Tag Archives: Inc

Average JOE SCOTUS: United States v. Arthrex, Inc.

Here’s a fun one. Imagine you’re applying for a patent, your patent will be reviewed by a team of Administrative Patent Judges (APJ). These people are appointed by the Secretary of Commerce, and and approved by the Director of the US patent office, similar to how the president appoints SCOTUS justices with review by the Senate. This was created as part of the 2012 America Invents Act.

Arthrex owned a patent for some medical device, and Smith & Nephew made something similar. So Arthrex sued Smith & Nephew, and Smith & Nephew fired back, asking the panel to review whether their gadget was even patentable. So these claims were subject to inter partes review, which is basically a fancy term meaning someone other than the patent holder challenged the legitimacy of the patent.

APJs reviewed Arthrex’s patent, and decided that their shit wasn’t patentable—win for Smith & Nephew. So then Arthrex was like, “We’ll show you, motherfuckers. We’re going to challenge your right to even fucking exist!”

You see, they argued that these APJs violate the constitution since they’re federal positions, where they can only be fired if they commit a crime basically, which Arthrex argues makes the “principal officers” and thus must be appointed by the president, and reviewed by the senate.

A circuit court agreed, and severed the part of the law that protects their tenure, and does allow for them to be fired, thus making them inferior officers, and no longer violating the appointments clause of the constitution.

All parties involved seemed bothered by this, because it removed Arthrex’s objection without providing relief, Smith & Nephew were pissed because the APJ decision was vacated, and the government was pissed because the court shit all over their statute.

Smith & Nephew along with the government say these APJs were always inferior because they are managed by the secretary of commerce, and director of the USPTO. But Arthrex is like, “Hey man, their decisions are final, and only reviewable by an appellate court. So sure they have fucking bosses, but if their decisions are final, they’re fucking principal officers.”

Counsel for Smith & Nephew came out swinging, that these APJs were already inferior officers. His opening salvo was:

Mark A. Perry

Mr. Chief Justice, and may it please the Court: Arthrex’s proposal for a bright-line administrative review requirement rests on a single line from Edmond noting that the military judges couldn’t render a final decision unless permitted to do so by other executive officers. The Court in that sentence was not announcing a requirement for inferior officer status.

It was commenting on the narrow scope of CAAF review, which followed its observation that the JAG could not provide advance guidance to the military judges. In sharp contrast, the PTO director can and does give substantive guidance to APJs. He also has unilateral institution and assignment power, and he can order review of any board decision. Moreover, only the director takes final actions by confirming or canceling patent claims.

APJs can’t render any decision unless the director permits them to do so.

They are inferior officers.

https://www.oyez.org/cases/2020/19-1434

Justice Thomas pushed counselor Perry to define the “test” as to what makes someone an inferior officer. The exchange went like this.

Clarence Thomas

Thank you, Mr. Chief Justice. What would be your test for whether someone is an — an inferior officer? The — it seems to be almost a totality of the circumstances.

Mark A. Perry

Justice Thomas, the — the — the principal officers sit at the right hand of the President.

They — the only ones this Court has recognized are the ambassadors and the cabinet officers, and the heads of agencies —

Clarence Thomas

Yes.

Mark A. Perry

— are one step removed. These individuals are three steps removed.

So, you know, the Secretary definitely is.

The director may be.

The APJs definitely are not.

And that’s the chain of command that the Court has described over and over again. That would be one test. The other, the — the Edmond totality- of-the-circumstances test is supervision and control.

And these officials are supervised and controlled in everything they do.

Clarence Thomas

And how much supervision and control are you talking about? Can it be partial supervision? Can it — does it have to be absolute supervision? I don’t — it’s really difficult to discern how much would be required under your test.

Mark A. Perry

Your Honor, the — the ultimate test is whether the President and his direct reports remain accountable for the operations of the agency.

So, if the Congress were to give total free reign to a — to a sleeper agent embedded within the agency, that might be a problem. But where the chain of command is preserved and the director and ultimately the Secretary and the President bear the responsibility and accountability, that is sufficient.

And the totality of the circumstances here show that the latter is the case with respect to the Patent Office.

Perry went on to argue how they are inferior to a separate question Justice Kavanaugh by saying:

The APJs do not cancel patents. The patent in this case is still valid. The board has declared it to be unpatentable, but the director has not canceled it. So, to this day, three years later, nothing has happened because the director, the politically appointed directly accountable to the President individual, has not taken the action specified by statute. The Congress has made a different determination here, but it is absolutely consistent with the dictates of the Appointments Clause.

https://www.oyez.org/cases/2020/19-1434

In a narrow 5:4 decision, where Thomas sided with the left justices, SCOTUS sided with the United States. These APJs are unconstitutional. As such, Chief Justice Roberts required the director of the USPTO hold the ultimate authority to review a final outcome of such proceedings going forward.

Justice Thomas felt like it wasn’t for the court to solve, by making them have a boss, but instead, the court should have just ended the APJs altogether.