Unconstitutionally Appointed Patent Judges Cannot Decide Appeals From Inter Partes Reexaminations

Before O’Malley, Moore, and Chen.  Appeal from the Patent Trial and Appeal Board.

VIRNETX INC. v. CISCO SYSTEMS, INC. (Denying Panel Rehearing)

VIRNETX INC. v. CISCO SYSTEMS, INC. (Denying Rehearing En Banc)

Summary:  When administrative patent judges are unconstitutionally appointed, their decisions in appeals from inter partes reexamination must be vacated, just like their decisions in inter partes review.

Appellee Cisco and Intervenor Andrei Iancu, the Director of the U.S. Patent and Trademark Office, petitioned for panel rehearing and rehearing en banc to challenge the Federal Circuit’s decision extending the holding of Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019), beyond the context of inter partes review (IPR).  Arthrex held that an IPR decision issued by a panel of administrative patent judges (APJs) who were unconstitutionally appointed had to be vacated.  The original panel decision in VirnetX extended the holding of Arthrex to inter partes reexamination. 

The rehearing petitions argued that, based on differences between IPRs and inter partes reexaminations, APJs should be deemed constitutionally appointed with respect to their duties reviewing appeals from inter partes reexamination.  In response to the rehearing petitions, the panel issued an order “for the purpose of more fully explaining our rationale.”

The panel analyzed Freytag v. Commissioner, 501 U.S. 868 (1991), where the Supreme Court held that the constitutionality of an appointment is based on all of the appointee’s duties and not just the authority exercised in a particular case.  Because the APJs who decide appeals from inter partes reexaminations also conduct IPRs, their appointments were unconstitutional under Arthrex.  Further, the panel found that even if inter partes reexaminations were analyzed on their own, they were similar enough to IPRs that they would raise the same constitutional problems identified in Arthrex.  Thus, the petitions for panel rehearing were denied.

In a separate order, the Federal Circuit also denied the petitions for rehearing en banc, without comment.

Editor: Paul Stewart