Nature of the Case
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Facts
The patent system is administered by the Patent and Trademark Office (PTO), an executive agency within the Department of Commerce “responsible for the granting and issuing of patents” in the name of the United States. Congress vested the “powers and duties” of the PTO in a sole Director appointed by the President with the advice and consent of the Senate. The Patent Trial and Appeal Board (PTAB) is an executive adjudicatory body within the PTO established by the Leahy-Smith America Invents Act of 2011. It sits in panels of at least three members drawn from the Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and more than 200 Administrative Patent Judges (APJs). The Board decides whether an invention satisfies the standards for patentability on review of decisions by primary examiners. The validity of a patent previously issued by the Patent and Trademark Office can be challenged before the Patent Trial and Appeal Board, an executive tribunal within the PTO. The Board, composed largely of Administrative Patent Judges appointed by the Secretary of Commerce, has the final word within the Executive Branch on the validity of a challenged patent. The PTAB can also take a second look at patents previously issued by the PTO. One such procedure is inter partes review. Inter partes review is an adversarial process by which members of the PTAB reconsider whether existing patents satisfy the novelty and nonobviousness requirements for inventions. Any person-other than the patent owner himself-can file a petition to institute inter partes review of a patent. The Director can institute review only if, among other requirements, he determines that the petitioner is reasonably likely to prevail on at least one challenged patent claim. Congress committed the decision to institute inter partes review to the Director’s unreviewable discretion. The Director designates at least three members of the PTAB to conduct an inter partes proceeding. The PTAB then assumes control of the process, which resembles civil litigation in many respects. The PTAB must issue a final written decision on all of the challenged patent claims within 12 to 18 months of institution. A party who disagrees with a decision may request rehearing by the PTAB. A party dissatisfied with the final decision may seek judicial review in the Court of Appeals for the Federal Circuit. D develops medical devices. It secured a patent on a surgical device for reattaching soft tissue to bone without tying a knot. D claimed that Ps had infringed the ’907 patent. Ps filed a petition challenging some of D’s patent claims. The Director instituted review. A panel of three administrative judges ultimately agreed with Ps that the disputed claims were unpatentable. The Director did not convene a panel to rehear that decision. Nor is there any suggestion that D sought rehearing from the Board or from the Director. D appealed the Board’s decision to the United States Court of Appeals for the Federal Circuit., and the dispute eventually made its way to inter partes review in the PTO. Three APJs formed the PTAB panel and concluded that a prior patent application “anticipated” the invention claimed by the ’907 patent so that D’s patent was invalid. On appeal D raised for the first time, an argument premised on the Appointments Clause of the Constitution. Under that Clause, Principal officers must be appointed by the President with the advice and consent of the Senate, while inferior officers may be appointed by the President alone, the head of an executive department, or a court. P argued that the APJs were principal officers and therefore their appointment by the Secretary of Commerce was unconstitutional. The United States intervened to defend the appointment procedure. The Federal Circuit agreed with P that APJs were principal officers. The Federal Circuit held that these restrictions meant that APJs were themselves principal officers, not inferior officers under the direction of the Secretary or Director. The Federal Circuit invalidated the tenure protections for APJs. Making APJs removable at will by the Secretary, the panel held, prospectively “renders them inferior rather than principal officers.” The Federal Circuit vacated the PTAB’s decision and remanded for a fresh hearing before a new panel of APJs, who would no longer enjoy protection against removal. Everybody objected and the Circuit denied a rehearing in banc. The Supreme Court granted certiorari.
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