U.S. Supreme Court Ruling Upholds Constitutionality of PTAB ALJ Structure

On June 21, 2021 the U.S. Supreme Court, in U.S. v. Arthrex, case number 19-1434, ruled on the constitutionality of the current structure of the Patent Trial and Appeal Board (PTAB), a tribunal within the U.S. Patent and Trademark Office where the validity of an issued patent can be challenged before administrative law judges (ALJs) during an inter partes review or a post grant review proceeding.

The Petitioners had challenged an issued patent before the PTAB and the patent was ruled invalid. Patent owner Arthrex appealed, claiming that the structure of the PTAB violated the Appointments Clause of the Constitution, which provides that only the President, with the advice and consent of the Senate, can appoint principal officers, while inferior officers must be directed and supervised at some level by others who were appointed by Presidential nomination. Arthrex argued that ALJs exercise significant executive authority and discretion, including ultimately deciding the patentability of any claims at issue without direction or supervision from a higher ranking authority, and therefore are to be regarding as principal officers. Arthrex argued that since ALJs are not appointed by the President, their appointments are unconstitutional.

The Supreme Court held that so long as the Director of the USPTO, who is appointed by the President, is granted the unilateral ability to review the judges’ decisions, ALJs are to be categorized as inferior officers. With this change, the PTAB is deemed constitutionally sound, and past decisions rendered by ALJs remain in place.

The Patent and Trademark Office responded by announcing an interim process for the Director’s review of PTAB decisions, including performing reviews of past and present cases without being petitioned to do so or by request of a party to a PTAB proceeding.