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The Patent Trial and Appeal Board Again Survives Supreme Court Review

By Gregory Curfman

For the generic drug and biosimilar industries, the Supreme Court’s recent decision in United States v. Arthrex, Inc. comes as a relief.

In his opinion, Chief Justice John Roberts allowed the Patent Trial and Appeal Board (PTAB) to survive and to continue to provide an alternative route for generic drugs and biosimilars to gain early market entry.

Patients, who may rely heavily on these less costly alternatives for their prescription drugs, will also benefit significantly from the Court’s decision in this case.

The Patent Trial and Appeal Board

The PTAB was established by the Leahy-Smith America Invents Act (2011) to provide an alternative mechanism for challenging the validity of patents without involving an Article III court. Any party may request PTAB review of a patent’s validity, a process referred to as inter partes review.

Since its inception, the PTAB has been particularly important to the generic drug and biosimilar industries, as the PTAB provides a more efficient pathway than Article III courts for challenging patents on originator products, thereby opening the door to earlier entry into the market.

Oil States Energy Services v. Greene’s Energy Group

In 2018, the constitutionality of the PTAB was challenged and reviewed by the Supreme Court in Oil States Energy Services v. Greene’s Energy Group. The plaintiff argued that patents may be invalidated only by Article III courts, not by administrative patent judges (APJs), who comprise the review panels of the PTAB, but the Court disagreed and ruled that the process of inter partes review conducted by the PTAB is constitutional.

United States v. Arthrex, Inc.

The constitutionality of the PTAB was also challenged in Arthrex — but on different grounds.

Arthrex, a medical device company, had one of its patents invalidated by the PTAB. On appeal to the Federal Circuit, Arthrex claimed that the APJs, who were inferior officers appointed by the Secretary of Commerce, not by the President, were nonetheless functioning as principal officers, since their rulings could not be reviewed or overturned by a superior officer.  The America Invents Act did not contain a provision authorizing such review by a superior officer.

Arthrex argued that the Director of the US Patent and Trademark Office (USPTO), who is a principal officer and responsible for signing off on all issued patents, could have his rulings overturned by inferior officers. APJs, Arthrex claimed, were effectively acting as principal officers, yet they had not been nominated to their positions by the President nor confirmed by the Senate, as would be required for principal officers by the Appointments Clause of Article II. This administrative arrangement, Arthrex contended, was constitutionally untenable.

The Federal Circuit’s Remedy

The Federal Circuit agreed with Arthrex that APJs were acting as principal officers, but the court provided a constitutional remedy by severing the APJs’ tenure provision in the America Invents Act, thus demoting APJs to the status of inferior officers. None of the parties in the case, however, were satisfied with this remedy, leading to the appeal to the Supreme Court for resolution.

The Supreme Court’s Opinion in Arthrex

In his opinion for the Court, Chief Justice Roberts agreed with Arthrex and the Federal Circuit that APJs were, effectively, principal officers and that the Constitution’s Appointments Clause had been violated.

But he offered a different remedy from that of the Federal Circuit, in which he severed language from §6(c) of the America Invents Act to permit the Director of the USPTO to review (and potentially overrule) patent validity decisions of the PTAB.

The Chief Justice wrote:

“In sum, we hold that 35 U.S.C. §6(c) is unenforceable as applied to the Director insofar as it prevents the Director from reviewing the decisions of the PTAB on his own. The Director may engage in such review and reach his own decision. When reviewing such a decision by the Director, a court must decide the case ‘conformably to the constitution, disregarding the law’ placing restrictions on his review authority in violation of Article II. Marbury v. Madison, 1 Cranch 137, 178 (1803).”

The Chief Justice’s citation of this historic case places an exclamation point on the remedy, which received a 7-2 vote among the justices in the Arthrex judgment.

Justice Gorsuch’s Partial Dissent

Justice Gorsuch, while concurring in the Court’s opinion in reference to the constitutional violation of the Appointments Clause, dissented in that part of the opinion providing the remedy.

Arthrex asked the Court to rule “the entire regime of inter partes review unconstitutional,” and Justice Gorsuch would have granted such relief to Arthrex. In his Arthrex dissent, he refers frequently to his comparable dissent in Oil States, in which he underscored his view that the PTAB and inter partes review constituted a breach of the Constitution’s separation of powers.

In his Oil States dissent, he wrote:

“In fact, from the time it established the American patent system in 1790 until about 1980, Congress left the job of invalidating patents at the federal level to courts alone.”

In his Arthrex dissent, he echoed his view on the matter that he previously expressed in his Oil States dissent:

“For most of the Nation’s history, an issued patent was considered a vested property right that could be taken from an individual only through a lawful process before a court…I continue to think this court’s recent decision in Oil States—upsetting this traditional understanding and allowing officials in the Executive Branch to ‘cancel’ already-issued patents—departed from the Constitution’s separation of powers.”

The Severability Analysis

In addition to his concern in the Arthrex dissent about separation of powers, Justice Gorsuch also underscored his dismay about the Court’s severability analysis:

“While the Court’s merits analysis ensures that executive power properly resides in the Executive Branch, its severability analysis seemingly confers legislative power to the Judiciary—endowing us with the authority to make a raw policy choice between competing lawful options.”

While the Chief Justice claimed to have applied severability as a tailored approach to preserving the PTAB, Justice Gorsuch interpreted the matter differently. He criticized the Court’s severability analysis as an example of simple policymaking, thereby exceeding the Court’s judicial authority and violating the Constitution’s separation of powers.

Review of PTAB Decisions

In addition to the remedy of severability, the Court also remanded to the Acting Director of the USPTO for him to decide whether to rehear the original PTAB petition claiming patent invalidity. In concluding his opinion, the Chief Justice noted that the Director is by no means required to review all PTAB decisions, but, to avoid a constitutional violation, he must have the authority to review them at his discretion.

It will be of considerable interest to the patent community to see if the Acting Director actually decides to rehear this petition, and to what extent he decides to rehear other PTAB inter partes reviews in the future.


Gregory Curfman, M.D. is the Senior Advisor and Physician Scholar in Residence for the Solomon Center for Health Law and Policy at Yale Law School. He is also the Deputy Editor of JAMA.

The Petrie-Flom Center Staff

The Petrie-Flom Center staff often posts updates, announcements, and guests posts on behalf of others.

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