Cadwalader attorneys considered the implications of a recent order by the United States Court of Appeals in Polaris Innovations Lt. v. Kingston Technology Company, Inc. ("Polaris") requiring a supplemental briefing on the constitutionality of patentability decisions issued by Administrative Patent Judges ("APJs") of the Patent Trial and Appeal Board ("PTAB").
The Court posed the following questions:
- "what level of supervision and review distinguish a principal from an inferior officer";
- "whether severing the application of Title 5's removal restrictions with respect to APJs under 35 U.S.C. §3(c) sufficiently remedies the alleged unconstitutional appointment at issue in these appeals";
- "whether, and how, the remedy for an Appointment Clause violation differs when it stems from an unconstitutional removal restriction, rather than an unconstitutional appointment itself"; and
- "whether severing the application of Title 5's removal restrictions with respect to APJs under 35 U.S.C. § 3(c) obviates the need to vacate and remand for a new hearing, given the Supreme Court's holdings on the retroactive application of constitutional rulings."
Cadwalader attorneys explained that while the issues concern the constitutionality of patentability decisions issued by the PTAB, the outcome in Polaris will likely impact other administrative proceedings, considering that both the SEC and PTAB have been found to be in constitutional violation when subjected to judicial scrutiny.
The Cadwalader attorneys stated that Polaris revisits Arthrex Inc. v. Smith & Nephew Inc. (Arthrex), which held that the current system of appointing APJs violated the Appointment Clause of the U.S. Constitution. Specifically, in Arthrex, the Court held that APJs were officers due to their "significant discretion," oversight and "ability to issue final written decisions[.]" The Court then held that the APJs were principal officers and, therefore, fell under the Appointment Clause because of the lack of supervision and review.
The attorneys stated that the first and second questions posed by the Polaris Court directly relate to Arthrex and signal that the Court is carefully considering how its holding affects other cases.
Commentary Danielle Tully
There are several possibilities that may occur if the Polaris court finds a constitutional violation. First, all unexpired patents invalidated by the PTAB could be reinstated. This is the most extreme outcome and likely would spawn numerous litigations, as well as uproar over the nullification of invalidity decisions that required significant monetary and time investments to obtain. Such an approach also would jeopardize the position of parties who relied in good faith on prior PTAB invalidity determinations when making business decisions. Second, the PTAB could appoint constitutional judges who quickly review all past opinions. This result would be less drastic, as past decisions likely would be upheld. However, a mere rubberstamping of past opinions may raise constitutional concerns, particularly in view of Oil States. Alternatively, a fulsome re-litigation of all implicated PTAB decisions would be burdensome and costly. Third, Congress could pass new legislation that would allow review of prior APJs' decisions under a framework that attempts to avoid the constitutional concerns identified by the Supreme Court and Federal Circuit. While this solution would be the most definitive, it may not come quickly enough to resolve many pressing issues, and it would still be vulnerable to a constitutional challenge by dissatisfied parties.
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