PTAB Update: IPRs Survive Supreme Court Scrutiny by Allowing USPTO Director to Review PTAB Decisions

The Supreme Court issued a decision today in U.S. v. Arthrex, Inc. upholding the use of inter partes reviews (IPRs) to challenge the validity of issued patents under the America Invents Act. While the Court determined that administrative patent judges (APJs) of the USPTO’s Patent Trial and Appeal Board (PTAB) were unconstitutionally appointed, the Court fixed the problem by providing the USPTO Director with the ability to review final PTAB decisions and issue decisions on behalf of the Board. 

The case turned on whether APJs are principal officers who must be appointed by the President with the consent of the Senate, or inferior officers who can be appointed by the Secretary of Commerce. The Supreme Court determined that “the unreviewable authority wielded by APJs during inter partes review is incompatible with their ap­pointment by the Secretary to an inferior office.” However, the Supreme Court fixed this constitutional problem by severing the objectionable portion of the statute, stating that “[i]n our view, however, the structure of the PTO and the governing constitutional principles chart a clear course: De­cisions by APJs must be subject to review by the Director.” Thus, the Court did not throw out the IPR regime as a whole and instead determined that “a tailored approach is the appropriate one” and “[t]he Director accordingly may re­view final PTAB decisions and, upon review, may issue de­cisions himself on behalf of the Board.” The case was remanded to the Acting Director to decide whether to rehear the IPR petition.