`
`IN THE
`Supreme Court of the United States
`————
`UNITED STATES OF AMERICA,
`Petitioner,
`
`v.
`ARTHREX, INC., ET AL.,
`Respondents.
`
`————
`On Writ of Certiorari
`to the United States Court of Appeals
`for the Federal Circuit
`————
`REPLY BRIEF FOR ARTHREX, INC.
`————
`JEFFREY A. LAMKEN
`Counsel of Record
`ROBERT K. KRY
`JAMES A. BARTA
`MOLOLAMKEN LLP
`The Watergate, Suite 500
`600 New Hampshire Ave., N.W.
`Washington, D.C. 20037
`(202) 556-2000
`jlamken@mololamken.com
`
`JORDAN A. RICE
`MOLOLAMKEN LLP
`300 North LaSalle Street
`Chicago, IL 60654
`(312) 450-6700
`
`
`ANTHONY P. CHO
`DAVID J. GASKEY
`JESSICA E. FLEETHAM
`DAVID L. ATALLAH
`CARLSON, GASKEY & OLDS, P.C.
`400 West Maple Road, Suite 350
`Birmingham, MI 48009
`(248) 988-8360
`
`CHARLES W. SABER
`SALVATORE P. TAMBURO
`BLANK ROME LLP
`1825 Eye Street, N.W.
`Washington, D.C. 20006
`(202) 420-2200
`
`JOHN W. SCHMIEDING
`TREVOR ARNOLD
`ARTHREX, INC.
`1370 Creekside Blvd.
`Naples, FL 34108
`(239) 643-5553
`
`Counsel for Arthrex, Inc.
`(additional captions on inside cover)
`(cid:58)(cid:44)(cid:47)(cid:54)(cid:50)(cid:49)(cid:16)(cid:40)(cid:51)(cid:40)(cid:54)(cid:3)(cid:51)(cid:53)(cid:44)(cid:49)(cid:55)(cid:44)(cid:49)(cid:42)(cid:3)(cid:38)(cid:50)(cid:17)(cid:15)(cid:3)(cid:44)(cid:49)(cid:38)(cid:17)(cid:3)(cid:3)(cid:3)(cid:177)(cid:3)(cid:3)(cid:3)(cid:11)(cid:21)(cid:19)(cid:21)(cid:12)(cid:3)(cid:26)(cid:27)(cid:28)(cid:16)(cid:19)(cid:19)(cid:28)(cid:25)(cid:3)(cid:3)(cid:3)(cid:177)(cid:3)(cid:3)(cid:3)(cid:58)(cid:36)(cid:54)(cid:43)(cid:44)(cid:49)(cid:42)(cid:55)(cid:50)(cid:49)(cid:15)(cid:3)(cid:39)(cid:17)(cid:38)(cid:17)(cid:3)(cid:21)(cid:19)(cid:19)(cid:19)(cid:21)(cid:3)
`
`
`
`
`
`
`
`————
`SMITH & NEPHEW, INC., ET AL.,
`Petitioners,
`
`v.
`ARTHREX, INC., ET AL.,
`Respondents.
`
`————
`ARTHREX, INC.,
`Petitioner,
`
`v.
`SMITH & NEPHEW, INC., ET AL.,
`Respondents.
`
`————
`
`
`(cid:3)
`
`(cid:3)
`
`
`
`QUESTIONS PRESENTED
`1. Whether, for purposes of the Appointments Clause,
`U.S. Const. art. II, § 2, cl. 2, administrative patent judges
`of the U.S. Patent and Trademark Office are principal
`officers who must be appointed by the President with the
`Senate’s advice and consent, or “inferior Officers” whose
`appointment Congress has permissibly vested in a de-
`partment head.
`2. Whether, if administrative patent judges are prin-
`cipal officers, the court of appeals properly cured any
`Appointments Clause defect in the current statutory
`scheme prospectively by severing the application of 5
`U.S.C. § 7513(a) to those judges.
`
`(i)
`
`
`
`ii
` CORPORATE DISCLOSURE STATEMENT
`Pursuant to this Court’s Rule 29.6, Arthrex, Inc. states
`that the corporate disclosure statement included in its
`opening brief remains accurate.
`
`
`
`
`
`
`TABLE OF CONTENTS
`
`Preliminary Statement ...............................................
`Argument ......................................................................
`I.(cid:3) The Court of Appeals’ Severance
`Remedy Was Insufficient To Cure
`the Violation .....................................................
`A.(cid:3) The Appointments Clause
`Requires Review of Administrative
`Patent Judges’ Decisions by
`Superior Executive Officers ...................
`B.(cid:3) Other Oversight Powers Are Not
`Substitutes for Review ............................
`II.(cid:3) The Court of Appeals’ Severance
`Remedy Defies Congressional Intent ..........
`A.(cid:3) Congress Would Not Have
`Enacted the Statute Without
`Tenure Protections ..................................
`B.(cid:3) Congress Should Determine the
`Appropriate Remedy ...............................
`C.(cid:3) Arthrex Is Entitled to Dismissal ...........
`III.(cid:3) Smith & Nephew’s Remaining
`Arguments Are Not Properly
`Before the Court ..............................................
`Conclusion .....................................................................
`
`Page
`1
`3
`
`3
`
`3
`
`11
`
`14
`
`14
`
`16
`19
`
`20
`23
`
`(iii)
`
`
`
`iv
`TABLE OF AUTHORITIES
`
`Page(s)
`
`12
`5
`
`16
`15
`
`12
`
`12
`
`16
`4
`5
`5
`
`CASES
`Abrams v. Soc. Sec. Admin.,
`703 F.3d 538 (Fed. Cir. 2012) ...........................
`Auffmordt v. Hedden, 137 U.S. 310 (1890) ...........
`Barr v. Am. Ass’n of Pol. Consultants,
`Inc., 140 S. Ct. 2335 (2020) ................................
`Bowsher v. Synar, 478 U.S. 714 (1986) ................
`Cuozzo Speed Techs., LLC v. Lee,
`136 S. Ct. 2131 (2016) .........................................
`Edmond v. United States,
`520 U.S. 651 (1997) ....................................... passim
`Facebook, Inc. v. Windy City Innovations,
`LLC, 973 F.3d 1321 (Fed. Cir. 2020) ...............
`Free Enter. Fund v. Pub. Co. Acct.
`Oversight Bd., 561 U.S. 477 (2010) ..................
`Freytag v. Comm’r, 501 U.S. 868 (1991) ..............
`Givens v. Comm’r, 90 T.C. 1145 (1988) ................
`Guerra v. Comm’r, 110 T.C. 271 (1998) ...............
`Harper v. Va. Dep’t of Tax’n,
`509 U.S. 86 (1993) ...............................................
`Humphrey’s Ex’r v. United States,
`295 U.S. 602 (1935) .............................................
`Kuretski v. Comm’r, 755 F.3d 929
`(D.C. Cir. 2014) ...................................................
`Lucia v. SEC, 138 S. Ct. 2044 (2018) ....................
`Marathon Pipeline Co. v. N. Pipeline
`Constr. Co., 12 B.R. 946 (D. Minn. 1981) ........
`Medtronic, Inc. v. Robert Bosch Healthcare
`Sys., Inc., 839 F.3d 1382 (Fed. Cir. 2016) .......
`
`20
`
`18
`
`5
`19
`
`20
`
`13
`
`
`
`23
`
`v
`TABLE OF AUTHORITIES—Continued
`Page(s)
`Morrison v. Olson, 487 U.S. 654 (1988) ...............
`6
`N. Pipeline Constr. Co. v. Marathon
`Pipe Line Co., 458 U.S. 50 (1982) ................. 19, 20
`Reynoldsville Casket Co. v. Hyde,
`514 U.S. 749 (1995) .............................................
`Seila Law LLC v. Consumer Fin. Prot.
`Bureau, 140 S. Ct. 2183 (2020) ........... 10, 11, 16, 19
`Tokyo Kikai Seisakusho, Ltd. v. United
`States, 529 F.3d 1352 (Fed. Cir. 2008) ........... 13, 17
`United States v. Booker,
`543 U.S. 220 (2005) .............................................
`United States v. Eaton,
`169 U.S. 331 (1898) .............................................
`Utica Packing Co. v. Block,
`781 F.2d 71 (6th Cir. 1986) ................................
`CONSTITUTIONAL PROVISIONS
`U.S. Const. art. II, § 2 ....................................... passim
`U.S. Const. art. III .................................................
`4
`STATUTES, REGULATIONS,
`AND RULES
`Patent Act:
`17
`35 U.S.C. § 3(b)(3)(A) .........................................
`35 U.S.C. § 6(c) .................................................. 3, 17
`35 U.S.C. § 131 ....................................................
`6
`35 U.S.C. § 141 ....................................................
`3
`35 U.S.C. § 305 ....................................................
`7
`35 U.S.C. § 314(d) ...............................................
`22
`35 U.S.C. § 318(a) ............................................ 13, 17
`35 U.S.C. § 318(b) ...............................................
`11
`
`12
`
`22
`
`8
`
`
`
`vi
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`Patent Act (2006):
`35 U.S.C. § 314(a) (2006) ....................................
`5 U.S.C. § 572 ...........................................................
`5 U.S.C. § 7121 .........................................................
`5 U.S.C. § 7122 .........................................................
`5 U.S.C. § 7511(b)(8) ...............................................
`5 U.S.C. § 7521 .........................................................
`10 U.S.C. § 942(c) ....................................................
`26 U.S.C. § 7443(f ) ..................................................
`31 U.S.C. § 3720D(c) ...............................................
`38 U.S.C. § 7253(f ) ..................................................
`41 U.S.C. § 7105(b)(3) .............................................
`41 U.S.C. § 7105(d)(2) .............................................
`Act of July 4, 1836, ch. 357, § 7,
`5 Stat. 117, 119 ....................................................
`Act of July 8, 1870, ch. 230, § 31,
`16 Stat. 198, 202 ..................................................
`Pub. L. No. 803, § 21(a),
` 44 Stat. 1424, 1436 (1927) .................................
`Pub. L. No. 92-576, § 15(a),
`86 Stat. 1251, 1261 (1972) ..................................
`Pub. L. No. 95-563, § 8(a)(1),
`92 Stat. 2383, 2385 (1978) ..................................
`Pub. L. No. 99-603, § 102(a),
`100 Stat. 3359, 3374 (1986) ................................
`Pub. L. No. 109-163, 119 Stat. 3136 (2006) ..........
`§ 847(a), 119 Stat. at 3391 ..................................
`§ 847(d)(2)(B), 199 Stat. at 3393........................
`
`7
`9
`9
`9
`15
`15
`18
`18
`8
`18
`15
`15
`
`6
`
`6
`
`10
`
`10
`
`10
`
`10
`10
`10
`10
`
`
`
`vii
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`15
`9
`6
`15
`21
`22
`14
`14
`5
`
`Leahy-Smith America Invents Act,
`Pub. L. No. 112-29, 125 Stat. 284 (2011) ...........
`10 C.F.R. § 2.1320(b)(2) ..........................................
`37 C.F.R. § 1.181(a)(1) ............................................
`39 C.F.R. § 3013.2(a) ...............................................
`S. Ct. R. 14.1(a) ........................................................
`S. Ct. R. 15.2 ............................................................
`Fed. Cir. IOP 10.5 ...................................................
`Fed. Cir. IOP 14.3 ...................................................
`Tax Ct. R. 182(d) .....................................................
`LEGISLATIVE MATERIALS
`H.R. Rep. No. 104-784 (1996) ................................
`157 Cong. Rec. 12,984 (Sept. 6, 2011) ...................
`EXECUTIVE MATERIALS
`Constitutional Limitations on Federal
`Government Participation in Binding
`Arbitration, 19 Op. O.L.C. 208 (1995) .............
`Designating an Acting Attorney General,
`2018 WL 6131923 (O.L.C. Nov. 14, 2018) .......
`Officers of the United States Within the
`Meaning of the Appointments Clause,
`31 Op. O.L.C. 73 (2007) ......................................
`Secretary of Education Review of
`Administrative Law Judge Decisions,
`15 Op. O.L.C. 8 (1991) ...................................... 9, 10
`Special Master for Troubled Asset Relief
`Program Executive Compensation,
`34 Op. O.L.C. 219 (2010) ....................................
`
`6
`
`10
`
`16
`16
`
`5
`
`8
`
`
`
`viii
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`OTHER AUTHORITIES
`Michael Asimow, Admin. Conf. of the U.S.,
`Federal Administrative Adjudication
`Outside the Administrative Procedure
`Act (2019) .............................................................
`Kent Barnett, To the Victor Goes the Toil—
`Remedies for Regulated Parties in
`Separation-of-Powers Litigation,
`92 N.C. L. Rev. 481 (2014) ................................
`Kent Barnett, et al., Admin. Conf. of the U.S.,
`Non-ALJ Adjudicators in Federal
`Agencies (Sept. 24, 2018) ..................................
`William Baude, Adjudication Outside Article
`III, 133 Harv. L. Rev. 1511 (2020) ...................
`Steven G. Calabresi & Gary Lawson,
`The Unitary Executive, Jurisdiction
`Stripping, and the Hamdan Opinions,
`107 Colum. L. Rev. 1002 (2007) .........................
`P.J. Federico, Early Interferences,
`19 J. Pat. Off. Soc’y 761 (1937) .........................
`P.J. Federico, Evolution of Patent Office
`Appeals, 22 J. Pat. Off. Soc’y 838 (1940) .........
`Anthony A. Hartmann, PTAB Finds
`No Derivation in First Derivation
`Proceeding, Finnegan AIA Blog
`(Mar. 25, 2019) ....................................................
`Patent Trial & Appeal Board, Appeal and
`Interference Statistics (Sept. 30, 2020) ...........
`Patent Trial & Appeal Board,
`Trial Statistics (Sept. 2020) .............................
`
`9
`
`20
`
`8
`
`5
`
`4
`
`6
`
`6
`
`18
`
`18
`
`18
`
`
`
`ix
`TABLE OF AUTHORITIES—Continued
`Page(s)
`
`7
`
`12
`
`2 The Records of the Federal Convention
`of 1787 (Max Farrand ed., 1911) ......................
`U.S. Br. in Cuozzo Speed Techs., LLC v. Lee,
`No. 15-446 (Mar. 2016) ......................................
`U.S. Supp. Br. in In re Boloro Glob. Ltd.,
`No. 19-2349, Dkt. 27 (Fed. Cir. filed
`Mar. 20, 2020) ................................................... 6, 18
`U.S. Supp. Br. in Polaris Innovations Ltd.
`v. Kingston Tech. Co., No. 18-1768,
`Dkt. 96 (Fed. Cir. filed Jan. 6, 2020) ...............
`Christopher J. Walker & Melissa
`F. Wasserman, The New World
`of Agency Adjudication,
`107 Calif. L. Rev. 141 (2019) ............................. 8, 9
`
`22
`
`
`
`IN THE
`Supreme Court of the United States
`————
`NO. 19-1434
`UNITED STATES OF AMERICA,
`Petitioner,
`
`v.
`ARTHREX, INC., ET AL.,
`Respondents.
`
`————
`NO. 19-1452
`SMITH & NEPHEW, INC., ET AL.,
`Petitioners,
`
`v.
`ARTHREX, INC., ET AL.,
`Respondents.
`
`————
`NO. 19-1458
`ARTHREX, INC.,
`Petitioner,
`
`v.
`SMITH & NEPHEW, INC., ET AL.,
`Respondents.
`
`————
`On Writ of Certiorari
` to the United States Court of Appeals
`for the Federal Circuit
`————
`REPLY BRIEF FOR ARTHREX, INC.
`————
`PRELIMINARY STATEMENT
`Neither the government nor Smith & Nephew cites a
`single case where this Court has upheld, much less im-
`posed, a regime remotely similar to the one the Federal
`Circuit imposed below. The standard federal model for
`
`
`
`
`2
`agency adjudication has long granted tenure protections
`to ensure the impartiality of administrative judges, while
`granting transparent review power to accountable agency
`heads. The court below created a regime that has neither
`impartiality nor accountability.
`Administrative patent judges make final decisions in-
`volving billions of dollars of intellectual property that
`shape the course of innovation across entire industries.
`But they now face the threat of being fired if their supe-
`riors—for reasons unknown to the parties—disagree.
`Their rulings may be driven, not by the facts and law, but
`by a desire to please their bosses. Superiors, meanwhile,
`must interfere behind the scenes to try to achieve desired
`outcomes, because the statute denies them any trans-
`parent power of review. Superiors thus avoid account-
`ability for their actions—to the President and the public
`alike. That structure is anathema to a constitutional
`provision “designed to preserve political accountability”
`so the public knows whom to blame for poor decisions.
`Edmond v. United States, 520 U.S. 651, 663 (1997).
`Smith & Nephew invokes Congress’s need for “flexi-
`bility in defining and filling federal offices.” S&N Reply
`51. The Appointments Clause does grant Congress flexi-
`bility—but only within constitutional bounds. And that
`flexibility is precisely why the court of appeals erred by
`imposing its own preferred remedy rather than letting
`Congress decide. The court’s remedy is unrecognizable
`in the annals of American administrative law. The Ap-
`pointments Clause does not permit it. Congress never
`would have enacted it. The court’s severance remedy
`should be reversed.
`
`
`
`
`
`3
`ARGUMENT
`I.(cid:3) THE COURT OF APPEALS’ SEVERANCE REMEDY
`WAS INSUFFICIENT TO CURE THE VIOLATION
`Even shorn of tenure protections, APJs still issue the
`Executive Branch’s final word, revoking valuable property
`rights with no opportunity for review by any superior
`officer. That power alone makes them principal officers.
`The court of appeals’ remedy was no remedy at all.
`A.(cid:3) The Appointments Clause Requires Review of
`Administrative Patent Judges’ Decisions by
`Superior Executive Officers
`The government does not dispute that neither the Di-
`rector nor any other superior executive officer can review
`APJ decisions. Only the Board can grant rehearing. 35
`U.S.C. § 6(c). And only the Federal Circuit can review
`decisions on appeal. Id. § 141. No superior executive
`officer can “single-handedly review, nullify or reverse [an
`APJ’s] decision.” Pet. App. 10a. That remains the case,
`whether APJs have tenure protections or not.
`1. That absence of review cannot be squared with
`precedent. Edmond treats review of decisions as an
`indispensable element of supervision for administrative
`judges: “What is significant is that the judges * * * have
`no power to render a final decision on behalf of the
`United States unless permitted to do so by other Execu-
`tive officers.” Edmond v. United States, 520 U.S. 651,
`665 (1997). Edmond thus makes clear that review and
`correction by a principal officer are required.1
`
`
`1 Arthrex never “agree[d]” that severance would cure the violation.
`Compare Gov’t Reply 33 with Arthrex Pet. in No. 19-1458, at 13 n.2.
`
`
`
`
`
`4
`Smith & Nephew quotes Edmond ’s observation that
`there is no “exclusive criterion” for inferior officers.
`S&N Reply 21. But the fact that different considerations
`may be relevant for different types of officers does not
`mean that for this category—administrative judges who
`do nothing but decide cases—Congress can eliminate the
`one oversight mechanism crucial to ensure account-
`ability. That Edmond considered other oversight mech-
`anisms in addition to review proves only that review
`alone may not be sufficient to make administrative judges
`inferior officers—not that Congress can eliminate review
`entirely. Arthrex Br. 24-25.2
`The Constitution’s other uses of the term “inferior”
`confirm as much. Cf. S&N Br. 21. Article III refers to
`lower federal courts as “inferior” precisely because their
`decisions are subject to this Court’s review. See Steven
`G. Calabresi & Gary Lawson, The Unitary Executive,
`Jurisdiction Stripping, and the Hamdan Opinions, 107
`Colum. L. Rev. 1002, 1006-1007 (2007). Courts that issued
`unreviewable decisions in minor matters might be “lesser”
`in quality or rank. But they would not be “inferior.” See
`Edmond, 520 U.S. at 662-663.
`The government does not deny that this Court has
`never held an administrative judge to be an inferior offi-
`cer absent some superior who could review his decisions.
`Smith & Nephew argues otherwise based on Freytag v.
`Commissioner, 501 U.S. 868 (1991). Even though the
`Tax Court could review special trial judge decisions, it
`
`
`2 For policymakers, removal may well be sufficient: Removing the
`policymaker changes the policy. By contrast, removing an adminis-
`trative judge does not alter decisions already made. Those decisions
`stand as the Executive Branch’s final word. Arthrex Br. 22.
`
`
`
`
`
`5
`claims, that court was not an Executive Branch entity
`and never actually reviewed any decisions. S&N Reply
`27-28. That is wrong on both counts. The Tax Court is
`an Executive Branch entity. See Kuretski v. Comm’r,
`755 F.3d 929, 939-945 (D.C. Cir. 2014) (“[T]he Tax Court
`exercises its authority as part of the Executive Branch.”),
`cert. denied, 135 S. Ct. 2309 (2015); William Baude, Adju-
`dication Outside Article III, 133 Harv. L. Rev. 1511,
`1563-1567 (2020). And it has reviewed special trial judge
`orders—dozens if not hundreds of times. See, e.g.,
`Guerra v. Comm’r, 110 T.C. 271, 271-272 (1998); Givens
`v. Comm’r, 90 T.C. 1145, 1145 (1988); Tax Ct. R. 182(d).
`2. The government and Smith & Nephew find no sup-
`port in Patent Office history. Gov’t Reply 25-30; S&N
`Reply 5-12. For more than a century, Congress lodged
`final decisionmaking authority in presidentially appointed,
`Senate-confirmed officers like the Commissioner and
`examiners-in-chief. Arthrex Br. 3-4. The handful of sup-
`posed counterexamples crumble upon inspection.
`The arbitrators who decided interferences and other
`limited matters under the 1793 and 1836 statutes were
`nothing like APJs. Cf. Gov’t Reply 25-26; S&N Reply 6-
`7. They acted in only one specific case. An arbitrator
`who decides a single case is not an “officer,” let alone a
`principal officer, because “[h]is position is without tenure,
`duration, continuing emolument, or continuous duties,
`and he acts only occasionally and temporarily.” Auff-
`mordt v. Hedden, 137 U.S. 310, 327 (1890); see also Con-
`stitutional Limitations on Federal Government Partici-
`pation in Binding Arbitration, 19 Op. O.L.C. 208, 216-
`219 (1995) (“arbitrators are not officers” because “their
`service does not bear the hallmarks of a constitutional
`office—tenure, duration, emoluments, and continuing du-
`ties” and they “do not occupy a position of employment
`
`
`
`
`
`6
`within the federal government”); Officers of the United
`States Within the Meaning of the Appointments Clause,
`31 Op. O.L.C. 73, 100-111 (2007) (canvassing Framing-era
`authorities). At most, the temporary and narrow nature
`of the assignments makes arbitrators inferior officers,
`even absent agency review. See Morrison v. Olson, 487
`U.S. 654, 672 (1988) (independent counsel “appointed
`essentially to accomplish a single task”).3
`The patent examiners who consider patent applica-
`tions are irrelevant too. Cf. Gov’t Reply 28; S&N Reply
`7. Their decisions have always been subject to agency
`review. The 1870 statute provided that “the commissioner
`shall cause an examination to be made * * * and if on such
`examination it shall appear that the claimant is justly
`entitled to a patent * * * issue a patent therefor.” Act of
`July 8, 1870, ch. 230, § 31, 16 Stat. 198, 202 (emphasis
`added); see also Act of July 4, 1836, ch. 357, § 7, 5 Stat.
`117, 119-120. The current statute is almost identical. 35
`U.S.C. § 131. That language does not grant examiners
`any unreviewable authority. “Unlike an IPR, which by
`statute the Board must ‘conduct,’ examination is entirely
`within the control of the Director,” who has “sole authority
`over the decision whether to grant the requested patent.”
`U.S. Supp. Br. in In re Boloro Glob. Ltd., No. 19-2349,
`Dkt. 27, at 3, 7-9 (Fed. Cir. filed Mar. 20, 2020) (citation
`omitted); see also 37 C.F.R. § 1.181(a)(1) (permitting peti-
`
`
`3 Arbitrations under the early statutes were exceedingly rare. See
`P.J. Federico, Early Interferences, 19 J. Pat. Off. Soc’y 761, 762
`(1937) (about one case per year under 1793 statute); P.J. Federico,
`Evolution of Patent Office Appeals, 22 J. Pat. Off. Soc’y 838, 841
`(1940) (nine cases total under short-lived 1836 statute). Arbitrations
`under the 1793 statute, moreover, had little effect: The losing party
`could obtain a patent regardless. See Federico (1937), supra, at 763.
`
`
`
`
`
`7
`tions for Director review). Unlike here, the Director has
`the final word.4
`The 1927 statute eliminating appeals from examiners-
`in-chief to the Commissioner is beside the point. Cf.
`Gov’t Reply 27-28; S&N Reply 7-8. Examiners-in-chief
`themselves remained presidentially appointed, Senate-
`confirmed officers until 1975. Arthrex Br. 4. The Com-
`missioner’s role as “chief officer” does not prove Congress
`understood examiners-in-chief to be inferior officers. Cf.
`Gov’t Reply 27-28. The Framers recognized, for example,
`that there could be “Superior Officers below Heads of
`Departments.” 2 The Records of the Federal Convention
`of 1787, at 627 (Max Farrand ed., 1911) (Madison). The
`best evidence of Congress’s understanding of the status
`of examiners-in-chief is that Congress gave them power
`to render the Patent Office’s final word while providing
`for their appointment in the manner required for princi-
`pal officers. Arthrex Br. 4.5
`Finally, the 1952 statute permitting examiners to “act
`as a member of the Board” for up to six months is no
`precedent either. Cf. Gov’t Reply 28-29. “Acting” offi-
`cers are inferior even when they wield principal-officer
`powers: “[A] subordinate officer * * * charged with the
`performance of the duty of the superior for a limited time
`and under special and temporary conditions * * * is not
`
`4 Smith & Nephew urges that examiners had the “de facto last word”
`because, as a practical matter, the Commissioner could not review
`every decision. S&N Reply 7. But the power to review, not its
`exercise, is what matters. Arthrex Br. 26-27. The Director has that
`same broad power over reexaminations too. 35 U.S.C. § 305; 35 U.S.C.
`§ 314(a) (2006).
`5 Smith & Nephew’s claim that “Arthrex does not actually dispute”
`Congress’s intent is thus wrong. S&N Reply 6.
`
`
`
`
`
`8
`thereby transformed into the superior and permanent
`official.” United States v. Eaton, 169 U.S. 331, 343 (1898);
`see Designating an Acting Attorney General, 2018 WL
`6131923, at *5-17 (O.L.C. Nov. 14, 2018).6
`3. The government and Smith & Nephew scour other
`agencies for counterexamples. Gov’t Reply 23; S&N
`Reply 26. Those efforts come up short. There is no se-
`rious dispute that the “vast majority” of agency adjudica-
`tion regimes permit superior officer review. Christopher
`J. Walker & Melissa F. Wasserman, The New World of
`Agency Adjudication, 107 Calif. L. Rev. 141, 157 (2019).
`The Board is a sharp break from that tradition.
`Smith & Nephew cites one study reporting that cer-
`tain agency hearings “permit no administrative appeal at
`all.” S&N Reply 26. By the study’s own account, how-
`ever, “[t]he matters in which the [officer] could issue a
`final decision without the possibility of any appellate re-
`view were limited to what appear to be extremely low-
`volume adjudications: CFTC wage-garnishment proceed-
`ings, labor arbitrations within the Alcohol and Tobacco
`Tax and Trade Bureau of Treasury, public/private part-
`nerships with NASA, and certain license-transfer agree-
`ments before the NRC.” Kent Barnett, et al., Admin.
`Conf. of the U.S., Non-ALJ Adjudicators in Federal
`Agencies 35 (Sept. 24, 2018). Moreover, none of those
`four examples actually supports Smith & Nephew’s posi-
`tion. Two are situations where the agency had authority
`to provide review, but chose not to. See 31 U.S.C.
`
`
`6 The 1939 statute permitting bills in equity likewise proves nothing.
`Cf. S&N Reply 8. Parties still had the right to seek administrative
`review. Arthrex Br. 33-34. Lower federal courts are “inferior” to
`this Court even though parties might decline to appeal.
`
`
`
`
`
`9
`§ 3720D(c) (wage-garnishment proceedings); 5 U.S.C. § 572
`(authority for NASA ombudsman). The other two involve
`arbitrations or orders that are subject to principal officer
`review. See 5 U.S.C. §§ 7121-7122 (labor arbitrations); 10
`C.F.R. § 2.1320(b)(2) (NRC license-transfer orders).
`The government points to another study to claim “sub-
`stantial variety” in review structures. Gov’t Reply 23
`(citing Michael Asimow, Admin. Conf. of the U.S., Federal
`Administrative Adjudication Outside the Administra-
`tive Procedure Act app. A (2019)). Mere “variety” does
`not imply elimination of review entirely. “In addition to
`the PTAB, [only] two agencies out of Asimow’s ten case
`studies * * * lacked higher-level agency reconsideration
`of their decisions.” Walker & Wasserman, supra, at 172
`(citing draft). And neither helps the government.7
`The government cites three statutes that designate
`subordinates’ decisions as “final” without expressly pro-
`viding for principal officer review. Gov’t Reply 23. But
`the government itself has repeatedly denied that such
`language precludes review. In 1991, the Office of Legal
`Counsel ruled that the Secretary of Education could
`review ALJ decisions despite a statute stating that they
`“shall be considered * * * final agency action.” Secretary
`of Education Review of Administrative Law Judge Deci-
`sions, 15 Op. O.L.C. 8, 13 (1991). A contrary construc-
`tion, it noted, “would raise serious questions under the
`Appointments Clause” because “[a]n ALJ whose deci-
`sion could not be reviewed by the Secretary * * * would
`
`
`7 One was the Board of Veterans’ Appeals; its decisions are review-
`able by an administrative court. Arthrex Br. 31. The other was the
`Civilian Board of Contract Appeals, one of the government’s three
`examples discussed next.
`
`
`
`
`
`10
`appear to be acting as a principal officer.” Id. at 14
`(emphasis added); see also Special Master for Troubled
`Asset Relief Program Executive Compensation, 34 Op.
`O.L.C. 219, 233-237 (2010) (“final and binding” order
`subject to “secretarial review”); Arthrex Br. 32 n.4.
`In any event, the government’s purported counter-
`examples are all recent, narrow, obscure, or some combi-
`nation of the three.8 In Seila Law LLC v. Consumer
`Financial Protection Bureau, 140 S. Ct. 2183 (2020), the
`Court found a “telling indication of [a] severe constitu-
`tional problem” despite a similar handful of outliers. Id.
`at 2201-2202. History justifies the same conclusion here.
`4. Smith & Nephew urges that APJs issue only “nar-
`row decisions that do not set policy.” S&N Reply 26.
`The scope of an officer’s authority, however, “marks, not
`the line between principal and inferior officer,” but “the
`line between officer and nonofficer.” Edmond, 520 U.S.
`at 662. Besides, deciding the fate of billions of dollars of
`intellectual property is hardly inconsequential. APJs’
`authority is all the more striking because APJs have the
`power to overrule the Director’s decision to grant a patent
`in the first place. Smith & Nephew cites no other context
`where purportedly “inferior” officers could overrule their
`own agency head.
`
`
`8 See Pub. L. No. 109-163, § 847(a), (d)(2)(B), 119 Stat. 3136, 3391-
`3394 (2006) (creating Civilian and Postal Service Boards of Contract
`Appeals); cf. Pub. L. No. 95-563, § 8(a)(1), 92 Stat. 2383, 2385 (1978)
`(authorizing but not requiring such boards); Pub. L. No. 99-603,
`§ 102(a), 100 Stat. 3359, 3374-3379 (1986) (one narrow category of dis-
`crimination claims); Pub. L. No. 92-576, § 15(a), 86 Stat. 1251, 1261
`(1972) (creating Benefits Review Board for longshoremen and har-
`bor workers); cf. Pub. L. No. 803, § 21(a), 44 Stat. 1424, 1436 (1927).
`
`
`
`
`
`11
`B.(cid:3) Other Oversight Powers Are Not Substitutes
`for Review
`The government and Smith & Nephew “brainstorm[ ]
`[other] methods of * * * control.” Seila Law, 140 S. Ct. at
`2207. None of them is an adequate substitute for review.
`1. Smith & Nephew urges that the Director can “in-
`formally recommend[ ]” that the Board grant rehearing,
`S&N Reply 14, or “intervene” on appeal, id. at 15. But
`trying to cajole other officers or a court into correcting
`an APJ’s mistakes does not make the APJ a subordinate.
`The Appointments Clause requires direction and super-
`vision, not hortatory recommendations to third parties.
`The Director, of course, is the one who ultimately can-
`cels a patent at the conclusion of an inter partes review.
`S&N Reply 17. If the Board finds a claim invalid, “the
`Director shall issue and publish a certificate canceling
`[the] claim.” 35 U.S.C. § 318(b) (emphasis added). That
`mandatory and ministerial duty does not give the Direc-
`tor any power to review Board decisions. It permits the
`Board to control the Director.
`Judicial review does not matter either. Cf. S&N Reply
`17. Administrative judges’ decisions must be reviewable
`by “Executive officers,” not federal judges. Edmond, 520
`U.S. at 665. If judicial review were enough, even cabinet
`secretaries would be inferior officers.9
`
`
`9 Review by other inferior officers is likewise insufficient. Cf. S&N
`Reply 29. Edmond requires oversight (direct or indirect) by officers
`“appointed by Presidential nomination with the advice and consent of
`the Senate.” 520 U.S. at 663. Nor does the Board include other offi-
`cers “whose appointments Arthrex does not question.” S&N Reply
`30. The Deputy Director’s and Commissioners’ appointments are
`invalid too. See Arthrex Cert. Reply in No. 19-1458, at 6-7.
`
`
`
`
`
`12
`2. The government exaggerates the scope of other
`powers. Even after the statutory removal restrictions
`are severed, for example, due process limits removal as a
`tool of control. Removing or threatening to remove an
`administrative judge to change the outcome of a case
`raises obvious due process concerns. See Arthrex Br. 63-
`64; Pet. App. 16a-17a n.3; Utica Packing Co. v. Block, 781
`F.2d 71, 78 (6th Cir. 1986). The government insists those
`concerns are insubstantial because agency heads can per-
`sonally adjudicate disputes despite bein