Arthrex, Inc. v. Smith & Nephew, Inc. ( 2022 )

Case: 18-2140 Document: 193 Page: 1 Filed: 05/27/2022
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: May 27, 2022
______________________
ANTHONY P. CHO, Carlson, Gaskey & Olds, PC, Bir-
mingham, MI, argued for appellant. Also represented by
DAVID LOUIS ATALLAH, JESSICA E. FLEETHAM, DAVID J.
GASKEY. Also argued by ROBERT KRY, MoloLamken LLP,
Washington, DC. Also represented by JEFFREY A. LAMKEN;
JORDAN RICE, Chicago, IL; TREVOR ARNOLD, JOHN W.
SCHMIEDING, Arthrex, Inc., Naples, FL.
CHARLES T. STEENBURG, Wolf, Greenfield & Sacks,
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2 ARTHREX, INC. v. SMITH & NEPHEW, INC.
P.C., Boston, MA, argued for appellees. Also represented
by RICHARD GIUNTA, TURHAN SARWAR, NATHAN R. SPEED;
MICHAEL N. RADER, New York, NY; MARK J. GORMAN,
Smith & Nephew, Inc., Cordova, TN.
JOSHUA MARC SALZMAN, Appellate Staff, Civil Division,
United States Department of Justice, Washington, DC, ar-
gued for intervenor. Also represented by BRIAN M.
BOYNTON, COURTNEY DIXON, SCOTT R. MCINTOSH; SARAH E.
CRAVEN, DANIEL KAZHDAN, THOMAS W. KRAUSE, FARHEENA
YASMEEN RASHEED, MOLLY R. SILFEN, Office of the Solici-
tor, United States Patent and Trademark Office, Alexan-
dria, VA.
______________________
Before MOORE, Chief Judge, REYNA and CHEN, Circuit
Judges.
MOORE, Chief Judge.
Arthrex, Inc. appeals a Patent Trial and Appeal Board
final written decision finding claims 1, 4, 8, 10–12, 16, 18,
and 25–28 of U.S. Patent No. 9,179,907 unpatentable as
anticipated. It also challenges a decision by the Commis-
sioner for Patents denying Arthrex’s request for the Direc-
tor of the Patent and Trademark Office (PTO) to review the
Board’s decision and grant rehearing. We affirm.
BACKGROUND
In 2015, Arthrex sued Smith & Nephew, Inc. and Ar-
throCare Corp. (collectively, S&N) in the United States
District Court for the Eastern District of Texas, alleging
infringement of the ’907 patent. Shortly before trial, S&N
petitioned the Board for inter partes review (IPR), arguing
certain claims of the ’907 patent were anticipated. The
Board instituted IPR and ultimately found that prior art
anticipated claims 1, 4, 8, 10–12, 16, 18, and 25–28. Smith
& Nephew, Inc. v. Arthrex, Inc., IPR2017-00275, 2018 WL
2084866, at *1 (P.T.A.B. May 2, 2018).
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ARTHREX, INC. v. SMITH & NEPHEW, INC. 3
Arthrex appealed. It primarily challenged the Board’s
decision on the merits, but it also argued that the Board
lacked constitutional authority to issue the agency’s final
decision. Arthrex reasoned that the Board could not issue
final decisions because its Administrative Patent Judges
(APJs) were not nominated by the President and confirmed
by the Senate, as the Appointments Clause requires for
principal officers. We agreed with Arthrex’s constitutional
challenge and held that the appropriate remedy was to (1)
sever the statutory limitations on the removal of APJs and
(2) remand for rehearing by a new panel of APJs. Arthrex,
Inc. v. Smith & Nephew, Inc., 941 F.3d 1320, 1338, 1340
(Fed. Cir. 2019). We did not reach the merits of the Board’s
decision.
The Supreme Court vacated and remanded. United
States v. Arthrex, Inc., 141 S. Ct. 1970 (2021) (Arthrex). It
agreed that because APJs are appointed by the Secretary
of Commerce, rather than the President with the advice
and consent of the Senate, they could not issue any “final
decision binding the Executive Branch.” Id. at 1985. The
Court held, however, that the appropriate remedy was to
(1) exempt the Director from 35 U.S.C. § 6(c), which pre-
cludes anyone but the Board from granting rehearing of a
Board decision, and (2) “remand to the Acting Director for
him to decide whether to rehear” the case. Id. at 1987.
On remand, Arthrex requested “rehearing by the Di-
rector.” Smith & Nephew, Inc. v. Arthrex, Inc., IPR2017-
00275, Paper 39 at 1 (P.T.A.B. Aug. 27, 2021). The office of
the Director was, however, vacant. As was the office of
Deputy Director, which is “vested with the authority to act
in the capacity of the Director in the event of [his] absence
or incapacity.” 35 U.S.C. § 3(b)(1). The responsibility of
addressing Arthrex’s request thus fell to the Commissioner
under a standing directive known as Agency Organization
Order 45-1. That order states, “If both the [Director] and
the Deputy [Director] positions are vacant, the Commis-
sioner for Patents . . . will perform the non-exclusive
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4 ARTHREX, INC. v. SMITH & NEPHEW, INC.
functions and duties of the [Director].” 1 U.S. Patent &
Trademark Off., U.S. Dep’t of Commerce, Agency Organi-
zation Order 45-1, at II.D (Nov. 7, 2016) (AOO 45-1). The
Commissioner then denied rehearing and ordered that the
Board’s decision “is the final decision of the agency.” Smith
& Nephew, Inc. v. Arthrex, Inc., IPR2017-00275, Paper 40
at 2 (P.T.A.B. Oct. 15, 2021).
Arthrex appeals. We have jurisdiction under 28 U.S.C.
§ 1295(a)(4)(A).
DISCUSSION
I
We first address Arthrex’s challenge to the Commis-
sioner’s order denying rehearing. Arthrex argues it “never
got the remedy the Supreme Court ordered” because “[n]o
presidentially appointed, Senate-confirmed principal of-
ficer decided Arthrex’s petition” for rehearing. Appellant’s
Supp. Br. 1. Specifically, it argues the Commissioner’s ex-
ercise of the Director’s authority to decide rehearing peti-
tions violated (1) the Appointments Clause, U.S. Const.,
art. II, § 2, cl. 2; (2) the Federal Vacancies Reform Act
(FVRA), 5 U.S.C. § 3345 et seq.; and (3) the Constitution’s
separation of powers, U.S. Const., art. II, § 3. We do not
agree.
A
The Appointments Clause requires all “Officers of the
United States” to be appointed by the President with the
advice and consent of the Senate. U.S. Const., art. II, § 2,
1 The order refers to the Director and Deputy Direc-
tor by their alternate titles of “Under Secretary of Com-
merce for Intellectual Property” and “Deputy Under
Secretary of Commerce for Intellectual Property,” respec-
tively. For clarity, we use the titles of Director and Deputy
Director.
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ARTHREX, INC. v. SMITH & NEPHEW, INC. 5
cl. 2. For “inferior Officers,” however, the Appointments
Clause authorizes Congress to dispense with joint appoint-
ment and vest appointment power “in the President alone,
in the Courts of Law, or in the Heads of Departments.” Id.
Congress did just that with the Commissioner for Patents,
empowering the Secretary of Commerce to unilaterally ap-
point him. 35 U.S.C. § 3(b)(2)(A).
Because the Commissioner for Patents is not a Presi-
dentially appointed, Senate-confirmed (PAS) officer, he or-
dinarily may not “issue a final decision binding the
Executive Branch.” Arthrex, 141 S. Ct. at 1985. Arthrex
argues the Commissioner violated this principle when he
denied Arthrex’s rehearing request and stamped the
Board’s decision as “the final decision of the agency.”
Smith & Nephew, IPR2017-00275, Paper 40 at 2.
1
Although an inferior officer generally cannot issue a fi-
nal agency decision, he may perform the functions and du-
ties of an absent PAS officer on a temporary, acting basis.
United States v. Eaton is instructive. 169 U.S. 331 (1898).
After falling ill, the consul general to Siam, Sempronius
Boyd, a PAS officer, unilaterally appointed Lewis Eaton,
then a missionary, to the position of vice consul general.
Id. at 331–32. Mr. Boyd then took a leave of absence, re-
turning to his home in Missouri, where he later died. Id.at 332–33. In the period between Mr. Boyd’s departure and
his replacement’s arrival, Mr. Eaton was required by law
to “temporarily . . . fill the place[ ] of consul[ ] general,”
which he did. Id. at 336 (quoting Revised Statutes § 1674).
The government, however, refused to pay Mr. Eaton for his
services. It argued that Congress violated the Appoint-
ments Clause by authorizing the President to promulgate
the consular regulations Mr. Boyd invoked to appoint Mr.
Eaton. See id. at 343.
The Supreme Court rejected that argument. It held
that an inferior officer “charged with the performance of
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6 ARTHREX, INC. v. SMITH & NEPHEW, INC.
the duty of [a] superior for a limited time, and under special
and temporary conditions,” need not be Presidentially ap-
pointed and Senate confirmed. Id. Otherwise, the Court
reasoned, “every delegation of power to an inferior to per-
form under any circumstances or exigency the duties of a
superior officer” would be void, “and the discharge of ad-
ministrative duties would be seriously hindered.” Id.
Eaton thus teaches that the Appointments Clause allows
an inferior officer to temporarily wield the powers of an ab-
sent PAS officer.
The Supreme Court reaffirmed Eaton’s holding in this
very case. It cited Eaton with approval as “holding that an
inferior officer can perform functions of [a] principal office
on [an] acting basis.” Arthrex, 141 S. Ct. at 1985 (citing
Eaton, 169 U.S. at 343). And based on that understanding
of Eaton, it distinguished the Board’s APJs from early pa-
tent arbitrators and examiners, explaining that “they exer-
cised their limited power under ‘special and temporary
conditions.’” Id. (quoting Eaton, 169 U.S. at 343). Con-
sistent with Eaton, an inferior officer can temporarily per-
form functions of a principal officer on an acting basis.
Eaton is, moreover, consistent with the FVRA. Under
the FVRA, if a PAS officer “dies, resigns, or is otherwise
unable to perform the functions and duties of the office,” an
inferior officer may fill in for him “temporarily in an acting
capacity.” 5 U.S.C. § 3345(a)(1), (3). The Supreme Court
alluded to this interim appointment mechanism when it or-
dered “a remand to the Acting Director for him to decide
whether to rehear [S&N’s] petition.” Arthrex, 141 S. Ct. at
1987 (emphasis added). This further supports that an in-
ferior officer may temporarily perform an absent PAS of-
ficer’s duties without violating the Appointments Clause.
2
This case is indistinguishable from Eaton. Like Mr.
Eaton, the Commissioner was merely performing the func-
tions and duties of the Director in the limited period
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ARTHREX, INC. v. SMITH & NEPHEW, INC. 7
between the former Director’s departure and the current
Director’s arrival. See Eaton, 169 U.S. at 332–33. And he
did so under a previous Director’s standing directive, see
AOO 45-1, at II.D (“If both the [Director] and the Deputy
[Director] positions are vacant, the Commissioner for Pa-
tents . . . will perform the non-exclusive functions and du-
ties of the [Director].”), which is akin to how Mr. Boyd
“called to” Mr. Eaton “and asked him to take charge of the
consulate and its archives.” Eaton, 169 U.S. at 331–32.
Eaton therefore counsels that the Commissioner’s actions
did not violate the Appointments Clause.
Arthrex argues that “only a [PAS] officer may issue fi-
nal agency decisions that are not subject to review by any
superior officer.” Appellant’s Supp. Br. 12. Adopting this
argument, however, would require us to ignore the Su-
preme Court’s prior decision in this case directing “a re-
mand to the Acting Director for him to decide whether to
rehear [S&N’s] petition.” Arthrex, 141 S. Ct. at 1987 (em-
phasis added); see also, e.g., 5 U.S.C. § 3345(a)(3) (provid-
ing that an Acting Director may be an inferior officer
within the PTO). It would also require us to hold the FVRA
facially unconstitutional insofar as it permits inferior offic-
ers to perform a PAS officer’s duties in an acting capacity.
See 5 U.S.C. § 3345(a)(1), (3). Lastly, this argument di-
rectly conflicts with Eaton’s clear holding that an inferior
officer may temporarily exercise a PAS officer’s powers in
his absence. See 169 U.S. at 343. We therefore reject the
argument that only a PAS officer may issue final agency
decisions in all circumstances.
We also reject Arthrex’s argument that Eaton is inap-
posite because it addressed only “situations where Con-
gress creates a mechanism for temporary appointments
that permits the President to select the appointee.” Appel-
lant’s Supp. Reply Br. 2. Arthrex misapprehends the facts
of Eaton and of this case. The President never selected Mr.
Eaton as vice consul general; Mr. Boyd did. Eaton, 169
U.S. at 331–32. Nor did Congress authorize the President
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8 ARTHREX, INC. v. SMITH & NEPHEW, INC.
to appoint Mr. Eaton; rather, it authorized him to promul-
gate regulations providing for such appointments. See id.
at 336 (“The president is authorized to . . . provide for the
appointment of vice consuls . . . under such regulations as
he shall deem proper . . . .” (quoting Revised Statutes
§ 1695)). Regardless, here, Congress did authorize the
President to select the Commissioner to temporarily per-
form the Director’s duties. That is because the Patent Act
broadly empowers the President, acting through the Direc-
tor, to delegate the Director’s duties as he sees fit. See 35
U.S.C. § 3(b)(3)(B) (“The Director shall . . . delegate to [of-
ficers and employees] such of the powers vested in the Of-
fice as the Director may determine.”); Patent and
Trademark Office Efficiency Act, Pub. L. No. 106-113,
§ 4745, 113 Stat. 1501, 1501A-587 (1999) (codified at 35
U.S.C. § 1 note) (The Director “may delegate any of [his]
functions . . . to such officers and employees . . . as [he] may
designate.”). This basis for distinguishing Eaton therefore
lacks merit.
Nor are we persuaded by Arthrex’s argument that this
case is different from Eaton because the Commissioner was
supposedly not performing the Director’s duties “for a lim-
ited time.” Appellant’s Supp. Br. 16. The Commissioner’s
time in that role was, from the outset, limited to the period
in which the Director and Deputy Director offices remained
vacant. See AOO 45-1, at II.D. Arthrex concedes this. Ap-
pellant’s Supp. Br. 16 (“Under the agency’s delegation,
Commissioner Hirshfeld serves indefinitely until a succes-
sor is appointed . . . .” (emphasis added)). It is immaterial
that AOO 45-1 did not specify exactly how long the Com-
missioner’s tenure would be, for neither did the temporary
appointment in Eaton. See 169 U.S. at 331–32 (noting ap-
pointment was for period “during [Sempronius Boyd’s] ab-
sence, and until the then expected arrival from the United
States of Robert M. Boyd, whom Sempronius Boyd desired
should act as consul general” but who had not yet quali-
fied). Moreover, the Commissioner denied Arthrex’s
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ARTHREX, INC. v. SMITH & NEPHEW, INC. 9
rehearing request on his 268th day performing the Direc-
tor’s duties, which is less than the 309 days the Supreme
Court deemed acceptable in Eaton. See id. at 333–34. Fi-
nally, the Commissioner’s stint as the Director’s stand-in
was always limited in that the President could have re-
placed him with an Acting Director at any time. See 5
U.S.C. § 3345(a)(2), (3). In light of this combination of
facts, the Commissioner was performing the Director’s du-
ties “for a limited time, and under special and temporary
conditions.” Eaton, 169 U.S. at 343.
In sum, Arthrex’s Appointments Clause challenge runs
headlong into Eaton and the Supreme Court’s prior deci-
sion in this case. We therefore conclude that the Commis-
sioner’s exercise of the Director’s authority while that office
was vacant did not violate the Appointments Clause.
B
Arthrex next argues the FVRA precluded the Commis-
sioner from ruling on Arthrex’s rehearing request and de-
prives the Commissioner’s decision of any “force or effect.”
Because the FVRA applies only to non-delegable duties,
and because deciding rehearing requests is a delegable
duty, we hold that the FVRA does not apply here.
1
When a PAS officer dies, resigns, or is otherwise una-
ble, the FVRA dictates who may temporarily perform his
“functions and duties” in an acting capacity. 5 U.S.C.
§ 3345(a); see also 5 U.S.C. § 3348(d)(1)–(2) (“An action
taken by any person who is not [appointed pursuant to the
FVRA], in the performance of any function or duty of a va-
cant office to which [the FVRA applies,] shall have no force
or effect” and “may not be ratified.” (emphasis added)).
Critically, the statute defines that term narrowly:
[T]he term “function or duty” means any function
or duty of the applicable office that—
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10 ARTHREX, INC. v. SMITH & NEPHEW, INC.
(A)
(i) is established by statute; and
(ii) is required by statute to be per-
formed by the applicable officer
(and only that officer); or
(B)
(i)
(I) is established by regulation;
and
(II) is required by such regula-
tion to be performed by the ap-
plicable officer (and only that
officer); and
(ii) includes a function or duty to
which clause (i)(I) and (II) applies,
and the applicable regulation is in
effect at any time during the 180-
day period preceding the date on
which the vacancy occurs.
5 U.S.C. § 3348(a)(2) (emphases added).
This statutory language is unambiguous: the FVRA
applies only to functions and duties that a PAS officer alone
is permitted by statute or regulation to perform. It does
not apply to delegable functions and duties. Other circuits
agree. Schaghticoke Tribal Nation v. Kempthorne, 587
F.3d 132, 135 (2d Cir. 2009) (holding the FVRA did not pro-
hibit an inferior officer from performing a function of a PAS
officer who had resigned because the agency’s regulations
permitted the PAS officer to delegate that function); Stand
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Up for Cal.! v. U.S. Dep’t of Interior, 994 F.3d 616, 622 (D.C.
Cir. 2021) (observing FVRA applies to “exclusive duties”). 2
The legislative history, as is often the case, demon-
strates the competing considerations that went into the
statute’s adoption. On one hand, the FVRA’s sponsors ex-
pressed a desire for the law to apply in nearly all circum-
stances. One sponsor “hope[d] that the Senate would make
the Vacancies Act ‘so tight, so air-tight, that no department
can find a crack or crevice anywhere through which to
creep.’” S. Rep. No. 105-250, at 9 (1998) (quoting statement
of Senator Robert Byrd). Likewise, another sponsor said
the law was meant to “cover all situations when the officer
cannot perform his duties.” 144 Cong. Rec. 27,496 (1998)
(statement of Senator Fred Thompson).
The Senate Committee on Governmental Affairs stated
that “[t]he purpose of [the FVRA] is to create a clear and
exclusive process to govern the performance of duties” in
an acting capacity. S. Rep. No. 105-250, at 1. It also said,
“The bill applies to all vacancies in Senate-confirmed posi-
tions in executive agencies with [only] a few express excep-
tions.” Id. at 2; see also id. at 15–17 (describing exceptions).
And it repeatedly rejected a narrow interpretation that
agencies vested with general delegation authority were ex-
empt from the FVRA. See, e.g., id. at 3–4.
On the other hand, commenting on the specific statu-
tory provision at issue here, 5 U.S.C. § 3348(a)(2), the Com-
mittee stated:
The bill defines “function or duty” of the office as
those functions or duties that (1) are established by
2 We acknowledge that these decisions are not bind-
ing on us and that Stand Up’s observation may be dictum.
See 994 F.3d at 622 n.2 (“Appellants have not raised their
FVRA claims on appeal . . . .”). Nevertheless, these cases
support our interpretation.
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12 ARTHREX, INC. v. SMITH & NEPHEW, INC.
statute and are required to be performed only by the
applicable officer; (2) are established by regulation
and are required to be performed only by the appli-
cable officer; [or] (3) were established by regulation
and were required to be performed only by the ap-
plicable officer at any time in the 180 days preced-
ing the vacancy . . . .
S. Rep. No. 105-250, at 17–18 (emphases added). The Com-
mittee elaborated, “The functions or duties of the office that
can be performed only by the head of the executive agency
are therefore defined as the non-delegable functions or du-
ties of the officer . . . .” Id. at 18 (emphasis added). And it
clarified that “[d]elegable functions of the office could still
be performed by other officers or employees.” Id. It ap-
pears this was a compromise to address concerns that a
broader definition could “cause an unintended shutdown of
the Federal agency within which the vacancy exists due to
administrative paralysis.” Id. at 30–31. These competing
narratives in the legislative history cannot alter the plain
language of the statute that was adopted, which provides
that the FVRA applies only to non-delegable functions and
duties. 5 U.S.C. § 3348(a)(2).
Arthrex is correct that this reading of § 3348(a)(2) ren-
ders the FVRA’s scope “vanishingly small.” Oral Arg. at
4:58–5:13. 3 The government readily admits that only “a
very small subset of duties” are non-delegable. Id. at
37:21–37. The Department of Justice agrees: “Most, and
in many cases all, the responsibilities performed by a PAS
officer will not be exclusive.” Guidance on Application of
Fed. Vacancies Reform Act of 1998, 23 Op. O.L.C. 60, 72
(1999). Pertinent here, the government contends that the
FVRA imposes no constraints whatsoever on the PTO be-
cause all the Director’s duties are delegable. Oral Arg. at
3 Available at https://oralarguments.cafc.uscourts.
gov/default.aspx?fl=18-2140_03302022.mp3.
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36:44–53 (Q: “Are there any functions or duties that a Di-
rector at the PTO has that in your view are not delegable?”
A: “No, I don’t believe there are any.”); id. at 38:38–57
(“When you ask the question whether . . . the FVRA im-
poses constraints as opposed to an affirmative grant of au-
thority to President Biden as it pertains to the Patent and
Trademark Office, I’d say no . . . .”). We find it disquieting
that the government views the FVRA as impacting such a
“very small subset of duties” and not impacting the PTO at
all.
That does not, however, justify departing from the
plain language of the statute. N.C. Dep’t of Transp. v. Crest
St. Cmty. Council, Inc., 479 U.S. 6, 14 (1986) (“[I]f one must
ignore the plain language of a statute to avoid a possibly
anomalous result, the short answer is that Congress did
not write the statute that way.” (cleaned up)). Moreover,
Congress chose the limiting language of § 3348(a)(2) know-
ing full well that “many [PAS officers] lack any meaningful
statutory duties.” S. Rep. No. 105-250, at 18. We can nei-
ther rewrite the statute nor supplant Congress’ judgment.
Furthermore, adopting Arthrex’s position would have
significant consequences. Arthrex does not dispute S&N’s
assertion that, in the last decade alone, the PTO has issued
more than 668,000 patents signed by an inferior officer fill-
ing in for the Director. Construing the FVRA to apply to
delegable duties would call the validity of those patents
into question. It would also cast doubt on all the IPR deci-
sions the PTO issued during the Commissioner’s tenure
performing the Director’s delegable functions. See 5 U.S.C.
§ 3348(d)(1) (“An action taken by any person who is not act-
ing under section 3345, 3346, or 3347 . . . shall have no
force or effect.”).
The impacts of such a decision would, moreover, rever-
berate far beyond the PTO. The universe of delegable PAS-
officer duties is expansive, potentially encompassing every
Executive agency. Oral Arg. at 41:03–13 (noting there are
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14 ARTHREX, INC. v. SMITH & NEPHEW, INC.
more than 1,000 PAS offices across the government); id. at
4:58–5:13 (“In the real world, every agency has general del-
egation authority, and it applies to the vast and over-
whelming majority of the agency’s functions.”); Guidance
on Application of Fed. Vacancies Reform Act of 1998, 23
Op. O.L.C. at 72 (“Most, and in many cases all, the respon-
sibilities performed by a PAS officer will not be exclusive.”).
Indeed, when Congress “delegates authority to a federal of-
ficer or agency, subdelegation to a subordinate federal of-
ficer or agency is presumptively permissible absent
affirmative evidence of a contrary congressional intent.”
Ethicon Endo-Surgery, Inc. v. Covidien LP, 812 F.3d 1023,
1031 (Fed. Cir. 2016) (quoting U.S. Telecom Ass’n v. FCC,
359 F.3d 554, 565 (D.C. Cir. 2004)); see also Kobach v. U.S.
Election Assistance Comm’n, 772 F.3d 1183, 1190–91 (10th
Cir. 2014) (“Our sibling circuits that have spoken on this
issue are unanimous in permitting subdelegations to sub-
ordinates, even where the enabling statute is silent, so long
as the enabling statute and its legislative history do not
indicate a prohibition on subdelegation.” (collecting cases)).
As between the exceedingly broad scope that Arthrex pro-
poses and the exceedingly narrow scope that the plain text
of § 3348(a)(2) demands, we must choose the latter.
Arthrex argues that our interpretation “read[s]
§ 3347(b) out of the statute entirely.” Oral Arg. at 11:02–
14. We do not agree. Section 3347(b) merely provides that
a statute granting the head of an agency “general authority
. . . to delegate [his] duties” does not exempt the agency
from the FVRA. Construing the FVRA to apply only to non-
delegable duties does not render this provision superflu-
ous. If, for example, Congress grants an agency head gen-
eral delegation authority but specifies that certain duties
are non-delegable, § 3347(b) makes clear that the FVRA
still applies to those non-delegable duties. And if no stat-
ute or regulation precludes delegation of a specific duty, the
FVRA would not apply for that reason, not because of a
statutory grant of general delegation authority. We
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ARTHREX, INC. v. SMITH & NEPHEW, INC. 15
therefore reject Arthrex’s argument that our reading of
§ 3348(a)(2) conflicts with § 3347(b).
The plain language of the statute limits the scope of the
FVRA to non-delegable functions and duties. The FVRA
does not, therefore, restrict who may perform a PAS of-
ficer’s delegable duties when he is absent.
2
Applying the statute to this case, we must determine
whether reviewing rehearing requests is a delegable duty
of the Director or a duty that the Director, and only the
Director, must perform. In Arthrex, the Supreme Court
held that the Director (or Acting Director) must have the
ability to rehear decisions of the Board. 141 S. Ct. at 1987
(“If the Director were to have the ‘authority to take control’
of a PTAB proceeding, APJs would properly function as in-
ferior officers.” (quoting Go-Bart Importing Co. v. United
States, 282 U.S. 344, 354 (1931))). It did not hold that the
Director must rehear every Board decision, nor did it re-
quire the Director to issue a decision in response to every
rehearing request. “To be clear, the Director need not re-
view every decision of the PTAB. What matters is that the
Director have the discretion to review decisions rendered
by APJs.” Id. at 1988. We conclude that under the Patent
Act this discretion includes the discretion to delegate re-
view of rehearing requests.
The Patent Act bestows upon the Director a general
power to delegate “such of the powers vested in the [PTO]
as the Director may determine.” 35 U.S.C. § 3(b)(3)(B).
There is nothing in the Patent Act indicating that the Di-
rector may not delegate this rehearing request review func-
tion. Arthrex identifies no statute, regulation, or other law
that limits the Director’s delegable duties or suggests that
rehearing requests are not delegable.
Arthrex cites 35 U.S.C. § 6(c), which provides that
“[o]nly the Patent Trial and Appeal Board may grant
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16 ARTHREX, INC. v. SMITH & NEPHEW, INC.
rehearings.” On its face, the statute does not even permit
the Director to grant rehearing, much less assign that au-
thority exclusively to him. The Supreme Court, however,
held that § 6(c) “cannot constitutionally be enforced to the
extent that its requirements prevent the Director from re-
viewing final decisions rendered by APJs.” Arthrex, 141 S.
Ct. at 1987. “The Director accordingly may review final
[Board] decisions” notwithstanding § 6(c). Id. 4 The Su-
preme Court held that the Director may review final Board
decisions. That is all the Appointments Clause requires,
that the Director have the option to review, if she so
chooses, a final Board decision. That the Appointments
Clause requires that a PAS have review authority does not
mean that a principal officer, once bestowed with such au-
thority, cannot delegate it to other agency officers.
Given the language of the statute, the Director’s gen-
eral grant of delegation authority, and the absence of any
language suggesting that rehearing requests must be re-
viewed by the Director and only the Director, we conclude
that, for purposes of the FVRA, the duty to decide rehear-
ing requests is delegable. Arthrex argues that the Direc-
tor’s general delegation authority cannot alone satisfy the
FVRA. Appellant’s Supp. Reply Br. 7–8. According to Ar-
threx, Congress enacted § 3347(b) of the FVRA specifically
to foreclose this argument. Id. (citing, e.g., S. Rep. No. 105-
250, at 17). There are two problems with Arthrex’s
4 Arthrex argues that after the Supreme Court’s de-
cision, § 6(c) now “permits the Director—and only the Di-
rector—to exercise a unilateral power to review Board
decisions.” Appellant’s Supp. Br. 22. But § 6(c) contains
no such limitation. The statute permits the Board to grant
rehearing, and the Supreme Court’s Arthrex decision con-
cluded that the Director may also grant rehearing. Noth-
ing in § 6(c) permits the Director (and only the Director) to
rule on rehearing requests.
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ARTHREX, INC. v. SMITH & NEPHEW, INC. 17
argument. First, § 3347(b) does not actually apply to the
Director at all. It provides that the general delegation au-
thority of “the head of an Executive agency” is not a basis
to evade the FVRA. (Emphasis added). Because the PTO
is a subagency of the Department of Commerce, see 35
U.S.C. § 1(a), it is not an “Executive agency” under the
FVRA. See 5 U.S.C. § 105 (“For the purpose of this title,
‘Executive agency’ means an Executive department, a Gov-
ernment corporation, and an independent establish-
ment.”); 5 U.S.C. § 101 (listing the Department of
Commerce as an Executive department). Second, even
when there exists general delegation authority, Congress
can still exempt specific duties or functions and thereby re-
quire those to be performed by the PAS officer. We are not,
therefore, relying upon the Director’s general delegation
authority alone in holding that the FVRA does not apply
here. Rather, our decision rests on the absence of any stat-
ute or regulation or law permitting only the Director to de-
cide rehearing requests.
We hold that the Commissioner’s order denying Ar-
threx’s rehearing request on the Director’s behalf did not
violate the FVRA. The FVRA does not restrict who may
perform the delegable functions and duties of an absent
PAS officer. And the Director’s authority to decide re-
quests for rehearing Board decisions is delegable. 5
C
Arthrex next contends that by exercising the Director’s
authority, the Commissioner violated the Constitution’s
separation of powers. We do not agree.
5 The government argues that there are no non-del-
egable duties of the Director. This decision is limited to a
determination that the Director’s authority to review re-
hearing requests is a delegable duty. As that is the only
power at issue in this case, we go no broader.
Case: 18-2140 Document: 193 Page: 18 Filed: 05/27/2022
18 ARTHREX, INC. v. SMITH & NEPHEW, INC.
The Constitution requires the President to “take Care
that the Laws be faithfully executed.” U.S. Const., art. II,
§ 3. “That power, in turn, generally includes the ability to
remove executive officials.” Seila Law LLC v. Consumer
Fin. Prot. Bureau, 140 S. Ct. 2183, 2197 (2020). Without
removal power, it would be “impossible for the President
. . . to take care that the laws be faithfully executed.” Id.
at 2198 (alteration in original) (quoting Myers v. United
States, 272 U.S. 52, 164 (1926)). Except in limited circum-
stances not pertinent here, Congress cannot restrict the
President’s removal power. See id. at 2191–92. So, for ex-
ample, a statute that prohibits the President from remov-
ing a PAS officer except for “inefficiency, neglect of duty, or
malfeasance in office” is an unconstitutional encroachment
upon Executive power. Id. at 2192–93 (quoting 12 U.S.C.
§ 5491(c)(3)).
Arthrex argues that because the Commissioner is re-
movable only for “misconduct or nonsatisfactory perfor-
mance,” 35 U.S.C. § 3(b)(2)(C), the Constitution’s
separation of powers precludes him from performing the
Director’s duties. This argument has no merit. Although
the President must have cause to remove the Commis-
sioner from that position, he needs no cause to remove the
Commissioner from his role as the Director’s temporary
stand-in. Arthrex concedes that the FVRA provides a
mechanism for the President to name an Acting Director
“with the stroke of a pen” and that “there is simply no bur-
den associated with doing that.” Oral Arg. at 22:31–23:02;
see 5 U.S.C. § 3345(a)(2), (3) (authorizing the President to
simply “direct” another PAS officer or a senior employee of
the agency “to perform the functions and duties of the va-
cant office temporarily in an acting capacity”). Because the
President has unfettered power under the FVRA to strip
the Commissioner of his temporary PAS-officer authority,
the Commissioner’s exercise of that authority does not vio-
late the Constitution’s separation of powers.
Case: 18-2140 Document: 193 Page: 19 Filed: 05/27/2022
ARTHREX, INC. v. SMITH & NEPHEW, INC. 19
II
Turning to the merits, Arthrex challenges the Board’s
finding that prior art anticipated claims 1, 4, 8, 10–12, 16,
18, and 25–28 of the ’907 patent. It also contends the Board
lacked statutory authority to determine the validity of Ar-
threx’s priority claim during IPR. Because substantial ev-
idence supports its anticipation finding, and because it has
the authority to resolve priority issues during IPR, we af-
firm the Board’s decision.
A
The ’907 patent discloses a surgical device for attaching
soft tissue to bone without requiring the surgeon to tie su-
ture knots to secure the suture or tissue. See ’907 patent
at 1:43–48. The device comprises an “eyelet” through
which the surgeon threads the suture. See id. at 1:51–53.
The eyelet may be a flexible “suture loop 70,” as shown be-
low:
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20 ARTHREX, INC. v. SMITH & NEPHEW, INC.
Id. at 5:51–59; Fig. 15. Alternatively, the eyelet may be a
rigid “implant 150 . . . formed of a transparent polymer ma-
terial”:
Id. at 7:4–10; Fig. 21.
Claim 1 is representative. Appellant’s Br. 13. Perti-
nent to this appeal, it recites “an eyelet” generically,
thereby encompassing both of the above embodiments:
1. A suture securing assembly, comprising:
an inserter including a distal end, a proxi-
mal end, and a longitudinal axis between
the distal end and the proximal end;
a first member including an eyelet oriented
to thread suture across the longitudinal
axis, the first member being situated near
the distal end of the inserter, the first mem-
ber being configured to be placed in bone;
and
a second member situated near the distal
end of the inserter, the second member be-
ing moveable by a portion of the inserter
relative to the first member in a distal di-
rection toward the eyelet into a suture se-
curing position where the second member
locks suture in place.
’907 patent at claim 1 (emphasis added).
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ARTHREX, INC. v. SMITH & NEPHEW, INC. 21
The Board found claim 1 anticipated by U.S. Patent
Publication No. 2002/0013608 (ElAttrache). Smith &
Nephew, Inc. v. Arthrex, Inc., IPR2017-00275, 2018 WL
2084866, at *4–5 (P.T.A.B. May 2, 2018) (Board Decision). 6
ElAttrache is the 2002 publication of an earlier Arthrex pa-
tent application, Application No. 09/886,280. ElAttrache
at [21]. It discloses the same flexible eyelet embodiment as
the ’907 patent:
Id. at Fig. 15.
Before the Board, Arthrex agreed that ElAttrache
would anticipate the challenged claims if it were prior art
but argued that ElAttrache is not, in fact, prior art. Board
Decision at *1. It reasoned that the ’907 patent claims
6 The Board also found claim 1 anticipated by Inter-
national Patent Publication No. WO 02/21999 A2 (Mar-
tinek). Id. at *5–6. Because we affirm the Board’s decision
based on ElAttrache, we need not address Martinek.
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22 ARTHREX, INC. v. SMITH & NEPHEW, INC.
priority to the ’280 application through a series of interven-
ing continuation, continuation-in-part, and divisional ap-
plications. Arthrex contended the effective filing date of
the challenged claims is the filing date of the ’280 applica-
tion, which was before ElAttrache’s publication date.
The Board rejected that argument. It found that one of
the intervening applications, Application No. 10/405,707,
lacks any written description of the flexible eyelet embodi-
ment encompassed by the generic eyelet claimed in the ’907
patent and, thus, cuts off the ’907 patent’s priority claim.
Board Decision at *7. The Board reasoned that although
the ’707 application incorporates the ’280 application by
reference, id. at *11–12, it criticizes the ’280 application’s
“flexible loop configuration” and purports to “overcome [its]
disadvantages” using a “fixed aperture,” see id. at *8–9
(quoting ’707 application, ¶¶ 5–7). Because of that criti-
cism, the Board found that a skilled artisan would have un-
derstood the ’707 application to do away with flexible
eyelets and require rigid eyelets. Id. at *9–11. Accord-
ingly, the Board concluded that the effective filing date of
the challenged claims is the filing date of the application
that issued as the ’907 patent, well after ElAttrache’s pub-
lication date. Id. at *4.
B
“[T]o gain the benefit of the filing date of an earlier ap-
plication under 35 U.S.C. § 120, each application in the
chain leading back to the earlier application must comply
with the written description requirement of 35 U.S.C.
§ 112.” Lockwood v. Am. Airlines, Inc., 107 F.3d 1565, 1571
(Fed. Cir. 1997) (citing In re Hogan, 559 F.2d 595, 609
(CCPA 1977)). That means each application in the chain
must “reasonably convey[ ] to those skilled in the art that
the inventor had possession of the [later-claimed] subject
matter as of the filing date.” Ariad Pharms., Inc. v. Eli
Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc)
(first citing Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555,
Case: 18-2140 Document: 193 Page: 23 Filed: 05/27/2022
ARTHREX, INC. v. SMITH & NEPHEW, INC. 23
1563 (Fed. Cir. 1991); and then citing In re Kaslow, 707
F.2d 1366, 1375 (Fed. Cir. 1983)). “Sufficiency of written
description is a question of fact, reviewed for substantial
evidence.” Gen. Hosp. Corp. v. Sienna Biopharms., Inc.,
888 F.3d 1368, 1371 (Fed. Cir. 2018) (citing Inphi Corp. v.
Netlist, Inc., 805 F.3d 1350, 1354 (Fed. Cir. 2015)).
Substantial evidence supports the Board’s finding that
the ’707 application lacks written description of flexible
eyelets and, thus, the generic eyelet claim limitation. The
’707 application’s only mention of flexible eyelets is in the
background section. There, it credits the ’280 application’s
overall technique as an improvement but strongly criticizes
its use of a flexible eyelet because it “impedes sliding of the
suture”:
Although the [’280 application’s] technique pro-
vides an improved method of graft fixation to bone,
the flexible loop configuration at the end of the
driver disadvantageously impedes sliding of the su-
ture or graft which is fed through the suture loop.
In addition, because the cannulated driver of [the
’280 application] is provided with a flexible loop at
its distal end, placement of the suture or graft at the
bottom of the blind hole or socket and the cortical
bone must be approximated, thus sometimes neces-
sitating additional removal, tapping and insertion
steps to ensure full insertion of the plug or screw
into the blind hole or socket. This, in turn, may
abrade the adjacent tissue and/or damage the bone
or cartilage.
’707 application, ¶ 5 (emphases added). Aside from this cri-
tique, the ’707 application is completely silent about flexi-
ble eyelets.
And to “overcome the disadvantages” of flexible eyelets,
the ’707 application exclusively discloses an eyelet with a
“fixed aperture” rather than a flexible loop. Id. ¶ 7. Unlike
flexible eyelets, this allows the suture to “freely slide
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24 ARTHREX, INC. v. SMITH & NEPHEW, INC.
through the aperture,” which in turn “allow[s] precise ad-
vancement and guiding of the plug or screw into the blind
hole or socket.” Id. ¶ 29. The application stresses the im-
portance of this feature, noting that the invention covers
“an aperture of any configuration of any geometrical shape,
as long as it . . . allows the captured suture to freely slide
within the aperture.” Id. ¶ 33 (emphasis added).
Based on these disclosures, S&N’s expert testified that
a skilled artisan would have understood the ’707 applica-
tion to require a rigid eyelet. He explained that because
the ’707 application mentions a flexible eyelet “only for pur-
poses of criticizing it and emphasizing the need for an al-
ternative approach that allows suture to slide freely,” a
skilled artisan would have understood that free sliding is
“essential to the purported invention” and that flexible eye-
lets are “contrary to the invention’s stated purpose.” J.A.
2324, § 125; J.A. 2323, § 123. This testimony and the dis-
closures of the ’707 application are substantial evidence
upon which the Board could find that the ’707 application
lacks written description of generic eyelets encompassing
flexible eyelets, as claimed by the ’907 patent. See Tronzo
v. Biomet, Inc., 156 F.3d 1154, 1159 (Fed. Cir. 1998) (hold-
ing substantial evidence did not support finding that par-
ent application provided written description of later-
claimed genus encompassing any shape where it “tout[ed]
the advantages of [a] conical shape,” mentioned other
shapes only in reciting the prior art, and “specifically dis-
tinguishe[d] the prior art as inferior”); see also Bilstad v.
Wakalopulos, 386 F.3d 1116, 1125 (Fed. Cir. 2004) (ex-
plaining that Tronzo is an “exception[ ] to the general rule
that disclosure of a species provides sufficient written de-
scription support for a later filed claim directed to the ge-
nus”).
Arthrex argues the Board failed to give effect to the
’707 application’s incorporation of the entire ’280 applica-
tion by reference. According to Arthrex, this broad incor-
poration by reference compels a finding that the ’707
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ARTHREX, INC. v. SMITH & NEPHEW, INC. 25
application provides written description support for flexi-
ble eyelets because there is no dispute that the ’280 appli-
cation discloses one. The Board, however, considered the
’707 application’s incorporation by reference and found it
did not outweigh the evidence that the ’707 application re-
lies entirely on rigid eyelets. Board Decision at *11–12.
Because the ’707 application denigrates flexible eyelets and
exclusively describes alternatives to overcome their disad-
vantages, we cannot say the Board’s finding was unreason-
able.
Arthrex further argues that the ’707 application ade-
quately describes generic eyelets because it discloses “the
function of threading suture,” which is “tied to” flexible eye-
lets. Appellant’s Br. 49. To be sure, the disclosure of a
function may provide written description of a known struc-
ture for performing that function if the function and struc-
ture are “sufficiently correlated” to one another. Amgen,
Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1332
(Fed. Cir. 2003). If, however, the specification derides a
particular structure and seeks to replace it with alterna-
tives that ostensibly perform its function better, a reason-
able person could find that the specification lacks written
description for that structure. The Board’s finding that the
’707 application does not adequately describe generic eye-
lets that encompass flexible eyelets is supported by sub-
stantial evidence, as is its determination that ElAttrache
is anticipatory prior art.
C
Lastly, there is no merit to Arthrex’s argument that the
Board lacked statutory authority to decide whether the
’707 application meets the written description
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26 ARTHREX, INC. v. SMITH & NEPHEW, INC.
requirement. 7 Arthrex argues that because the scope of an
IPR is limited to “ground[s] that could be raised under sec-
tion 102 or 103,” 35 U.S.C. § 311(b), the Board could not
address the written description requirement of § 112. Sec-
tion 311(b), however, merely dictates the grounds on which
an IPR petition may be based, not the issues that the Board
may consider to resolve those grounds. S&N complied with
§ 311(b) by asserting invalidity grounds under § 102. And
because Arthrex argued that ElAttrache is not prior art by
claiming priority to the ’280 application, the Board needed
to determine whether the ’707 application satisfied the
written description requirement. See In re NTP, Inc., 654
F.3d 1268, 1279 (Fed. Cir. 2011) (holding “priority can be
considered and determined during reexamination proceed-
ings,” which are governed by similar statutory language). 8
The Board therefore did not exceed its authority.
7 Although the government contends Arthrex for-
feited this argument, we exercise our discretion to address
it. See Singleton v. Wulff, 428 U.S. 106, 121 (1976) (“The
matter of what questions may be taken up and resolved for
the first time on appeal is one left primarily to the discre-
tion of the courts of appeals, to be exercised on the facts of
individual cases.”).
8 Compare 35 U.S.C. §§ 301, 302 (“Any person at any
time may file a request for reexamination by the Office of
any claim of a patent on the basis of any prior art [consist-
ing of patents or printed publications bearing on the pa-
tentability of that claim].”) with 35 U.S.C. § 311(b) (“A
petitioner in an inter partes review may request to cancel
as unpatentable 1 or more claims of a patent only on a
ground that could be raised under section 102 or 103 and
only on the basis of prior art consisting of patents or
printed publications.”).
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ARTHREX, INC. v. SMITH & NEPHEW, INC. 27
CONCLUSION
Arthrex does not persuade us that the Commissioner
violated the Appointments Clause, the FVRA, or the Con-
stitution’s separation of powers in denying Arthrex’s re-
hearing request. Nor does it identify reversible error in the
Board’s decision that ElAttrache anticipated the chal-
lenged claims of the ’907 patent. Accordingly, we affirm.
AFFIRMED
COSTS
The parties shall bear their own costs.