Arthrex, Inc. v. Smith & Nephew, Inc. ( 2019 )

United States Court of Appeals
for the Federal Circuit
______________________
ARTHREX, INC.,
Appellant
v.
SMITH & NEPHEW, INC., ARTHROCARE CORP.,
Appellees
UNITED STATES,
Intervenor
______________________
2018-2140
______________________
Appeal from the United States Patent and Trademark
Office, Patent Trial and Appeal Board in No. IPR2017-
00275.
______________________
Decided: October 31, 2019
______________________
ANTHONY P. CHO, Carlson, Gaskey & Olds, PC, Bir-
mingham, MI, argued for appellant. Also represented by
DAVID LOUIS ATALLAH, DAVID J. GASKEY, JESSICAE
ZILBERBERG.
CHARLES T. STEENBURG, Wolf, Greenfield & Sacks, PC,
Boston, MA, argued for appellees. Also represented by
RICHARD GIUNTA, TURHAN SARWAR; MICHAEL N. RADER,
New York, NY.
2 ARTHREX, INC. v. SMITH & NEPHEW, INC.
MELISSA N. PATTERSON, Appellate Staff, Civil Division,
United States Department of Justice, Washington, DC, ar-
gued for intervenor. Also represented by COURTNEY DIXON,
SCOTT R. MCINTOSH, JOSEPH H. HUNT; SARAH E. CRAVEN,
THOMAS W. KRAUSE, JOSEPH MATAL, FARHEENA YASMEEN
RASHEED, Office of the Solicitor, United States Patent and
Trademark Office, Alexandria, VA.
______________________
Before MOORE, REYNA, and CHEN, Circuit Judges.
MOORE, Circuit Judge.
Arthrex, Inc. appeals from the final written decision of
the Patent Trial and Appeal Board holding claims 1, 4, 8,
10–12, 16, 18, and 25–28 of U.S. Patent No. 9,179,907 un-
patentable as anticipated. Arthrex appeals this decision
and contends that the appointment of the Board’s Admin-
istrative Patent Judges (“APJs”) by the Secretary of Com-
merce, as currently set forth in Title 35, violates the
Appointments Clause, U.S. Const., art. II, § 2, cl. 2. We
agree and conclude that the statute as currently con-
structed makes the APJs principal officers. To remedy the
violation, we follow the approach set forth by the Supreme
Court in Free Enterprise Fund v. Public Company Account-
ing Oversight Board, 561 U.S. 477 (2010) and followed by
the D.C. Circuit in Intercollegiate Broadcasting System,
Inc. v. Copyright Royalty Board, 684 F.3d 1332 (2012). As
the Supreme Court instructs, “‘[g]enerally speaking, when
confronting a constitutional flaw in a statute, we try to
limit the solution to the problem,’ severing any ‘problem-
atic portions while leaving the remainder intact.’” Free En-
terprise Fund, 561 U.S. at 508 (quoting Ayotte v. Planned
Parenthood of Northern New Eng., 546 U.S. 320, 328–29
(2006)). We conclude that severing the portion of the Pa-
tent Act restricting removal of the APJs is sufficient to ren-
der the APJs inferior officers and remedy the constitutional
appointment problem. As the final written decision on
ARTHREX, INC. v. SMITH & NEPHEW, INC. 3
appeal issued while there was an Appointments Clause vi-
olation, we vacate and remand. Following Lucia v. S.E.C.,
138 S. Ct. 2044 (2018), the appropriate course of action is
for this case to be remanded to a new panel of APJs to
which Arthrex is entitled.
BACKGROUND
Arthrex owns the ’907 patent, which is directed to a
knotless suture securing assembly. Smith & Nephew, Inc.
and Arthrocare Corp. (collectively “Petitioners” or “Appel-
lees”) filed a petition requesting inter partes review of
claims 1, 4, 8, 10–12, 16, 18, and 25–28 of the ’907 patent.
Inter partes review is a “‘hybrid proceeding’ with ‘adju-
dicatory characteristics’ similar to court proceedings.”
Saint Regis Mohawk Tribe v. Mylan Pharms., 896 F.3d
1322, 1326 (Fed. Cir. 2018). After a petitioner files a peti-
tion requesting that the Board consider the patentability of
issued patent claims, the Director of the United States Pa-
tent and Trademark Office (“USPTO”) determines whether
to institute an inter partes review proceeding. 35 U.S.C.
§ 314. 1 A three-judge panel of Board members then con-
ducts the instituted inter partes review. Id. § 316(c). 2 If an
1 The Director delegated that authority to the Board,
so now “[t]he Board institutes the trial on behalf of the Di-
rector.” 37 C.F.R. § 42.4(a).
2 The Board consists of “[t]he Director, the Deputy
Director, the Commissioner for Patents, the Commissioner
for Trademarks, and the administrative patent judges.” 35
U.S.C. § 6(a). The Director of the USPTO is “appointed by
the President, by and with the advice and consent of the
Senate.” Id. § 3(a). The Deputy Director and the Commis-
sioners are appointed by the Secretary of Commerce; the
former being nominated by the Director. Id. §§ 3(b)(1)–(2).
The Administrative Patent Judges “are appointed by the
4 ARTHREX, INC. v. SMITH & NEPHEW, INC.
instituted review is not dismissed before the conclusion of
the proceedings, the Board issues a final written decision
determining the patentability of challenged claims. Id.
§ 318(a). Once the time for appeal of the decision expires
or any appeal has been terminated, the Director issues and
publishes a certificate canceling any claim of the patent fi-
nally determined to be unpatentable. Id. § 318(b).
The inter partes review of the ’907 patent was heard by
a three-judge panel consisting of three APJs. The Board
instituted review and after briefing and trial, the Board is-
sued a final written decision finding the claims unpatenta-
ble as anticipated. J.A. 12, 14, 42.
ANALYSIS
A. Waiver
Appellees and the government argue that Arthrex for-
feited its Appointments Clause challenge by not raising the
issue before the Board. Although “[i]t is the general
rule . . . that a federal appellate court does not consider an
issue not passed upon below,” we have discretion to decide
when to deviate from that general rule. Singleton v. Wulff,
428 U.S. 106, 120–21 (1976). The Supreme Court has in-
cluded Appointments Clause objections to officers as a
challenge which could be considered on appeal even if not
raised below. Freytag v. Commissioner of Internal Reve-
nue, 501 U.S. 868, 878–79 (1991); Glidden Co. v. Zdanok,
370 U.S. 530, 535–36 (1962).
In Freytag, the Supreme Court exercised its discretion
to decide an Appointments Clause challenge despite peti-
tioners’ failure to raise a timely objection at trial. 501 U.S.
at 878–79. In fact, the Court reached the issue despite the
fact that it had not been raised until the appellate stage.
Secretary [of Commerce], in consultation with the Direc-
tor.” Id. § 6(a).
ARTHREX, INC. v. SMITH & NEPHEW, INC. 5
The Court explained that the structural and political roots
of the separation of powers concept are embedded in the
Appointments Clause. It concluded that the case was one
of the “rare cases in which we should exercise our discre-
tion to hear petitioners’ challenge to the constitutional au-
thority.” Id. at 879. We believe that this case, like Freytag,
is one of those exceptional cases that warrants considera-
tion despite Arthrex’s failure to raise its Appointments
Clause challenge before the Board. Like Freytag, this case
implicates the important structural interests and separa-
tion of powers concerns protected by the Appointments
Clause. Separation of powers is “a fundamental constitu-
tional safeguard” and an “exceptionally important” consid-
eration in the context of inter partes review proceedings.
Cascades Projection LLC v. Epson America, Inc., 864 F.3d
1309, 1322 (Fed. Cir. 2017) (Reyna, J., dissenting from de-
nial of petition for hearing en banc). The issue presented
today has a wide-ranging effect on property rights and the
nation’s economy. Timely resolution is critical to providing
certainty to rights holders and competitors alike who rely
upon the inter partes review scheme to resolve concerns
over patent rights.
Appellees and the government argue that like In re
DBC we should decline to address the Appointments
Clause challenge as waived. DBC recognized that the court
retains discretion to reach issues raised for the first time
on appeal, but declined to do so in that case. 545 F.3d 1373,
1380 (Fed. Cir. 2008). The court predicated its decision on
the fact that if the issue had been raised before the Board,
it could have corrected the Constitutional infirmity be-
cause there were Secretary appointed APJs and that Con-
gress had taken “remedial action” redelegating the power
of appointment to the Secretary of Commerce in an attempt
to “eliminat[e] the issue of unconstitutional appointments
going forward.” Id. at 1380. As the court noted, “the Sec-
retary, acting under the new statute, has reappointed the
administrative patent judges involved in DBC’s appeal.”
6 ARTHREX, INC. v. SMITH & NEPHEW, INC.
Id. at 1381. Not only had Congress taken remedial action
to address the constitutionality issue, the Secretary had al-
ready been implementing those remedies limiting the im-
pact. Id. No such remedial action has been taken in this
case and the Board could not have corrected the problem.
Because the Secretary continues to have the power to ap-
point APJs and those APJs continue to decide patentability
in inter partes review, we conclude that it is appropriate for
this court to exercise its discretion to decide the Appoint-
ments Clause challenge here. This is an issue of excep-
tional importance, and we conclude it is an appropriate use
of our discretion to decide the issue over a challenge of
waiver.
B. Appointments Clause
Arthrex argues that the APJs who presided over this
inter partes review were not constitutionally appointed. It
argues the APJs were principal officers who must be, but
were not, appointed by the President with the advice and
consent of the Senate.
The Appointments Clause of Article II provides:
[The President] . . . shall nominate, and by and
with the Advice and Consent of the Senate, shall
appoint Ambassadors, other public Ministers and
Consuls, Judges of the supreme Court, and all
other Officers of the United States, whose Appoint-
ments are not herein otherwise provided for, and
which shall be established by Law: but the Con-
gress may by Law vest the Appointment of such in-
ferior Officers, as they think proper, in the
President alone, in the Courts of Law, or in the
Heads of Departments.
U.S. Const. art. II, § 2, cl. 2. APJs are appointed by the
Secretary of Commerce, in consultation with the Director
of the USPTO. 35 U.S.C. § 6(a). The issue, therefore, is
whether APJs are “Officers of the United States” and if so,
ARTHREX, INC. v. SMITH & NEPHEW, INC. 7
whether they are inferior officers or principal officers; the
latter requiring appointment by the President as opposed
to the Secretary of Commerce. We hold that in light of the
rights and responsibilities in Title 35, APJs are principal
officers.
An “Officer of the United States,” as opposed to a mere
employee, is someone who “exercis[es] significant authority
pursuant to the laws of the United States.” Buckley v.
Valeo, 424 U.S. 1, 125–26 (1976). The Appointments
Clause ensures that the individuals in these positions of
significant authority are accountable to elected Executive
officials. See Lucia, 138 S. Ct. at 2056 (Thomas, J., concur-
ring) (citing The Federalist No. 76, p. 455 (C. Rossiter ed.
1961) (A. Hamilton)). It further ensures that the Presi-
dent, and those directly responsible to him, does not dele-
gate his ultimate responsibility and obligation to supervise
the actions of the Executive Branch. See Free Enterprise
Fund, 561 U.S. at 496. The Appointments Clause provides
structural protection against the President diffusing his ac-
countability and from Congress dispensing power too freely
to the same result. “The structural interests protected by
the Appointments Clause are not those of any one branch
of Government but of the entire Republic.” Freytag, 501
U.S. at 880. Because “people do not vote for the ‘Officers of
the United States,’” the public relies on the Appointments
Clause to connect their interests to the officers exercising
significant executive authority. Free Enterprise Fund, 561
U.S. at 497–98. Arthrex argues that the APJs exercise the
type of significant authority that renders them Officers of
the United States. Neither Appellees nor the government
dispute that APJs are officers as opposed to employees. We
agree that APJs are Officers of the United States. See John
F. Duffy, Are Administrative Patent Judges Constitu-
tional?, 2007 Patently–O Patent L.J. 21, 25 (2007) (con-
cluding that administrative patent judges are officers as
opposed to mere employees).
8 ARTHREX, INC. v. SMITH & NEPHEW, INC.
Under 35 U.S.C. § 6(a), APJs “hold a continuing office
established by law . . . to a position created by statute.” Lu-
cia, 138 S. Ct. at 2053. The APJs exercise significant dis-
cretion when carrying out their function of deciding inter
partes reviews. They oversee discovery, 37 C.F.R. § 42.51,
apply the Federal Rules of Evidence, 37 C.F.R. § 42.62(a),
and hear oral arguments, 37 C.F.R. § 42.70. And at the
close of review proceedings, the APJs issue final written
decisions containing fact findings and legal conclusions,
and ultimately deciding the patentability of the claims at
issue. See 35 U.S.C. § 318(a). The government itself has
recognized that there is a “functional resemblance between
inter partes review and litigation,” and that the Board uses
“trial-type procedures in inter partes review.” Br. of United
States at 26, 31, Oil States Energy Servs., LLC v. Greene’s
Energy Grp., LLC, 138 S. Ct. 1365 (2018). The Board’s pa-
tentability decisions are final, subject only to rehearing by
the Board or appeal to this court. See 35 U.S.C. §§ 6(c),
141(c), 319. Like the special trial judges (“STJs”) of the Tax
Court in Freytag, who “take testimony, conduct trials, rule
on the admissibility of evidence, and have the power to en-
force compliance with discovery orders,” 501 U.S. at 881–
82, and the SEC Administrative Law Judges in Lucia, who
have “equivalent duties and powers as STJs in conducting
adversarial inquiries,” 138 S. Ct. at 2053, the APJs exercise
significant authority rendering them Officers of the United
States.
The remaining question is whether they are principal
or inferior officers. The Supreme Court explained that
“[w]hether one is an ‘inferior’ officer depends on whether
he has a superior,” and “‘inferior officers’ are officers whose
work is directed and supervised at some level by others who
were appointed by Presidential nomination with the advice
and consent of the Senate.” Edmond v. United States, 520
U.S. 651, 662–63 (1997). There is no “exclusive criterion
for distinguishing between principal and inferior officers
for Appointments Clause purposes.” Id. at 661. However,
ARTHREX, INC. v. SMITH & NEPHEW, INC. 9
the Court in Edmond emphasized three factors:
(1) whether an appointed official has the power to review
and reverse the officers’ decision; (2) the level of supervi-
sion and oversight an appointed official has over the offic-
ers; and (3) the appointed official’s power to remove the
officers. See id. at 664–65; see also Intercollegiate, 684 F.3d
at 1338. These factors are strong indicators of the level of
control and supervision appointed officials have over the
officers and their decision-making on behalf of the Execu-
tive Branch. The extent of direction or control in that rela-
tionship is the central consideration, as opposed to just the
relative rank of the officers, because the ultimate concern
is “preserv[ing] political accountability.” Edmond, 520
U.S. at 663. The only two presidentially-appointed officers
that provide direction to the USPTO are the Secretary of
Commerce and the Director. Neither of those officers indi-
vidually nor combined exercises sufficient direction and su-
pervision over APJs to render them inferior officers.
1. Review Power
The Supreme Court deemed it “significant” whether an
appointed official has the power to review an officer’s deci-
sion such that the officer cannot independently “render a
final decision on behalf of the United States.” Edmond, 520
U.S. at 665. No presidentially-appointed officer has inde-
pendent statutory authority to review a final written deci-
sion by the APJs before the decision issues on behalf of the
United States. There are more than 200 APJs and a mini-
mum of three must decide each inter partes review. 35
U.S.C. § 6(c). The Director is the only member of the Board
who is nominated by the President and confirmed by the
Senate. The Director is however only one member of the
Board and every inter partes review must be decided by at
least three Board judges. At the conclusion of the agency
proceeding, the Board issues a final written decision. 35
U.S.C. § 318(a).
10 ARTHREX, INC. v. SMITH & NEPHEW, INC.
There is no provision or procedure providing the Direc-
tor the power to single-handedly review, nullify or reverse
a final written decision issued by a panel of APJs. If parties
are dissatisfied with the Board decision, they may request
rehearing by the Board or may appeal to this court. 35
U.S.C. §§ 6(c), 141(c), 319. “Only the Patent Trial and Ap-
peal Board may grant rehearings,” upon a party’s request.
Id. § 6(c). Again, the decision to rehear would be made by
a panel of at least three members of the Board. And the
rehearing itself would be conducted by a panel of at least
three members of the Board.
The government argues that the Director has multiple
tools that give him the authority to review decisions issued
by APJs. The government argues that the Director pos-
sesses the power to intervene and become a party in an ap-
peal following a final written decision with which he
disagrees. See 35 U.S.C. § 143. But that authority offers
no actual reviewability of a decision issued by a panel of
APJs. At most, the Director can intervene in a party’s ap-
peal and ask this court to vacate the decision, but he has
no authority to vacate the decision himself. And the stat-
ute only gives the parties to the inter partes review the
power to appeal the decision, not the Director. See id.
§ 319. If no party appeals the APJs’ decision, the Director’s
hands are tied. “[T]he Director shall issue and publish a
certificate canceling any claim of the patent finally deter-
mined to be unpatentable. . . .” Id. § 318(b) (emphasis
added). The Director cannot, on his own, sua sponte review
or vacate a final written decision.
The government argues that the Director has addi-
tional review authority through his institution of the re-
cently created Precedential Opinion Panel. That standing
panel, composed of at least three Board members, can re-
hear and reverse any Board decision and can issue deci-
sions that are binding on all future panels of the Board.
See Patent Trial and Appeal Board Standard Operating
Procedure 2 at 8. The Director’s authority is limited to
ARTHREX, INC. v. SMITH & NEPHEW, INC. 11
“conven[ing] a Precedential Opinion Panel to review a de-
cision in a case and determine whether to order sua sponte
rehearing” and to act as one of the three default members
of the panel. Id. at 4–5. When the Director sits on a panel
as a member of the Board, he is serving as a member of the
Board, not supervising the Board.
Additionally, the government points out that the Direc-
tor “may designate any decision by any panel, including the
Precedential Opinion Panel, as precedential . . . .” Id. at 8.
These powers do not, however, provide the type of review-
ability over APJs’ decisions comparable to the review
power principal officers in other cases have had. See, e.g.,
Edmond, 520 U.S. at 664–65; Masias v. Secretary of Health
and Human Servs., 634 F.3d 1283, 1294–95 (Fed. Cir.
2011) (special masters under the Vaccine Act were inferior
officers in part because their decisions were “subject to re-
view by the Court of Federal Claims” (an Article I court)).
To be clear, the Director does not have the sole authority to
review or vacate any decision by a panel of APJs. He can
only convene a panel of Board members to decide whether
to rehear a case for the purpose of deciding whether it
should be precedential. No other Board member is ap-
pointed by the President. The government certainly does
not suggest that the Director controls or influences the
votes of the other two members of his special rehearing
panel. Thus, even if the Director placed himself on the
panel to decide whether to rehear the case, the decision to
rehear a case and the decision on rehearing would still be
decided by a panel, two-thirds of which is not appointed by
the President. There is no guarantee that the Director
would even be in the majority of that decision. Thus, there
is no review by other Executive Branch officers who meet
the accountability requirements of the Appointments
Clause. Moreover, the Standard Operating Procedure
makes clear that the Director would convene such a panel
only in cases of “exceptional importance”: to potentially set
precedent for the Board. In other words, this form of
12 ARTHREX, INC. v. SMITH & NEPHEW, INC.
review—constrained to a limited purpose—is still con-
ducted by a panel of APJs who do not meet the require-
ments of the Appointments Clause and represents the
exception.
Finally, the government alleges that the Director has
review authority over Board decisions because he can de-
cide not to institute an inter partes review in the first in-
stance. We do not agree that the Director’s power to
institute (ex ante) is any form of review (ex post). For the
past several years, the Board has issued over 500 inter
partes review final written decisions each year. The rele-
vant question is to what extent those decisions are subject
to the Director’s review.
The situation here is critically different from the one in
Edmond. In Edmond, the Supreme Court considered
whether military judges on the Coast Guard Court of Crim-
inal Appeals were principal as opposed to inferior officers.
520 U.S. at 655. There, the Court of Appeals for the Armed
Forces, an Executive Branch entity, had the power to re-
verse decisions by the military judges and “review[ed]
every decision of the Court of Criminal Appeals in which:
(a) the sentence extends to death; (b) the Judge Advocate
General orders such review; or (c) the court itself grants
review upon petition of the accused.” Id. at 664–65. And
while the Judge Advocate General (a properly appointed
Executive officer) could not reverse decisions of the mili-
tary judges, he could order any of those decisions be re-
viewed by the Court of Appeals for the Armed Forces (a
presidentially-appointed Executive Branch, Article I
court). Id. The Court deemed it “significant [] that the
judges of the Court of Criminal Appeals ha[d] no power to
render a final decision on behalf of the United States unless
permitted to do so by other Executive officers.” Id. at 665
(emphasis added). That is simply not the case here. Panels
of APJs issue final decisions on behalf of the USPTO, at
times revoking patent rights, without any principal officers
having the right to review those decisions. Thus, APJs
ARTHREX, INC. v. SMITH & NEPHEW, INC. 13
have substantial power to issue final decisions on behalf of
the United States without any review by a presidentially-
appointed officer. We find that there is insufficient review
within the agency over APJ panel decisions. This supports
a conclusion that APJs are principal officers.
2. Supervision Power
The extent to which an officer’s work is supervised or
overseen by another Executive officer also factors into de-
termining inferior versus principal officer status. See Ed-
mond, 520 U.S. at 664. The Director exercises a broad
policy-direction and supervisory authority over the APJs.
The Director is “responsible for providing policy direction
and management supervision” for the USPTO. 35 U.S.C.
§ 3(a)(2)(A). Arthrex argues the Director’s oversight au-
thority amounts to little more than high-level, arms-length
control. We disagree.
The Director has the authority to promulgate regula-
tions governing the conduct of inter partes review. Id.
§ 316. He also has the power to issue policy directives and
management supervision of the Office. Id. § 3(a). He may
provide instructions that include exemplary applications of
patent laws to fact patterns, which the Board can refer to
when presented with factually similar cases. Moreover, no
decision of the Board can be designated or de-designated as
precedential without the Director’s approval. Patent Trial
and Appeal Board Standard Operating Procedure 2 at 1.
And all precedential decisions of the Board are binding on
future panels. Id. at 11. In addition to these policy controls
that guide APJ-panel decision making, the Director has ad-
ministrative authority that can affect the procedure of in-
dividual cases. For example, the Director has the
independent authority to decide whether to institute an in-
ter partes review based on a filed petition and any corre-
sponding preliminary response. 35 U.S.C. § 314(a). And
the Director is authorized to designate the panel of judges
who decides each inter partes review. See 35 U.S.C. § 6(c).
14 ARTHREX, INC. v. SMITH & NEPHEW, INC.
Not only does the Director exercise administrative super-
visory authority over the APJs based on his issuance of pro-
cedures, he also has authority over the APJs’ pay. 35
U.S.C. § 3(b)(6).
The Director’s administrative oversight authority is
similar to the supervisory authority that was present in
both Edmond and Intercollegiate. In Edmond, the Judge
Advocate General “exercise[d] administrative oversight”
and had the responsibility of “prescrib[ing] uniform rules
of procedure” for the military judges. 520 U.S. at 664.
Likewise, in Intercollegiate, the Librarian of Congress was
responsible for approving the Copyright Royalty Judges’
(“CRJs”) “procedural regulations . . . and [] overseeing var-
ious logistical aspects of their duties.” 684 F.3d at 1338.
And the Register of Copyrights, who was subject to the con-
trol of the Librarian, had “the authority to interpret the
copyright laws and provide written opinions to the CRJs.”
Id. The Director possesses similar authority to promulgate
regulations governing inter partes review procedure and to
issue policy interpretations which the APJs must follow.
Accordingly, we conclude that the Director’s supervisory
powers weigh in favor of a conclusion that APJs are inferior
officers.
3. Removal Power
The Supreme Court viewed removal power over an of-
ficer as “a powerful tool for control” when it was unlimited.
Edmond, 520 U.S. at 664. Under the current Title 35
framework, both the Secretary of Commerce and the Direc-
tor lack unfettered removal authority.
Appellees and the government argue that the Director
can remove an APJ based on the authority to designate
which members of the Board will sit on any given panel.
See 35 U.S.C. § 6(c). The government argues that the Di-
rector could exclude any APJ from a case who he expects
would approach the case in a way inconsistent with his
views. The government suggests that the Director could
ARTHREX, INC. v. SMITH & NEPHEW, INC. 15
potentially remove all judicial function of an APJ by refus-
ing to assign the APJ to any panel. The government also
claims that the Director could remove an APJ from an inter
partes review mid-case if he does not want that particular
APJ to continue on the case. Br. of United States at 3, 41.
Section 6(c) gives the Director the power to designate the
panel who hears an inter partes review, but we note that
the statute does not expressly authorize de-designation.
The government argues that because Title 35 authorizes
the Director to designate members of a panel in an inter
partes review proceeding, he also has the authority to
change the panel composition at any time because “removal
authority follows appointment authority.” Oral Arg.
35:52–54; see also Br. of United States at 3, 41. It is correct
that when a statute is silent on removal, the power of re-
moval is presumptively incident to the power of appoint-
ment. See In re Hennen, 38 U.S. 230 (1839); Myers v.
United States, 272 U.S. 52 (1926). The government argues
by analogy to these cases that the power to de-designate
follows the power to designate. We do not today decide
whether the Director in fact has such authority. 3
3 It is not clear the Director has de-designation au-
thority. To be sure, someone must have the power to re-
move an officer from government service, so when a statute
is silent about removal, we presume that the person who
appoints the officer to office has the power to remove
him. But it is not clear that Congress intended panels once
designated to be able to be de-designated. Such a conclu-
sion could run afoul of Congress’ goal of speedy resolution
through “quick and cost effective alternatives to litiga-
tion.” H.R. Rep. No. 112–98, pt. 1, at 48 (2011). Addition-
ally, it is not clear whether this type of mid-case de-
designation of an APJ could create a Due Process prob-
lem. However, we need not decide whether the Director
16 ARTHREX, INC. v. SMITH & NEPHEW, INC.
The government analogizes the Director’s designation
power to the Judge Advocate General’s power in Edmond,
which allowed him to remove a military judge “from his ju-
dicial assignment without cause.” 520 U.S. at 664. The
Director’s authority to assign certain APJs to certain pan-
els is not the same as the authority to remove an APJ from
judicial service without cause. Removing an APJ from an
inter partes review is a form of control, but it is not nearly
as powerful as the power to remove from office without
cause. “[T]he power to remove officers at will and without
cause is a powerful tool for control of an inferior.” Free En-
terprise Fund., 561 U.S. at 501.
The only actual removal authority the Director or Sec-
retary have over APJs is subject to limitations by Title 5.
Title 35 does not provide statutory authority for removal of
the APJs. Instead, 35 U.S.C. § 3(c) provides, “[o]fficers and
employees of the Office shall be subject to the provisions of
title 5, relating to Federal employees.” No one disputes
that Title 5 creates limitations on the Secretary’s or Direc-
tor’s authority to remove an APJ from his or her employ-
ment at the USPTO. Specifically, APJs may be removed
“only for such cause as will promote the efficiency of the
service.” 5 U.S.C. § 7513(a). 4 This limitation requires “a
has such authority or whether such authority would run
afoul of the Constitution because even if we accept, for pur-
poses of this appeal, that he does possess that authority, it
would not change the outcome.
4 The parties dispute which provision of Title 5 gov-
erns removal of APJs. Arthrex argues that 5 U.S.C. §
7521(a) limits removal of the APJs to removal “only for
good cause established and determined by the Merit Sys-
tems Protection Board on the record after opportunity for
hearing before the Board.” Whereas the government ar-
gues that § 7521 does not apply to APJs because they are
ARTHREX, INC. v. SMITH & NEPHEW, INC. 17
nexus between the misconduct and the work of the agency,
i.e., that the employee’s misconduct is likely to have an ad-
verse impact on the agency’s performance of its functions.”
Brown v. Department of the Navy, 229 F.3d 1356, 1358
(Fed. Cir. 2000). 5 Moreover, § 7513 provides procedural
limitations on the Director’s removal authority over APJs.
See, e.g., 5 U.S.C. § 7513(b) (entitling the APJ to 30 days
advanced written notice stating specific reasons for the
proposed removal, an opportunity to answer with docu-
mentary evidence, entitlement to representation by an at-
torney, and a written decision with specific reasons); Id.
§ 7513(d) (right of appeal to the Merit Systems and Protec-
tions Board).
The government argues that the Secretary’s authority
to remove APJs from employment for “such cause as will
promote efficiency of the service”—the same standard ap-
plied to any other federal employee—underscores that
APJs are subject to significant supervision and control. It
argues that Title 5’s removal restrictions are less cumber-
some than the restrictions on the Court of Federal Claims’
removal authority over the special masters who were
appointed not under 5 U.S.C. § 3105, but under 35 U.S.C.
§ 6. The government argues therefore that removal of
APJs is governed by the section of Title 5 related to federal
employees generally, which limits removal “only for such
cause as will promote the efficiency of the service.” 5 U.S.C.
§ 7513(a). We agree with the government that the applica-
ble provision to removal of APJs in Title 5 is § 7513. Sec-
tion 7513 contains a lower threshold to support removal
than does § 7521.
5 Under § 7513(b), the Director does not have unfet-
tered authority to remove an APJ from service. We do not,
however, express an opinion as to circumstances which
could justify a removal for such cause as would promote the
efficiency of service.
18 ARTHREX, INC. v. SMITH & NEPHEW, INC.
deemed inferior officers in Masias. In Masias, we held that
special masters authorized by the Vaccine Act were inferior
officers. 634 F.3d at 1295. The special masters were ap-
pointed and supervised by judges of the Court of Federal
Claims, who are presidentially-appointed. Id. at 1294. The
special masters could be removed only “for incompetency,
misconduct, or neglect of duty or for physical or mental dis-
ability or for other good cause shown.” Id. (quoting 42
U.S.C. § 300aa–12(c)(2)). Though there were significant
limits on removal in Masias, our court recognized that “de-
cisions issued by the special masters are subject to review
by the Court of Federal Claims.” Id. at 1294. We held that
the review power over the special masters’ decisions paral-
leled the review by the Court of Appeals for the Armed
forces in Edmond, and although the review was not de
novo, it favored a finding that the special masters were not
principal officers. Id. at 1295. That significant power of
review does not exist with respect to final written decisions
issued by the APJs.
The APJs are in many ways similar to the CRJs in In-
tercollegiate for purposes of determining whether an officer
is principal or inferior. The CRJs issued ratemaking deci-
sions that set the terms of exchange for musical works. In-
tercollegiate, 684 F.3d at 1338. The APJs issue written
decisions determining patentability of patent claims. Both
are intellectual property decisions upon which “billions of
dollars and the fates of entire industries can ride.” Id. In
Intercollegiate, the Librarian approved procedural regula-
tions, issued ethical rules, and oversaw logistical aspects of
the CRJs’ duties. Id. Additionally, the Register of Copy-
rights provided written opinions interpreting copyright law
and could correct any legal errors in the CRJs’ decisions.
Id. at 1338–39. Similarly, the Director has the authority
to promulgate regulations governing inter partes review
and provides written policy directives. He does not, how-
ever, have the ability to modify a decision issued by APJs,
even to correct legal misstatements. The Director’s
ARTHREX, INC. v. SMITH & NEPHEW, INC. 19
inability to review or correct issued decisions by the APJs
likens those decisions to “the CRJs’ rate determinations
[which] are not reversible or correctable by any other of-
ficer or entity within the executive branch.” Id. at 1340.
Moreover, the limitations on removal in Title 5 are similar
to the limitations on removal in Intercollegiate. There, the
Librarian could only remove CRJs “for misconduct or ne-
glect of duty.” Id. at 1340. Here, APJs can only be removed
from service for “such cause as will promote the efficiency
of the service,” meaning for “misconduct [that] is likely to
have an adverse impact on the agency’s performance of its
functions.” 5 U.S.C. § 7513; Brown, 229 F.3d at 1358. The
D.C. Circuit in Intercollegiate determined that given the
CRJs’ nonremovability and the finality of their decisions,
“the Librarian’s and Register’s supervision functions still
fall short of the kind that would render [them] inferior of-
ficers.” 684 F.3d at 1339. Likewise, APJs issue decisions
that are final on behalf of the Executive Branch and are not
removable without cause. We conclude that the supervi-
sion and control over APJs by appointed Executive Branch
officials in significant ways mirrors that of the CRJs in In-
tercollegiate.
4. Other Limitations
We do not mean to suggest that the three factors dis-
cussed are the only factors to be considered. However,
other factors which have favored the conclusion that an of-
ficer is an inferior officer are completely absent here. For
example, in Morrison v. Olson, 487 U.S. 654 (1988), the
Court concluded that the Independent Counsel was an in-
ferior officer because he was subject to removal by the At-
torney General, performed limited duties, had limited
jurisdiction, and had a limited tenure. Edmond, 520 U.S.
at 661. Unlike the Independent Counsel, the APJs do not
have limited tenure, limited duties, or limited jurisdiction.
Interestingly, prior to the 1975 amendment to Title 35,
“Examiners-in-Chief”—the former title of the current
20 ARTHREX, INC. v. SMITH & NEPHEW, INC.
APJs—were subject to nomination by the President and
confirmation by the Senate. 35 U.S.C. § 3 (1952). In 1975,
Congress eliminated their Presidential appointment and
instead gave the Secretary of Commerce, upon nomination
by the Commissioner, the power to appoint. 35 U.S.C. § 3
(1975). There can be no reasonable dispute that APJs who
decide reexaminations, inter partes reviews, and post-grant
reviews wield significantly more authority than their Ex-
aminer-in-Chief predecessors. But the protections ensur-
ing accountability to the President for these decisions on
behalf of the Executive Branch clearly lessened in 1975.
Having considered the issues presented, we conclude
that APJs are principal officers. The lack of any presiden-
tially-appointed officer who can review, vacate, or correct
decisions by the APJs combined with the limited removal
power lead us to conclude, like our sister circuit in Intercol-
legiate, which dealt with the similarly situated CRJs, that
these are principal officers. While the Director does exer-
cise oversight authority that guides the APJs procedurally
and substantively, and even if he has the authority to de-
designate an APJ from inter partes reviews, we conclude
that the control and supervision of the APJs is not suffi-
cient to render them inferior officers. The lack of control
over APJ decisions does not allow the President to ensure
the laws are faithfully executed because “he cannot oversee
the faithfulness of the officers who execute them.” Free En-
terprise Fund, 561 U.S. at 484. These factors, considered
together, confirm that APJs are principal officers under Ti-
tle 35 as currently constituted. As such, they must be ap-
pointed by the President and confirmed by the Senate;
because they are not, the current structure of the Board
violates the Appointments Clause.
C. Severability
Having determined that the current structure of the
Board under Title 35 as constituted is unconstitutional, we
must consider whether there is a remedial approach we can
ARTHREX, INC. v. SMITH & NEPHEW, INC. 21
take to address the constitutionality issue. “In exercising
our power to review the constitutionality of a statute, we
are compelled to act cautiously and refrain from invalidat-
ing more of the statute than is necessary.” Helman v. De-
partment of Veterans Affairs, 856 F.3d 920, 930 (Fed. Cir.
2017) (citing Regan v. Time, Inc., 468 U.S. 641, 652 (1984)).
Where appropriate, we “try to limit the solution to the prob-
lem, [by] severing any problematic portions while leaving
the remainder intact.” Free Enterprise Fund, 561 U.S. at
508. Severing the statute is appropriate if the remainder
of the statute is “(1) constitutionally valid, (2) capable of
functioning independently, and (3) consistent with Con-
gress’ basic objectives in enacting the statute.” United
States v. Booker, 543 U.S. 220, 258–59 (2005).
The government suggests possible remedies to achieve
this goal. As to 35 U.S.C. § 3(c)’s requirement that “Offic-
ers and employees of the Office shall be subject to the pro-
visions of title 5,” the government argues that we could
construe Title 5’s “efficiency of the service” standard to per-
mit removal in whatever circumstances the Constitution
requires. Construing the words “only for such cause as will
promote the efficiency of the service” as permitting at-will,
without-cause removal is not a plausible construction.
Commodity Futures Trading Commission v. Schor, 478
U.S. 833, 841 (1986) (“[a]lthough this Court will often
strain to construe legislation so as to save it against consti-
tutional attack, it must not and will not carry this to the
point of perverting the purpose of a statute . . . or judicially
rewriting it.” (citations omitted)); Jennings v. Rodriguez,
138 S. Ct. 830, 842 (2018) (“The canon of constitutional
avoidance ‘comes into play only when, after the application
of ordinary textual analysis, the statute is found to be sus-
ceptible of more than one construction. In the absence of
more than one plausible construction, the canon simply has
no application.” (internal citations omitted)). Moreover,
that statutory section pertains to nearly all federal employ-
ees. We will not construe 5 U.S.C. § 7513 one way for APJs
22 ARTHREX, INC. v. SMITH & NEPHEW, INC.
and a different way for everyone else to which it applies.
The government next argues that we could construe the
statute as providing the Director the authority to unilater-
ally revise a Board decision before it becomes final. We see
no language in the statute that could plausibly be so con-
strued. The statute is clear that Board decisions must be
rendered by at least three Board judges and that only the
Board can grant rehearing. 35 U.S.C. § 6(c) (“Each appeal,
derivation proceeding, post-grant review, and inter partes
review shall be heard by at least 3 members of the Patent
Trial and Appeal Board, who shall be designated by the Di-
rector. Only the Patent Trial and Appeal Board may grant
rehearings.”). Indeed, the government recommends in the
alternative that we simply sever the “three-member
clause.”
Allowing the Director to appoint a single Board mem-
ber to hear or rehear any inter partes review (appeal, deri-
vation proceeding, and post grant review), especially when
that Board member could be the Director himself, would
cure the Constitutional infirmity. While the Board mem-
bers would still not be subject to at-will removal, their de-
cision would not be the “final decision on behalf of the
United States unless permitted to do so by other Executive
officers.” Edmond, 520 U.S. at 665. This combined with
the other forms of supervision and controlled exercised over
APJs would be sufficient to render them inferior officers.
We conclude, however, that severing three judge review
from the statute would be a significant diminution in the
procedural protections afforded to patent owners and we do
not believe that Congress would have created such a sys-
tem. Eliminating three-APJ panels from all Board pro-
ceedings would be a radical statutory change to the process
long required by Congress in all types of Board proceed-
ings. The current three-judge review system provides a
broader collection of technical expertise and experience on
each panel addressing inter partes reviews, which impli-
cate wide cross-sections of technologies. The breadth of
ARTHREX, INC. v. SMITH & NEPHEW, INC. 23
backgrounds and the implicit checks and balances within
each three-judge panel contribute to the public confidence
by providing more consistent and higher quality final writ-
ten decisions. 6 We are uncomfortable with such a sweeping
change to the statute at our hands and uncertain that Con-
gress would have been willing to adopt such a change. And,
importantly, we see a far less disruptive alternative to the
scheme Congress laid out.
The government also suggested partially severing 35
U.S.C. § 3(c), the provision that applies Title 5 to officers
and employees of the USPTO. Br. of United States at 35
(“Alternatively, this Court could hold that 35 U.S.C. § 3(c)’s
provision that USPTO officers and employees are subject
to Title 5 cannot constitutionally be applied to Board mem-
bers with respect to that Title’s removal restrictions, and
thus must be severed to that extent.”). We think this the
6 In 2015, the USPTO requested comments on a pro-
posed pilot program under which institution decisions for
inter partes reviews would be decided by a single APJ as
opposed to three-APJ panels. Multiple commenters ex-
pressed concern that such a change would reduce con-
sistency, predictability, and accuracy in the institution
decisions. See, e.g., Comments of the American Bar Asso-
ciation Section of Intellectual Property at 3 (Nov. 12, 2015)
(“a single judge panel . . . will increase the likelihood of in-
correct decisions); Comments of Various Automotive Com-
panies at 3 (Nov. 17, 2015) (“Using just one APJ to decide
a particular matter would greatly dilute . . . deliberative-
ness.”); Comments of Askeladden LLC at 2 (Nov. 18, 2015)
(“the inherent safeguard of a three-judge arbiter gives the
public confidence”); Comments of Public Knowledge and
Electronic Frontier Foundation at 2 (Nov. 18, 2015) (“by
changing the institution decision body from a three-judge
panel to a single judge, the USPTO risks a decline in qual-
ity of institution decisions”).
24 ARTHREX, INC. v. SMITH & NEPHEW, INC.
narrowest viable approach to remedying the violation of
the Appointments Clause. We follow the Supreme Court’s
approach in Free Enterprise Fund, similarly followed by the
D.C. Circuit in Intercollegiate. See 561 U.S. 477; 684 F.3d
1332. In Free Enterprise Fund, the Supreme Court held
that a “for-cause” restriction on the removal power of the
SEC’s Commissioners violated the Constitution. Id. at 492.
The Court invalidated and severed the problematic “for-
cause” restriction from the statue rather than holding the
larger structure of the Public Company Accounting Over-
sight Board unconstitutional. Id. at 508.
The D.C. Circuit followed this approach in Intercolle-
giate, by invalidating and severing the restriction on the
Librarian’s removal power over CRJs. 684 F.3d at 1340.
The court held unconstitutional all language in the rele-
vant removal statute other than, “[t]he Librarian of Con-
gress may sanction or remove a Copyright Royalty Judge.”
Id. The Court determined that giving the Librarian of Con-
gress unfettered removal power was sufficient such “that
the CRJs’ decisions will be constrained to a significant de-
gree by a principal officer (the Librarian).” Id. at 1341.
And the constraint of that power was enough to render the
CRJs inferior officers. Id.
Severing Title 5’s removal restrictions might arguably
be achieved either by severing the words “Officers and” or
by concluding that those removal restrictions are unconsti-
tutional as applied to APJs. The government recommends
a partial invalidation, namely that we sever the application
of Title 5’s removal restrictions to APJs. See United States
v. Nat’l Treasury Emps. Union, 513 U.S. 454 (1995); United
States v. Grace, 461 U.S. 171 (1983). All parties and the
government agree that this would be an appropriate cure
for an Appointments Clause infirmity. This as-applied sev-
erance is the narrowest possible modification to the scheme
Congress created and cures the constitutional violation in
the same manner as Free Enterprise Fund and
ARTHREX, INC. v. SMITH & NEPHEW, INC. 25
Intercollegiate. Title 5’s removal protections cannot be
constitutionally applied to APJs, so we sever that applica-
tion of the statute.
Severability turns on whether “the statute will func-
tion in a manner consistent with the intent of Congress.”
Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685 (1987) (em-
phasis omitted). In Free Enterprise Fund, the Court sev-
ered the removal provision because it concluded that
“nothing in the statute’s text or historical context” sug-
gested that Congress “would have preferred no Board at all
to a Board whose members are removable at will.” 561 U.S.
at 509. Indeed, we answer affirmatively the question:
“Would the legislature have preferred what is left of its
statute to no statute at all?” Ayotte, 546 U.S. at 330. It is
our view that Congress intended for the inter partes review
system to function to review issued patents and that it
would have preferred a Board whose members are remov-
able at will rather than no Board at all.
The narrowest remedy here is similar to the one
adopted in Intercollegiate, the facts of which parallel this
case. Thus, we conclude that the appropriate remedy to the
constitutional violation is partial invalidation of the statu-
tory limitations on the removal of APJs. Title 35 U.S.C.
§ 3(c) declares the applicability of Title 5 rights to “Officers
and employees of the Office.” See also Supp. Br. of United
States at 9–10 (noting that Title 5 definitions might cover
APJs). Title 5 U.S.C. § 7513(a) permits agency action
against those officers and employees “only for such cause
as will promote the efficiency of the service.” Accordingly,
we hold unconstitutional the statutory removal provisions
as applied to APJs, and sever that application. Like the
D.C. Circuit in Intercollegiate, we believe severing the re-
striction on removal of APJs renders them inferior rather
than principal officers. Although the Director still does not
have independent authority to review decisions rendered
by APJs, his provision of policy and regulation to guide the
outcomes of those decisions, coupled with the power of
26 ARTHREX, INC. v. SMITH & NEPHEW, INC.
removal by the Secretary without cause provides signifi-
cant constraint on issued decisions.
The decision to partially invalidate statutory removal
protections limits the effect of the severance to APJs and to
their removal protections. We are mindful that the alter-
native of severing the “Officers and” provision from § 3(c)
may not have been limited to APJs (there might have been
other officers whose Title 5 rights would have been af-
fected) and it might have removed all Title 5 protections,
not just removal protections. Severing the application to
APJs of removal protections is the narrowest remedy. The
choice to sever and excise a portion of a statute as uncon-
stitutional in order to preserve the statute as a whole is
limited, and does not permit judicial rewriting of statutes.
Booker, 543 U.S. at 258 (to address the constitutional infir-
mity, we consider “which portions of the . . . statute we
must sever and excise as inconsistent with the Court’s con-
stitutional requirement”); Ayotte, 546 U.S. at 329 (“[W]e re-
strain ourselves from ‘rewrit[ing] . . . law to conform it to
constitutional requirements’ even as we strive to salvage
it”). “‘Unless it is evident that the Legislature would not
have enacted those provisions which are within its power,
independently of that which is not, the invalid part may be
dropped if what is left is fully operative as a law.’” Buckley,
424 U.S. at 108–09 (quoting Champlin Refining Co. v. Cor-
poration Comm’n of Oklahoma, 286 U.S. 210, 234
(1932)). We are not, under the guise of severability, per-
mitted to add exceptions for APJs to the language § 3(c)
officer protections. Railroad Retirement Bd. v. Alton R.
Co., 295 U.S. 330, 362 (1935) (when severing a statute, we
must avoid “rewrit[ing] a statute”). We hold that the ap-
plication of Title 5’s removal protections to APJs is uncon-
stitutional and must be severed. And we are convinced
that Congress would preserve the statutory scheme it cre-
ated for reviewing patent grants and that it intended for
APJs to be inferior officers. Our severance of the limits on
removal of APJs achieves this. We believe that this, the
ARTHREX, INC. v. SMITH & NEPHEW, INC. 27
narrowest revision to the scheme intended by Congress for
reconsideration of patent rights, is the proper course of ac-
tion and the action Congress would have undertaken.
Because the Board’s decision in this case was made by
a panel of APJs that were not constitutionally appointed at
the time the decision was rendered, we vacate and remand
the Board’s decision without reaching the merits. The gov-
ernment argues that while this court has the discretion to
vacate and remand in the event there is an Appointments
Clause challenge, we should decline to do so because the
challenge was not first brought before the Board. The gov-
ernment argues that Arthrex’s challenge was not timely
and as such we should decline to award the relief Lucia
deems appropriate. Arthrex argues it would have been fu-
tile to raise the Appointments Clause challenge before the
Board because the Board lacked the authority to grant it
relief. Arthrex argues it raised the challenge at the first
stage where it could have obtained relief and therefore its
argument is timely. We agree with Arthrex that the Board
was not capable of providing any meaningful relief to this
type of Constitutional challenge and it would therefore
have been futile for Arthrex to have made the challenge
there. “An administrative agency may not invalidate the
statute from which it derives its existence and that it is
charged with implementing.” Jones Bros., Inc. v. Sec’y of
Labor, 898 F.3d 669, 673 (6th Cir. 2018) (citing Mathews v.
Diaz, 426 U.S. 67, 76 (1976); Weinberger v. Salfi, 422 U.S.
749, 765 (1975); Johnson v. Robison, 415 U.S. 361, 368
(1974); PUC v. United States, 355 U.S. 534, 539-40 (1958)).
The PTAB itself has declined to examine this issue in other
cases. See Samsung Elecs. Am., Inc. v. Uniloc, 2017 LLC,
No. IPR2018-01653, 2019 WL 343814, at *2 (PTAB Jan. 25,
2019) (declining to consider constitutional challenge to ap-
pointments because “administrative agencies do not have
jurisdiction to decide the constitutionality of congressional
enactments” and “[t]his is especially true when, as here,
the constitutional claim asks the agency to act contrary to
28 ARTHREX, INC. v. SMITH & NEPHEW, INC.
its statutory charter”) (internal citations and quotation
marks omitted); see also Intel Corp. v VLSI Tech. LLC, No.
IPR2018-01107, 2019 PAT. APP. LEXIS 4893, at *26-27
(P.T.A.B. Feb. 12, 2019); Unified Patents Inc. v. MOAEC
Techs., LLC, No. IPR2018-01758, 2019 WL 1752807, at *9
(P.T.A.B. Apr. 17, 2019). The only possibility of correction
which the government claims the agency could have made
is the Director shutting down the IPR regime by refusing
to institute. Petitioners argue that if the Appointments
Clause challenge had been raised at the Board, it “could
have prompted the PTAB to defer institution decisions on
all IPRs” and “[t]he Executive Branch could have then
championed legislation to address the alleged constitu-
tional infirmity.” Arthrex sought to have its case decided
by a constitutionally appointed board. The PTO could not
provide this relief.
We agree with Arthrex that its Appointments Clause
challenge was properly and timely raised before the first
body capable of providing it with the relief sought—a de-
termination that the Board judges are not constitutionally
appointed. Our decision in DBC is not to the contrary. In
DBC, the Appointments Clause challenge was to the par-
ticular APJs who were appointed by the Director, rather
than the Secretary. We observed that if the issue had been
raised before the agency, the agency could have “corrected
the constitutional infirmity.” DBC, 545 F.3d at 1379. At
that time, there were APJs who had been appointed by the
Secretary who could have decided the case and thus the
agency could have cured the constitutional defect. In DBC,
we observed that in LA Tucker and Woodford, had the issue
been raised at the agency, the agency could have corrected
the problem. See id. at 1378 (citing Woodford v. Ngo, 548
U.S. 81 (2006); United States v. LA Tucker Truck Lines, 344
U.S. 33 (1952)). Ryder v. United States, cited by the gov-
ernment, likewise involved a challenge made to a particu-
lar judge, and the problem could have been cured by
reassigning the case to a different judge at the trial level.
ARTHREX, INC. v. SMITH & NEPHEW, INC. 29
515 U.S. 177 (1995). In contrast, here the Director is the
only Presidentially-appointed, Senate confirmed member
of the Board. The Board was not capable of correcting the
constitutional infirmity. We conclude that this Constitu-
tional challenge is one in which the Board had no authority
to provide any meaningful relief and that it was thus futile
for Arthrex to have raise the challenge before the Board.
The Lucia court explained that Appointments Clause
remedies are designed to advance structural purposes of
the Appointments Clause and to incentivize Appointments
Clause challenges. Lucia, 138 S. Ct. at 2055 n.5. We con-
clude that both of these justifications support our decision
today to vacate and remand. See Collins v. Mnuchin, 938
F.3d 553, 593 (5th Cir. 2019) (recognizing, “the Court has
invalidated actions taken by individuals who were not
properly appointed under the Constitution.”). The Su-
preme Court held in Freytag that Appointments Clause
challenges raise important structural interests and sepa-
ration of powers concerns. We conclude that challenges un-
der these circumstances should be incentivized at the
appellate level and accordingly the remedy provided is ap-
propriate. We have decided only that this case, where the
final decision was rendered by a panel of APJs who were
not constitutionally appointed and where the parties pre-
sented an Appointments Clause challenge on appeal, must
be vacated and remanded. Appointments Clause chal-
lenges are “nonjurisdictional structural constitutional ob-
jections” that can be waived when not presented. Freytag,
501 U.S. at 878–79. Thus, we see the impact of this case
as limited to those cases where final written decisions were
issued and where litigants present an Appointments
Clause challenge on appeal.
Finally, on remand we hold that a new panel of APJs
must be designated and a new hearing granted. See Appel-
lant’s Supp. Br. at 12 (“This Court should thus order a re-
mand to a new PTAB panel for a new oral argument.”) The
Supreme Court has explained that when a judge has heard
30 ARTHREX, INC. v. SMITH & NEPHEW, INC.
the case and issued a decision on the merits, “[h]e cannot
be expected to consider the matter as though he had not
adjudicated it before. To cure the constitutional error, an-
other ALJ . . . must hold the new hearing.” Lucia, 138
S. Ct. at 2055. Lucia suggests that the remedy is not to
vacate and remand for the same Board judges to rubber-
stamp their earlier unconstitutionally rendered decision.
Like Lucia, we hold that a new panel of APJs must be des-
ignated to hear the inter partes review anew on remand.
To be clear, on remand the decision to institute is not sus-
pect; we see no constitutional infirmity in the institution
decision as the statute clearly bestows such authority on
the Director pursuant to 35 U.S.C. § 314. Finally, we see
no error in the new panel proceeding on the existing writ-
ten record but leave to the Board’s sound discretion
whether it should allow additional briefing or reopen the
record in any individual case.
VACATED AND REMANDED
COSTS
The parties shall bear their own costs.