INSIGHT: Current Rules for Arthrex Challenges at the Federal Circuit

In Arthrex Inc. v. Smith & Nephew Inc., Judge Kimberly A. Moore, writing for the Federal Circuit in 2019, made a broad pronouncement that administrative patent judges (APJs) of the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office were “principal officers” of the U.S. and must be nominated by the president with the advice and consent of the Senate under the Appointments Clause of the U.S. Constitution.

This constitutional infirmity, which was found only to affect final written decisions issued prior to Oct. 31, 2019, was promptly remedied by severing APJs’ Title 5 protections against being removed from office “only for such cause as will promote the efficiency of service.” See Charles R. Macedo, ARE PTAB Law Alert: Federal Circuit Declares PTAB APJs To Be Superior Officers Appointed In An Unconstitutional Manner, But Offers A Fix Going Forward With Limited Relief Going Back.

While Arthrex continues to be challenged by not only the losing petitioner, but the U.S. government and even the patent owner who obtained the reversal, there are clear rules of the road which the Federal Circuit has laid out in Arthrex and its progeny.

1. An Arthrex challenge only applies to final written decisions issued before Oct. 31, 2019, and not to any final written decisions which issued after that date. See, e.g., Caterpillar Paving Products Inc. v. Wirtgen America, No. 20-1261(Fed. Cir. May 6, 2020) (constitutional challenge under Arthrex did not apply to final written decision issued on Nov. 13, 2019, after Oct. 31, 2019).
2. An Arthrex challenge must be raised in an opening brief on appeal or in a pre-opening brief motion. The failure to timely raise such a challenge will be deemed a waiver by the Federal Circuit and render it moot. See, e.g., Verify Smart v. Askeladden, No. 19-1076 (Fed. Cir. Feb. 21, 2020); Sanofi-Aventis Deutschland GmbH v. Mylan Pharms., Nos. 19-1368, 19-1369, slip op. at 20 n.4 (Fed. Cir. Nov. 19, 2019) (“Our precedent holds that failure to raise the Arthrex Appointments Clause issue in the opening brief forfeits the challenge.”); Customedia Techs. v. Dish Network, No. 18-2239 (Fed. Cir. Nov. 1, 2019) (denying motions to vacate and remand because “Customedia did not raise any semblance of an Appointments Clause challenge in its opening brief or raise this challenge in a motion filed prior to its opening brief”); Customedia Techs. v. Dish Network, No. 19-1001 (Fed. Cir. Nov. 1, 2019), reh’g and reh’g en banc denied (Fed. Cir. Dec. 23, 2019) (per curiam) (Newman, J., dissenting).
3. A timely raised Arthrex challenge to a pre-Oct. 31, 2019, final written decision of the PTAB in an inter partes review proceeding will likely be summarily granted by the Federal Circuit. This has happened in over 100 cases. See General Order in Cases Remanded Under Arthrex Inc. v. Smith & Nephew Inc., 941 F.3d 1320 (Fed. Cir. 2019) (PTAB May 4, 2020) (Boalick, Ch. APJ) (listing 103 IPRs held in abeyance on remand).
4. A losing petitioner cannot raise an Arthrex challenge, even to an adverse final written decision that issued prior to Oct. 31, 2019. See Ciena Corp. v. Oyster Optics LLC, No. 19-2117 (Fed. Cir. May 5, 2020) (denying Arthrex motion by losing petitioner, since it asked the PTAB to institute proceeding below).
5. An Arthrex challenge may apply to other actions taken by the APJs before Oct. 31, 2019, such as decisions in both inter partes reexamination proceedings and ex parte reexamination proceedings. See Virnetx Inc. v. Cisco Systems Inc., No. 20-1671, slip op. at 3-4 (Fed. Cir. May 13, 2020) (on panel rehearing) (“Thus, if these APJs are unconstitutionally appointed principal officers because of their inter partes review duties in light of Arthrex, it would appear that under Freytag vacatur would be appropriate for all agency actions rendered by those APJs regardless of the specific type of review proceeding on appeal.” (citing, inter alia, Freytag v. Commissioner, 501 U.S. 868, 882 (1991))). In re JHO Intellectual Property Holdings LLC, No. 2019-2330, order (Fed. Cir. June 18, 2020) (“Although this appeal arises out of an ex parte reexamination, we see no relevant distinction between the proceedings such that the reasoning in VirnetX should not apply here. We therefore grant JHO’s motion [to vacate and remand based on Arthrex].”).
6. Notwithstanding dissents and concurring opinions from four of the circuit court judges, the Federal Circuit does not appear likely to grant any en banc rehearings or stays of Arthrex challenges. Even when all the parties to Arthrex asked the full court to rehear the issue, a divided Federal Circuit denied the request. See Arthrex v. Smith & Nephew, 18-2140 (Fed. Cir. Mar. 23, 2020) (with five concurring and/or dissenting opinions).

Absent the U.S. Supreme Court granting an extension, petitions for certiorari are due later this month, but are unlikely to be decided until the new Supreme Court term in the fall.

At least for now, the rules will continue to govern Arthrex challenges at the Federal Circuit.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Charles R. Macedo is a partner at Amster, Rothstein & Ebenstein LLP, where he practices all facets of intellectual property law, including patent, trademark and copyright law. He has successfully represented petitioner and patent owners at the PTAB, and frequently represents parties and amicus at the Federal Circuit and Supreme Court on important issues related to intellectual property law.