High court: Congress erred in patent dispute board setup

The Supreme Court on Monday ruled that Congress erred when it set up a board to oversee patent disputes by failing to make the judges properly accountable to the president.

Five conservative justices agreed that Congress had erred, but both conservative and liberal justices agreed on the fix. They concluded that a portion of federal law related to how the Patent Trial and Appeal Board functions can’t be enforced. The result of the court’s action is that the director of the Patent and Trademark Office can review and reverse any decisions made by the board’s judges. The director is nominated by the president and confirmed by the senate.

The case before the justices involved more than 200 administrative patent judges who make up the Patent Trial and Appeal Board and issue hundreds of decisions every year. The case is of particular importance to patent holders and inventors, including major technology companies.

The question for the court had to do with whether Congress violated the Constitution’s Appointments Clause in the way it set up the board. The board’s judges are not appointed by the president and confirmed by the Senate but instead appointed by the Secretary of Commerce.

Both the Biden administration and the Trump administration had told the justices that there was no issue with the system Congress set up.

The specific case the justices ruled in involves medical device company Arthrex. The Naples, Florida-based company patented a surgical device for reattaching soft tissue to bone. Arthrex sued a British company, Smith & Nephew, for patent infringement in 2015. The companies ultimately settled, but Smith & Nephew challenged Arthrex’s patent.

During that challenge before the Patent Trial and Appeal Board, a panel of three administrative patent judges sided with Smith & Nephew and found Arthrex’s claims unpatentable. Arthrex appealed, arguing the judges were unconstitutionally appointed, and a federal appeals court agreed.

As a result of the Supreme Court’s decision, the case will be sent back and the Patent Trial and Appeal Board’s acting director can decide whether to rehear the petition filed by Smith & Nephew.