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US Supreme Court finds part of patent law unconstitutional

The US Supreme Court has given the Director of the USPTO the power to review decisions of the boards of appeals on revocation of patents in inter partes review proceedings.

The Supreme Court chose to do this in order to avoid having to render these proceedings inoperative because of a constitutional problem. It is expected to make little difference to the outcomes of existing practice.

Inter partes review

Inter partes review (IPR) is a proceeding introduced in 2011 to have granted patents revoked or amended by the USPTO. This proceeding offers a simpler and cheaper alternative to invalidation by the courts. The proceeding is also popular with potential infringers because there is a perception that the chances of revoking a patent in IPR are higher than in court. Patent owners, on the other hand, have often tried to attack the principle of IPR. Most attacks have failed, but in Arthrex v. Smith and Nephew, the court ruled that the appointment of members of the boards of appeal violated the Constitution, and therefore demanded that IPR as a whole be rendered inoperative.

Constitutional problem

Under US patent law, the ordinary members of the boards of appeal are appointed by the Secretary of Commerce, in consultation with the Director of the USPTO. In this manner, hundreds of members have been appointed. The US Constitution permits such a nomination process for inferior officers of the US, but senior officers require nomination by the President and consent by the Senate.

The question, therefore, was whether members of the boards of appeal could qualify as inferior officers. The Supreme Court used the criterion that the work of an inferior officer must be under the direction and supervision of a superior. However, the patent law provides that decisions in IPR, in addition to appeals before the courts, can only be reviewed by the boards of appeal themselves. Thus, the supervision required to be an inferior officer was lacking, and the appointment procedure was unconstitutional.

Pyrrhic victory

In the US, it is normal to solve these kinds of constitutional problems in a law by making something in the law inoperative, which makes the constitutional problem disappear. One Supreme Court justice thought that the possibility of IPR as a whole should be rendered inoperative. But a majority thought it was sufficient to make the members of the boards of appeals inferior officers by giving the director of the USPTO discretion to review their IPR decisions.

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