Supreme Court Says Over 200 Patent Judges Were Improperly Appointed

WASHINGTON — The Supreme Court ruled on Monday that more than 200 administrative judges who hear patent disputes, some of them over billions of dollars, had been appointed in violation of the Constitution.

The solution, a fractured majority of the court ruled, was to give the director of the U.S. Patent and Trademark Office the power to review the judges’ decisions in cases brought under a 2011 law that made it easier to challenge questionable patents.

Supporters of the procedure, called inter partes review, which is Latin for “between the parties,” say it helps combat patent “trolls,” or companies that obtain patents not to use them but to demand royalties and sue for damages. Opponents say the procedure is skewed toward the cancellation of valid patents.

The decision on Monday means the challenges will largely proceed as before, without changes to how the judges are appointed. The court’s narrow fix, subjecting the judges to additional supervision, fell well short of upending the current system.

The case, United States v. Arthrex, No. 19-1434, arose from a challenge filed by Smith & Nephew, a medical technology company, against patents held by a competitor, Arthrex, on a medical device. A panel of judges on the Patent Trial and Appeal Board, an administrative tribunal in the executive branch created by the 2011 law, ruled that Arthrex’s patents were invalid.

Arthrex appealed to the United States Court of Appeals for the Federal Circuit, a specialized court in Washington, saying that the patent judges’ decision should be thrown out because they had not been properly appointed.

The appeals court agreed, ruling that the judges performed important work without supervision and so were “principal officers” under the Constitution, meaning that they had to be appointed by the president and confirmed by the Senate.

The appeals court’s solution to the constitutional problem was to strike down a part of the law that protected the patent judges from being fired without cause. This effectively demoted them from “principal officers,” the appeals court said.

Chief Justice John G. Roberts Jr., writing for five justices on Monday, agreed that there was a constitutional problem with the fit between how the judges had been appointed and their duties. “The unreviewable executive power exercised” by the judges, he wrote, “is incompatible with their status as inferior officers.”

“Only an officer properly appointed to a principal office may issue a final decision binding the executive branch in the proceeding before us,” the chief justice wrote.

Justices Samuel A. Alito Jr., Neil M. Gorsuch, Brett M. Kavanaugh and Amy Coney Barrett joined that part of the chief justice’s opinion.

Chief Justice Roberts wrote for only four justices in another part of his opinion, this one concerning what the court should do about the constitutional problem it had identified. He said the judges’ decisions must be made subject to the director’s review. Justice Gorsuch did not agree with that part of the ruling, saying it was up to Congress to address how to fix the constitutional flaw.

Justice Stephen G. Breyer, joined by Justices Sonia Sotomayor and Elena Kagan, dissented from the first part of the chief justice’s opinion. “Today’s decision,” he wrote, “is both unprecedented and unnecessary, and risks pushing the judiciary further into areas where we lack both the authority to act and the capacity to act wisely.”

But those three justices nonetheless said they accepted Chief Justice Roberts’s solution to the problem the majority had identified.

Justice Clarence Thomas issued a separate dissent, joined in large part by Justices Breyer, Sotomayor and Kagan. “The court today draws a new line dividing inferior officers from principal ones,” he wrote. “The fact that this line places administrative patent judges on the side of ambassadors, Supreme Court justices and department heads suggests that something is not quite right.”