Arthrex, Inc. v. Smith & Nephew, Inc.

35 F.4th 1328

• Court: Court of Appeals for the Federal Circuit
• Decided: May 27, 2022
• Docket: 18-2140
• Status: Published

Opinion

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, Case: 18-2140 Document: 193 Page: 2 Filed: 05/27/2022

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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). Case: 18-2140 Document: 193 Page: 3 Filed: 05/27/2022

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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 Case: 18-2140 Document: 193 Page: 4 Filed: 05/27/2022

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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. Case: 18-2140 Document: 193 Page: 5 Filed: 05/27/2022

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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 Case: 18-2140 Document: 193 Page: 6 Filed: 05/27/2022

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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 Case: 18-2140 Document: 193 Page: 7 Filed: 05/27/2022

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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 Case: 18-2140 Document: 193 Page: 8 Filed: 05/27/2022

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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 Case: 18-2140 Document: 193 Page: 9 Filed: 05/27/2022

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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— Case: 18-2140 Document: 193 Page: 10 Filed: 05/27/2022

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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 Case: 18-2140 Document: 193 Page: 11 Filed: 05/27/2022

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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. Case: 18-2140 Document: 193 Page: 12 Filed: 05/27/2022

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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. Case: 18-2140 Document: 193 Page: 13 Filed: 05/27/2022

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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 Case: 18-2140 Document: 193 Page: 14 Filed: 05/27/2022

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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 Case: 18-2140 Document: 193 Page: 15 Filed: 05/27/2022

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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 Case: 18-2140 Document: 193 Page: 16 Filed: 05/27/2022

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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. Case: 18-2140 Document: 193 Page: 17 Filed: 05/27/2022

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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 may perform the delegable functions and duties of an absent PAS officer. And the Director’s authority to decide re- quests for rehearing Board decisions is delegable. 5 C Arthrex next contends that by exercising the Director’s authority, the Commissioner violated the Constitution’s separation of powers. We do not agree.

5 The government argues that there are no non-del- egable duties of the Director. This decision is limited to a determination that the Director’s authority to review re- hearing requests is a delegable duty. As that is the only power at issue in this case, we go no broader. Case: 18-2140 Document: 193 Page: 18 Filed: 05/27/2022

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The Constitution requires the President to “take Care that the Laws be faithfully executed.” U.S. Const., art. II, § 3. “That power, in turn, generally includes the ability to remove executive officials.” Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2197 (2020). Without removal power, it would be “impossible for the President . . . to take care that the laws be faithfully executed.” Id. at 2198 (alteration in original) (quoting Myers v. United States, 272 U.S. 52, 164 (1926)). Except in limited circum- stances not pertinent here, Congress cannot restrict the President’s removal power. See id. at 2191–92. So, for ex- ample, a statute that prohibits the President from remov- ing a PAS officer except for “inefficiency, neglect of duty, or malfeasance in office” is an unconstitutional encroachment upon Executive power. Id. at 2192–93 (quoting 12 U.S.C. § 5491(c)(3)). Arthrex argues that because the Commissioner is re- movable only for “misconduct or nonsatisfactory perfor- mance,” 35 U.S.C. § 3(b)(2)(C), the Constitution’s separation of powers precludes him from performing the Director’s duties. This argument has no merit. Although the President must have cause to remove the Commis- sioner from that position, he needs no cause to remove the Commissioner from his role as the Director’s temporary stand-in. Arthrex concedes that the FVRA provides a mechanism for the President to name an Acting Director “with the stroke of a pen” and that “there is simply no bur- den associated with doing that.” Oral Arg. at 22:31–23:02; see 5 U.S.C. § 3345(a)(2), (3) (authorizing the President to simply “direct” another PAS officer or a senior employee of the agency “to perform the functions and duties of the va- cant office temporarily in an acting capacity”). Because the President has unfettered power under the FVRA to strip the Commissioner of his temporary PAS-officer authority, the Commissioner’s exercise of that authority does not vio- late the Constitution’s separation of powers. Case: 18-2140 Document: 193 Page: 19 Filed: 05/27/2022

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II Turning to the merits, Arthrex challenges the Board’s finding that prior art anticipated claims 1, 4, 8, 10–12, 16, 18, and 25–28 of the ’907 patent. It also contends the Board lacked statutory authority to determine the validity of Ar- threx’s priority claim during IPR. Because substantial ev- idence supports its anticipation finding, and because it has the authority to resolve priority issues during IPR, we af- firm the Board’s decision. A The ’907 patent discloses a surgical device for attaching soft tissue to bone without requiring the surgeon to tie su- ture knots to secure the suture or tissue. See ’907 patent at 1:43–48. The device comprises an “eyelet” through which the surgeon threads the suture. See id. at 1:51–53. The eyelet may be a flexible “suture loop 70,” as shown be- low: Case: 18-2140 Document: 193 Page: 20 Filed: 05/27/2022

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Id. at 5:51–59; Fig. 15. Alternatively, the eyelet may be a rigid “implant 150 . . . formed of a transparent polymer ma- terial”:

Id. at 7:4–10; Fig. 21. Claim 1 is representative. Appellant’s Br. 13. Perti- nent to this appeal, it recites “an eyelet” generically, thereby encompassing both of the above embodiments: 1. A suture securing assembly, comprising: an inserter including a distal end, a proxi- mal end, and a longitudinal axis between the distal end and the proximal end; a first member including an eyelet oriented to thread suture across the longitudinal axis, the first member being situated near the distal end of the inserter, the first mem- ber being configured to be placed in bone; and a second member situated near the distal end of the inserter, the second member be- ing moveable by a portion of the inserter relative to the first member in a distal di- rection toward the eyelet into a suture se- curing position where the second member locks suture in place. ’907 patent at claim 1 (emphasis added). Case: 18-2140 Document: 193 Page: 21 Filed: 05/27/2022

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The Board found claim 1 anticipated by U.S. Patent Publication No. 2002/0013608 (ElAttrache). Smith & Nephew, Inc. v. Arthrex, Inc., IPR2017-00275, 2018 WL 2084866, at *4–5 (P.T.A.B. May 2, 2018) (Board Decision). 6 ElAttrache is the 2002 publication of an earlier Arthrex pa- tent application, Application No. 09/886,280. ElAttrache at [21]. It discloses the same flexible eyelet embodiment as the ’907 patent:

Id. at Fig. 15. Before the Board, Arthrex agreed that ElAttrache would anticipate the challenged claims if it were prior art but argued that ElAttrache is not, in fact, prior art. Board Decision at *1. It reasoned that the ’907 patent claims

6 The Board also found claim 1 anticipated by Inter- national Patent Publication No. WO 02/21999 A2 (Mar- tinek). Id. at *5–6. Because we affirm the Board’s decision based on ElAttrache, we need not address Martinek. Case: 18-2140 Document: 193 Page: 22 Filed: 05/27/2022

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priority to the ’280 application through a series of interven- ing continuation, continuation-in-part, and divisional ap- plications. Arthrex contended the effective filing date of the challenged claims is the filing date of the ’280 applica- tion, which was before ElAttrache’s publication date. The Board rejected that argument. It found that one of the intervening applications, Application No. 10/405,707, lacks any written description of the flexible eyelet embodi- ment encompassed by the generic eyelet claimed in the ’907 patent and, thus, cuts off the ’907 patent’s priority claim. Board Decision at *7. The Board reasoned that although the ’707 application incorporates the ’280 application by reference, id. at *11–12, it criticizes the ’280 application’s “flexible loop configuration” and purports to “overcome [its] disadvantages” using a “fixed aperture,” see id. at *8–9 (quoting ’707 application, ¶¶ 5–7). Because of that criti- cism, the Board found that a skilled artisan would have un- derstood the ’707 application to do away with flexible eyelets and require rigid eyelets. Id. at *9–11. Accord- ingly, the Board concluded that the effective filing date of the challenged claims is the filing date of the application that issued as the ’907 patent, well after ElAttrache’s pub- lication date. Id. at *4. B “[T]o gain the benefit of the filing date of an earlier ap- plication under 35 U.S.C. § 120, each application in the chain leading back to the earlier application must comply with the written description requirement of 35 U.S.C. § 112.” Lockwood v. Am. Airlines, Inc., 107 F.3d 1565, 1571 (Fed. Cir. 1997) (citing In re Hogan, 559 F.2d 595, 609 (CCPA 1977)). That means each application in the chain must “reasonably convey[ ] to those skilled in the art that the inventor had possession of the [later-claimed] subject matter as of the filing date.” Ariad Pharms., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1351 (Fed. Cir. 2010) (en banc) (first citing Vas-Cath Inc. v. Mahurkar, 935 F.2d 1555, Case: 18-2140 Document: 193 Page: 23 Filed: 05/27/2022

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1563 (Fed. Cir. 1991); and then citing In re Kaslow, 707 F.2d 1366, 1375 (Fed. Cir. 1983)). “Sufficiency of written description is a question of fact, reviewed for substantial evidence.” Gen. Hosp. Corp. v. Sienna Biopharms., Inc., 888 F.3d 1368, 1371 (Fed. Cir. 2018) (citing Inphi Corp. v. Netlist, Inc., 805 F.3d 1350, 1354 (Fed. Cir. 2015)). Substantial evidence supports the Board’s finding that the ’707 application lacks written description of flexible eyelets and, thus, the generic eyelet claim limitation. The ’707 application’s only mention of flexible eyelets is in the background section. There, it credits the ’280 application’s overall technique as an improvement but strongly criticizes its use of a flexible eyelet because it “impedes sliding of the suture”: Although the [’280 application’s] technique pro- vides an improved method of graft fixation to bone, the flexible loop configuration at the end of the driver disadvantageously impedes sliding of the su- ture or graft which is fed through the suture loop. In addition, because the cannulated driver of [the ’280 application] is provided with a flexible loop at its distal end, placement of the suture or graft at the bottom of the blind hole or socket and the cortical bone must be approximated, thus sometimes neces- sitating additional removal, tapping and insertion steps to ensure full insertion of the plug or screw into the blind hole or socket. This, in turn, may abrade the adjacent tissue and/or damage the bone or cartilage. ’707 application, ¶ 5 (emphases added). Aside from this cri- tique, the ’707 application is completely silent about flexi- ble eyelets. And to “overcome the disadvantages” of flexible eyelets, the ’707 application exclusively discloses an eyelet with a “fixed aperture” rather than a flexible loop. Id. ¶ 7. Unlike flexible eyelets, this allows the suture to “freely slide Case: 18-2140 Document: 193 Page: 24 Filed: 05/27/2022

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through the aperture,” which in turn “allow[s] precise ad- vancement and guiding of the plug or screw into the blind hole or socket.” Id. ¶ 29. The application stresses the im- portance of this feature, noting that the invention covers “an aperture of any configuration of any geometrical shape, as long as it . . . allows the captured suture to freely slide within the aperture.” Id. ¶ 33 (emphasis added). Based on these disclosures, S&N’s expert testified that a skilled artisan would have understood the ’707 applica- tion to require a rigid eyelet. He explained that because the ’707 application mentions a flexible eyelet “only for pur- poses of criticizing it and emphasizing the need for an al- ternative approach that allows suture to slide freely,” a skilled artisan would have understood that free sliding is “essential to the purported invention” and that flexible eye- lets are “contrary to the invention’s stated purpose.” J.A. 2324, § 125; J.A. 2323, § 123. This testimony and the dis- closures of the ’707 application are substantial evidence upon which the Board could find that the ’707 application lacks written description of generic eyelets encompassing flexible eyelets, as claimed by the ’907 patent. See Tronzo v. Biomet, Inc., 156 F.3d 1154, 1159 (Fed. Cir. 1998) (hold- ing substantial evidence did not support finding that par- ent application provided written description of later- claimed genus encompassing any shape where it “tout[ed] the advantages of [a] conical shape,” mentioned other shapes only in reciting the prior art, and “specifically dis- tinguishe[d] the prior art as inferior”); see also Bilstad v. Wakalopulos, 386 F.3d 1116, 1125 (Fed. Cir. 2004) (ex- plaining that Tronzo is an “exception[ ] to the general rule that disclosure of a species provides sufficient written de- scription support for a later filed claim directed to the ge- nus”). Arthrex argues the Board failed to give effect to the ’707 application’s incorporation of the entire ’280 applica- tion by reference. According to Arthrex, this broad incor- poration by reference compels a finding that the ’707 Case: 18-2140 Document: 193 Page: 25 Filed: 05/27/2022

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application provides written description support for flexi- ble eyelets because there is no dispute that the ’280 appli- cation discloses one. The Board, however, considered the ’707 application’s incorporation by reference and found it did not outweigh the evidence that the ’707 application re- lies entirely on rigid eyelets. Board Decision at *11–12. Because the ’707 application denigrates flexible eyelets and exclusively describes alternatives to overcome their disad- vantages, we cannot say the Board’s finding was unreason- able. Arthrex further argues that the ’707 application ade- quately describes generic eyelets because it discloses “the function of threading suture,” which is “tied to” flexible eye- lets. Appellant’s Br. 49. To be sure, the disclosure of a function may provide written description of a known struc- ture for performing that function if the function and struc- ture are “sufficiently correlated” to one another. Amgen, Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313, 1332 (Fed. Cir. 2003). If, however, the specification derides a particular structure and seeks to replace it with alterna- tives that ostensibly perform its function better, a reason- able person could find that the specification lacks written description for that structure. The Board’s finding that the ’707 application does not adequately describe generic eye- lets that encompass flexible eyelets is supported by sub- stantial evidence, as is its determination that ElAttrache is anticipatory prior art. C Lastly, there is no merit to Arthrex’s argument that the Board lacked statutory authority to decide whether the ’707 application meets the written description Case: 18-2140 Document: 193 Page: 26 Filed: 05/27/2022

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requirement. 7 Arthrex argues that because the scope of an IPR is limited to “ground[s] that could be raised under sec- tion 102 or 103,” 35 U.S.C. § 311(b), the Board could not address the written description requirement of § 112. Sec- tion 311(b), however, merely dictates the grounds on which an IPR petition may be based, not the issues that the Board may consider to resolve those grounds. S&N complied with § 311(b) by asserting invalidity grounds under § 102. And because Arthrex argued that ElAttrache is not prior art by claiming priority to the ’280 application, the Board needed to determine whether the ’707 application satisfied the written description requirement. See In re NTP, Inc., 654 F.3d 1268, 1279 (Fed. Cir. 2011) (holding “priority can be considered and determined during reexamination proceed- ings,” which are governed by similar statutory language). 8 The Board therefore did not exceed its authority.

7 Although the government contends Arthrex for- feited this argument, we exercise our discretion to address it. See Singleton v. Wulff, 428 U.S. 106, 121 (1976) (“The matter of what questions may be taken up and resolved for the first time on appeal is one left primarily to the discre- tion of the courts of appeals, to be exercised on the facts of individual cases.”). 8 Compare 35 U.S.C. §§ 301, 302 (“Any person at any time may file a request for reexamination by the Office of any claim of a patent on the basis of any prior art [consist- ing of patents or printed publications bearing on the pa- tentability of that claim].”) with 35 U.S.C. § 311(b) (“A petitioner in an inter partes review may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.”). Case: 18-2140 Document: 193 Page: 27 Filed: 05/27/2022

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CONCLUSION Arthrex does not persuade us that the Commissioner violated the Appointments Clause, the FVRA, or the Con- stitution’s separation of powers in denying Arthrex’s re- hearing request. Nor does it identify reversible error in the Board’s decision that ElAttrache anticipated the chal- lenged claims of the ’907 patent. Accordingly, we affirm. AFFIRMED COSTS The parties shall bear their own costs.