Do You Want An Inferior Judge?: Why PTAB Judges May Be Unconstitutional And What Happens If They Are

By: Rebecca Lindhorst and Jason D. Eisenberg

Is the appointment of PTAB administrative patent judges (APJs) constitutional? The patent bar is asking in the wake of the Supreme Court’s decision in Lucia v. SEC.[i]

In Lucia, the Supreme Court held that SEC administrative law judges (“ALJs”) are inferior officers of the United States and not mere employees. Based on this status, the Court held that the process of appointing SEC ALJs was unconstitutional because the appointments were not done by a method approved in the Appointments Clause. The Appointments Clause requires inferior officers to be appointed by one of four methods: (1) by the President with advice and consent of the Senate; (2) by the President alone; (3) by the “courts of law”; or (4) by the “heads of departments.” In the wake of the Lucia decision, commentators have questioned if this holding will extend to invalidate all existing ALJ appointments across all agencies.

But this is not a new issue for APJs. Decades ago a constitutional challenge was made to a 1999 statute that vested the power to appoint BPAI APJs in the PTO Director. The BPAI was the predecessor court to the PTAB. At that time Professor John Duffy argued that these appointments were unconstitutional unless BPAI judges were not officers or the Director was a “head of department.”[ii] Similar to PTAB judges, BPAI judges had the ability to run trials, take evidence, rule on admissibility, and reach a final administrative decision. The argument was that these abilities demonstrated that BPAI judges were exercising significant authority under the law and were at least inferior officers for purposes of the Appointments Clause. Additionally, the PTO Director ran a sub-unit of the Department of Commerce, answered to the Secretary of Commerce, and was, consequently, not a “head of department.” Therefore, Duffy argued that appointments of BPAI judges by the PTO Director violated the Appointments Clause.

Congress implicitly validated Duffy’s argument by swiftly introducing legislation to amend the appointment process for BPAI judges. In 2008, corrective legislation was passed that removed the power of the PTO Director to appoint BPAI judges and restored it to a “head of department,” the Secretary of Commerce. This legislation also provided two solutions to address cases decided by unconstitutionally appointed BPAI judges. The first solution authorized the Secretary of Commerce to make the new appointments of existing BPAI APJs take effect retroactively. The second solution provided that the “de facto officer” doctrine shall be a defense to a challenge of the appointment of an APJ.

While the PTAB has replaced the BPAI in the America Invents Act (AIA), the process of appointing PTAB APJs remains unchanged. And “[a]ny reference in any Federal law,
Executive order, rule, regulation, or delegation of authority, or any document pertaining to the Board of Patent Appeals and Interferences is deemed to refer to the Patent Trial and Appeal Board.”[iii] So if PTAB judges are inferior officers, unlike the SEC ALJs in Lucia, the PTAB APJ appointments should be considered constitutional.

The argument is that, in light of the 2008 legislation and the Lucia decision, it appears that PTAB APJs are at least inferior officers. Yet whether PTAB APJs are inferior or principal officers remains uncertain and there is no bright line rule for discerning an inferior from a principal officer. Furthermore, if PTAB APJs are actually principal officers, the current process for appointing PTAB APJs remains unconstitutional. The Appointments Clause mandates that, unlike inferior officers, principal officers can only be appointed by the President with advice and consent of the Senate.

One case to consider is Esmond v. United States, where the Supreme Court held that “generally” inferior officers are those who are directed and supervised by others who have been appointed by the President with the advice and consent of the Senate.[iv] In view of Esmond, officers that issue final executive decisions, subject only to Presidential review, are likely to be considered principal officers.

Here, the PTAB is the final authority within the PTO on matters of substantive law. The PTO Director, while retaining the power to appoint 3-member PTAB panels, does not have the express statutory authority to overrule PTAB decisions. Because PTAB panels make the final executive decision on matters of patent law, PTAB APJs are arguably principal officers under the Edmonds test.

Years ago Duffy anticipated this argument and reasoned that BPAI APJs are inferior and not principal officers because the PTO Director has the power to select panels, and designate certain opinions as precedential (and informative). This authority remains today for PTAB APJs. But other commentators have countered that “[t]he power to pick the panels is not the power to decide.”[v]

If PTAB APJs are determined to be principal officers then their appointment is unconstitutional in light of the Appointments Clause. This scenario could challenge the validity of PTAB decisions. While legislation similar to the 2008 corrective legislation could be passed to address this issue, both solutions provided in the 2008 legislation have weaknesses. The retroactive appointment of PTAB APJs conflicts with Marbury v. Madison, which states in dicta that appointment occurs when a commission has been signed.[vi] The Supreme Court has also rejected that the “de facto officer” doctrine can protect judges who were unconstitutionally appointed.[vii]

In Lucia the Supreme Court held that the appropriate remedy for an adjudication decided by an unconstitutionally-appointed official is a “new hearing before a properly appointed” official. Furthermore, this official must not be the same official who heard the original adjudication, even if the original official has subsequently received a constitutional appointment. This remedy is available to “one who makes a timely challenge to the constitutional validity of the appointment of an officer who adjudicates his case.”

If the appointment of PTAB APJs is found to be unconstitutional, Congress may attempt to retroactively correct the problem with legislation similar to the 2008 corrective legislation. But in light of prior precedent, including Lucia, if the solutions were challenged the Supreme Court may deem them inadequate and remand the challenged case back to a new panel of constitutionally-appointed PTAB APJs. This remedy may be limited, however, to parties who timely challenge the constitutional validity of the PTAB APJs who adjudicated their case.

President Trump recently issued an executive order to counter Lucia that might end the debate. But we will see how this develops and update our readers as necessary.

[i] 138 S.Ct. 2044 (2018).
[ii] John F. Duffy, Are Administrative Patent Judges Unconstitutional?, 2007 Patently-O Patent L.J. 21.
[iii] 35 U.S.C. § 6 (2012).
[iv] 520 U.S. 651 (1997).
[v] Gary Lawson, Appointments and Illegal Adjudication: The AIA through a Constitutional Lens, 41 Geo. Mason U. L. Rev. (forthcoming 2018).
[vi] Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803).
[vii] Ryder v. United States, 515 U.S. 177 (1995).

This article appeared in the July 2018 issue of PTAB Strategies and Insights. To view our past issues, as well as other firm newsletters, please click here.