The America Invents Act (“AIA”) may be back on Congress’s agenda this year.  Enacted in 2011, the AIA established the Patent Trial and Appeal Board (“PTAB”) to adjudicate patentability disputes.  The Board is composed of administrative patent judges (APJs) who are appointed by the U.S. Secretary of Commerce and removable by either the Secretary or the Director of the U.S. Patent and Trademark Office for “such cause as will promote the efficiency of the service.”  The U.S. Court of Appeals for the Federal Circuit recently concluded that this appointment and tenure structure is unconstitutional, raising questions for Congress about the ability of APJs to adjudicate cases.

Last fall, a panel of the Federal Circuit held in Arthrex, Inc. v. Smith & Nephew, Inc., that the current appointment of APJs violates the Appointments Clause of the U.S. Constitution.  The Federal Circuit reasoned that because APJs have significant discretion to decide cases, there is no direct review of their decisions, and their removal is limited by the AIA, APJs are “principal officers” who can be appointed only by the President with advice and consent by the Senate.  To correct this constitutional violation, the Federal Circuit severed the tenure protection provision from the Act, so that APJs can still be appointed by the Secretary but can now be terminated at will.

The Federal Circuit decision may not be the last word on the issue.  The case could be heard by the full Federal Circuit sitting en banc and eventually by the U.S. Supreme Court.  Any final decision on the issue might not come from the courts for at least another two years, and there is no guarantee that the en banc court or Supreme Court will reach the same result.  APJs and litigants are therefore continuing to participate in the patentability review process without certainty about whether the Board’s decisions could later be overturned because of a conclusion that the APJs are unconstitutional.

The issue has caught Congress’s attention.  The House Committee on the Judiciary’s Subcommittee on Courts, Intellectual Property, and the Internet held a hearing in November to address the potential concerns.  The Subcommittee heard testimony from law professors and practitioners about how the Arthrex decision forces APJs to decide cases without the tenure protections usually afforded to judges in administrative agencies.  Without these protections, the experts warned, the APJs may lose their independence to decide cases without undue pressure from the agency and Department heads.  The experts suggested acting quickly to restore certainty and impartiality to  the patentability review process.

The Subcommittee’s Chair, Representative Hank Johnson (D-GA), noted that it is inconsistent to create an adjudicatory body with judges who have no job security.  Chairman of the full Judiciary Committee, Representative Jerry Nadler (D-NY), added that APJs without tenure protections would simply try to discern what the Director of the U.S. Patent and Trademark Office wants, leaving litigants to question if the Board is in fact impartial.  The Subcommittee’s Ranking Member, Representative Martha Roby (R-AL), observed that although the Arthrex decision may have remedied the constitutional defect, the Board still raises concerns because its decisions are not subject to review except by Article III courts.  Since its decisions are so impactful, involving patent assets worth tens of millions of dollars, Ranking Member Roby questioned whether a non-Senate-confirmed entity should have so much authority.

In light of the time it would take to receive a final decision from the courts, and the possibility that any final decision’s solution may not be satisfying, the Subcommittee appeared willing to consider a legislative fix.  Chairman Johnson raised four alternative provisions that the experts suggested would pass constitutional muster: (1) have all APJs be appointed by the President and confirmed by the Senate; or subject Board decisions to (2) discretionary review by the Director, (3) a panel of presidentially appointed and Senate-confirmed officials, or (4) of a presidentially appointed and Senate-confirmed chief APJ.  These reforms would ensure greater accountability of the APJs’ decisions to a presidentially appointed and Senate-confirmed entity without removing their tenure protections.

Any of these plans, and maybe others, appear to be fair game for potential legislation this year.