Case: 18-1831 Document: 97 Page: 1 Filed: 01/31/2020
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit ______________________
POLARIS INNOVATIONS LIMITED, Appellant
v.
KINGSTON TECHNOLOGY COMPANY, INC., Appellee
UNITED STATES, Intervenor ______________________
2018-1831 ______________________
Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2017- 00116. ______________________
Decided: January 31, 2020 ______________________
MATTHEW D. POWERS, Tensegrity Law Group LLP, Redwood Shores, CA, argued for appellant. Also repre- sented by JENNIFER ROBINSON; AZRA HADZIMEHMEDOVIC, AARON MATTHEW NATHAN, SAMANTHA A. JAMESON, McLean, VA; NATHAN NOBU LOWENSTEIN, KENNETH J. WEATHERWAX, Lowenstein & Weatherwax LLP, Los Ange- les, CA. Case: 18-1831 Document: 97 Page: 2 Filed: 01/31/2020
DAVID M. HOFFMAN, Fish & Richardson PC, Austin, TX, argued for appellee. Also represented by MICHAEL JOHN BALLANCO, Washington, DC; NITIKA GUPTA FIORELLA, Wil- mington, DE.
MELISSA N. PATTERSON, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, ar- gued for intervenor. Also represented by COURTNEY DIXON, DENNIS FAN, SCOTT R. MCINTOSH, JOSEPH H. HUNT; THOMAS W. KRAUSE, JOSEPH MATAL, FARHEENA YASMEEN RASHEED, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA. ______________________
Before REYNA, WALLACH, and HUGHES, Circuit Judges. Opinion for the court filed PER CURIAM. Concurring opinion filed by Circuit Judge HUGHES, in which Circuit Judge WALLACH joins. PER CURIAM. In its opening brief, Polaris Innovations Limited ar- gues that the final written decision at issue in this appeal exceeds the scope of the Patent Trial and Appeal Board’s authority and violates the Constitution’s Appointments Clause. See Appellant’s Br. 53 (citing U.S. Const. art. II, § 2, cl. 2). This court recently decided this issue in Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019). Accordingly, the Board’s decision in No. IPR2017- 00116 is vacated, and the case is remanded to the Board for proceedings consistent with this court’s decision in Arthrex. VACATED AND REMANDED COSTS No costs. Case: 18-1831 Document: 97 Page: 3 Filed: 01/31/2020
United States Court of Appeals for the Federal Circuit ______________________
Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2017- 00116. ______________________
HUGHES, Circuit Judge, concurring, in which WALLACH, Circuit Judge, joins. I concur because we are bound by the prior panel decision in Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d Case: 18-1831 Document: 97 Page: 4 Filed: 01/31/2020
1320 (Fed. Cir. 2019). 1 However, I write separately to note that I disagree with the merits and question the remedy of the Arthrex panel decision. I believe that viewed in light of the Director’s significant control over the activities of the Patent Trial and Appeal Board and Administrative Patent Judges, APJs are inferior officers already properly appointed by the Secretary of Commerce. But if APJs are properly considered principal officers, I have grave doubts about the remedy Arthrex applied to fix their unconstitutional appointment. In the face of an unconstitutional statute, our role is to determine whether severance of the unconstitutional portion would be consistent with Congress’s intent. Given the federal employment protections APJs and their predecessors have enjoyed for more than three decades, I find no legislative intent to divest APJs of their Title 5 removal protections to cure any alleged constitutional defect. Because the bar to find non-severability is so high, though, I reluctantly agree with Arthrex’s remedy. I None of the parties here or in Arthrex dispute that APJs are officers who exercise “significant authority pur- suant to the laws of the United States.” Buckley v. Valeo,
1 The parties have raised the same arguments on the merits of the Appointments Clause issue in both Polaris cases before this panel, Nos. 2018-1768 and 2018-1831. However, the government contends that Polaris waived its Appointments Clause challenge in No. 2018-1768 because it failed to make the argument before the Board in the first instance. I need not address the waiver issue because this concurrence addresses only the merits of the Appointments Clause argument. And I address this concurrence to No. 2018-1831 because the parties agree the issue was pre- served there. Case: 18-1831 Document: 97 Page: 5 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 3 CO. INC.
424 U.S. 1, 126 (1976) (per curiam). But “significant au- thority” marks the line between an officer and an em- ployee, not a principal and an inferior officer. Despite being presented with the opportunity to do so, the Supreme Court has declined to “set forth an exclusive criterion for distinguishing between principal and inferior officers for Appointments Clause purposes.” Edmond v. United States, 520 U.S. 651, 661 (1997). Instead, the pertinent cases make clear that the hall- mark of an inferior officer is whether a presidentially-nom- inated and senate-confirmed principal officer “direct[s] and supervise[s] [her work] at some level.” Id. at 663. Edmond does not lay out a more exacting test than this, and we should not endeavor to create one in its stead. The cases employ an extremely context-specific inquiry, which ac- counts for the unique systems of direction and supervision in each case. See infra Section I. Finally, Edmond also makes clear that the Appointments Clause seeks to “pre- serve political accountability relative to important govern- ment assignments.” 520 U.S. at 663. The current structure for appointing, directing and supervising, and re- moving APJs allows such political accountability through the Director’s significant, substantive supervision of APJs’ work, and the ability to discipline and terminate APJs to promote the efficiency of the service. Arthrex, in my view, pays insufficient attention to the significant ways in which the Director directs and super- vises the work of the APJs and, instead, focuses on whether the Director can single-handedly review and reverse Board decisions, and whether APJs are removable at will. In do- ing so, the Arthrex panel essentially distills the Supreme Court’s direction and supervision test into two discrete questions: (1) are an officer’s decisions reviewable by a principal officer and (2) is the officer removable at will? Be- cause I believe that the Supreme Court would have an- nounced such a simple test if it were proper, I respectfully disagree with the Arthrex panel decision that APJs are Case: 18-1831 Document: 97 Page: 6 Filed: 01/31/2020
principal officers. The Director’s power to direct and su- pervise the Board and individual APJs, along with the fact that APJs are already removable under the efficiency of the service standard, suffices to render APJs inferior officers. A The Director may issue binding policy guidance, insti- tute and reconsider institution of an inter partes review, select APJs to preside over an instituted inter partes re- view, single-handedly designate or de-designate any final written decision as precedential, and convene a panel of three or more members of his choosing to consider rehear- ing any Board decision. The Arthrex panel categorized some of these as “powers of review” and others as “powers of supervision,” but I view them all as significant tools of direction and supervision. As Arthrex recognized, “[t]he Director is ‘responsible for providing policy direction and management supervision’ for the [United States Patent and Trademark Office].” 941 F.3d at 1331 (quoting 35 U.S.C. § 3(a)(2)(A)). Not only can the Director promulgate regulations governing inter partes review procedures, but he may also prospectively issue binding policy guidance “interpreting and applying the pa- tent and trademark laws.” Gov’t. Br. 21. APJs must apply this guidance in all subsequent inter partes review proceed- ings. Such guidance might encompass, for instance, exem- plary application of the law to specific fact patterns, such as those posed in pending cases. These powers provide the Director with control over the process and substance of Board decisions. Gov’t. Br. 8, 21. And though the Director cannot directly reverse an individual Board decision that neglects to follow his guidance, APJs who do so risk disci- pline or removal under the efficiency of the service stand- ard applicable under Title 5. See infra Section I C. Such Case: 18-1831 Document: 97 Page: 7 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 5 CO. INC.
binding guidance, and the consequences of failing to follow it, are powerful tools for control of an inferior officer. 2 The Director also has unreviewable authority to insti- tute inter partes review. 35 U.S.C. § 314(a), (d). Cf. Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 504 (2010) (discussing the importance of the ability to “start, stop, or alter individual [PCAOB] investigations,” even where the reviewing principal officer already had sig- nificant “power over [PCAOB] activities”). Though the Ar- threx panel did not address the Director’s ability to reconsider an institution decision, our precedent also holds that the Board 3 may reconsider and reverse its initial in- stitution decision. See, e.g., Medtronic, Inc. v. Robert Bosch Healthcare Sys., Inc., 839 F.3d 1382, 1385−86 (Fed. Cir. 2016) (explaining that “§ 318(a) contemplates that a pro- ceeding can be ‘dismissed’ after it is instituted, and, as our prior cases have held, administrative agencies possess in- herent authority to reconsider their decisions, subject to certain limitations, regardless of whether they possess ex- plicit statutory authority to do so” (internal quotation and citation omitted)). The Director also controls which APJs will hear any given instituted inter partes review. 35 U.S.C. § 6(c). In
2 To be sure, I do not mean to suggest that the Direc- tor’s extensive powers of supervision mean that he can dic- tate the outcome of a specific inter partes proceeding. Rather, his ability to issue guidance and designate prece- dential opinions provides the general type of supervision and control over APJs’ decision-making that renders them inferior, not principal, officers. 3 The Director’s delegation of his institution power to the Board does not diminish its existence. 37 C.F.R. § 42.4(a) (stating that “[t]he Board institutes the trial on behalf of the Director”). See also Ethicon Endo-Surgery, Inc. v. Covidien LP, 812 F.3d 1023, 1033 (Fed. Cir. 2016). Case: 18-1831 Document: 97 Page: 8 Filed: 01/31/2020
my view, this power of panel designation is a quintessential method of directing and controlling a subordinate. Im- portantly, I do not believe that in stating that the power to remove an officer at-will from federal employment is “a powerful tool for control of an inferior,” Free Enterprise, 561 U.S. at 510 (internal quotation omitted), the Supreme Court meant that such removal power is the only effective form of control in the context of the Appointments Clause. For example, the Judge Advocate General in Edmond could remove the Court of Criminal Appeal judges from judicial service without cause, but not necessarily federal employ- ment altogether. Edmond, 520 U.S. at 664. See also Free Enterprise, 561 U.S. at 510 (relying on both at-will removal authority and “the [SEC’s] other oversight authority” in finding with “no hesitation” that the PCAOB members are inferior officers). That is akin to the Director’s authority to designate which APJs will consider a certain case. And de- spite acknowledging that “when a statute is silent on re- moval, the power of removal is presumptively incident to the power of appointment[,]” the Arthrex panel declined to opine on the Director’s ability to de-designate APJs from a panel under § 6(c). Arthrex, 941 F.3d at 1332. But Edmond referenced the ability to remove the judges there “from [their] judicial assignment[s],” followed by a recognition of the potent power of removal. 520 U.S. at 664. If the Direc- tor’s ability to control APJs plays a significant part in the unconstitutionality at issue, such that the remedy is to make APJs removable at will, the panel should have defin- itively addressed the Director’s de-designation authority. Moreover, as outlined in Section I C, infra, APJs already may be disciplined or removed from federal employment under the routine efficiency of the service standard, which is not incompatible with discipline or removal for failing to follow the Director’s binding guidance. And the Director may continue to provide substantial direction and supervision after the Board issues its final written decision. As Arthrex discusses, the Director may Case: 18-1831 Document: 97 Page: 9 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 7 CO. INC.
convene a Precedential Opinion Panel (POP), of which the Director is a member, to consider whether to designate a decision as precedential. Arthrex, 941 F.3d at 1330. But I read the Standard Operating Procedures more broadly, such that the Director may also make a precedential desig- nation or de-designation decision single-handedly, 4 thereby unilaterally establishing binding agency authority on important constitutional questions and other exception- ally important issues. Standard Operating Procedure 2, at 3−4. Indeed, it appears that the Director has done so in at least sixteen cases in 2018 and 2019. See USPTO, Patent Trial and Appeal Board Precedential and informative deci- sions, available at https://www.uspto.gov/patents-applica- tion-process/patent-trial-and-appeal-board/precedential- informative-decisions (listing decisions designated as prec- edential in the past year, where some are labeled as “Prec- edential Opinion Panel decision” and others are not). The Director may also convene a POP of his choice, of which he is by default a member, to consider whether to rehear and reverse any opinion. Standard Operating Procedure 2, at 4. And, the Director may “determine that a panel of more than three members is appropriate” and then choose those additional members as well. Id. Though the Arthrex panel recognized these powers, it dismissed them because the Di- rector has only one vote out of at least three. 941 F.3d at
4 “No decision will be designated or de-designated as precedential or informative without the approval of the Di- rector. This SOP does not limit the authority of the Director to designate or de-designate decisions as precedential or in- formative, or to convene a Precedential Opinion Panel to review a matter, in his or her sole discretion without regard to the procedures set forth herein.” Patent Trial and Ap- peal Board, Standard Operating Procedure 2 (Revision 10) at 1 (Standard Operating Procedure 2), available at https://www.uspto.gov/sites/default/files/documents/SOP 2%20R10%20FINAL.pdf. Case: 18-1831 Document: 97 Page: 10 Filed: 01/31/2020
1331−32. This assessment, however, fails to recognize the practical influence the Director wields with the power to hand-pick a panel, particularly when the Director sits on that panel. The Director’s ability to unilaterally designate or de-designate a decision as precedential and to convene a POP of the size and composition of his choosing are there- fore important tools for the direction and supervision of the Board even after it issues a final written decision. 5
5 The Arthrex panel’s underestimation of the Direc- tor’s power is particularly evident in light of this court’s prior en banc decision in In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994), abrogated on other grounds by In re Bilski, 545 F.3d 943 (Fed. Cir. 2008). Alappat contained strong lan- guage about the ability to control the composition and size of panels. See, e.g., id. at 1535 (noting that “the Board is merely the highest level of the Examining Corps, and like all other members of the Examining Corps, the Board op- erates subject to the Commissioner’s overall ultimate au- thority and responsibility”). While the duties of the Board and the Director have changed since Alappat was decided, the authority to determine the Board’s composition for re- consideration of an examiner’s patentability determination mirrors the current authority with respect to inter partes review. Compare 35 U.S.C. § 6(c) (2012) (giving the Direc- tor authority to designate “at least 3 members of the Patent Trial and Appeal Board” to review “[e]ach appeal, deriva- tion proceeding, post-grant review, and inter partes re- view”), with 35 U.S.C. § 7(b) (1988) (giving the Commissioner power to designate “at least three members of the Board of Appeals and Interferences” to review “ad- verse decisions of examiners upon applications for pa- tents”). Therefore, I believe the panel should have at least discussed how Alappat’s view of the power to control the Board might impact the Appointments Clause analysis. Case: 18-1831 Document: 97 Page: 11 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 9 CO. INC.
Combined, all of these powers illustrate that the Direc- tor has constitutionally significant means of direction and supervision over APJs─making them inferior officers un- der the rule of Edmond. B Despite the Director’s significant powers of direction and supervision, the Arthrex panel concluded that APJs are principal officers in large part because no principal officer may “single-handedly review, nullify or reverse” the Board’s decisions. Arthrex, 941 F.3d at 1329. But Supreme Court precedent does not require such power. And in the cases in which the Court emphasized a principal officer’s power of review, that principal officer had less authority to direct and supervise an inferior officer’s work ex ante than the Director has here. In Edmond, for instance, the Court of Appeals for the Armed Forces, an Article I court, could review decisions of the Court of Criminal Appeals judges at issue. However, its scope of review was limited. Edmond, 520 U.S. at 665 (explaining that the Court of Appeals for the Armed Forces may only reevaluate the facts when there is no “competent evidence in the record to establish each element of the of- fense beyond a reasonable doubt”). And while the Judge Advocate General “exercise[d] administrative oversight” and could “prescribe uniform rules of procedure,” he could “not attempt to influence (by threat of removal or other- wise) the outcome of individual proceedings.” Id. at 664. Nonetheless, the Supreme Court found that the Court of Criminal Appeals judges were inferior, not principal, offic- ers. In comparison, while the Director may not unilaterally decide to rehear or reverse a Board decision, he has many powers to direct and supervise APJs both ex ante and ex post, Section I A, supra, that no principal officer had in Ed- mond. Similarly, in Freytag v. Comm’r, 501 U.S. 868 (1991), the Supreme Court considered the status of special trial Case: 18-1831 Document: 97 Page: 12 Filed: 01/31/2020
judges appointed by the Tax Court, whose independent de- cision-making varied based on the type of case before them. The Court held that the special trial judges were inferior officers—not employees—when presiding over “declaratory judgment proceedings and limited-amount tax cases” be- cause they “render[ed] the decisions of the Tax Court” in those cases. Id. at 882. In doing so, the Court distin- guished between cases in which the special trial judges acted as “inferior officers who exercise independent author- ity,” and cases in which they still had significant discretion but less independent authority. Id. The Court’s analysis distinguished between inferior officer and employee; no- where did the Court suggest that special trial judges’ “in- dependent authority” to decide declaratory judgment proceedings and limited-amount cases rendered them prin- cipal officers. See id. at 881−82. Most recently, the Court applied the framework of Freytag in deciding whether ad- ministrative law judges (ALJs) of the Securities and Ex- change Commission (SEC) are inferior officers or employees. Lucia v. S.E.C., 138 S. Ct. 2044, 2053 (2018). The Court reasoned that SEC ALJs and Freytag’s special trial judges are extremely similar, but SEC ALJs arguably wield more power because their decisions become final if the SEC declines review. Id. at 2053−54. But again, the Court found this structure still only rendered SEC ALJs officers, not employees. Id. at 2054. No mention was made of SEC ALJs being principal officers. 6 See id. at 2051 n.3 (explaining that the distinction between principal and in- ferior officers was “not at issue here”). Just as the special
6 In fact, the Court declined “to elaborate on Buck- ley’s ‘significant authority’ test” marking the line between officer and employee, citing two parties’ briefs which ar- gued that the test between officer and employee, not prin- cipal and inferior officer, should include some measure of the finality of decision making. Lucia, 138 S. Ct. at 2051─52. Case: 18-1831 Document: 97 Page: 13 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 11 CO. INC.
trial judges in Freytag and the SEC ALJs in Lucia were inferior officers, so too are APJs. Nor does this court’s precedent require unfettered re- view as a marker of inferior officer status. In Masias v. Sec’y of Health & Human Servs., we rebuffed the argument that because the Court of Federal Claims does not review decisions of the Vaccine Program’s special masters de novo, the special masters are principal officers. 634 F.3d 1283, 1293−94 (Fed. Cir. 2011). There, we recognized that the Court of Federal Claims may only “set aside any findings of fact or conclusions of law of the special master found to be arbitrary, capricious, an abuse of discretion, or other- wise not in accordance with law . . . .” Id. at 1294. This limited review means that many of the special masters’ de- cisions are effectively final because the Court of Federal Claims has no basis to set aside findings of fact or conclu- sions of law. We reasoned that such limited review of spe- cial masters’ decisions by the Court of Federal Claims resembled the review in Edmond, and that “the fact that the review is limited does not mandate that special masters are necessarily ‘principal officers.’” Id. at 1295. Finally, the panel analogized the Arthrex issue to the one addressed by the D.C. Circuit in Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Bd., 684 F.3d 1332 (D.C. Cir. 2012). See Arthrex, 941 F.3d at 1334. But the facts of In- tercollegiate are significantly different than those in Ar- threx, or here. The Librarian of Congress—the principal officer who supervises the Copyright Royalty Judges (CRJs) at issue—was much more constrained in her ability to direct and supervise the CRJs than the Director. The governing statute grants CRJs broad discretion over rate- making. See 17 U.S.C. § 802(f)(1)(A)(i) (stating that “[CRJs] shall have full independence in making” numerous copyright rate-related decisions). The Librarian “ap- prov[es] the CRJs’ procedural regulations, . . . issu[es] eth- ical rules for the CRJs, [and] . . . oversee[s] various logistical aspects of their duties,” such as publishing CRJs’ Case: 18-1831 Document: 97 Page: 14 Filed: 01/31/2020
decisions and providing administrative resources. Intercol- legiate, 684 F.3d at 1338. In fact, it appears the only way the Librarian can exercise substantive control over the CRJs’ ratemaking decisions is indirectly through the Reg- ister of Copyrights, whom she, not the President, appoints. See 17 U.S.C. § 701(a). The Register corrects any legal er- rors in the CRJs’ ratemaking decisions, 17 U.S.C. § 802(f)(1)(D), and provides written opinions to the CRJs on “novel question[s] of law,” 17 U.S.C. § 802(f)(1)(B), or when the CRJ requests such an opinion. 17 U.S.C. § 802(f)(1)(A)(ii). But the CRJs may not consult with the Register about a question of fact. 17 U.S.C. § 802(f)(1)(A)(i). The Librarian therefore exerts far less control over CRJs than the Director can over APJs using all the powers of direction and supervision discussed in Section I A, supra. The ill-suited comparison to Intercollegiate in Arthrex again highlights how the unique powers of direction and supervision in each case should be viewed in totality, ra- ther than as discrete categories weighing in favor of infe- rior officer status or not. In particular, by breaking up the analysis into three discrete categories—Review, Supervi- sion, and Removal—the Arthrex panel overlooks how the powers in each category impact each other. Again, for ex- ample, whereas ex post the Court of Appeals for the Armed Forces has more power to review the Court of Criminal Ap- peals judges’ decisions than the Director has to review a Board decision, neither the JAG nor the Court of Appeals for the Armed Forces have the Director’s ex ante control, such as the power to decide whether to hear a case at all or to issue binding guidance on how to apply the law in a case. Viewed through this integrated lens, I believe APJs com- fortably fit with prior Supreme Court precedent that has never found a principal officer in a challenged position to date. Case: 18-1831 Document: 97 Page: 15 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 13 CO. INC.
C Finally, to the extent that the Arthrex panel decision is based on the lack of review along with perceived impermis- sible restrictions on removal of APJs, I believe it misappre- hends the applicable efficiency of the service standard that protects APJs. The efficiency of the service standard al- lows discipline and removal for “misconduct [that] is likely to have an adverse impact on the agency’s performance of its functions.” See Brown v. Dep’t of the Navy, 229 F.3d 1356, 1358 (Fed. Cir. 2000). To be sure, the efficiency of the service standard does not allow discipline or removal of APJs “without cause,” as in Edmond. See Arthrex, 941 F.3d at 1333. But neither the Supreme Court nor this court has required that a civil servant be removable at will to qualify as an inferior officer. To the contrary, the Supreme Court and this court have upheld for-cause removal limitations on inferior officers. See, e.g., Morrison v. Olson, 487 U.S. 654, 692−93 (1988) (holding that the “good cause” re- striction on removal of the independent counsel, an inferior officer, is permissible); Masias, 634 F.3d at 1294 (stating that the Court of Federal Claims can remove special mas- ters for “incompetency, misconduct, or neglect of duty or for physical or mental disability or for other good cause shown”). See also Free Enterprise, 561 U.S. at 494 (explain- ing that the Court previously “adopted verbatim the rea- soning of the Court of Claims, which had held that when Congress ‘ “vests the appointment of inferior officers in the heads of Departments[,] it may limit and restrict the power of removal as it deems best for the public interest’ ” (alter- ation in original) (quoting United States v. Perkins, 116 U.S. 483, 485 (1886) (itself quoting Perkins v. United States, 20 Ct. Cl. 438, 444 (1885)))). The efficiency of the service standard allows supervi- sors to discipline and terminate employees for arguably even a wider range of reasons than the standards above, including failure or refusal to follow the Director’s policy or legal guidance. Together with the significant authority the Case: 18-1831 Document: 97 Page: 16 Filed: 01/31/2020
Director wields in directing and supervising APJs’ work, the ability to remove an APJ on any grounds that promote the efficiency of the service supports finding that APJs are inferior officers. II Assuming for the sake of argument that APJs are prin- cipal officers, a remedy is required to cure the constitu- tional violation arising from their present appointment scheme. However, I do not believe that the remedy pro- posed by the Arthrex panel comports with congressional in- tent as evidenced by the employment protections provided to APJs and their predecessors for over thirty years. The Arthrex panel makes APJs removable at will by partially severing 35 U.S.C. § 3(c) as it applies Title 5’s removal pro- tections to APJs. Arthrex, 941 F.3d at 1337–38. I question whether Congress would have wanted to leave APJs with- out the removal protections of Title 5. But, given the high standard for finding non-severability, I cannot say that the Arthrex panel’s remedy was improper. A Before proceeding to the traditional severance analy- sis, I must note several concerns about the panel’s pur- ported “severance.” In traditional severance cases, both the unconstitutional language being severed and the re- maining language are usually part of one statute enacted at the same time. In what appears to be a smaller number of cases, an unconstitutional amendment was severed from the original statute. E.g., Reitz v. Mealey, 314 U.S. 33, 38−39 (1941), overruled in part on other grounds by Perez v. Campbell, 402 U.S. 637 (1971). But here the “severance” is far more convoluted—to the extent that I question whether “severance” is even the appropriate characteriza- tion of the Arthrex remedy. A court may sever the application of a particular stat- ute without striking language explicitly. See, e.g., Nat’l Case: 18-1831 Document: 97 Page: 17 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 15 CO. INC.
Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 586 (2012) (invalidating the application of a statute to cure a constitu- tional defect). But the Arthrex panel did not simply sever the application of 35 U.S.C. § 3(c) to APJs. It severed § 3(c)’s application of Title 5 protections, but only with re- spect to Title 5’s removal protections, and only to APJs. See Arthrex, 941 F.3d at 1337–38. In doing so, it severed the application of a separate statute, indeed, a section in a sep- arate title of the United States Code. Id. Further, the Title 5 employment protections afforded by 35 U.S.C. § 3(c) al- ready existed when Congress significantly amended other portions of Title 35, but made no changes to § 3(c), with the America Invents Act in 2011. See infra Section II C. I question whether it is appropriate to solve the alleged con- stitutional infirmity at issue in Arthrex and in this case by severing the application of a statute that Congress left un- touched in its most recent revision, the substance of which had applied in various forms for over 30 years. See infra Section II B. B When faced with an unconstitutional statute, we must determine whether severing the offending portion is possi- ble. To do so, we must determine if the remaining statute “will function in a manner consistent with the intent of Congress.” Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685 (1987) (emphasis removed). The question of severability is a weighty one and the bar for finding an unconstitutional provision non-severable is high. We “must refrain from invalidating more of the statute than is necessary. Indeed, we must retain those portions of the Act that are (1) constitutionally valid, (2) ca- pable of ‘functioning independently,’ and (3) consistent with Congress’ basic objectives in enacting the statute.” United States v. Booker, 543 U.S. 220, 258–59, (2005) (in- ternal citations omitted). Case: 18-1831 Document: 97 Page: 18 Filed: 01/31/2020
Because the statute as severed by Arthrex can function independently and is constitutionally valid, the key ques- tion is whether the statute as excised “remains consistent with Congress’ initial and basic . . . intent.” Id. at 264. Here, I question whether the Arthrex-excised statute does so. Congress afforded federal employment protections to APJs and their predecessors for over thirty years. And it seems unlikely to me that Congress, faced with this Ap- pointments Clause problem, would have chosen to strip APJs of their employment protections, rather than choose some other alternative. However, because the bar for non- severability is so high, and Congress can, at the end of the day, make another legislative choice if it disagrees with the outcome here, I reluctantly conclude that § 3(c) can be sev- ered as it applies to the removal protections for APJs. To be sure, I do not question the ability to sever an un- constitutional provision lightly. But our touchstone must remain the intent of Congress, and in this case, Congress has maintained federal employment protections for USPTO officers and employees, including APJs and their predecessors, from 1975 to today. This long-standing stat- utory protection leads me to believe that Congress intended for APJs to have removal protections, such as those incor- porated through Title 5 in 35 U.S.C. § 3(c), regardless of changes made to the Board’s duties in the AIA. C As the Arthrex panel noted, examiners-in-chief—“the former title of the current APJs”—were in fact nominated by the President and confirmed by the Senate until 1975. Arthrex, 941 F.3d at 1344. See also 35 U.S.C. § 3 (1952). But the 1975 amendment did not simply remove Presiden- tial nomination and Senate confirmation; it instead pro- vided for the appointment of examiners-in-chief (1) by the Secretary of Commerce (2) “under the classified civil ser- vice.” An Act To Amend Title 35, United States Code, “Pa- tents”, and For Other Purposes, Pub. L. No. 93–601, secs. Case: 18-1831 Document: 97 Page: 19 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 17 CO. INC.
1–2, §§ 3, 7, 88 Stat. 1956, 1956 (1975) (codified as amended at 35 U.S.C. §§ 3, 7 (1976)). This amendment provided fed- eral employment protections to examiners-in-chief. See, e.g., Arnett v. Kennedy, 416 U.S. 134, 150–51 (1974), over- ruled in part on other grounds by Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985) (explaining that the Lloyd- LaFollette Act’s “efficiency of the service” standard gov- erned the dismissal of a competitive civil service employee); Cole v. Young, 351 U.S. 536, 543 (1956) (describing dismis- sal of federal employees as governed by “general personnel laws,” such as the Lloyd-LaFollette Act’s “efficiency of the service” standard). Two reasons for this change appear in the legislative history. First, due to the growing number of examiners-in- chief, Presidential nomination and Senate confirmation posed a “burden.” H.R. REP. NO. 93-856, at 2 (1974). In an early case discussing the Appointments Clause, the Su- preme Court said that this was exactly the reason for providing for appointment of inferior officers by people other than the President. United States v. Germaine, 99 U.S. 508, 509–10 (1878). Second, the position of examiner- in-chief “requir[es] unique legal and technical qualifica- tions and experience.” An Act To Amend Title 35, United States Code, “Patents”, and For Other Purposes: Hearing on S. 645, H.R. 5237, S. 1253 and S.1254 Before Subcomm. No. 3 of the H. Comm. on the Judiciary, 92d Cong. 28−29 (1974) (letter from William N. Letson, Acting General Counsel of the Dep’t of Commerce, to Emanuel Celler, Chairman of the H. Comm. on the Judiciary). In making this change, Congress implicitly recognized that APJs be- longed in the civil service, where expertise and nonpartisan decision-making are expected of all civil servants. Indeed, such ideas motivated the passage of the Civil Service Re- form Act (CSRA) only three years after Congress provided for the appointment of APJs through the civil service sys- tem. Lovshin v. Dep’t of Navy, 767 F.2d 826, 832 (Fed. Cir. 1985) (citing the Senate’s discussion of the public’s right to Case: 18-1831 Document: 97 Page: 20 Filed: 01/31/2020
a government that is both “efficient and effective” and “im- partially administered”). Congress then maintained these federal employment protections through several amendments over more than three decades. In 1985, Congress amended 35 U.S.C. § 7, creating the Board of Patent Appeals and Interferences (BPAI) from the existing Board of Appeals, and again pro- vided that the examiners-in-chief “shall be appointed to the competitive service.” 7 Patent Law Amendment Acts of 1984, Pub. L. 98–622, title II, sec. 201, § 7(a), 98 Stat. 3383, 3386 (1984) (codified as amended at 35 U.S.C. § 7 (1988)). Though the 1978 CSRA replaced the Lloyd-LaFollette Act between the 1975 and 1985 amendments to 35 U.S.C. § 7, the CSRA maintained the “efficiency of the service” stand- ard for discipline and dismissal of federal employees in the competitive service. 5 U.S.C. § 7513 (1978). See also Cor- nelius v. Nutt, 472 U.S. 648, 669 (1985) (“The statutory phrase ‘such cause as will promote the efficiency of the ser- vice’ pre-dates the Civil Service Reform Act’s recognition of federal sector collective bargaining.”) (Marshall, J., dis- senting). In 1999, Congress made four changes significant here. First, Congress modified the statutory language governing the BPAI, moving the Board’s governing language from § 7 to its current location in § 6. See Patent and Trademark Office Efficiency Act, Pub. L. 106–113, ch. 1, sec. 4717, 113 Stat. 1501, 1501A-580 (1999) (codified at 35 U.S.C. § 6 (2000)). Second, it introduced the terminology of adminis- trative patent judge, in place of examiners-in-chief. Id. at 1501A-580–81. Third, Congress removed the previous
7 For the Appointments Clause analysis here, I treat the terms “competitive service” and “classified civil service” as interchangeable. See, e.g., 5 U.S.C. § 2102(c) (2018) (“As used in other Acts of Congress, ‘classified civil service’ or ‘classified service’ means the ‘competitive service[.]’”). Case: 18-1831 Document: 97 Page: 21 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 19 CO. INC.
language appointing examiners-in-chief under the compet- itive service, but added the current § 3(c), giving Title 5 protections to USPTO employees and officers. Id. at sec. 4713, § 3(c), 113 Stat. at 1501A-577 (codified as amended at 35 U.S.C. § 3(c) (2000)). This meant that even though their title changed, APJs remained subject to discipline or dismissal subject to the efficiency of the service standard. See 5 U.S.C. § 7513 (2000). Fourth, the amendment trans- ferred the power to appoint APJs from the Secretary of Commerce to the Director. Patent and Trademark Office Efficiency Act, Pub. L. 106–113, ch. 1, sec. 4717, 113 Stat. 1501, 1501A-581 (1999) (codified at 35 U.S.C. § 6(a) (2000)). This fourth change is particularly significant because only a few years later, Congress explicitly considered the constitutionality of this choice—whether APJs were em- ployees that could be appointed by the Director or officers that must be appointed by the Secretary of Commerce. Congress chose the latter. Consideration of this issue was prompted by an intellectual property law scholar’s sugges- tion in 2007 that APJs were inferior officers, not employ- ees, and therefore must be appointed by the President, a Court of Law, or the Head of a Department. See John F. Duffy, Are Administrative Patent Judges Unconstitu- tional?, 2007 PATENTLY-O PAT. L.J. 21, 25 (2007). Congress responded swiftly, amending the law in 2008 to give the power to appoint APJs back to the Secretary of Commerce. Patent and Trademark Administrative Judges Appoint- ment Authority Revision, Pub. L. 110–313, sec. 1, § 6, 122 Stat. 3014, 3014 (2008) (codified as amended at 35 U.S.C. § 6(a) (2012)). While some legislators viewed the fix as un- necessary, none suggested that APJs were in fact principal officers appointable only by the President. Compare 154 Cong. Rec. H7234 (daily ed. Jul. 29, 2008 edition) (state- ment of Rep. King) (“[A] straightforward reading of article II, section 2, which I strongly endorse, suggests the 1999 authority that Congress bestowed on the Patent and Case: 18-1831 Document: 97 Page: 22 Filed: 01/31/2020
Trademark Office Director to appoint administrative law judges is unconstitutional, inconsistent with article II, sec- tion 2. Instead, this right is more properly reserved for . . . the Secretary of Commerce . . . .”), with id. (statement of Rep. Cohen) (“We firmly believe that appointments made by the Director are constitutional.”). That Congress ex- plicitly considered the constitutionality of APJ appoint- ments just four years before passing the AIA, and confirmed their appointment by the Head of a Department, strongly suggests that Congress believed APJs were infe- rior officers in 2000, 2007, and 2011, and thus, could be constitutionally appointed by the Secretary, even with re- strictions on their removal. Finally, though Congress made significant changes to Title 35 through the AIA, it did not modify § 3(c)’s applica- tion of Title 5 protections to USPTO employees and offic- ers. 8 35 U.S.C. § 3(c) (2012). Yet again, APJs remained subject to the efficiency of the service removal standard ap- plicable to many federal employees. Further confirmation regarding Congressional intent comes from the fact that § 3 provides specific, and limited, removal procedures for the Director and the Commissioner for Patents, as opposed to all other officers and employees subject to § 3(c). The Director may be removed only by the President. 35 U.S.C. § 3(a)(4). The Commissioner may be removed “for misconduct or nonsatisfactory performance” under her performance agreement, “without regard to the provisions of title 5.” 35 U.S.C. § 3(b)(2)(C). That Congress described specific removal procedures for these two
8 The AIA did amend 35 U.S.C. § 3(b), see Leahy- Smith America Invents Act, Pub. L. 112-29, sec. 21, § 3(b), 125 Stat. 284, 336 (2011) (governing the Director’s ability to fix pay for APJs), and 35 U.S.C. § 3(e)(2), id. at sec. 20 § 3(e)(2), 125 Stat. at 334 (technical amendment changing “this Act” to “that Act”). Case: 18-1831 Document: 97 Page: 23 Filed: 01/31/2020
POLARIS INNOVATIONS LIMITED v. KINGSTON TECHNOLOGY 21 CO. INC.
positions strongly implies it intended that all other USPTO employees and officers enjoy the Title 5 protections pro- vided in § 3(c). Given this unbroken line of federal employment protec- tion afforded to APJs and their predecessors for over three decades, I question whether severing § 3(c)’s Title 5 re- moval protections for APJs “remains consistent with Con- gress’ initial and basic . . . intent.” Booker, 543 U.S. at 264. My concerns are not alleviated by the Arthrex panel’s focus on Congress’s intent as it pertained to the importance of inter partes review, without considering why Congress chose to provide Title 5 employment protections to APJs for decades. See Arthrex, 941 F.3d at 1337–38. D Finally, I am mindful of the Supreme Court’s guidance that: Our ability to devise a judicial remedy that does not entail quintessentially legislative work often de- pends on how clearly we have already articulated the background constitutional rules at issue and how easily we can articulate the remedy. . . . But making distinctions in a murky constitutional con- text, or where line-drawing is inherently complex, may call for a ‘far more serious invasion of the leg- islative domain’ than we ought to undertake. Ayotte v. Planned Parenthood of N. New England, 546 U.S. 320, 329−30 (2006) (quoting United States v. Nat’l Treasury Emps. Union, 513 U.S. 454, 479 n.26 (1995)). Given the limited extent of Appointments Clause jurisprudence and Congress’s repeated decisions to provide federal employ- ment protections to APJs for decades, I am particularly concerned that Arthrex’s remedy constitutes an unwise in- vasion of the legislative domain. I recognize that the Arthrex panel considered several potential fixes and chose the one it viewed both as Case: 18-1831 Document: 97 Page: 24 Filed: 01/31/2020
constitutional and minimally disruptive. But removing long-standing employment protections from hundreds of APJs is quite disruptive. Given no clear evidence that Con- gress would have intended such a drastic change, I would defer to Congress to fix the problem. This is a legislative problem best left to a legislative solution. Congress faces fewer constraints than we do in fixing an unconstitutional statute. For example, Congress might choose to: grant the Director unilateral review over all Board decisions; make the Chief PTAB Judge a presidential appointee and grant her review of all Board decisions; provide for review of Board decisions by a panel of three Presidential appointees at the USPTO (having created at least two such positions in addition to the Director); or provide for presidential ap- pointment of all APJs. In sum, I believe the Director currently exercises suffi- cient oversight and supervision of APJs to render them in- ferior officers under the Appointments Clause. But if APJs must be viewed as principal officers, I question curing the ensuing constitutional violation by removing their Title 5 removal protections because I believe it conflicts with Con- gress’s intent.