' Arthrex, PTAB, and the Unitary Executive | MTLR

Arthrex, PTAB, and the Unitary Executive

Patent law is often thought of as a statutory area of law, governed primarily by Title 35 of the U.S. Code and the long history of judicial opinions interpreting it. But with the passage of the AIA came the Patent Trial and Appeal Board (PTAB) and the rapid expansion of the role of the USPTO in not only granting patents, but in adjudicating disputes over them. Suddenly, administrative law was a fundamental piece of the puzzle of patent litigation. And while the PTAB has faced challenges to its validity and authority since, the Supreme Court seems to have ruled that, for now, it’s here to stay.

This doesn’t mean that PTAB’s path forward is free of any administrative hurdles, however. As is evident in United States v. Arthrex, Inc. (which heard oral arguments at the Supreme Court this March), the new frontier of administrative patent trials comes with the typical issues of constitutionality other administrative courts have encountered. In Arthrex, the familiar issue of the principal/inferior status of administrative officers is center-stage, with Smith & Nephew and the United States arguing for Administrative Patent Judges (APJs) as inferior officers (and thus preserving the current system where APJs are appointed solely by the Secretary of Commerce) while Arthrex touts them as principal officers (whose appointments require the advice and consent of the Senate).

The ultimate decision of the Supreme Court likely won’t cause a major shift in what technologies are granted patents, or even in the administrative process around patent disputes. After all, even if the Court determines the APJs to be unconstitutionally appointed, the system can stay so long as the appointment process is corrected to meet the requirements of Article II. But the traditional debate around the Appointments Clause takes on a new focus as it moves into the sphere of patent law: what role does, or should, the Executive Branch have in determining the validity of individual patents?

This question isn’t exactly new, of course. Through the USPTO, the executive branch grants individual patents in the first place, approving them as valid by nature of extending that protection to every applicant it approves. And there is a robust history of administrative involvement in patents and patent litigation through overlapping bodies, such as the FDA’s ANDA system for encouraging generic drug production and, by extension, patent infringement litigation.

But never has the issue of executive control of patent validity been so direct. By overseeing the deliberations and decisions on whether a patent is invalid, the APJs can be an extremely close line for the President or her administration to flip the switch on a patent that might otherwise be upheld, or vice-versa. Most PTAB cases would likely escape any sort of command-from-on-high, but high-profile technologies such as vital medical treatments could easily become targets for an administration’s agenda. For example, the Trump administration sued Gilead, Inc. for patent infringement on PrEP, the current leading preventative treatment for the spread of HIV, including a successful rebuff of Gilead’s attempts to invalidate the government’s patents through PTAB. The ongoing COVID-19 pandemic, and the accompanying debate over how to handle patent rights to vaccines and treatments, puts this issue into sharp focus as well. And it’s not hard to imagine non-medical patents that an administration might have a stake in, such as electric and autonomous vehicle technology or inventions that could make broadband access easy and affordable across the nation. By flexing its authority to appoint and fire the APJs who preside over these cases, an administration can have a significant impact on the availability of these technologies and the profits of the companies who hold patents on them.

The question, then, is whether this sort of executive influence in PTAB proceedings is desirable. More conservative proponents might worry about the democratic limits of extending power to an administration to override otherwise valid patents. By making APJs subject to Senate approval, it could ensure they have bipartisan approval and create distance from the whims of the President. Moreover, close executive control of PTAB proceedings risks undermining the legislative goals of Title 35, which seeks to foster innovation through patents, and might be seen as an unconstitutional shift of the powers enumerated in Article II, §8, Clause 8 away from Congress. Conversely, preventing close executive control of APJs through mechanisms such as for-cause removal might actually limit democratic responsiveness, allowing past-appointed APJs to persist in opposition to a duly-elected President and her administration. And the efficient execution of the PTAB proceedings could be encumbered by requiring time-consuming and sometimes contentious Senate approvals of each APJ. The relative speed, simplicity, and low cost of PTAB proceedings are a large part of their popularity. Bogging down the administration’s ability to carry out those proceedings would undermine the great success of PTAB’s quick and cost-effective trial alternatives.

The potential to influence APJ decisions seems unlikely to be heavily abused, either. Under the current scheme, the Secretary of Commerce appoints and terminates APJs, but the Director of the USPTO (though also appointed by the Secretary of Commerce) assigns APJs to cases. While this might change depending on how the Supreme Court lands on Arthrex, this creates a buffer to direct influence of the President or even the Secretary of Commerce on the APJs. Further, few individual patents are likely to be both at issue under the PTAB and important enough for an administration to take notice. Those that do, such as medical treatments that could greatly impact public health, are more likely to merit the administration stepping in anyways. In this way, a strong unitary executive might be an important safety valve for prioritizing public interest in the wide availability of a patented invention, such as a vaccine, over the default protection of intellectual property rights.

Regardless, the outcome of Arthrex could be important in shaping the role future administrations take with respect to patent law, and patent and administrative lawyers alike await the Court’s decision with bated breath.

* Nathaniel Cook is an Associate Editor on the Michigan Technology Law Review.

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