United States v. Arthrex, Inc.
The Supreme Court ruled that the Patent Trial and Appeal Board's structure violated the Constitution, because the judges who issued final patent rulings could not be reviewed or overridden by any accountable executive official.
To fix the problem, the Court ruled that the Patent and Trademark Office Director may now personally review and reverse PTAB decisions, restoring a line of accountability running up through the President.
How it got here: The Federal Circuit found APJs were unconstitutionally appointed principal officers and stripped their tenure protections as a remedy; all three parties sought certiorari and the Court agreed to hear the consolidated cases.
The Case in Depth
What happened
Arthrex, a medical device company, held a patent on a surgical tool for reattaching soft tissue to bone. A competitor, Smith & Nephew, petitioned the Patent Trial and Appeal Board — a body of Administrative Patent Judges (APJs) inside the Patent and Trademark Office — to cancel Arthrex's patent. Three APJs ruled the patent invalid. Arthrex challenged that outcome, arguing the APJs' appointment was unconstitutional because they wielded final, unreviewable executive power despite being appointed only by the Secretary of Commerce.
The question before the Court
Can Congress give a group of government patent judges the final word on whether patents are valid — with no superior executive official able to review or override their decisions?
The Court's answer
Yes — the Court found that Administrative Patent Judges who decide patent validity challenges violated the Constitution, because they issued final, unreviewable rulings with no superior executive official able to override them. The Appointments Clause allows department heads to appoint lower-level officers only if those officers remain subject to direction and supervision by someone accountable to the President. APJs had no such check — their rulings were the executive branch's final word, with only the Board itself able to grant rehearing.
To fix the problem, the Court ruled that the part of the law blocking the Patent and Trademark Office Director from reviewing APJ decisions is unenforceable. The Director may now personally step in, review a final PTAB ruling, and issue a decision of his own. The specific case was sent back to the Acting Director to decide whether to rehear the patent challenge that started the dispute.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Companies and patent holders involved in inter partes review proceedings — which handle billions of dollars in patent disputes — can now seek review by the PTO Director. The Director's new oversight authority changes the dynamics of patent validity challenges: a politically accountable official now has the final word, not an insulated panel of judges.
What changes now
The case goes back to the Acting Director of the Patent and Trademark Office to decide whether to rehear Smith & Nephew's challenge to Arthrex's patent. Going forward, the PTO Director has authority to review and reverse any final PTAB decision in inter partes review, giving the President's chain of command direct reach over patent validity rulings. Congress may choose to codify, adjust, or revisit the PTAB's structure in light of the ruling.
What this does not decide
The ruling covers only inter partes review proceedings, not other PTAB adjudications such as the patent examination process. The Court also did not set a general rule requiring all inferior officers' decisions to be reviewable by a principal officer — the holding is confined to adjudications where inferior officers issue final, unreviewable, binding executive decisions.
Concurrences and dissents
Concurrence in part — Justice Gorsuch
Justice Gorsuch joined the majority's finding that the APJ structure broke the constitutional chain of command, but refused to join the Court's remedy. He argued that 'severability doctrine' — picking apart the statute and rewriting the Director's powers — was an impermissible policy choice that only Congress should make. He would have simply set aside the PTAB decision in the case and left it to Congress to decide how to fix the problem. He also renewed his view that the Oil States decision (allowing executive officers to cancel issued patents at all) was itself constitutionally suspect and has generated ongoing due process problems.
Dissent in part — Justice Breyer
Justice Breyer, joined by Justices Sotomayor and Kagan, disagreed with the majority's core constitutional finding — arguing the Court should take a functional rather than formalistic approach and defer to Congress's reasonable judgment that APJs needed some independence from political pressure. He contended the Director already had sufficient control over APJs through pay, panel selection, rulemaking, and precedential decisions. He agreed with the majority's chosen remedy, however, because if a constitutional violation exists under the majority's framework, the Director-review fix is appropriately tailored to it.
Dissent — Justice Thomas
Justice Thomas, joined by Justices Breyer, Sotomayor, and Kagan as to Parts I and II, argued that APJs are straightforwardly inferior officers — both formally (sitting below the Director and the Secretary of Commerce in the agency hierarchy) and functionally (subject to substantial supervision through panel assignment, policy directives, removal authority, and the Director's power to convene special review panels). In his view, the majority invented a novel constitutional rule with no basis in the Appointments Clause's text or history, and he would have left Congress's patent scheme intact.
How the Court got there
The legal reasoning, step by step
- The Court applied the test from Edmond v. United States (1997), which requires that 'inferior officers' — those who can be appointed by a department head without Senate confirmation — must still be 'directed and supervised at some level' by presidentially appointed, Senate-confirmed officials. The question was whether APJs met that standard.
- APJs are clearly 'officers' of the United States, not mere employees, because they exercise significant authority by adjudicating whether existing patents are valid — a power that binds the entire Executive Branch and can turn on billions of dollars. No party disputed this threshold point.
- The Court found the critical ingredient from Edmond was absent. In that earlier case, Coast Guard judges had 'no power to render a final decision on behalf of the United States unless permitted to do so by other Executive officers.' APJs, by contrast, issue final decisions that no superior executive official can review or reverse — only the Board itself can grant rehearing under the statute.
- The Director's indirect tools — selecting favorable APJ panels, issuing policy guidance, deciding whether to institute review — don't solve the constitutional problem. Maneuvering behind the scenes to influence outcomes 'blurs the lines of accountability' and leaves parties with neither a neutral expert decision nor a transparent one that a politically accountable official must own.
- Because the flaw was the statutory restriction blocking the Director from reviewing APJ decisions — not the APJs' appointments themselves — the Court severed that restriction. The provision preventing the Director from reviewing Board decisions on his own is unenforceable; the Director may now personally review and decide inter partes review cases.
- The appropriate remedy was a limited remand to the Acting Director to decide whether to rehear the petition — not a full new hearing before a different panel of APJs — because the constitutional problem arose from blocked review authority, not a defective appointment process.
Doctrinal impact
Cases affected by this decision
Reaffirms Edmond v. United States (520 U.S. 651)
The Court explicitly reaffirms and extends Edmond's rule that inferior officers must be directed and supervised by Senate-confirmed officials.