascott,
`Research Report on Federal Agency
`ALJ Hiring After Lucia and Executive
`Order 13843 (May 31, 2019) ................................ 42
`
`Levin H. Campbell,
`The Patent System of the United
`States so Far as It Relates to the
`Granting of Patents: A History (1891) ................. 43
`
`Christopher M. Davis & Michael Greene,
`Presidential Appointee Positions
`Requiring Senate Confirmation and
`Committees Handling Nominations,
`CRS Report RL30959 (May 3, 2017) ................... 31
`
`
`
`

`

`xvii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Dep’t of Health & Human Servs.,
`2018 Board Decisions (Oct. 19, 2020) .................. 42
`
`John F. Duffy,
`Are Administrative Patent Judges
`Unconstitutional?,
`2007 Patently-O Pat. L.J. 21 (2007) .................... 46
`
`General Order,
`2020 WL 2119932 (P.T.A.B. May 1, 2020) .......... 14
`
`H.R. Rep. No. 93-856 (1974) ...................................... 45
`
`Aydin H. Harston,
`Responding to Growing Criticisms, PTAB
`Expands Discretion to Deny Institution,
`Rothwell Figg (May 17, 2019) .............................. 29
`
`Samuel Johnson,
`Dictionary of the English Language (1755) ........ 21
`
`Jeffrey P. Kushan,
`The Fruits of the Convoluted Road to Patent
`Reform: The New Invalidity Proceedings of
`the Patent and Trademark Office,
`30 Yale L. & Pol’y Rev. 385 (2012) ...................... 47
`
`Florian Mueller,
`USPTO Drifting Out of Balance
`Under Director (Undersecretary)
`Andrei Iancu: PTAB Under Attack,
`Foss Patents (May 20, 2019) ............................... 29
`
`
`
`

`

`xviii
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Order,
`In re JHO Intellectual Prop.
`Holdings, LLC, No. 19-2330, Dkt. 25
`(Fed. Cir. June 18, 2020) ..................................... 15
`
`Patent Trial and Appeal Board Standard
`Operating Procedure 1 ........................................... 7
`
`Patent Trial and Appeal Board Standard
`Operating Procedure 2 ......................... 8, 26, 37, 38
`
`Request for Comments on Discretion to
`Institute Trials Before the Patent
`Trial and Appeal Board,
`85 Fed. Reg. 66,502 (Oct. 20, 2020) ..................... 26
`
`RPX Corp. v. Applications in Internet Time, LLC,
`Case IPR2015-01750, Paper 124
`(P.T.A.B. Sept. 4, 2020) ........................................ 27
`
`RPX Corp. v. Applications in Internet Time, LLC,
`Case IPR2015-01750, Paper 126
`(P.T.A.B. Sept. 9, 2020) ........................................ 27
`
`R. of Prac. of the U.S. Patent Office in
`Patent Cases (1949) ............................................. 45
`
`Daniel T. Shedd,
`Overview of the Appeal Process for
`Veterans’ Claims,
`CRS Report R42609 (Apr. 29, 2013) .................... 40
`
`
`
`

`

`xix
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Thomas Sheridan,
`A Complete Dictionary of the English
`Language (2d ed. 1789) ........................................ 21
`
`Matthew A. Smith et al.,
`Inter Partes Revocation Proceedings: Inter
`Partes Review, Post-Grant Review and Inter
`Partes Reexamination (West 2012 ed.) ................ 47
`
`U.S. Court of Appeals for Veterans Claims,
`About the Court .................................................... 41
`
`Noah Webster,
`An American Dictionary of the
`English Language (1828) ..................................... 21
`
`Writings of George Washington
`(John C. Fitzpatrick ed., 1939) ............................ 22
`
`
`
`
`
`

`

`
`
`OPENING BRIEF
`FOR SMITH & NEPHEW, INC.
`AND ARTHROCARE CORP.
`
`The Court has granted three petitions for writs of
`certiorari (in Nos. 19-1434, 19-1452 & 19-1458) to re-
`view two questions arising out of the same Federal
`Circuit judgment. See Order, No. 19-1434 (U.S. Oct.
`13, 2020). Smith & Nephew, Inc. and ArthroCare
`Corp. (collectively, Smith & Nephew), petitioners in
`No. 19-1452, respectfully submit that the judgment
`below should be reversed.
`
`OPINIONS BELOW
`The opinion of the court of appeals (U.S. Pet. App.
`1a) is reported at 941 F.3d 1320. That court’s order
`denying rehearing en banc, with additional opinions
`(U.S. Pet. App. 229a), is reported at 953 F.3d 760. The
`Patent Trial and Appeal Board’s final written decision
`(U.S. Pet. App. 60a) is unreported.
`
`JURISDICTION
`The court of appeals entered its judgment on Oc-
`tober 31, 2019, U.S. Pet. App. 1a, and denied timely
`petitions for rehearing on March 23, 2020, id. at 229a.
`On March 19, 2020, by general order, this Court ex-
`tended the time to file the petition for a writ of certio-
`rari to August 20, 2020. Smith & Nephew’s petition
`was filed on June 29, 2020, and granted on October
`13, 2020. This Court has jurisdiction under 28 U.S.C.
`§ 1254(1).
`
`
`
`

`

`2
`
`CONSTITUTIONAL AND STATUTORY
`PROVISIONS INVOLVED
`The Appointments Clause as well as most perti-
`nent statutory provisions are reproduced in the gov-
`ernment’s petition appendix. U.S. Pet. App. 298a–
`321a. Additional provisions are reproduced in the Ap-
`pendix to this brief.
`
`STATEMENT
`Administrative patent judges (APJs) preside over
`a variety of adjudicatory proceedings under the direc-
`tion and supervision of the Director of the United
`States Patent and Trademark Office (USPTO). This
`Court has ruled that administrative adjudicators
`whose “work is directed and supervised at some level”
`by other executive Officers are inferior Officers within
`the meaning of the Appointments Clause and there-
`fore may be appointed by a Head of Department, as
`APJs are appointed. Edmond v. United States, 520
`U.S. 651, 663 (1997). In this case, however, the Fed-
`eral Circuit ruled that APJs are principal Officers
`who must be appointed by the President with the ad-
`vice and consent of the Senate. U.S. Pet. App. 1a–2a.
`The court went on to “sever[ ]” APJs’ statutory re-
`moval protections and grant the patent owner a new
`hearing. Ibid.
`1. Article II of the Constitution establishes a
`President supported by various officials in the execu-
`tive chain of command. At the top are a small number
`of principals—such as “Ambassadors,” “other public
`Ministers and Consuls,” and at least one person in
`“each of the executive Departments”—who are in
`charge of formulating or executing federal policy in a
`particular area. U.S. Const. art. II, § 2. Below them
`are a larger number of “inferior Officers,” ibid., and
`
`
`
`

`

`3
`
`then an even larger number of non-Officer employees.
`See generally United States v. Germaine, 99 U.S. 508,
`509–10 (1879).
`The Appointments Clause is a “significant struc-
`tural safeguard[ ] of [this] constitutional scheme.”
`Edmond, 520 U.S. at 659. By requiring presidential
`nomination and senatorial confirmation for all princi-
`pal Officers, U.S. Const. art. II, § 2, cl. 2, the Clause
`“ensure[s] public accountability for both the making of
`a bad appointment and the rejection of a good one,”
`Edmond, 520 U.S. at 660. With respect to “inferior
`Officers,” however, “administrative convenience . . .
`was deemed to outweigh the benefits of the more cum-
`bersome procedure.” Ibid. The Clause therefore per-
`mits (but does not require) Congress to vest the ap-
`pointment of “inferior Officers” “in the President
`alone, in the Courts of Law, or in the Heads of Depart-
`ments.” U.S. Const. art. II, § 2, cl. 2.
`a. The USPTO is an executive agency within the
`Department of Commerce, 35 U.S.C. § 1(a), with re-
`sponsibility for granting, reviewing, amending, and
`canceling patent claims. The USPTO’s “powers and
`duties” are vested in a Director, who also serves as
`Under Secretary of Commerce for Intellectual Prop-
`erty, and is nominated by the President, confirmed by
`the Senate, and removable by the President at will.
`Id. § 3(a)(1), (4). The Director is “responsible for
`providing policy direction and management supervi-
`sion for the Office,” id. § 3(a)(2)(A), and has the au-
`thority to establish regulations “govern[ing] the con-
`duct of proceedings in the Office,” id. § 2(b)(2).
`The Director leads the Patent Trial and Appeal
`Board (Board), “an adjudicatory body within the PTO”
`that Congress created in the mold of prior adjudica-
`tory bodies that, for most of our Nation’s history, have
`
`
`
`

`

`4
`
`conducted administrative review of patent claims. Oil
`States Energy Servs., LLC v. Greene’s Energy Grp.,
`LLC, 138 S. Ct. 1365, 1370–71 (2018); see also
`35 U.S.C. § 6(b). The Board is composed of the Direc-
`tor and his subordinates: the Deputy Director, two
`Commissioners, and more than 200 “administrative
`patent judges.” 35 U.S.C. § 6(a); U.S. Pet. App. 10a.
`Congress provided for the Commissioners and Deputy
`Director to be appointed by the Secretary of Com-
`merce. 35 U.S.C. § 3(b). APJs are currently “ap-
`pointed by the Secretary, in consultation with the Di-
`rector,” id. § 6(a), at a pay rate fixed by the Director,
`id. § 3(b)(6). As officials in the civil service, id. § 3(c),
`most APJs may be terminated by the Secretary to
`“promote the efficiency of the service,” 5 U.S.C.
`§ 7513(a), and some—as members of the Senior Exec-
`utive Service, see 83 Fed. Reg. 29,312, 29,324 (June
`22, 2018)—are subject to even “fewer protections”
`from removal, Shenwick v. Dep’t of State, 92 M.S.P.R.
`289, 295 (M.S.P.B. 2002).
`b. For nearly two centuries, Congress has pro-
`vided that a principal Officer direct and supervise the
`work done by APJs and their predecessors, who have
`always been considered inferior Officers.
`In 1836, Congress established the Commissioner
`of Patents (today known as the Director) as a “princi-
`pal officer” in charge of the USPTO. Act of July 4,
`1836, ch. 357, §§ 1–2, 7–8, 16, 5 Stat. 117, 117–25. Be-
`tween 1861 and 1870, Congress created two types of
`inferior Officers who did the work now performed by
`APJs: Three “examiners-in-chief”—originally ap-
`pointed by the President with confirmation by the
`Senate, i.e., the “default manner of appointment for
`inferior officers,” Edmond, 520 U.S. at 660—heard ap-
`peals from decisions by patent examiners, and their
`
`
`
`

`

`5
`
`decisions were appealable, in turn, to the Commis-
`sioner. Act of Mar. 2, 1861, ch. 88, § 2, 12 Stat. 246,
`246–47. And an “examiner in charge of interfer-
`ences”—appointed by the Secretary of Interior (later,
`the Secretary of Commerce)—decided in the first in-
`stance “interference” disputes concerning which party
`first made an invention and thus is entitled to a pa-
`tent. Act of July 8, 1870, ch. 230, §§ 2, 10, 16 Stat.
`198, 198–200.
`As the expansion of the Patent Office’s docket
`made it infeasible for the Commissioner to review
`every appeal from these inferior Officers, Congress re-
`placed the Commissioner’s unilateral review power
`with the power to designate a panel of examiners to
`hear each appeal or interference proceeding. Act of
`Mar. 2, 1927, ch. 273, § 3, 44 Stat. 1335, 1335–36
`(“board of appeals”); Act of Aug. 5, 1939, ch. 451, §§ 1–
`4, 53 Stat. 1212, 1212–13 (“board of interference ex-
`aminers”). By 1975, the growing number of examin-
`ers-in-chief made presidential nomination and sena-
`torial confirmation a “burden,” and Congress vested
`their appointment in the Secretary of Commerce—
`aligning with how interference examiners had always
`been appointed. Polaris Innovations Ltd. v. Kingston
`Tech. Co., 792 F. App’x 820, 829 (Fed. Cir. 2020)
`(Hughes, J., concurring) (citation omitted).
`“Over the last several decades,” Congress has also
`created several “administrative processes” for review-
`ing previously issued patent claims. Oil States, 138
`S. Ct. at 1370. In 1980, Congress authorized the
`Board of Appeals to hear appeals from “ex parte reex-
`aminations,” 35 U.S.C. § 134(b), which are third-party
`challenges to the patentability of issued patent
`claims, see Oil States, 138 S. Ct. at 1370. In 1984,
`
`
`
`

`

`6
`
`Congress expanded interference proceedings to in-
`clude patentability issues and authorized examiners-
`in-chief to conduct all interference proceedings. See
`Patent Law Amendments Act of 1984, Pub. L. No. 98-
`622, §§ 201–202, 98 Stat. 3383, 3386–87. And in 1999,
`Congress renamed examiners-in-chief APJs and em-
`powered them to preside over appeals from “inter
`partes reexaminations,” which are similar to ex parte
`reexaminations but with more third-party participa-
`tion. Oil States, 138 S. Ct. at 1371. Congress contin-
`ued to view APJs as the Director’s subordinates—even
`briefly vesting their appointment in the Director be-
`fore “redelegat[ing] the power of appointment to the
`Secretary” to “eliminat[e] the issue of unconstitu-
`tional appointments going forward.” In re DBC, 545
`F.3d 1373, 1380 (Fed. Cir. 2008).
`In 2011, Congress replaced inter partes reexami-
`nations with a new procedure called “inter partes re-
`view” (IPR). See Leahy-Smith America Invents Act
`(AIA), §§ 3(n), 7(e), Pub. L. No. 112-29, 125 Stat. 284,
`293, 315 (2011); 35 U.S.C. § 311. The AIA further au-
`thorized the Board to conduct “post-grant review[s]”
`for canceling patent claims within nine months of a
`post-AIA patent’s issuance, 35 U.S.C. § 321; “covered
`business method” reviews, for a particular category of
`patents, AIA § 18, 125 Stat. at 329–31; and “deriva-
`tion proceedings,” for correcting inventorship or can-
`celing patent claims that claim an invention derived
`from the applicant’s invention, 35 U.S.C. § 135.
`c. The IPR procedure established by the AIA—
`currently the most widely used administrative proce-
`dure for reviewing previously issued patent claims,
`and the one at issue in this case—illustrates the ex-
`tent to which the Director directs and controls the
`work of APJs.
`
`
`
`

`

`7
`
`The IPR procedure begins when any person other
`than the patent owner files a petition requesting can-
`cellation of patent claims that fail certain standards
`for patent validity. 35 U.S.C. § 311. The Director pos-
`sesses the sole and unreviewable discretion whether
`to institute an IPR, see Thryv, Inc. v. Click-To-Call
`Techs., LP, 140 S. Ct. 1367, 1370 (2020) (citing
`35 U.S.C. § 314(d)), and whether to reconsider and
`dismiss an IPR after institution, see Medtronic, Inc. v.
`Robert Bosch Healthcare Sys., Inc., 839 F.3d 1382,
`1386 (Fed. Cir. 2016).
`When an IPR is instituted, a panel of “at least 3
`members” of the Board, “designated by the Director,”
`determines whether the challenged claims are patent-
`able. 35 U.S.C. § 6(c). The statute does not limit the
`Director’s authority to alter the panel’s composition
`and size on his own initiative at any time. See ibid.
`Accordingly, the Director takes the position that he
`can assign himself to a panel, and can assign, sua
`sponte reassign, or add APJs to panels based on the
`need “to secure and maintain uniformity of the
`Board’s decisions” on “major policy or procedural is-
`sues.” Patent Trial and Appeal Board Standard Op-
`erating Procedure 1 (Revision 15) at 6–12, 15 & n.4
`(Sept. 20, 2018), https://www.uspto.gov/sites/default/
`f

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