“Why hasn’t Director Iancu cleaned house at the PTAB following Arthrex? It would seem to be because the USPTO believes Arthrex was wrongly decided.”

On November 13, the United States Patent and Trademark Office (USPTO) requested the U.S. Court of Appeals for the Federal Circuit suspend all consideration of an appeal from the Patent Trial and Appeal Board (PTAB) that would raise the same issues addressed in Arthrex, Inc. v. Smith and Nephew, Inc., because the Office will seek rehearing en banc in Arthrex. See Stuben Foods, Inc. v. Nestle USA, Inc., No. 20-1082, -1083.

As a reminder, on October 31, the Federal Circuit issued an important constitutional decision in Arthrex, which found that the hiring of Administrative Patent Judges (APJs) violated the Appointments Clause of the U.S. Constitution. The Federal Circuit did, however, attempt to provide a gift to the Office by rewriting the section of the statute they found to create the problem, which created the PTAB and the appointment of APJs, and by so doing turned APJs into inferior officers. The solution: APJs were judicially decreed to be employees-at-will in order to save the statute.

An Early Christmas Present

After Arthrex, enterprising patent owners that have been targets of efficient infringers and have been mercilessly treated to the indignity of the PTAB now have the upper hand for the first time, and are going to put the PTAB on trial. Josh Malone, the inventor of Bunch O’ Balloons and the vocal leader of innovators subjected to the whims of the PTAB immediately took to LinkedIn to say that he expects APJs to be fired now that they are employees-at-will.

While Malone’s statement may seem extreme, those familiar with the PTAB and its practices know well that there are some APJs who simply do not follow the agenda set out by Director Iancu. They were hired to kill patents, and for some, the shifting sentiment of the leadership of the USPTO makes no difference.

While the Patent Office continues to evade inquiries regarding the exact number of APJs currently serving on the PTAB, estimates from multiples sources familiar with the PTAB place the number of APJs north of 250, most probably between 260 to 280 APJs. One source close to the PTAB estimates the current workload likely supports approximately 150 to 160 APJs, which is why some APJs create work for themselves by instituting inter partes review (IPR) challenges that otherwise would not be instituted in a just system, or a system where an independent panel was impounded solely for the purpose of determining whether to institute challenges. That is, however, the exact mischief that can and does happen when APJs who face a work production quota are the gatekeepers of their own work.

The Federal Circuit decision in Arthrex was an early Christmas present for Director Iancu. APJs instantly transformed into employees-at-will overnight without employment protections should be exactly what the Office needs to right-size the PTAB workforce. Director Iancu should be able to clean house and at a minimum get rid of those APJs who refuse to get on board with his initiatives.

USPTO: Return This Gift to Sender

So, why hasn’t Director Iancu cleaned house at the PTAB? It would seem to be because the USPTO believes Arthrex was wrongly decided.

“The deadline for the government or the appellee in Arthrex to seek rehearing en banc is December 16, 2019,” the government wrote in its November 13 Motion to Stay Proceedings or Extend Time. “The United States intends to seek rehearing en banc in Arthrex. The United States hereby requests that proceedings in this case relating to Arthrex be stayed pending the Court’s disposition of the government’s forthcoming rehearing petition in that case.”

So, the last chapter in the constitutionality of the appointment of APJs has yet to be written. There will at a minimum be an en banc rehearing request filed by the USPTO. And this is precisely the type of archaic constitutional law question that affects almost no one that the Supreme Court will almost certainly find too riveting to ignore.

In the meantime, patent owners can and should continue to put the PTAB on trial. With the USPTO filing a request for en banc rehearing, it is hard to know how much longer patent owners will enjoy this upper hand.

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