Kathi Vidal has been in her new position as Senate-confirmed Director of the Patent & Trademark Office (USPTO) for nearly two months, but the echo caused by the Supreme Court’s Arthrex decision last June and the Biden administration’s year-long delay in replacing previous USPTO Director Andrei Iancu is still reverberating. Last week, the Federal Circuit issued a new opinion in the Arthrex dispute – this time over whether Acting Director Drew Hirshfeld had the authority to issue a final agency decision in an inter partes review of Arthrex’s patent.
The Patent Trial and Appeal Board (PTAB) initially found claims in Arthrex’s patent were anticipated by prior art. Arthrex appealed the decision, famously challenging whether the PTAB judges, who are not presidentially-appointed nor confirmed by the Senate, had constitutional authority to issue a final decision. The Supreme Court ultimately said no, but decided the problem could be fixed by allowing the USPTO Director discretion to conduct a rehearing of any PTAB decision. The Court remanded to the PTAB, where Arthrex requested a rehearing that then-Acting Director Hirshfeld denied. Arthrex appealed again, arguing that Acting Director Hirshfeld lacked authority under the Supreme Court’s decision because he was also not appointed or confirmed to the position.
The Federal Circuit found “indistinguishable” precedent (U.S. v. Eaton, 169 U.S. 331 (1898)) for an inferior officer performing the duties of a presidentially-appointed officer on a temporary, acting basis. The Court also held that the Federal Vacancies Reform Act (FVRA) did not prevent Acting Director Hirshfeld from making final agency decisions in the absence of an appointed Director. According to the Court, the FVRA applies only to “non-delegable functions and duties.” In contrast, “the Director’s authority to decide requests for rehearing Board decisions is delegable.” Finally, the Court rejected Arthrex’s separation of powers argument because the president has “unfettered power” to name an Acting Director.
Is this the end of the issue? Arthrex has the option to appeal and perhaps the Supreme Court will find flaws in the Federal Circuit’s analysis that require clarification. After all, this decision may have consequences to other agencies. However, the Federal Circuit’s analysis refers several times to a quote from the Supreme Court’s Arthrex opinion ordering “a remand to the Acting Director for him to decide whether to rehear” the petition (emphasis added). By the time the Supreme Court rendered its opinion, former Director Iancu had already resigned and Mr. Hirshfeld was already in place as the Acting Director. The Federal Circuit’s reasoning portrays the Supreme Court as providing implicit recognition and approval of an Acting Director overseeing an Arthrex rehearing. If that inference is correct, then the Supreme Court may not see a reason to hear from Arthrex a second time.
The team at Panitch Schwarze is dedicated to crafting effective and efficient solutions for succeeding in IPRs and other post-grant proceedings before the PTAB. Stephen Murray has over fifteen years of experience in preparing and prosecuting patent applications. He also has extensive experience in post-grant proceedings at the Patent Trial and Appeal Board, having successfully represented both petitioners and patent owners, and is the Co-Chair of the firm’s Post-Grant Practice Group.