Update (Apr. 3, 2020): The Federal Circuit recently denied rehearing petitions in the Polaris appeals referenced below (see link and link), and also denied the PTO’s request to stay the mandate in the Arthrex appeal (see link).
The Federal Circuit recently issued an order denying multiple rehearing petitions in Arthrex Inc. v. Smith & Nephew, Inc., Appeal 2018-2140 (Fed. Cir. Mar. 23, 2020) (en banc). Apparently neither of the parties nor the government (PTO) found the original panel’s Halloween-day decision satisfying. Five separate opinions accompanied the order, which was hardly unanimous. One third of the circuit judges dissented, some having previously stated that aspects of the original panel decision were wrong. No matter, the court is now done with the case and its issues, having earlier vacated and remanded appeals in Polaris Innovations Ltd. v. Kingston Technology Co., Appeals 2018-1768, -1831 (Fed. Cir. Jan. 31, 2020).
Unsurprisingly, the three judges on the original Arthrex panel found nothing worth rehearing. Judge O’Malley joined these three. Together, they said that the original panel followed the Supreme Court’s precedent to conclude that administrative patent judges (APJs) were improperly appointed principal officers, and followed the Court’s direction by effectively rewriting the relevant statutory provision (i.e., construing Title 5’s removal safeguard in 35 U.S.C. § 3(c) inapplicable to APJs) to not only solve that Constitutional problem but also minimize disruptions to AIA trials generally. Since Halloween, “APJs are constitutionally appointed and inter partes reviews may proceed according to Congress’ initial intent.” Sure, the PTAB may be burdened with remands, but these judges note that burden is limited to 81 cases, and Congress is free to legislate a better fix.
Leading in dissent, Judge Dyk (joined by three judges) wrote that even if the original panel was correct in concluding that APJs were improperly appointed principal officers, rewriting the statute was “draconian” and a “major surgery … that Congress could not possibly have foreseen or intended” when it sought to prevent the arbitrary removal of APJs from their jobs. These four think that Congress would prefer an opportunity to fix the statute and three even think that the agency itself could offer a less disruptive remedy by, for example, creating a new review process within the agency. Today, however, Congress and the agency have far more pressing concerns than trying to address a single sentence affecting only 81 judgments from an agency whose decisions the Federal Circuit reverses only 12% of the time anyway.
Continuing, Judge Dyk cited Marbury v. Madison, 5 U.S. 137, 178 (1803), in explaining that “the statute here must be read as though the APJs had always been constitutionally appointed, ‘disregarding’ the unconstitutional removal provisions.” As a result, the Federal Circuit should be reviewing their decisions “on the merits” and “not vacat[ing] for a new hearing before a different panel.” Judge O’Malley (joined by two judges) separately wrote to disagree. The court’s rewriting of the statute (to cure the Constitutional problem), she said, was not a “remedy” to losing patent owners that were in the appellate pipeline on Halloween, instead it “is a forward-looking judicial fix” that “avoids continuing harm in the future.” The 60+ pages of these five concurring and dissenting opinions reveal, among other things, ambiguities in the Supreme Court’s guidance.
The practical takeaway is that the PTAB will have to redo up to 81 final written decisions. But even the successful IPR petitioners in those cases are not screaming “justice delayed is justice denied.” For one thing, they already won before. Without a charge to reopen the record of those proceedings or permit new briefs, the PTAB’s original judgments may not change even if the text of its new decisions differs. Eventually, the Federal Circuit will have its opportunity to address the new judgments. Yet the PTO has asked the court to stay issuance of its mandate for 90 days or until disposition of a certiorari petition the PTO may file. Successfully predicting the fate of a certiorari petition in Arthrex would likely be a fool’s errand. The Supreme Court grants certiorari in patent cases having astonishingly little importance,* and routinely denies it in cases of overwhelming importance.** Sure, in Arthrex’s wake lies a mess, but the mess is fine: it’s contained, increasingly fleeting, and hardly insurmountable.
* See, e.g., Return Mail, Inc. v. United States Postal Serv., 139 S. Ct. 1853 (2019).
** See, e.g., Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743 (Fed. Cir.), reh’g and reh’g en banc denied, 927 F.3d 1333 (Fed. Cir. 2019), cert. denied, __ S. Ct. __ (U.S. Jan. 13, 2020) (No. 19-430).