792 Fed.Appx. 820 (Fed. Cir. 2020), 2018-1831, Polaris Innovations Limited v. Kingston Technology Co., Inc.

Docket Nº:2018-1831
Citation:792 Fed.Appx. 820
Opinion Judge:PER CURIAM.
Party Name:POLARIS INNOVATIONS LIMITED, Appellant v. KINGSTON TECHNOLOGY COMPANY, INC., Appellee United States, Intervenor
Attorney:Matthew D. Powers, Tensegrity Law Group LLP, Redwood Shores, CA, argued for appellant. Also represented by Jennifer Robinson; Azra Hadzimehmedovic, Aaron Matthew Nathan, Samantha A. Jameson, McLean, VA; Nathan Nobu Lowenstein, Kenneth J. Weatherwax, Lowenstein & Weatherwax LLP, Los Angeles, CA. D...
Judge Panel:Before Reyna, Wallach, and Hughes, Circuit Judges. Hughes, Circuit Judge, concurring, in which Wallach, Circuit Judge, joins.
Case Date:January 31, 2020
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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792 Fed.Appx. 820 (Fed. Cir. 2020)

POLARIS INNOVATIONS LIMITED, Appellant

v.

KINGSTON TECHNOLOGY COMPANY, INC., Appellee United States, Intervenor

No. 2018-1831

United States Court of Appeals, Federal Circuit

January 31, 2020

Editorial Note:

This Disposition is Nonprecedential. (See Federal Rule of Appellate Procedure Rule 32.1. See also U.S.Ct. of App. Fed. Cir. Rule 32.1.)

Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. IPR2017-00116.

Matthew D. Powers, Tensegrity Law Group LLP, Redwood Shores, CA, argued for appellant. Also represented by Jennifer Robinson; Azra Hadzimehmedovic, Aaron Matthew Nathan, Samantha A. Jameson, McLean, VA; Nathan Nobu Lowenstein, Kenneth J. Weatherwax, Lowenstein & Weatherwax LLP, Los Angeles, CA.

David M. Hoffman, Fish & Richardson PC, Austin, TX, argued for appellee. Also represented by Michael John Ballanco, Washington, DC; NITIKA GUPTA FIORELLA, Wilmington, DE.

Melissa N. Patterson, Appellate Staff, Civil Division, United States Department of Justice, Washington, DC, argued 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

PER CURIAM.

In its opening brief, Polaris Innovations Limited argues 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.

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 1320 (Fed. Cir. 2019).1 However, I write separately to note that I disagree with the

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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 pursuant to the laws of the United States." Buckley v. Valeo, 424 U.S. 1, 126, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976) (per curiam). But "significant authority" marks the line between an officer and an employee, 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, 117 S.Ct. 1573, 137 L.Ed.2d 917 (1997).

Instead, the pertinent cases make clear that the hallmark of an inferior officer is whether a presidentially-nominated and senate-confirmed principal officer "direct[s] and supervise[s] [her work] at some level." Id. at 663, 117 S.Ct. 1573. 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 accounts 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 "preserve political accountability relative to important government assignments." 520 U.S. at 663, 117 S.Ct. 1573. The current structure for appointing, directing and supervising, and removing 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 supervises 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 doing 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? Because I believe that the Supreme Court would have announced such a simple test if it were proper, I respectfully disagree with the Arthrex panel decision that APJs are principal officers. The Director’s power to direct and supervise 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, institute and reconsider institution

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of an inter partes review, select APJs to preside over an instituted inter partes review, 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 rehearing 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 patent and trademark laws." Gov’t. Br. 21. APJs must apply this guidance in all subsequent inter partes review proceedings. Such guidance might encompass, for instance, exemplary 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 discipline or removal under the efficiency of the service standard applicable under Title 5. See infra Section I C. Such 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 institute 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, 130 S.Ct. 3138, 177 L.Ed.2d 706 (2010) (discussing the importance of the ability to "start, stop, or alter individual [PCAOB] investigations," even where the reviewing principal officer already had significant "power over [PCAOB] activities"). Though the Arthrex panel did not address the Director’s ability to reconsider an institution decision, our precedent also holds that the Board3 may reconsider and reverse its initial institution 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 proceeding can be ‘dismissed’ after it is instituted, and, as our prior cases have held, administrative agencies possess inherent authority to reconsider their decisions, subject to certain limitations, regardless of whether they possess explicit 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...

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