Arguing Arthrex – Smith & Nephew and the U.S. Urge the Court To Deem Patent Judges Inferior Officers

07 December 2020 PTAB Trial Insights Blog
Authors: Randy J. Pummill George E. Quillin

Opening briefs from Smith & Nephew and the United States have been filed with the Supreme Court in the Arthrex cases which, as previously discussed, granted the petitions for certiorari from Arthrex, Inc., Smith & Nephew Inc., and the United States and consolidated the cases into a single proceeding (currently docketed as 19-1434).  Both opening briefs urge the Court to overrule Arthrex, and can be found here and here

Both opening briefs present a similar argument—the theme of which has previously found success in front of the Court—characterizing the Federal Circuit’s application of Supreme Court precedents as overly rigid, and urging a more flexible application of the law.  In this instance, the briefs urge the Court to view the Federal Circuit’s application of Edmond v. United States, 520 U.S. 651 (2007), as an improper “rigid multipart test” not supported by Edmond

According to Smith & Nephew, the Federal Circuit’s focus on three factors (review power, supervision power, and removal power) resulted in a decision that “reduce[d] Edmond to a mechanical best-two-out-of-three test.” Similarly, the United States characterized the Federal Circuit’s focus on three factors as “a mechanical checklist.”

The briefs advocate that Edmond requires a holistic determination of the level to which the work of a patent judge is directed and supervised by others who were appointed by presidential nomination with the advice and consent of the Senate. Both briefs advocate accounting for the cumulative effect of how the patent judges are directed and supervised, rather than a stepwise assessment.

While each brief focused on similar themes, we provide a brief summary of the different approaches from Smith & Nephew and the United States.

Brief of Smith & Nephew

In its brief, Smith & Nephew advocates that the Court should recognize the “pragmatic” interpretation of what constitutes an inferior officer, as set forth in Edmond. Smith & Nephew advocates for this pragmatic interpretation by examining the original meaning of “inferior” as it was understood by the authors of the Constitution and concludes that the members of the early government would have seen an inferior officer as one subordinate to a principal officer.  Further, Smith & Nephew argues that defining inferior officers by their relationship to other officials in the Executive branch makes sense of the government structure laid out in the Constitution.  Finally, it points to policy considerations with an assertion that this pragmatic interpretation maintains political accountability where it is needed—with the President and senators involved in selecting and confirming principal officers. 

Smith & Nephew next turns to the “directed and supervised by others” factor based on a “pragmatic” interpretation of Edmond, and notes that both the Secretary of Commerce and the Director of the USPTO have supervisory and directorial powers. For example, the Director has the power to provide mandatory policy direction to patent judges, and to determine how many judges sit on a panel, which judges rehear a case, and whether or not a decision will become precedential.  The Secretary of Commerce has the power to hire patent judges and to release them for the “efficiency of the service.”

Further, Smith & Nephew draws an important distinction between actual control of inferior officers and the mechanisms of control.  It argues that the CAFC mistakenly interpreted Edmond to require an inferior officer to be subject to specific mechanisms of control, such as unfettered removal power, instead of being subject to a sufficient level of control.  Smith & Nephew argues that the level of control and review that the Director and the Secretary of Commerce have over patent judges is sufficient for them to be inferior officers.     

Brief of United States

The U.S. also advocates that an inferior officer is one whose work is supervised at some level by a principal officer.  The brief characterizes the decision in Arthrex as “distill[ing] three specific supervisory mechanisms from Edmond” that the Court had never identified as indispensable, and that by using “that checklist approach, the court of appeals ascribed undue weight to the perceived absence of specific control mechanisms.”

The U.S. also turns to the “directed and supervised by others” factor, noting that the Court has never identified any particular form of control as indispensable, and that complete control of every action that an inferior officer takes has never been required, as long as such officers’ work remains “supervised at some level.”

In its last argument, the U.S. turned to the lack of historical basis in the Federal Circuit decision.   To be sure, after analyzing the three factors from Edmond, the Federal Circuit noted that until 1975, the predecessors of patent judges (called “Examiners-in-Chief ”) were subject to nomination by the President and confirmation by the Senate. The Federal Circuit noted that, in deciding reexaminations, inter partes reviews, and post-grant reviews, today’s administrative patent judges “wield significantly more authority” than their predecessors, but that “the protections ensuring accountability to the President” for Executive Branch decisions “clearly lessened in 1975.” The U.S. asserts that this difference makes no difference.  The statutory change to patent judges changed the structure of the Office, and there is no evidence that this change was viewed as raising constitutional concerns at the time it was made.

More to Come

Almost a score of amicus briefs in support of the position of Smith & Nephew or the U.S. (or in support of no party) have already been filed and Arthrex’s opening brief is due December 23.  Check the PTAB Trial Insights Blog for analysis on these and future developments in the upcoming weeks. 

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