Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Arthrex, Inc. v. Smith & Nephew, Inc., No. 2018-2140 (May 27, 2022), affirming a decision of the Patent Trial and Appeal Board in an inter partes review of Arthrex’s U.S. Patent No. 9,179,907.
Smith & Nephew sought, and the Board instituted, an IPR of the ’907 patent. In a final written decision, the Board determined that certain claims of the ’907 patent were anticipated by Arthrex’s prior published application. On appeal, the Supreme Court held that the Board lacked constitutional authority to issue a final written decision because its Administrative Patent Judges were not nominated by the President and confirmed by the Senate. The Supreme Court held the appropriate remedy was to (1) exempt the Director from 35 U.S.C. § 6(c), which precludes anyone but the Board from granting rehearing, and (2) “remand to the Acting Director for him to decide whether to rehear” the case.
On remand, Arthrex requested rehearing by the Director. The offices of the Director and Deputy Director were vacant, however, so the responsibility of addressing Arthrex’s request fell to the Commissioner. The Commissioner denied rehearing and ordered that the Board’s decision “is the final decision of the agency.” Arthrex appealed, arguing it “never got the remedy the Supreme Court ordered” because “[n]o presidentially appointed, Senate-confirmed [PAS] principal officer decided Arthrex’s petition” for rehearing.
The Federal Circuit affirmed. The Court held the Commissioner’s exercise of the Director’s authority did not violate the Appointments Clause because an inferior officer may perform the functions and duties of an absent PAS officer on a temporary, acting basis. The Court further determined the Federal Vacancies Reform Act (FVRA) did not preclude the Commissioner from deciding Arthrex’s request because the FVRA applies only to non-delegable duties, and deciding rehearing requests is a delegable duty. Finally, the Court held the Commissioner did not violate the Constitution’s separation of powers because the President has unfettered power to strip the Commissioner of temporary authority.
On the merits, the Court held that substantial evidence supported the Board’s finding that Arthrex was not entitled to claim priority to its earlier published application because an intervening application lacked adequate written description of the claimed invention. The Court affirmed the Board’s anticipation finding and held there was “no merit” to Arthrex’s argument that the Board lacked authority to decide the priority claim.