IP UPDATE
Exploring the Latest in Intellectual Property Law
IP UPDATE
Exploring the Latest in Intellectual Property Law
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Heightened Written Description Standard for Negative Limitations?

by | Jun 30, 2022 |

Addressing the issue of negative claim limitations, the US Court of Appeals for the Federal Circuit granted a petition for panel rehearing, vacated its prior decision (authored by now-retired Judge O’Malley) and reversed the district court’s finding that the patent was not invalid for inadequate written description. Novartis Pharms. v. Accord Healthcare Inc., Case No. 21-1070 (Fed. Cir. June 21, 2022) (Moore, C.J.; Hughes, J.) (Linn, J., dissenting).

This is the second time this Hatch-Waxman case has been before the Federal Circuit. Novartis sued HEC, alleging that HEC’s abbreviated new drug application infringed a patent directed to methods of treating remitting multiple sclerosis (RRMS) with fingolimod or a fingolimod salt at a daily dose of 0.5 mg without an immediately preceding loading dose. The district court found sufficient written description for the claimed 0.5 mg daily dose and no-loading dose negative limitation. In January 2022, the Federal Circuit affirmed the district court’s decision finding adequate written description.

HEC petitioned for panel rehearing. The Federal Circuit granted the petition, vacated its January 2022 decision and reversed the district court’s judgment finding adequate written description for the no-loading dose negative limitation. The majority explained that “silence is generally not disclosure” because “[i]f it were, then every later-added negative limitation would be supported so long as the patent makes no mention of it.” The majority also explained that implicit disclosure cannot satisfy the written description requirement if it would render the limitation obvious to a skilled artisan. The majority emphasized that while a negative limitation need not be recited in the specification in haec verba, there generally must be something in the specification that conveys to a skilled artisan that the inventor intended the exclusion—for example, a description of a reason to exclude the relevant element. Here, the majority found that the specification made no mention of the presence or absence of a loading dose. This silence cannot support a later-added claim limitation that precludes loading doses, particularly where there was no evidence that the patentee precluded the use of a loading dose and skilled artisans agreed that loading doses are sometimes given to RRMS patients.

Judge Linn (a member of the majority in the January 2022 opinion) dissented, arguing that the majority applied a heightened written description standard requiring not only a “reason to exclude” but a showing that the negative limitation was also “necessarily excluded.” He stated that the question was not whether the patentee precluded the use of a loading dose, but whether the claim limitation that precluded a loading dose was supported by the specification’s written description that disclosed only a daily dose. Judge Linn argued that disclosure along with the testimony of Novartis’s experts implied an absence of a loading dose to a skilled artisan, and that is all that is required for adequate written description. Citing precedent and the US Patent & Trademark Office’s guidance in the Manual of Patent Examining Procedure, he argued that newly added claims or claim limitations may be supported [...]

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Since Vacatur Seeks Equitable Relief, Clean Hands Matter

by | Jun 30, 2022 |

In an opinion related to its 2021 ruling that a decision in earlier inter partes reexaminations of related patents had a preclusive effect that collaterally estopped the Patent Trial & Appeal Board (Board) from making new findings on the same issue, the US Court of Appeals for the Federal Circuit vacated the Board’s decision on remand since the patent at issue expired. SynQor, Inc. v. Vicor Corp, Case No. 20-1259 (Fed. Cir. Jun. 17, 2022) (Chen, Prost, JJ.), (Lourie, J., dissenting) (non-precedential).

Background

After being sued by SynQor, Vicor petitioned for reexamination of several SynQor patents (including the ’021 and ’190 patents). In the ’190 patent reexamination proceeding, Vicor successfully argued that the ’190 patent claims (including new claims sought to be added by SynQor) were unpatentable over two references. After appeals to the Board (which reversed the examiner) and Federal Circuit (which reversed-in-part, vacated-in-part), the case was remanded to the Board to consider the examiner’s obviousness rejections in light of the Court’s conclusion that prior art patents anticipated certain claims.

On remand, the Board affirmed almost all of the examiner’s rejections and applied a new ground of rejection to one of SynQor’s proposed new claims. However, before the Board issued its final decision regarding the new claims, the ’190 patent expired and SynQor appealed to the Federal Circuit to vacate the Board’s decisions regarding the new claims on the ground that the ’190 patent’s expiration rendered the Board’s patentability decision moot. The Court agreed and vacated the Board’s decisions, explaining that the inability to issue the new claims meant that “the Board’s patentability determinations were unreviewable for mootness” since the Court would be “frustrated by the vagaries of circumstance” (thereby falling under the Supreme Court’s Munsingwear doctrine) from reviewing the Board’s determinations on the merits.

Similarly, in the ’021 patent’s reexamination, the examiner rejected all challenged claims, including two new claims that SynQor proposed. The Board affirmed the examiner’s rejections, and on appeal the Federal Circuit affirmed-in-part, vacated-in-part and remanded for the Board to reconsider two obviousness grounds it deemed the Board had unjustifiably reached inconsistent conclusions on (relative to a separate reexamination proceeding for another related patent). On remand, the Board again found SynQor’s proposed new claims unpatentable, unaware that the ’021 patent had expired over a year prior. In its rehearing petition, SynQor informed the Board of the ’021 patent’s expiration and asked the Board to vacate its decision on the merits. SynQor appealed after the Board declined to do so.

Appeal on the ’021 Patent

On appeal, SynQor requested that the Federal Circuit vacate the Board’s decision (for the same reasoning as in the ’190 patent appeal). Vicor argued that the Court lacked Article III jurisdiction to consider the request, and that SynQor was not entitled to equitable relief because of its failure to inform the Board of the ’021 patent’s expiration date, which caused the remand decision to be issued. Vicor also argued that the timing of the ’021 patent expiring before [...]

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Claim Construction and Jurisdictional Discovery Are More Than Skin Deep

by | Jun 23, 2022 |

Referencing the use of antecedents from a “wherein” clause, the US Court of Appeals for the Federal Circuit reversed a district court’s claim construction and vacated its summary judgment ruling of indefiniteness that relied on that construction. University of Massachusetts v. L’Oréal S.A., Case No. 21-1969 (Fed. Cir. June 13, 2022) (Prost, Mayer, Taranto, JJ.) The Court also reversed the dismissal of a defendant based on personal jurisdiction, finding error in the district court’s refusal to permit jurisdictional discovery before granting a motion to dismiss on that basis.

This case involved two patents directed towards the topical treatment of skin with a composition of adenosine at a certain concentration, held by the University of Massachusetts (UMass). L’Oréal is French-based company (L’Oréal S.A.) and its US-based company (L’Oréal USA) were involved in the suit. L’Oréal S.A. moved to dismiss for lack of personal jurisdiction, and the district court granted the motion without an opportunity for UMass to conduct jurisdictional discovery. After the dismissal, the district court ruled on the construction of a claim limitation and subsequently wielded that construction to invalidate another limitation as indefinite. The district court entered a final judgment of invalidity on this basis. UMass appealed, challenging the claim construction and lack of jurisdictional discovery.

Construction Using “Wherein” Clause

The Federal Circuit explained that there are two steps in reviewing claim construction: determining whether there is a plain meaning of a disputed term and, as necessary, properly construing the term. After determining that there was no plain meaning of the claim term “concentration,” the Court addressed the construction of the phrase “topically applying to the skin a composition comprising a concentration of adenosine.” The Court found that the district court erred in its determination that the “concentration applied to the dermal cells” meant that the concentration must be measured by the concentration directly applied to the dermal cells beneath the skin, rather than the composition applied to the surface of the skin. The Patent Trial & Appeal Board had adopted the same interpretation in an inter partes review, and therefore “concentration applied to the dermal cells” required no further construction.

UMass challenged that the proper construction. The Federal Circuit, citing to support in the specification, stated that the concentration of adenosine found in the composition should be construed as that applied to the epidermis. Viewing the claim as a whole and use of antecedents, the Court explained that “applied” could relate to both direct and indirect application. The Court specifically noted the use of the word “the” in the wherein clause, and found that this read, for antecedent, as the concentration of the composition. In viewing the prosecution history, the Court determined there was no disavowal of indirect application, and the specification and dependent claims supported a read of the term “concentration” to mean the composition applied to the surface of the skin, rather than requiring testing of the concentration to which the dermal cells were actually exposed. The Court also noted that in the prosecution history, UMass [...]

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Can’t Hide Behind Minor Clerical Error to Escape Willful Infringement Verdict

by | Jun 9, 2022 |

The US Court of Appeals for the Federal Circuit affirmed a district court decision correcting a clerical error in a claim. Pavo Solutions LLC v. Kingston Technology Company, Inc., Case Nos. 21-1834 (Fed. Cir. June 3, 2022) (Lourie, Prost, Chen, JJ.)

The Pavo patent is generally directed to a “flash memory apparatus having a single body type rotary cover.” CATR Co., later substituted by Pavo, sued Kingston for infringing the Pavo patent. Supported by the patent specification and prosecution, the district court judicially corrected the claim language in its claim construction order to read “pivoting the cover with respect to the flash memory main body,” not “pivoting the case with respect to the flash memory main body” (change emphasized). Pavo’s damages expert, Bergman, presented a profit-based model of reasonable royalty damages, relying on an earlier settlement agreement between CATR and IPMedia to arrive at a profit split of 18.75%, amounting to 40 cents/unit for Kingston. The jury returned a verdict of willful infringement and awarded Pavo a 20% reasonable royalty.

Judicial Correction

The Federal Circuit addressed and affirmed three issues on appeal, the first being that the district court approximately corrected an obvious minor clerical error in the claims. Correction is appropriate “only if (1) the correction is not subject to reasonable debate based on consideration of the claim language and the specification and (2) the prosecution history does not suggest a different interpretation of the claims.” In deciding whether a particular correction is appropriate, a court “must consider how a potential correction would impact the scope of a claim and if the inventor is entitled to the resulting claim scope based on the written description of the patent.”

The Federal Circuit decided that the error was clear from the full context of the claim language, supported by the specification, and did not broaden the claim scope. Additionally, the correction was not subject to reasonable debate. Judicial correction “is merely giving to it the meaning which was intended by the applicant and understood by the examiner.” Kingston’s alternative correction would just reverse the order in which the structural components appear in the claim.

The prosecution history also did not suggest a different interpretation of the claim. The applicant and the examiner consistently characterized the claims as describing pivoting the case within the cover, which both the Patent Trial & Appeal Board (Board) and the court recognized. Each reviewing body understood the nature and scope of the invention consistent with correcting “case” to “cover.” Kingston argued that the Board denied the applicant’s request to correct the language, but the denial was on procedural grounds.

Willfulness

Second, the Federal Circuit determined that Kingston could form requisite intent to support a willful infringement verdict despite its arguments that it reasonably relied on not infringing the claims as originally written, and it could not anticipate that a court would later correct the claims. However, “reliance on an obvious minor clerical error in the claim language is not a defense to willful infringement.” By definition, [...]

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Drink Up, but Not with Lehman Brand

by | Jun 9, 2022 |

In the context of an opposition proceeding, the US Court of Appeals for the Federal Circuit upheld a Trademark Trial & Appeal Board (Board) refusal to register a trademark based on likelihood of confusion with a famous but expired mark, notwithstanding the applicant’s assertion of abandonment of the mark by the original registrant. Tiger Lily Ventures Ltd. v. Barclays Capital Inc., Case Nos. 21-1107;- 1228 (Fed. Cir. June 1, 2022) (Lourie, Bryson, Prost, JJ.)

Tiger Lily sought to register the word mark LEHMAN BROTHERS for beer and spirits and for bar services and restaurant services. Barclays, whose Lehman Brothers marks had expired, opposed the applications based on likelihood of confusion. Tiger Lily argued that Barclays had abandoned the mark and filed an opposition to Barclays’ application to register the work mark LEHMAN BROTHERS. The Board sustained Barclays’ oppositions on the grounds of likelihood of confusion and dismissed Tiger Lily’s opposition. Tiger Lily appealed.

Tiger Lily challenged the Board’s decision, arguing that the Board erred in its determination that Barclays did not abandon its rights in the LEHMAN BROTHERS mark and, relatedly, that Barclays established priority with respect to the LEHMAN BROTHERS mark in its own application. Tiger Lily also argued that the Board erred in finding that its proposed mark for beer and spirits and its proposed mark for bar services and restaurant services would cause a likelihood of confusion with Barclays’ LEHMAN BROTHERS mark.

Addressing the issue of abandonment, the Federal Circuit explained that “there are two elements to a claim for abandonment: (1) nonuse; and (2) intent not to resume use,” and “even limited use can be sufficient to avoid a finding that use of a mark has been ‘discontinued.’” The Court noted that Tiger Lily acknowledged that Barclays had used the mark “continuously in the course of winding up the affairs of at least one Lehman Brothers affiliated company” and thus failed to prove nonuse. Whether Lehman Brothers would exist after bankruptcy proceedings ended was immaterial.

On the issue of likelihood of confusion and the DuPont factors, the Federal Circuit found that “because the LEHMAN BROTHERS mark has achieved a high degree of fame, it is afforded a broad scope of protection.” Tiger Lily attempted to draw a distinction between “consumer recognition” as compared with “goodwill” as a factor and argued that it was actually trying to trade on the “bad will” associated with the mark. The Court found “no legal support for [this] subtle distinction.” The Court concluded that “Tiger Lily’s attempts to capitalize on the fame of the LEHMAN BROTHERS mark weighs in favor of finding a likelihood of confusion,” and that the Board’s findings on the remaining factors were supported by substantial evidence.



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Co-Authorship ≠ Co-Inventorship but Can Be Supportive of Inventive Contribution

by | Jun 9, 2022 |

The US Court of Appeals for the Federal Circuit vacated and remanded a Patent Trial & Appeal Board (Board) decision because it failed to resolve fundamental testimonial conflict relating to inventive contribution and complete the Duncan Parking analysis. Google LLC v. IPA Technologies Inc., Case Nos. 21-1179; -1180; -1185 (Fed. Cir. May 19, 2022) (Dyk, Schall, Taranto, JJ.)

Under Duncan Parking, analyzing whether a reference patent is “by another” requires the following three steps:

  1. Determining what portions were relied on as prior art to anticipate the claim limitations at issue
  2. Evaluating the degree to which those portions were conceived by another
  3. Deciding whether that other person’s contribution is significant enough to render them a joint inventor of the applied portions of the reference patent.

SRI International filed two patent applications in 1999 related to the software-based Open Agent Architecture (OAA) and listed Martin and Cheyer as the inventors. In March 1998, an academic paper describing the OAA project was published and named these inventors and Moran as co-authors (Martin reference). During prosecution, the examiner identified the Martin reference as prior art and rejected the claims. SRI asserted that the Martin reference was not prior art because it was made by the same inventive entity as the patents. The patents were granted and assigned to IPA.

Google petitioned the Board for inter partes review of the patent claims. Google argued obviousness in view of the Martin reference and asserted that since the authors of the Martin reference (Martin, Cheyer, Moran) were not the same as the named inventive entity (Martin, Cheyer), the Martin reference was prior art “by others.” The Board instituted review but decided that Google did not meet its burden to provide sufficient support in establishing the correct inventive entity of the claimed subject matter and concluded that Moran’s testimony was insufficiently corroborated. Google appealed.

First, the Federal Circuit discussed the differences between burdens of persuasion and production and responded to Google’s argument that the Board improperly imposed a burden of proof. The Court found no error in the Board requiring Google to establish that the Martin reference was prior art “by another” by showing that Moran made a significant-enough contribution to qualify as a joint inventor on the relevant portions of the Martin reference.

Second, the Federal Circuit explained that the issue in this case was not the lack of corroboration for Moran’s testimony but rather whether his testimony should be credited over Cheyer and Martin’s conflicting testimony. The Court explained that to address joint inventorship under Duncan Parking, Moran “must have made an inventive contribution to the portions of the reference relied on and relevant to establishing obviousness.” Moran’s testimony could support co-inventorship of portions in the Martin reference relied on by Google and relevant to the challenged claims.

The Federal Circuit explained that although most corroboration cases involve issued patents, corroboration is also required for testimony that an individual is an inventor of a potentially invalidating, non-patent prior art reference. The record contained “more [...]

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“Self-Similar” More Objective Than One Might Think

by | Jun 9, 2022 |

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision holding that the term “self-similar” was not indefinite and denying leave to file a sanctions motion. ClearOne, Inc. v. Shure Acquisition Holdings, Case No. 2021-1517 (Fed. Cir. June 1, 2022) (Moore, Newman, Hughes, JJ.)

Shure owns a patent relating to arrays of microphones and housings that can be fitted to a drop ceiling grid, providing “equivalent beamwidth performance at any given look angle.” During inter partes review, Shure moved to amend the claims to add a new claim reciting microphones “arranged in a self-similar configuration.” The Board granted that motion, holding that “self-similar” was not indefinite. The Board denied ClearOne’s motion for rehearing and separate motion for sanctions alleging a failure to disclose prior that Shure had asserted in a post-grant review initiated against one of ClearOne’s patents.

The Federal Circuit first reviewed the Board’s indefiniteness holding. Since “[d]efiniteness is a matter of claim construction,” the Court applied de novo review while reviewing underlying factual determinations for substantial evidence. The Court held that the intrinsic record alone supported the Board’s definiteness finding because it provided the scope of “self-similar” with reasonable certainty. The specification disclosed microphones arranged in a “self-similar or repeating configuration”; a “fractal, or self-similar, configuration surrounding a central microphone”; and arrangements in circular or other repeating shapes, such as “ovals, squares, rectangles, triangles, pentagons, or other polygons.” Thus, “self-similar,” when read in view of the specification, informed skilled artisans about the scope of the invention with reasonable certainty.

The Federal Circuit rejected ClearOne’s argument that “self-similar or fractal-like” and “self-similar or repeating” distinguished self-similar from other types of patterns, holding that in context, it was clear that the phrases equated, not juxtaposed, self-similar with those patterns. Reviewing the extrinsic evidence, the Court also rejected ClearOne’s arguments premised upon “a series of rhetorical questions to show [ClearOne’s] varying interpretations of the self-similar term.” The possibility of varying interpretations, the Court held, “does not render [a term] indefinite,” as otherwise nearly every term would be indefinite if susceptible to alternative plausible constructions.

The Federal Circuit also rejected ClearOne’s motion for leave to seek sanctions. The Board held that allowing the sanctions motion would lead to an inefficient proceeding because the sanctions motion raised the same arguments as the denied request for rehearing, a ruling that ClearOne conceded on appeal. The Board also found a lack of intent to breach a duty to disclose references. Without analysis and applying the abuse of discretion review standard, the Court found that these factual determinations sufficiently established that the Board did not abuse its discretion.



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Oh Snap: Sufficient Reasoning Must Support Declaratory Judgment Dismissal

by | Jun 2, 2022 |

The US Court of Appeals for the Federal Circuit vacated and remanded the dismissal of a declaratory judgment action because the district court failed to sufficiently support its decision. Mitek Systems, Inc. v. United Services Automobile Association, Case No. 21-1989 (Fed. Cir. May 20, 2022) (Dyk, Taranto, Cunningham, JJ.)

United Services Automobile Association (USAA) owns four patents directed to using a mobile device to capture and transmit an image of a bank check for deposit. Mitek created software for mobile check capture called MiSnap™, which it licenses in the form of a software development kit to financial institutions. In 2017, USAA sent letters to Mitek’s customers, some with claim charts and patent lists. The customers subsequently demanded indemnification by Mitek. In 2018, USAA sued Wells Fargo, a Mitek customer, in the Eastern District of Texas. As the case progressed, USAA served a subpoena on Mitek seeking documents, source code and testimony about MiSnap™. The case went to trial on two of the four patents, and Mitek and its products were frequently mentioned.

Shortly thereafter, Mitek filed a complaint in California seeking declaratory judgment of no infringement as to all four USAA patents. To support jurisdiction for its declaratory judgment claim, Mitek alleged that there was real and substantial apprehension of imminent litigation between Mitek and USAA for infringement of the patents-in-suit. In response, USAA argued that there was no case or controversy as required by Article III of the Constitution, and thus the case should be dismissed under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction. USAA also argued that the California court should exercise discretion to decline to hear claims for declaratory relief. USAA requested alternatively that the action be transferred to the Eastern District of Texas.

The California court transferred the case to the Eastern District of Texas. The Texas court then dismissed the action for lack of a case or controversy and stated that the court would exercise discretion to decline to entertain the declaratory judgment action. Mitek appealed.

Addressing subject matter jurisdiction, the Federal Circuit explained that the question was “whether the facts alleged, under all the circumstances, show that there is substantial controversy, between parties having adverse legal interest, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Along these lines, a plaintiff must plead facts sufficient to establish jurisdiction at the time of the complaint, and a case or controversy must remain present throughout the course of the suit. The Court found that the Texas court’s decision provided insufficient reasoning for dismissal because it failed to identify first whether to treat the Rule 12(b)(1) motion as a facial or factual challenge, as required under Fifth Circuit precedent. The Federal Circuit instructed the district court on remand to explore any post-filing events that may have impacted jurisdiction, as well as similarities between Mitek’s relationships with Wells Fargo and other customers.

The Federal Circuit found that the district court’s case or controversy analysis was similarly inadequate. The Court explained [...]

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Except Where Futile, Litigant Must Preserve Issue at Jury Instruction Phase to Preserve Claim Construction Dispute

by | Jun 2, 2022 |

The US Court of Appeals for the Federal Circuit affirmed the denial of a defendant’s post-judgment motion for a new trial based on a failure to preserve an O2 Micro challenge. The Court also reversed the denial of a prejudgment interest award to the plaintiff. Kaufman v. Microsoft, Case Nos. 21-1634; -1691 (Fed. Cir. May 20, 2022) (Dyk, Reyna, Taranto, JJ.)

Michael Philip Kaufman brought a patent infringement suit against Microsoft asserting his now-expired patent that covered a method for operating a computer to automatically generate an end-user interface that permit users to interact with data in relational databases (which store data in multiple tables that are related to each other in defined ways). Kaufman alleged infringement by Microsoft’s development tools for the .NET framework software platform, specifically Microsoft’s Dynamic Data product that allegedly automatically generated a web application for viewing and editing data. A jury found Microsoft liable for infringement and awarded $7 million in damages. Post-trial, Microsoft moved for judgment as a matter of law and a new trial, arguing that the district court failed to resolve claim construction disputes before trial and that Microsoft was therefore entitled to a new trial under 02 Micro. Kaufman moved for prejudgment interest. Both motions were denied, and both sides appealed.

Microsoft argued that the district court erred by not clarifying the claim term “automatically” and that a new trial was warranted under O2 Micro because the clarification reasonably could have led the jury to a different verdict. The Federal Circuit disagreed, explaining that Microsoft failed to preserve its O2 Micro challenge by not pursuing the matter at the jury instruction phase. The Court reasoned that the parties did not request a construction of “automatically” during the original Markman proceeding, nor did Microsoft propose a definition of “automatically” in its proposed jury instructions defining the term. Further, in its summary judgment briefing, Microsoft only said that there was a “fundamental legal dispute” as to the definition of “automatic.” Microsoft never clearly stated that a construction was needed on the term or offered the district court a formulation of such a claim construction. Microsoft also never defined a proposed construction for the term that would accommodate its action after trial. While the Court allowed that a claim construction issue does not always need to be re-raised in the specific setting of making proposals for, or airing objections to, jury instructions, that exception is limited to situations where the issue was sufficiently raised and settled earlier. The Court explained that application of that principle was settled in O2 Micro, “referring to circumstances in which the claim-construction position of the appellant was ‘made clear to the district court,’ a further objection would have been ‘not only futile but unnecessary,’ and the issue was ‘fully litigated and decided at the Markman stage of the litigation.’”

Turing to Kauffman’s appeal, the Federal Circuit reversed the denial of prejudgment interest. The district court had reasoned that the jury verdict “subsumed interest” and that Microsoft was prejudiced by [...]

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Arthrex, Still Without Director Review, Gets Constitutional Review from Patent Commissioner

by | Jun 2, 2022 |

A panel of the US Court of Appeals for the Federal Circuit considered whether the Patent Commissioner, on assuming the role of the US Patent & Trademark Office (PTO) Director, can constitutionally evaluate the rehearing of Patent Trial & Appeal Board (Board) inter partes review (IPR) decisions. The panel concluded that neither Appointments Clause jurisprudence nor the Federal Vacancies Reform Act (FVRA) impeded the Commissioner from exercising the PTO Director’s authority. Arthrex, Inc. v. Smith & Nephew, Inc. et al., Case No. 18-2140 (Fed. Cir., May 27, 2022) (Moore, C.J.; Reyna, Chen, JJ.)

Approximately one year ago, Arthrex succeeded in the Supreme Court of the United States on its argument that the Appointments Clause of the Constitution was violated unless a presidentially appointed and Senate-confirmed officer (such as the PTO Director) could review the Board’s final IPR decisions. (United States v. Arthrex, Inc.) The case returned to the PTO on remand. At the time, the position of PTO Director was vacant, and there was no acting director. Pursuant to the FVRA, the Commissioner of Patents (a position filled by the Secretary of Commerce) exercised the PTO Director’s authority to review Board decisions and ultimately rejected Arthrex’s challenge to the Board’s unpatentability determination. Arthrex appealed.

Arthrex contended that the Commissioner could not constitutionally exercise the PTO Director’s IPR review authority without running afoul of the Appointments Clause, that the FVRA barred the Commissioner’s exercise of authority and that the Commissioner violated separation of powers. Arthrex also challenged the ruling on the merits. None of these challenges were successful.

First, the Federal Circuit concluded that Arthrex reinforced long-settled Supreme Court precedent that an inferior officer could exercise a principal officer’s authority constitutionally on a temporary basis without violating the Appointments Clause. Here, the Court concluded that the Commissioner’s exercise of the PTO Director’s IPR review authority until a new director was installed presented no problem.

Second, the FVRA provides a statutory framework for the exercise of a principal officer’s duties under certain circumstances, which, if the law applied, would not have allowed the Commissioner to review IPR decisions. However, the Federal Circuit explained that the FVRA narrowly governs only those duties of an officer that are statutorily non-delegable (i.e., which US Congress has required to be exercised personally by the officer). According to the Court, such provisions did not apply here because nothing demonstrated that the PTO Director’s newly created authority to review IPR decisions was non-delegable.

Third, the Federal Circuit rejected Arthrex’s argument that the Commissioner’s service as the PTO Director violated the line of precedent that limits Congress’ ability to circumscribe the president’s removal authority for superior officers. Arthrex contended that the Commissioner, a non-superior officer, could be removed only for “misconduct or nonsatisfactory performance” and therefore could not fill the role of the PTO Director. The panel disagreed, explaining that the president could name an acting director “with the stroke of a pen,” and so the limits on removing the Commissioner from his role as Commissioner [...]

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