Case: 18-2140 Document: 69 Page: 1 Filed: 10/31/2019
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`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: October 31, 2019
`______________________
`
`ANTHONY P. CHO, Carlson, Gaskey & Olds, PC, Bir-
`mingham, MI, argued for appellant. Also represented by
`DAVID LOUIS ATALLAH, DAVID J. GASKEY, JESSICAE
`ZILBERBERG.
`
` CHARLES T. STEENBURG, Wolf, Greenfield & Sacks, PC,
`Boston, MA, argued for appellees. Also represented by
`RICHARD GIUNTA, TURHAN SARWAR; MICHAEL N. RADER,
`New York, NY.
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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`
` MELISSA N. PATTERSON, Appellate Staff, Civil Division,
`United States Department of Justice, Washington, DC, ar-
`gued for intervenor. Also represented by COURTNEY DIXON,
`SCOTT R. MCINTOSH, JOSEPH H. HUNT; SARAH E. CRAVEN,
`THOMAS W. KRAUSE, JOSEPH MATAL, FARHEENA YASMEEN
`RASHEED, Office of the Solicitor, United States Patent and
`Trademark Office, Alexandria, VA.
` ______________________
`
`Before MOORE, REYNA, and CHEN, Circuit Judges.
`MOORE, Circuit Judge.
`
`Arthrex, Inc. appeals from the final written decision of
`the Patent Trial and Appeal Board holding claims 1, 4, 8,
`10–12, 16, 18, and 25–28 of U.S. Patent No. 9,179,907 un-
`patentable as anticipated. Arthrex appeals this decision
`and contends that the appointment of the Board’s Admin-
`istrative Patent Judges (“APJs”) by the Secretary of Com-
`merce, as currently set forth in Title 35, violates the
`Appointments Clause, U.S. Const., art. II, § 2, cl. 2. We
`agree and conclude that the statute as currently con-
`structed makes the APJs principal officers. To remedy the
`violation, we follow the approach set forth by the Supreme
`Court in Free Enterprise Fund v. Public Company Account-
`ing Oversight Board, 561 U.S. 477 (2010) and followed by
`the D.C. Circuit in Intercollegiate Broadcasting System,
`Inc. v. Copyright Royalty Board, 684 F.3d 1332 (2012). As
`the Supreme Court instructs, “‘[g]enerally speaking, when
`confronting a constitutional flaw in a statute, we try to
`limit the solution to the problem,’ severing any ‘problem-
`atic portions while leaving the remainder intact.’” Free En-
`terprise Fund, 561 U.S. at 508 (quoting Ayotte v. Planned
`Parenthood of Northern New Eng., 546 U.S. 320, 328–29
`(2006)). We conclude that severing the portion of the Pa-
`tent Act restricting removal of the APJs is sufficient to ren-
`der the APJs inferior officers and remedy the constitutional
`appointment problem. As the final written decision on
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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`appeal issued while there was an Appointments Clause vi-
`olation, we vacate and remand. Following Lucia v. S.E.C.,
`138 S. Ct. 2044 (2018), the appropriate course of action is
`for this case to be remanded to a new panel of APJs to
`which Arthrex is entitled.
`BACKGROUND
`Arthrex owns the ’907 patent, which is directed to a
`knotless suture securing assembly. Smith & Nephew, Inc.
`and Arthrocare Corp. (collectively “Petitioners” or “Appel-
`lees”) filed a petition requesting inter partes review of
`claims 1, 4, 8, 10–12, 16, 18, and 25–28 of the ’907 patent.
`Inter partes review is a “‘hybrid proceeding’ with ‘adju-
`dicatory characteristics’ similar to court proceedings.”
`Saint Regis Mohawk Tribe v. Mylan Pharms., 896 F.3d
`1322, 1326 (Fed. Cir. 2018). After a petitioner files a peti-
`tion requesting that the Board consider the patentability of
`issued patent claims, the Director of the United States Pa-
`tent and Trademark Office (“USPTO”) determines whether
`to institute an inter partes review proceeding. 35 U.S.C.
`§ 314.1 A three-judge panel of Board members then con-
`ducts the instituted inter partes review. Id. § 316(c).2 If an
`
`
`1 The Director delegated that authority to the Board,
`so now “[t]he Board institutes the trial on behalf of the Di-
`rector.” 37 C.F.R. § 42.4(a).
`2 The Board consists of “[t]he Director, the Deputy
`Director, the Commissioner for Patents, the Commissioner
`for Trademarks, and the administrative patent judges.” 35
`U.S.C. § 6(a). The Director of the USPTO is “appointed by
`the President, by and with the advice and consent of the
`Senate.” Id. § 3(a). The Deputy Director and the Commis-
`sioners are appointed by the Secretary of Commerce; the
`former being nominated by the Director. Id. §§ 3(b)(1)–(2).
`The Administrative Patent Judges “are appointed by the
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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`instituted review is not dismissed before the conclusion of
`the proceedings, the Board issues a final written decision
`determining the patentability of challenged claims. Id.
`§ 318(a). Once the time for appeal of the decision expires
`or any appeal has been terminated, the Director issues and
`publishes a certificate canceling any claim of the patent fi-
`nally determined to be unpatentable. Id. § 318(b).
`The inter partes review of the ’907 patent was heard by
`a three-judge panel consisting of three APJs. The Board
`instituted review and after briefing and trial, the Board is-
`sued a final written decision finding the claims unpatenta-
`ble as anticipated. J.A. 12, 14, 42.
`ANALYSIS
`A. Waiver
`Appellees and the government argue that Arthrex for-
`feited its Appointments Clause challenge by not raising the
`issue before the Board. Although “[i]t is the general
`rule . . . that a federal appellate court does not consider an
`issue not passed upon below,” we have discretion to decide
`when to deviate from that general rule. Singleton v. Wulff,
`428 U.S. 106, 120–21 (1976). The Supreme Court has in-
`cluded Appointments Clause objections to officers as a
`challenge which could be considered on appeal even if not
`raised below. Freytag v. Commissioner of Internal Reve-
`nue, 501 U.S. 868, 878–79 (1991); Glidden Co. v. Zdanok,
`370 U.S. 530, 535–36 (1962).
`In Freytag, the Supreme Court exercised its discretion
`to decide an Appointments Clause challenge despite peti-
`tioners’ failure to raise a timely objection at trial. 501 U.S.
`at 878–79. In fact, the Court reached the issue despite the
`fact that it had not been raised until the appellate stage.
`
`
`Secretary [of Commerce], in consultation with the Direc-
`tor.” Id. § 6(a).
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`The Court explained that the structural and political roots
`of the separation of powers concept are embedded in the
`Appointments Clause. It concluded that the case was one
`of the “rare cases in which we should exercise our discre-
`tion to hear petitioners’ challenge to the constitutional au-
`thority.” Id. at 879. We believe that this case, like Freytag,
`is one of those exceptional cases that warrants considera-
`tion despite Arthrex’s failure to raise its Appointments
`Clause challenge before the Board. Like Freytag, this case
`implicates the important structural interests and separa-
`tion of powers concerns protected by the Appointments
`Clause. Separation of powers is “a fundamental constitu-
`tional safeguard” and an “exceptionally important” consid-
`eration in the context of inter partes review proceedings.
`Cascades Projection LLC v. Epson America, Inc., 864 F.3d
`1309, 1322 (Fed. Cir. 2017) (Reyna, J., dissenting from de-
`nial of petition for hearing en banc). The issue presented
`today has a wide-ranging effect on property rights and the
`nation’s economy. Timely resolution is critical to providing
`certainty to rights holders and competitors alike who rely
`upon the inter partes review scheme to resolve concerns
`over patent rights.
`Appellees and the government argue that like In re
`DBC we should decline to address the Appointments
`Clause challenge as waived. DBC recognized that the court
`retains discretion to reach issues raised for the first time
`on appeal, but declined to do so in that case. 545 F.3d 1373,
`1380 (Fed. Cir. 2008). The court predicated its decision on
`the fact that if the issue had been raised before the Board,
`it could have corrected the Constitutional infirmity be-
`cause there were Secretary appointed APJs and that Con-
`gress had taken “remedial action” redelegating the power
`of appointment to the Secretary of Commerce in an attempt
`to “eliminat[e] the issue of unconstitutional appointments
`going forward.” Id. at 1380. As the court noted, “the Sec-
`retary, acting under the new statute, has reappointed the
`administrative patent judges involved in DBC’s appeal.”
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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`Id. at 1381. Not only had Congress taken remedial action
`to address the constitutionality issue, the Secretary had al-
`ready been implementing those remedies limiting the im-
`pact. Id. No such remedial action has been taken in this
`case and the Board could not have corrected the problem.
`Because the Secretary continues to have the power to ap-
`point APJs and those APJs continue to decide patentability
`in inter partes review, we conclude that it is appropriate for
`this court to exercise its discretion to decide the Appoint-
`ments Clause challenge here. This is an issue of excep-
`tional importance, and we conclude it is an appropriate use
`of our discretion to decide the issue over a challenge of
`waiver.
`
`B. Appointments Clause
`Arthrex argues that the APJs who presided over this
`inter partes review were not constitutionally appointed. It
`argues the APJs were principal officers who must be, but
`were not, appointed by the President with the advice and
`consent of the Senate.
`The Appointments Clause of Article II provides:
`[The President] . . . shall nominate, and by and
`with the Advice and Consent of the Senate, shall
`appoint Ambassadors, other public Ministers and
`Consuls, Judges of the supreme Court, and all
`other Officers of the United States, whose Appoint-
`ments are not herein otherwise provided for, and
`which shall be established by Law: but the Con-
`gress may by Law vest the Appointment of such in-
`ferior Officers, as they think proper, in the
`President alone, in the Courts of Law, or in the
`Heads of Departments.
`U.S. Const. art. II, § 2, cl. 2. APJs are appointed by the
`Secretary of Commerce, in consultation with the Director
`of the USPTO. 35 U.S.C. § 6(a). The issue, therefore, is
`whether APJs are “Officers of the United States” and if so,
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`whether they are inferior officers or principal officers; the
`latter requiring appointment by the President as opposed
`to the Secretary of Commerce. We hold that in light of the
`rights and responsibilities in Title 35, APJs are principal
`officers.
`An “Officer of the United States,” as opposed to a mere
`employee, is someone who “exercis[es] significant authority
`pursuant to the laws of the United States.” Buckley v.
`Valeo, 424 U.S. 1, 125–26 (1976). The Appointments
`Clause ensures that the individuals in these positions of
`significant authority are accountable to elected Executive
`officials. See Lucia, 138 S. Ct. at 2056 (Thomas, J., concur-
`ring) (citing The Federalist No. 76, p. 455 (C. Rossiter ed.
`1961) (A. Hamilton)). It further ensures that the Presi-
`dent, and those directly responsible to him, does not dele-
`gate his ultimate responsibility and obligation to supervise
`the actions of the Executive Branch. See Free Enterprise
`Fund, 561 U.S. at 496. The Appointments Clause provides
`structural protection against the President diffusing his ac-
`countability and from Congress dispensing power too freely
`to the same result. “The structural interests protected by
`the Appointments Clause are not those of any one branch
`of Government but of the entire Republic.” Freytag, 501
`U.S. at 880. Because “people do not vote for the ‘Officers of
`the United States,’” the public relies on the Appointments
`Clause to connect their interests to the officers exercising
`significant executive authority. Free Enterprise Fund, 561
`U.S. at 497–98. Arthrex argues that the APJs exercise the
`type of significant authority that renders them Officers of
`the United States. Neither Appellees nor the government
`dispute that APJs are officers as opposed to employees. We
`agree that APJs are Officers of the United States. See John
`F. Duffy, Are Administrative Patent Judges Constitu-
`tional?, 2007 Patently–O Patent L.J. 21, 25 (2007) (con-
`cluding that administrative patent judges are officers as
`opposed to mere employees).
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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`Under 35 U.S.C. § 6(a), APJs “hold a continuing office
`established by law . . . to a position created by statute.” Lu-
`cia, 138 S. Ct. at 2053. The APJs exercise significant dis-
`cretion when carrying out their function of deciding inter
`partes reviews. They oversee discovery, 37 C.F.R. § 42.51,
`apply the Federal Rules of Evidence, 37 C.F.R. § 42.62(a),
`and hear oral arguments, 37 C.F.R. § 42.70. And at the
`close of review proceedings, the APJs issue final written
`decisions containing fact findings and legal conclusions,
`and ultimately deciding the patentability of the claims at
`issue. See 35 U.S.C. § 318(a). The government itself has
`recognized that there is a “functional resemblance between
`inter partes review and litigation,” and that the Board uses
`“trial-type procedures in inter partes review.” Br. of United
`States at 26, 31, Oil States Energy Servs., LLC v. Greene’s
`Energy Grp., LLC, 138 S. Ct. 1365 (2018). The Board’s pa-
`tentability decisions are final, subject only to rehearing by
`the Board or appeal to this court. See 35 U.S.C. §§ 6(c),
`141(c), 319. Like the special trial judges (“STJs”) of the Tax
`Court in Freytag, who “take testimony, conduct trials, rule
`on the admissibility of evidence, and have the power to en-
`force compliance with discovery orders,” 501 U.S. at 881–
`82, and the SEC Administrative Law Judges in Lucia, who
`have “equivalent duties and powers as STJs in conducting
`adversarial inquiries,” 138 S. Ct. at 2053, the APJs exercise
`significant authority rendering them Officers of the United
`States.
`The remaining question is whether they are principal
`or inferior officers. The Supreme Court explained that
`“[w]hether one is an ‘inferior’ officer depends on whether
`he has a superior,” and “‘inferior officers’ are officers whose
`work is directed and supervised at some level by others who
`were appointed by Presidential nomination with the advice
`and consent of the Senate.” Edmond v. United States, 520
`U.S. 651, 662–63 (1997). There is no “exclusive criterion
`for distinguishing between principal and inferior officers
`for Appointments Clause purposes.” Id. at 661. However,
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`factors:
`three
`in Edmond emphasized
`the Court
`(1) whether an appointed official has the power to review
`and reverse the officers’ decision; (2) the level of supervi-
`sion and oversight an appointed official has over the offic-
`ers; and (3) the appointed official’s power to remove the
`officers. See id. at 664–65; see also Intercollegiate, 684 F.3d
`at 1338. These factors are strong indicators of the level of
`control and supervision appointed officials have over the
`officers and their decision-making on behalf of the Execu-
`tive Branch. The extent of direction or control in that rela-
`tionship is the central consideration, as opposed to just the
`relative rank of the officers, because the ultimate concern
`is “preserv[ing] political accountability.” Edmond, 520
`U.S. at 663. The only two presidentially-appointed officers
`that provide direction to the USPTO are the Secretary of
`Commerce and the Director. Neither of those officers indi-
`vidually nor combined exercises sufficient direction and su-
`pervision over APJs to render them inferior officers.
`1. Review Power
`The Supreme Court deemed it “significant” whether an
`appointed official has the power to review an officer’s deci-
`sion such that the officer cannot independently “render a
`final decision on behalf of the United States.” Edmond, 520
`U.S. at 665. No presidentially-appointed officer has inde-
`pendent statutory authority to review a final written deci-
`sion by the APJs before the decision issues on behalf of the
`United States. There are more than 200 APJs and a mini-
`mum of three must decide each inter partes review. 35
`U.S.C. § 6(c). The Director is the only member of the Board
`who is nominated by the President and confirmed by the
`Senate. The Director is however only one member of the
`Board and every inter partes review must be decided by at
`least three Board judges. At the conclusion of the agency
`proceeding, the Board issues a final written decision. 35
`U.S.C. § 318(a).
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`There is no provision or procedure providing the Direc-
`tor the power to single-handedly review, nullify or reverse
`a final written decision issued by a panel of APJs. If parties
`are dissatisfied with the Board decision, they may request
`rehearing by the Board or may appeal to this court. 35
`U.S.C. §§ 6(c), 141(c), 319. “Only the Patent Trial and Ap-
`peal Board may grant rehearings,” upon a party’s request.
`Id. § 6(c). Again, the decision to rehear would be made by
`a panel of at least three members of the Board. And the
`rehearing itself would be conducted by a panel of at least
`three members of the Board.
`The government argues that the Director has multiple
`tools that give him the authority to review decisions issued
`by APJs. The government argues that the Director pos-
`sesses the power to intervene and become a party in an ap-
`peal following a final written decision with which he
`disagrees. See 35 U.S.C. § 143. But that authority offers
`no actual reviewability of a decision issued by a panel of
`APJs. At most, the Director can intervene in a party’s ap-
`peal and ask this court to vacate the decision, but he has
`no authority to vacate the decision himself. And the stat-
`ute only gives the parties to the inter partes review the
`power to appeal the decision, not the Director. See id.
`§ 319. If no party appeals the APJs’ decision, the Director’s
`hands are tied. “[T]he Director shall issue and publish a
`certificate canceling any claim of the patent finally deter-
`mined to be unpatentable. . . .” Id. § 318(b) (emphasis
`added). The Director cannot, on his own, sua sponte review
`or vacate a final written decision.
`The government argues that the Director has addi-
`tional review authority through his institution of the re-
`cently created Precedential Opinion Panel. That standing
`panel, composed of at least three Board members, can re-
`hear and reverse any Board decision and can issue deci-
`sions that are binding on all future panels of the Board.
`See Patent Trial and Appeal Board Standard Operating
`Procedure 2 at 8. The Director’s authority is limited to
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`“conven[ing] a Precedential Opinion Panel to review a de-
`cision in a case and determine whether to order sua sponte
`rehearing” and to act as one of the three default members
`of the panel. Id. at 4–5. When the Director sits on a panel
`as a member of the Board, he is serving as a member of the
`Board, not supervising the Board.
`Additionally, the government points out that the Direc-
`tor “may designate any decision by any panel, including the
`Precedential Opinion Panel, as precedential . . . .” Id. at 8.
`These powers do not, however, provide the type of review-
`ability over APJs’ decisions comparable to the review
`power principal officers in other cases have had. See, e.g.,
`Edmond, 520 U.S. at 664–65; Masias v. Secretary of Health
`and Human Servs., 634 F.3d 1283, 1294–95 (Fed. Cir.
`2011) (special masters under the Vaccine Act were inferior
`officers in part because their decisions were “subject to re-
`view by the Court of Federal Claims” (an Article I court)).
`To be clear, the Director does not have the sole authority to
`review or vacate any decision by a panel of APJs. He can
`only convene a panel of Board members to decide whether
`to rehear a case for the purpose of deciding whether it
`should be precedential. No other Board member is ap-
`pointed by the President. The government certainly does
`not suggest that the Director controls or influences the
`votes of the other two members of his special rehearing
`panel. Thus, even if the Director placed himself on the
`panel to decide whether to rehear the case, the decision to
`rehear a case and the decision on rehearing would still be
`decided by a panel, two-thirds of which is not appointed by
`the President. There is no guarantee that the Director
`would even be in the majority of that decision. Thus, there
`is no review by other Executive Branch officers who meet
`the accountability requirements of the Appointments
`Clause. Moreover, the Standard Operating Procedure
`makes clear that the Director would convene such a panel
`only in cases of “exceptional importance”: to potentially set
`precedent for the Board. In other words, this form of
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`review—constrained to a limited purpose—is still con-
`ducted by a panel of APJs who do not meet the require-
`ments of the Appointments Clause and represents the
`exception.
`Finally, the government alleges that the Director has
`review authority over Board decisions because he can de-
`cide not to institute an inter partes review in the first in-
`stance. We do not agree that the Director’s power to
`institute (ex ante) is any form of review (ex post). For the
`past several years, the Board has issued over 500 inter
`partes review final written decisions each year. The rele-
`vant question is to what extent those decisions are subject
`to the Director’s review.
`The situation here is critically different from the one in
`Edmond. In Edmond, the Supreme Court considered
`whether military judges on the Coast Guard Court of Crim-
`inal Appeals were principal as opposed to inferior officers.
`520 U.S. at 655. There, the Court of Appeals for the Armed
`Forces, an Executive Branch entity, had the power to re-
`verse decisions by the military judges and “review[ed]
`every decision of the Court of Criminal Appeals in which:
`(a) the sentence extends to death; (b) the Judge Advocate
`General orders such review; or (c) the court itself grants
`review upon petition of the accused.” Id. at 664–65. And
`while the Judge Advocate General (a properly appointed
`Executive officer) could not reverse decisions of the mili-
`tary judges, he could order any of those decisions be re-
`viewed by the Court of Appeals for the Armed Forces (a
`presidentially-appointed Executive Branch, Article I
`court). Id. The Court deemed it “significant [] that the
`judges of the Court of Criminal Appeals ha[d] no power to
`render a final decision on behalf of the United States unless
`permitted to do so by other Executive officers.” Id. at 665
`(emphasis added). That is simply not the case here. Panels
`of APJs issue final decisions on behalf of the USPTO, at
`times revoking patent rights, without any principal officers
`having the right to review those decisions. Thus, APJs
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`have substantial power to issue final decisions on behalf of
`the United States without any review by a presidentially-
`appointed officer. We find that there is insufficient review
`within the agency over APJ panel decisions. This supports
`a conclusion that APJs are principal officers.
`2. Supervision Power
`The extent to which an officer’s work is supervised or
`overseen by another Executive officer also factors into de-
`termining inferior versus principal officer status. See Ed-
`mond, 520 U.S. at 664. The Director exercises a broad
`policy-direction and supervisory authority over the APJs.
`The Director is “responsible for providing policy direction
`and management supervision” for the USPTO. 35 U.S.C.
`§ 3(a)(2)(A). Arthrex argues the Director’s oversight au-
`thority amounts to little more than high-level, arms-length
`control. We disagree.
`The Director has the authority to promulgate regula-
`tions governing the conduct of inter partes review. Id.
`§ 316. He also has the power to issue policy directives and
`management supervision of the Office. Id. § 3(a). He may
`provide instructions that include exemplary applications of
`patent laws to fact patterns, which the Board can refer to
`when presented with factually similar cases. Moreover, no
`decision of the Board can be designated or de-designated as
`precedential without the Director’s approval. Patent Trial
`and Appeal Board Standard Operating Procedure 2 at 1.
`And all precedential decisions of the Board are binding on
`future panels. Id. at 11. In addition to these policy controls
`that guide APJ-panel decision making, the Director has ad-
`ministrative authority that can affect the procedure of in-
`dividual cases. For example, the Director has the
`independent authority to decide whether to institute an in-
`ter partes review based on a filed petition and any corre-
`sponding preliminary response. 35 U.S.C. § 314(a). And
`the Director is authorized to designate the panel of judges
`who decides each inter partes review. See 35 U.S.C. § 6(c).
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`Not only does the Director exercise administrative super-
`visory authority over the APJs based on his issuance of pro-
`cedures, he also has authority over the APJs’ pay. 35
`U.S.C. § 3(b)(6).
`The Director’s administrative oversight authority is
`similar to the supervisory authority that was present in
`both Edmond and Intercollegiate. In Edmond, the Judge
`Advocate General “exercise[d] administrative oversight”
`and had the responsibility of “prescrib[ing] uniform rules
`of procedure” for the military judges. 520 U.S. at 664.
`Likewise, in Intercollegiate, the Librarian of Congress was
`responsible for approving the Copyright Royalty Judges’
`(“CRJs”) “procedural regulations . . . and [] overseeing var-
`ious logistical aspects of their duties.” 684 F.3d at 1338.
`And the Register of Copyrights, who was subject to the con-
`trol of the Librarian, had “the authority to interpret the
`copyright laws and provide written opinions to the CRJs.”
`Id. The Director possesses similar authority to promulgate
`regulations governing inter partes review procedure and to
`issue policy interpretations which the APJs must follow.
`Accordingly, we conclude that the Director’s supervisory
`powers weigh in favor of a conclusion that APJs are inferior
`officers.
`
`3. Removal Power
`The Supreme Court viewed removal power over an of-
`ficer as “a powerful tool for control” when it was unlimited.
`Edmond, 520 U.S. at 664. Under the current Title 35
`framework, both the Secretary of Commerce and the Direc-
`tor lack unfettered removal authority.
`Appellees and the government argue that the Director
`can remove an APJ based on the authority to designate
`which members of the Board will sit on any given panel.
`See 35 U.S.C. § 6(c). The government argues that the Di-
`rector could exclude any APJ from a case who he expects
`would approach the case in a way inconsistent with his
`views. The government suggests that the Director could
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`Case: 18-2140 Document: 69 Page: 15 Filed: 10/31/2019
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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
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`15
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`potentially remove all judicial function of an APJ by refus-
`ing to assign the APJ to any panel. The government also
`claims that the Director could remove an APJ from an inter
`partes review mid-case if he does not want that particular
`APJ to continue on the case. Br. of United States at 3, 41.
`Section 6(c) gives the Director the power to designate the
`panel who hears an inter partes review, but we note that
`the statute does not expressly authorize de-designation.
`The government argues that because Title 35 authorizes
`the Director to designate members of a panel in an inter
`partes review proceeding, he also has the authority to
`change the panel composition at any time because “removal
`authority follows appointment authority.” Oral Arg.
`35:52–54; see also Br. of United States at 3, 41. It is correct
`that when a statute is silent on removal, the power of re-
`moval is presumptively incident to the power of appoint-
`ment. See In re Hennen, 38 U.S. 230 (1839); Myers v.
`United States, 272 U.S. 52 (1926). The government argues
`by analogy to these cases that the power to de-designate
`follows the power to designate. We do not today decide
`whether the Director in fact has such authority.3
`
`
`3
`It is not clear the Director has de-designation au-
`thority. To be sure, someone must have the power to re-
`move an officer from government service, so when a statute
`is silent about removal, we presume that the person who
`appoints the officer to office has the power to remove
`him. But it is not clear that Congress intended panels once
`designated to be able to be de-designated. Such a conclu-
`sion could run afoul of Congress’ goal of speedy resolution
`through “quick and cost effective alternatives to litiga-
`tion.” H.R. Rep. No. 112–98, pt. 1, at 48 (2011). Addition-
`ally, it is not clear whether this type of mid-case de-
`designation of an APJ could create a Due Process prob-
`lem. However, we need not decide whether the Director
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`16
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`ARTHREX, INC. v. SMITH & NEPHEW, INC.
`
`The government analogizes the Director’s designation
`power to the Judge Advocate General’s power in Edmond,
`which allowed him to remove a military judge “from his ju-
`dicial assignment without cause.” 520 U.S. at 664. The
`Director’s authority to assign certain APJs to certain pan-
`els is not the same as the authority to remove an APJ from
`judicial service without cause. Removing an APJ from an
`inter partes review is a form of control, but it is not nearly
`as powerful as the power to remove from office without
`cause. “[T]he power to remove officers at will and without
`cause is a powerful tool for control of an inferior.” Free En-
`terprise Fund., 561 U.S. at 501.
`The only actual removal authority the Director or Sec-
`retary have over APJs is subject to limitations by Title 5.
`Title 35 does not provide statutory authority for removal of
`the APJs. Instead, 35 U.S.C. § 3(c) provides, “[o]fficers and
`employees of the Office shall be subject to the provisions of
`title 5, relating to Federal employees.” No one disputes
`that Title 5 creates limitations on the Secretary’s or Direc-
`tor’s authority to remove an APJ from his or her employ-
`ment at the USPTO. Specifically, APJs may be removed
`“only for such cause as will promote the efficiency of the
`service.” 5 U.S.C. § 7513(a).4 This limitation requires “a
`
`
`has such authority or whether such authority would run
`afoul of the Constitution because even if we accept, for pur-
`poses of this appeal, that he does possess that authority, it
`would not change the outcome.
`4 The parties dispute which provision of Title 5 gov-
`erns removal of APJs. Arthrex argues that 5 U.S.C. §
`7521(a) limits removal of the APJs to removal “only for
`good cause establi