Last Week in the Federal Circuit (July 6-10): Arthrex Strikes Again

Although this was the week of the July argument sitting, that didn’t slow the Court down in issuing decisions with seventeen total. Below we give our usual week’s statistics and case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 3, plus 1 precedential order

Non-precedential opinions: 11

Rule 36: 3

Longest pending case from argument: Fitbit, Inc. v. Valencell, Inc., No. 19-1048 (309 days from argument to decision)

Shortest pending case from argument (non-Rule 36): J.S.T. Corporation v. ITC, No. 19-2308 (4 days from argument to decision)

Case of the week: In re Boloro Global Ltd., No. 19-2349 (July 7, 2020)

Panel: Judges Lourie, Dyk, and Reyna, with Judge Dyk writing the opinion.

Read this case if: you’re involved in a PTAB appeal by a patent applicant.

This week we’re looking at a new precedential order extending Arthrex to PTAB decisions by initial patent applicants. As you likely know since you’re reading this blog (and as we explained here), last Halloween the Federal Circuit held that the administrative patent judges who decide inter partes reviews were unconstitutionally appointed principal officers. To remedy that, the Court severed the portion of the Patent Act restricting those judges’ removal. Since then, the Federal Circuit has vacated many IPR final written decisions decided before the Court’s Arthrex decision and remanded them for a new hearing before a new panel of PTAB judges.

But unlike Arthrex, Boloro involved a patent applicant (rather than patent owner) appealing a PTAB decision from an initial examination. The Court held that was a distinction without a difference under Arthrex and VirnetX Inc. v. Cisco Systems, Inc., 958 F.3d 1333 (Fed. Cir. 2020). VirnetX extended Arthrex to decisions by PTAB judges in inter partes reexaminations based partly on the fact that the same PTAB judges decide IPRs and those reexaminations. 958 F.3d at 1335-36. Yet VirnetX appeared to leave open whether Arthrex should extend “to all Board proceedings.” Id

Boloro now holds that Arthrex also extends to initial examination proceedings. In response to the Court’s request for supplemental briefing, the Director had conceded that under Arthrex and VirnetX PTAB judges “were principal officers for purposes of all governmental functions of their office.” Given that concession, the Court held that the same remedy of a new hearing before a new panel of PTAB judges should apply. Even though the Director argued that he had far greater control over Board proceedings involving patent applicants, the Court saw “no principled reason to depart here from the resulting remedy applied in Arthrex and VirnetX.” The Court reached this conclusion based on the motion briefing and responses to two court requests for supplemental briefing; there was no merits briefing or argument.

Boloro likely will have only limited effect for now, because the Federal Circuit has limited Arthrex’s reach to PTAB final written decisions issued before October 31, 2019, and cases where the appellant sufficiently preserved on appeal an Appointments Clause challenge. Yet the Federal Circuit may not have the final word—there are now multiple petitions for certiorari challenging different aspects of Arthrex. Some of those petitions argue that the Federal Circuit’s Arthrex ruling could not cure the Appointments Clause problem. Depending on what happens at the Supreme Court, Boloro could become far more significant (or be effectively overruled).