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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`Case: 18-2140 Document: 193 Page: 2 Filed: 05/27/2022
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`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.
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`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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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`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.
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`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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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`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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`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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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`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.
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`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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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`(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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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`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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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`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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`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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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`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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`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 m