United States: Constitutionality Of PTAB Judge Appointments Challenged In Polaris IPR Appeal

In the wake of Lucia v. SEC, where the Supreme Court held in June 2018 that Administrative Law Judges (ALJs) at the SEC are "officers" subject to the Appointments Clause, there have been challenges to the constitutionality of Administrative Patent Judges (APJs) at the PTAB in IPR proceedings. In 2008, the Patent Act was amended to require APJ appointment by the Secretary of Commerce.i Commentators had argued that APJs were "inferior officers," and the structural rearrangement proactively cured that potential constitutional defect. But in a pending appeal of an IPR to the Federal Circuit, at least one litigant has argued further that APJs are not merely inferior officers but "principal officers."ii If that is correct, APJs would require appointment by the President and confirmation by the Senate.iii (Alternatively, the principal-officer status might be changed if the PTAB were restructured to give the Director explicit direct oversight of each case. Or the for-cause removal provision might be altered to at-will removal.) This would mean more political control over APJ practices. Any IPRs in which an Appointments Clause challenge had been timely made would likely require a new hearing before a duly appointed panel. However, the majority's reasoning in Lucia suggests that the issue would need to be raised while the proceeding was pending and that it would not be retroactive to resolved matters.

The Polaris Appeal

Patent owner Polaris Innovations appealed an adverse IPR decision, in part, on Appointments Clause grounds (No. 18-1768, Fed. Cir., filed July 7, 2010).iv Polaris noted that, like the tax court judges of Freytag and the SEC ALJs of Lucia, APJs occupy non-temporary offices established by law, have statutorily-specified duties, salaries, and means of appointment, exercise significant authority pursuant to the laws of the United States, exercise trial-like procedural functions, and issue final decisions on the agency's behalf. But Polaris argued that APJs occupy a position of even greater independence, removable only for cause and unreviewable in their decisionmaking by any other Executive Branch entity. Thus, Polaris argued, APJs are "principal officers," like railroad passenger rate arbitrators and Copyright Royalty Board members, as held by the D.C. Circuit.v

Principal vs. Inferior Officers

The Supreme Court has not articulated a bright-line rule on who is an "inferior" or "principal" officer, but the case law focuses on whether the officer is subject to direction and control. In Edmond v. United States, the majority held that "[w]hether one is an 'inferior' officer depends on whether he has a superior. It is not enough that other officers may be identified who formally maintain a higher rank, or possess responsibilities of a greater magnitude. . . . Rather, in the context of a Clause designed to preserve political accountability relative to important Government assignments, we think it evident that '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."vi This marked a broadening from Morrison v. Olson, where the Court had distinguished inferior from principal officers on the basis of a multifactor inquiry considering removal power, limited duties, limited jurisdiction, and limited tenure.vii

Other Challenges to PTAB Judge Consitutionality

The principal-officer issue has been raised in several IPRs even before Lucia was handed down.viii So far, the PTAB has declined to consider the constitutional challenge, either citing case law holding that administrative agencies do not have jurisdiction to decide the constitutionality of their own authorityix or simply finding the proffered arguments unpersuasive.x

Some commentators have also proposed, with some pushback, that APJs are "principal officers," especially through the lens of originalism.xi Under this view, an "inferior" officer's decisions must be subject to review by another Executive Branch official other than the President.

Awaiting Clarification

APJ decisions are indeed formally unreviewable within the Patent Office. However, each PTAB decision is subject to reconsideration by an expanded panel.xii Further, the individual authority of any one APJ is muted by the fact that final decisions are issued by panels of 3 APJs (or more if it is an enlarged panel), not individual APJs, and so no one APJ has full final decisionmaking authority.xiii Also, institution decisions, by statute, are subject to the authority of the Director.xiv Further, the Director may designate panels, may use expanded panels to exercise decisional oversight through rehearing, and may disapprove designation of decisions as precedential.

And the USPTO—though not on a case-by-case basis—exercises oversight of APJs as employees. Moreover, in the wake of Oil States, parties may argue that PTAB decisions do not extinguish private rights (see "Supreme Court Upholds Constitutionality of IPRs in Oil States").

It remains to be seen how the Federal Circuit will view this constitutionality challenge in the Polaris appeal, so stay tuned for further posts.


i Act of Aug. 12, 2008, Pub. L. No. 110-313, 122 Stat. 3014 (amending 35 U.S.C. § 6).

ii Principal Brief of Appellant Polaris Innovations Ltd., Polaris Innovations Ltd. v. Kingston Tech. Co., No. 18-1768 (Fed. Cir. July 7, 2010) [hereinafter Polaris Brief].

iii See U.S. Const. art. II, § 2, cl. 2 ("[The President] shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law 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 Departments.").

iv Polaris Brief at 52-59.

v See Ass'n of Am. R.R. v. U.S. DOT, 821 F.3d 19, 39 (D.C. Cir. 2016), reh'g denied mem. (D.C. Cir. 2016) (per curiam); Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Board, 684 F.3d 1332, 1336-40 (D.C. Cir. 2012).

vi 520 U.S. 651, 662-63 (1997).

vii 487 U.S. 654, 671-72 (1988).

viii St. Jude Med., LLC v. Synders Heart Valve LLC, 2018 Pat. App. Filings LEXIS 64, IPR2018-00107 (Feb. 6, 2018); Unified Patents Inc. v. Sound View Innovations, LLC., 2018 Pat. App. Filings LEXIS 37, IPR2018-00096 (Feb. 1, 2018); Hulu v. Sound View Innovations, 2018 Pat. App. Filings LEXIS 22, IPR2018-00017, Paper 11 (P.T.A.B. Jan. 18, 2018).

ix Hulu, IPR2018-00017, Paper 14, at 27-28 (P.T.A.B. Apr. 16, 2018); Unified Patents, IPR2018-00096, Paper 11, at 36 (P.T.A.B. Apr. 18, 2018).

x St. Jude, IPR2018-00107, Paper 16, at 8-9 (P.T.A.B. May 3, 2018).

xi See, e.g., Gary Lawson, Appointments and Illegal Adjudication: The AIA Through a Constitutional Lens, 41 Geo. Mason L. Rev. (forthcoming 2018), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3105511.

xii 37 C.F.R. § 42.71 (2018).

xiii See 37 C.F.R. § 42.2 (2018).

xiv 35 U.S.C. § 314 (2012).

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