Moore, Circuit Judge.
Arthrex, Inc. appeals from the final written decision of the Patent Trial and Appeal Board holding claims 1, 4, 8, 10-12, 16, 18, and 25-28 of U.S. Patent No. 9,179, 907 unpatentable as anticipated. Arthrex appeals this decision and contends that the appointment of the Board's Administrative Patent Judges ("APJs") by the Secretary of Commerce, as currently set forth in Title 35, violates the Appointments Clause, U.S. Const., art. II, § 2, cl. 2. We agree and conclude that the statute as currently constructed makes the APJs principal officers. To remedy the violation, we follow the approach set forth by the Supreme Court in Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477, 130 S.Ct. 3138, 177 L.Ed.2d 706 (2010) and followed by the D.C. Circuit in Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Board, 684 F.3d 1332 (2012). As the Supreme Court instructs, "`[g]enerally speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to the problem,' severing any `problematic portions while leaving the remainder intact.'" Free Enterprise Fund, 561 U.S. at 508, 130 S.Ct. 3138 (quoting Ayotte v. Planned Parenthood of Northern New Eng., 546 U.S. 320, 328-29, 126 S.Ct. 961, 163 L.Ed.2d 812 (2006)). We conclude that severing the portion of the Patent Act restricting removal of the APJs is sufficient to render the APJs inferior officers and remedy the constitutional appointment problem. As the final written decision on appeal issued while there was an Appointments Clause violation, we vacate and remand. Following Lucia v. S.E.C., ___ U.S. ___, 138 S.Ct. 2044, 201 L.Ed.2d 464 (2018), the appropriate course of action is for this case to be remanded to a new panel of APJs to which Arthrex is entitled.
BACKGROUND
Arthrex owns the '907 patent, which is directed to a knotless suture securing assembly. Smith & Nephew, Inc. and Arthrocare Corp. (collectively "Petitioners" or "Appellees") filed a petition requesting inter partes review of claims 1, 4, 8, 10-12, 16, 18, and 25-28 of the '907 patent.
Inter partes review is a "`hybrid proceeding' with `adjudicatory characteristics' similar to court proceedings." Saint Regis
The inter partes review of the '907 patent was heard by a three-judge panel consisting of three APJs. The Board instituted review and after briefing and trial, the Board issued a final written decision finding the claims unpatentable as anticipated. J.A. 12, 14, 42.
ANALYSIS
A. Waiver
Appellees and the government argue that Arthrex forfeited its Appointments Clause challenge by not raising the issue before the Board. Although "[i]t is the general rule . . . that a federal appellate court does not consider an issue not passed upon below," we have discretion to decide when to deviate from that general rule. Singleton v. Wulff, 428 U.S. 106, 120-21, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976). The Supreme Court has included Appointments Clause objections to officers as a challenge which could be considered on appeal even if not raised below. Freytag v. Commissioner of Internal Revenue, 501 U.S. 868, 878-79, 111 S.Ct. 2631, 115 L.Ed.2d 764 (1991); Glidden Co. v. Zdanok, 370 U.S. 530, 535-36, 82 S.Ct. 1459, 8 L.Ed.2d 671 (1962).
In Freytag, the Supreme Court exercised its discretion to decide an Appointments Clause challenge despite petitioners' failure to raise a timely objection at trial. 501 U.S. at 878-79, 111 S.Ct. 2631. In fact, the Court reached the issue despite the fact that it had not been raised until the appellate stage. The Court explained that the structural and political roots of the separation of powers concept are embedded in the Appointments Clause. It concluded that the case was one of the "rare cases in which we should exercise our discretion to hear petitioners' challenge to the constitutional authority." Id. at 879, 111 S.Ct. 2631. We believe that this case, like Freytag, is one of those exceptional cases that warrants consideration despite Arthrex's failure to raise its Appointments Clause challenge before the Board. Like Freytag, this case implicates the important structural interests and separation of powers concerns protected by the Appointments Clause. Separation of powers is "a
Appellees and the government argue that like In re DBC we should decline to address the Appointments Clause challenge as waived. DBC recognized that the court retains discretion to reach issues raised for the first time on appeal, but declined to do so in that case. 545 F.3d 1373, 1380 (Fed. Cir. 2008). The court predicated its decision on the fact that if the issue had been raised before the Board, it could have corrected the Constitutional infirmity because there were Secretary appointed APJs and that Congress had taken "remedial action" redelegating the power of appointment to the Secretary of Commerce in an attempt to "eliminat[e] the issue of unconstitutional appointments going forward." Id. at 1380. As the court noted, "the Secretary, acting under the new statute, has reappointed the administrative patent judges involved in DBC's appeal." Id. at 1381. Not only had Congress taken remedial action to address the constitutionality issue, the Secretary had already been implementing those remedies limiting the impact. Id. No such remedial action has been taken in this case and the Board could not have corrected the problem. Because the Secretary continues to have the power to appoint APJs and those APJs continue to decide patentability in inter partes review, we conclude that it is appropriate for this court to exercise its discretion to decide the Appointments Clause challenge here. This is an issue of exceptional importance, and we conclude it is an appropriate use of our discretion to decide the issue over a challenge of waiver.
B. Appointments Clause
Arthrex argues that the APJs who presided over this inter partes review were not constitutionally appointed. It argues the APJs were principal officers who must be, but were not, appointed by the President with the advice and consent of the Senate.
The Appointments Clause of Article II provides:
U.S. Const. art. II, § 2, cl. 2. APJs are appointed by the Secretary of Commerce, in consultation with the Director of the USPTO. 35 U.S.C. § 6(a). The issue, therefore, is whether APJs are "Officers of the United States" and if so, whether they are inferior officers or principal officers; the latter requiring appointment by the President as opposed to the Secretary of Commerce. We hold that in light of the rights and responsibilities in Title 35, APJs are principal officers.
An "Officer of the United States," as opposed to a mere employee, is someone who "exercis[es] significant authority
Under 35 U.S.C. § 6(a), APJs "hold a continuing office established by law . . . to a position created by statute." Lucia, 138 S. Ct. at 2053. The APJs exercise significant discretion when carrying out their function of deciding inter partes reviews. They oversee discovery, 37 C.F.R. § 42.51, apply the Federal Rules of Evidence, 37 C.F.R. § 42.62(a), and hear oral arguments, 37 C.F.R. § 42.70. And at the close of review proceedings, the APJs issue final written decisions containing fact findings and legal conclusions, and ultimately deciding the patentability of the claims at issue. See 35 U.S.C. § 318(a). The government itself has recognized that there is a "functional resemblance between inter partes review and litigation," and that the Board uses "trial-type procedures in inter partes review." Br. of United States at 26, 31, Oil States Energy Servs., LLC v. Greene's Energy Grp., LLC, ___ U.S. ___, 138 S.Ct. 1365, 200 L.Ed.2d 671 (2018). The Board's patentability decisions are final, subject only to rehearing by the Board or appeal to this court. See 35 U.S.C. §§ 6(c), 141(c), 319. Like the special trial judges ("STJs") of the Tax Court in Freytag, who "take testimony, conduct trials, rule on the admissibility of evidence, and have the power to enforce compliance with discovery orders," 501 U.S. at 881-82, 111 S.Ct. 2631, and the SEC Administrative Law Judges in Lucia, who have "equivalent duties and powers as STJs in conducting adversarial inquiries," 138 S. Ct. at 2053, the APJs exercise significant authority rendering them Officers of the United States.
The remaining question is whether they are principal or inferior officers. The Supreme Court explained that "[w]hether one is an `inferior' officer depends on whether he has a superior," and "`inferior officers' are officers whose work is directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate." Edmond v. United States, 520 U.S. 651, 662-63, 117 S.Ct. 1573, 137 L.Ed.2d 917 (1997). There is no "exclusive criterion for distinguishing between principal
1. Review Power
The Supreme Court deemed it "significant" whether an appointed official has the power to review an officer's decision such that the officer cannot independently "render a final decision on behalf of the United States." Edmond, 520 U.S. at 665, 117 S.Ct. 1573. No presidentially-appointed officer has independent statutory authority to review a final written decision by the APJs before the decision issues on behalf of the United States. There are more than 200 APJs and a minimum of three must decide each inter partes review. 35 U.S.C. § 6(c). The Director is the only member of the Board who is nominated by the President and confirmed by the Senate. The Director is however only one member of the Board and every inter partes review must be decided by at least three Board judges. At the conclusion of the agency proceeding, the Board issues a final written decision. 35 U.S.C. § 318(a).
There is no provision or procedure providing the Director the power to single-handedly review, nullify or reverse a final written decision issued by a panel of APJs. If parties are dissatisfied with the Board decision, they may request rehearing by the Board or may appeal to this court. 35 U.S.C. §§ 6(c), 141(c), 319. "Only the Patent Trial and Appeal Board may grant rehearings," upon a party's request. Id. § 6(c). Again, the decision to rehear would be made by a panel of at least three members of the Board. And the rehearing itself would be conducted by a panel of at least three members of the Board.
The government argues that the Director has multiple tools that give him the authority to review decisions issued by APJs. The government argues that the Director possesses the power to intervene and become a party in an appeal following a final written decision with which he disagrees. See 35 U.S.C. § 143. But that authority offers no actual reviewability of a decision issued by a panel of APJs. At most, the Director can intervene in a party's appeal and ask this court to vacate the decision, but he has no authority to vacate the decision himself. And the statute only gives the parties to the inter partes review the power to appeal the decision, not the Director. See id. § 319. If no party appeals the APJs' decision, the Director's hands are tied. "[T]he Director shall issue and publish a certificate canceling any claim of the patent finally determined to be unpatentable.. . ." Id. § 318(b) (emphasis added). The Director cannot, on his own, sua sponte review or vacate a final written decision.
Additionally, the government points out that the Director "may designate any decision by any panel, including the Precedential Opinion Panel, as precedential. . . ." Id. at 8. These powers do not, however, provide the type of reviewability over APJs' decisions comparable to the review power principal officers in other cases have had. See, e.g., Edmond, 520 U.S. at 664-65, 117 S.Ct. 1573; Masias v. Secretary of Health and Human Servs., 634 F.3d 1283, 1294-95 (Fed. Cir. 2011) (special masters under the Vaccine Act were inferior officers in part because their decisions were "subject to review by the Court of Federal Claims" (an Article I court)). To be clear, the Director does not have the sole authority to review or vacate any decision by a panel of APJs. He can only convene a panel of Board members to decide whether to rehear a case for the purpose of deciding whether it should be precedential. No other Board member is appointed by the President. The government certainly does not suggest that the Director controls or influences the votes of the other two members of his special rehearing panel. Thus, even if the Director placed himself on the panel to decide whether to rehear the case, the decision to rehear a case and the decision on rehearing would still be decided by a panel, two-thirds of which is not appointed by the President. There is no guarantee that the Director would even be in the majority of that decision. Thus, there is no review by other Executive Branch officers who meet the accountability requirements of the Appointments Clause. Moreover, the Standard Operating Procedure makes clear that the Director would convene such a panel only in cases of "exceptional importance": to potentially set precedent for the Board. In other words, this form of review—constrained to a limited purpose—is still conducted by a panel of APJs who do not meet the requirements of the Appointments Clause and represents the exception.
Finally, the government alleges that the Director has review authority over Board decisions because he can decide not to institute an inter partes review in the first instance. We do not agree that the Director's power to institute (ex ante) is any form of review (ex post). For the past several years, the Board has issued over 500 inter partes review final written decisions each year. The relevant question is to what extent those decisions are subject to the Director's review.
The situation here is critically different from the one in Edmond. In Edmond, the Supreme Court considered whether military judges on the Coast Guard Court of Criminal Appeals were principal as opposed to inferior officers. 520 U.S. at 655, 117 S.Ct. 1573. There, the Court of Appeals for the Armed Forces, an Executive Branch entity, had the power to reverse decisions by the military judges and "review[ed] every decision of the Court of Criminal Appeals in which: (a) the sentence extends to death; (b) the Judge Advocate
2. Supervision Power
The extent to which an officer's work is supervised or overseen by another Executive officer also factors into determining inferior versus principal officer status. See Edmond, 520 U.S. at 664, 117 S.Ct. 1573. The Director exercises a broad policy-direction and supervisory authority over the APJs. The Director is "responsible for providing policy direction and management supervision" for the USPTO. 35 U.S.C. § 3(a)(2)(A). Arthrex argues the Director's oversight authority amounts to little more than high-level, arms-length control. We disagree.
The Director has the authority to promulgate regulations governing the conduct of inter partes review. Id. § 316. He also has the power to issue policy directives and management supervision of the Office. Id. § 3(a). He may provide instructions that include exemplary applications of patent laws to fact patterns, which the Board can refer to when presented with factually similar cases. Moreover, no decision of the Board can be designated or de-designated as precedential without the Director's approval. Patent Trial and Appeal Board Standard Operating Procedure 2 at 1. And all precedential decisions of the Board are binding on future panels. Id. at 11. In addition to these policy controls that guide APJ-panel decision making, the Director has administrative authority that can affect the procedure of individual cases. For example, the Director has the independent authority to decide whether to institute an inter partes review based on a filed petition and any corresponding preliminary response. 35 U.S.C. § 314(a). And the Director is authorized to designate the panel of judges who decides each inter partes review. See 35 U.S.C. § 6(c). Not only does the Director exercise administrative supervisory authority over the APJs based on his issuance of procedures, he also has authority over the APJs' pay. 35 U.S.C. § 3(b)(6).
The Director's administrative oversight authority is similar to the supervisory authority that was present in both Edmond and Intercollegiate. In Edmond, the Judge Advocate General "exercise[d] administrative oversight" and had the responsibility of "prescrib[ing] uniform rules of procedure" for the military judges. 520 U.S. at 664, 117 S.Ct. 1573. Likewise, in Intercollegiate, the Librarian of Congress was responsible for approving the Copyright Royalty Judges' ("CRJs") "procedural regulations . . . and [] overseeing various logistical aspects of their duties."
3. Removal Power
The Supreme Court viewed removal power over an officer as "a powerful tool for control" when it was unlimited. Edmond, 520 U.S. at 664, 117 S.Ct. 1573. Under the current Title 35 framework, both the Secretary of Commerce and the Director lack unfettered removal authority.
Appellees and the government argue that the Director can remove an APJ based on the authority to designate which members of the Board will sit on any given panel. See 35 U.S.C. § 6(c). The government argues that the Director could exclude any APJ from a case who he expects would approach the case in a way inconsistent with his views. The government suggests that the Director could potentially remove all judicial function of an APJ by refusing to assign the APJ to any panel. The government also claims that the Director could remove an APJ from an inter partes review mid-case if he does not want that particular APJ to continue on the case. Br. of United States at 3, 41. Section 6(c) gives the Director the power to designate the panel who hears an inter partes review, but we note that the statute does not expressly authorize de-designation. The government argues that because Title 35 authorizes the Director to designate members of a panel in an inter partes review proceeding, he also has the authority to change the panel composition at any time because "removal authority follows appointment authority." Oral Arg. 35:52-54; see also Br. of United States at 3, 41. It is correct that when a statute is silent on removal, the power of removal is presumptively incident to the power of appointment. See In re Hennen, 38 U.S. 13 Pet. 230, 10 S.Ct. 138 (1839); Myers v. United States, 272 U.S. 52, 47 S.Ct. 21, 71 S.Ct. 160 (1926). The government argues by analogy to these cases that the power to de-designate follows the power to designate. We do not today decide whether the Director in fact has such authority.
The government analogizes the Director's designation power to the Judge Advocate General's power in Edmond, which allowed him to remove a military judge "from his judicial assignment without cause." 520 U.S. at 664, 117 S.Ct. 1573. The Director's authority to assign certain APJs to certain panels is not the same as the authority to remove an APJ from judicial service without cause. Removing an
The only actual removal authority the Director or Secretary have over APJs is subject to limitations by Title 5. Title 35 does not provide statutory authority for removal of the APJs. Instead, 35 U.S.C. § 3(c) provides, "[o]fficers and employees of the Office shall be subject to the provisions of title 5, relating to Federal employees." No one disputes that Title 5 creates limitations on the Secretary's or Director's authority to remove an APJ from his or her employment at the USPTO. Specifically, APJs may be removed "only for such cause as will promote the efficiency of the service." 5 U.S.C. § 7513(a).
The government argues that the Secretary's authority to remove APJs from employment for "such cause as will promote efficiency of the service"—the same standard applied to any other federal employee—underscores that APJs are subject to significant supervision and control. It argues that Title 5's removal restrictions are less cumbersome than the restrictions on the Court of Federal Claims' removal authority over the special masters who were deemed inferior officers in Masias. In Masias, we held that special masters authorized by the Vaccine Act were inferior officers. 634 F.3d. at 1295. The special masters were appointed and supervised by judges of the Court of Federal Claims, who are presidentially-appointed. Id. at 1294. The special masters could be removed only "for incompetency, misconduct, or neglect of duty or for physical or mental disability or for other good cause shown." Id. (quoting 42 U.S.C. § 300aa-12(c)(2)). Though there were significant limits on removal in Masias, our court recognized that "decisions issued by the special masters are subject to review by
The APJs are in many ways similar to the CRJs in Intercollegiate for purposes of determining whether an officer is principal or inferior. The CRJs issued ratemaking decisions that set the terms of exchange for musical works. Intercollegiate, 684 F.3d at 1338. The APJs issue written decisions determining patentability of patent claims. Both are intellectual property decisions upon which "billions of dollars and the fates of entire industries can ride." Id. In Intercollegiate, the Librarian approved procedural regulations, issued ethical rules, and oversaw logistical aspects of the CRJs' duties. Id. Additionally, the Register of Copyrights provided written opinions interpreting copyright law and could correct any legal errors in the CRJs' decisions. Id. at 1338-39. Similarly, the Director has the authority to promulgate regulations governing inter partes review and provides written policy directives. He does not, however, have the ability to modify a decision issued by APJs, even to correct legal misstatements. The Director's inability to review or correct issued decisions by the APJs likens those decisions to "the CRJs' rate determinations [which] are not reversible or correctable by any other officer or entity within the executive branch." Id. at 1340. Moreover, the limitations on removal in Title 5 are similar to the limitations on removal in Intercollegiate. There, the Librarian could only remove CRJs "for misconduct or neglect of duty." Id. at 1340. Here, APJs can only be removed from service for "such cause as will promote the efficiency of the service," meaning for "misconduct [that] is likely to have an adverse impact on the agency's performance of its functions." 5 U.S.C. § 7513; Brown, 229 F.3d at 1358. The D.C. Circuit in Intercollegiate determined that given the CRJs' nonremovability and the finality of their decisions, "the Librarian's and Register's supervision functions still fall short of the kind that would render [them] inferior officers." 684 F.3d at 1339. Likewise, APJs issue decisions that are final on behalf of the Executive Branch and are not removable without cause. We conclude that the supervision and control over APJs by appointed Executive Branch officials in significant ways mirrors that of the CRJs in Intercollegiate.
4. Other Limitations
We do not mean to suggest that the three factors discussed are the only factors to be considered. However, other factors which have favored the conclusion that an officer is an inferior officer are completely absent here. For example, in Morrison v. Olson, 487 U.S. 654, 108 S.Ct. 2597, 101 L.Ed.2d 569 (1988), the Court concluded that the Independent Counsel was an inferior officer because he was subject to removal by the Attorney General, performed limited duties, had limited jurisdiction, and had a limited tenure. Edmond, 520 U.S. at 661, 117 S.Ct. 1573. Unlike the Independent Counsel, the APJs do not have limited tenure, limited duties, or limited jurisdiction.
Interestingly, prior to the 1975 amendment to Title 35, "Examiners-in-Chief"—the former title of the current APJs—were subject to nomination by the President and confirmation by the Senate. 35 U.S.C. § 3 (1952). In 1975, Congress eliminated their
Having considered the issues presented, we conclude that APJs are principal officers. The lack of any presidentially-appointed officer who can review, vacate, or correct decisions by the APJs combined with the limited removal power lead us to conclude, like our sister circuit in Intercollegiate, which dealt with the similarly situated CRJs, that these are principal officers. While the Director does exercise oversight authority that guides the APJs procedurally and substantively, and even if he has the authority to de-designate an APJ from inter partes reviews, we conclude that the control and supervision of the APJs is not sufficient to render them inferior officers. The lack of control over APJ decisions does not allow the President to ensure the laws are faithfully executed because "he cannot oversee the faithfulness of the officers who execute them." Free Enterprise Fund, 561 U.S. at 484, 130 S.Ct. 3138. These factors, considered together, confirm that APJs are principal officers under Title 35 as currently constituted. As such, they must be appointed by the President and confirmed by the Senate; because they are not, the current structure of the Board violates the Appointments Clause.
C. Severability
Having determined that the current structure of the Board under Title 35 as constituted is unconstitutional, we must consider whether there is a remedial approach we can take to address the constitutionality issue. "In exercising our power to review the constitutionality of a statute, we are compelled to act cautiously and refrain from invalidating more of the statute than is necessary." Helman v. Department of Veterans Affairs, 856 F.3d 920, 930 (Fed. Cir. 2017) (citing Regan v. Time, Inc., 468 U.S. 641, 652, 104 S.Ct. 3262, 82 L.Ed.2d 487 (1984)). Where appropriate, we "try to limit the solution to the problem, [by] severing any problematic portions while leaving the remainder intact." Free Enterprise Fund, 561 U.S. at 508, 130 S.Ct. 3138. Severing the statute is appropriate if the remainder of the statute is "(1) constitutionally valid, (2) capable of functioning independently, and (3) consistent with Congress' basic objectives in enacting the statute." United States v. Booker, 543 U.S. 220, 258-59, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005).
The government suggests possible remedies to achieve this goal. As to 35 U.S.C. § 3(c)'s requirement that "Officers and employees of the Office shall be subject to the provisions of title 5," the government argues that we could construe Title 5's "efficiency of the service" standard to permit removal in whatever circumstances the Constitution requires. Construing the words "only for such cause as will promote the efficiency of the service" as permitting at-will, without-cause removal is not a plausible construction. Commodity Futures Trading Commission v. Schor, 478 U.S. 833, 841, 106 S.Ct. 3245, 92 L.Ed.2d 675 (1986) ("[a]lthough this Court will often strain to construe legislation so as to save it against constitutional attack, it must not and will not carry this to the point of perverting the purpose of a statute. . . or judicially rewriting it." (citations omitted)); Jennings v. Rodriguez, ___ U.S.
Allowing the Director to appoint a single Board member to hear or rehear any inter partes review (appeal, derivation proceeding, and post grant review), especially when that Board member could be the Director himself, would cure the Constitutional infirmity. While the Board members would still not be subject to at-will removal, their decision would not be the "final decision on behalf of the United States unless permitted to do so by other Executive officers." Edmond, 520 U.S. at 665, 117 S.Ct. 1573. This combined with the other forms of supervision and controlled exercised over APJs would be sufficient to render them inferior officers. We conclude, however, that severing three judge review from the statute would be a significant diminution in the procedural protections afforded to patent owners and we do not believe that Congress would have created such a system. Eliminating three-APJ panels from all Board proceedings would be a radical statutory change to the process long required by Congress in all types of Board proceedings. The current three-judge review system provides a broader collection of technical expertise and experience on each panel addressing inter partes reviews, which implicate wide cross-sections of technologies. The breadth of backgrounds and the implicit checks and balances within each three-judge panel contribute to the public confidence by providing more consistent and higher quality final written decisions.
The government also suggested partially severing 35 U.S.C. § 3(c), the provision that applies Title 5 to officers and employees of the USPTO. Br. of United States at 35 ("Alternatively, this Court could hold that 35 U.S.C. § 3(c)'s provision that USPTO officers and employees are subject to Title 5 cannot constitutionally be applied to Board members with respect to that Title's removal restrictions, and thus must be severed to that extent."). We think this the narrowest viable approach to remedying the violation of the Appointments Clause. We follow the Supreme Court's approach in Free Enterprise Fund, similarly followed by the D.C. Circuit in Intercollegiate. See 561 U.S. 477, 130 S.Ct. 3138, 177 L.Ed.2d 706; 684 F.3d 1332. In Free Enterprise Fund, the Supreme Court held that a "for-cause" restriction on the removal power of the SEC's Commissioners violated the Constitution. Id. at 492, 130 S.Ct. 3138. The Court invalidated and severed the problematic "for-cause" restriction from the statute rather than holding the larger structure of the Public Company Accounting Oversight Board unconstitutional. Id. at 508, 130 S.Ct. 3138.
The D.C. Circuit followed this approach in Intercollegiate, by invalidating and severing the restriction on the Librarian's removal power over CRJs. 684 F.3d at 1340. The court held unconstitutional all language in the relevant removal statute other than, "[t]he Librarian of Congress may sanction or remove a Copyright Royalty Judge." Id. The Court determined that giving the Librarian of Congress unfettered removal power was sufficient such "that the CRJs' decisions will be constrained to a significant degree by a principal officer (the Librarian)." Id. at 1341. And the constraint of that power was enough to render the CRJs inferior officers. Id.
Severing Title 5's removal restrictions might arguably be achieved either by severing the words "Officers and" or by concluding that those removal restrictions are unconstitutional as applied to APJs. The government recommends a partial invalidation, namely that we sever the application of Title 5's removal restrictions to APJs, See United States v. Nat'l Treasury Emps. Union, 513 U.S. 454, 115 S.Ct. 1003, 130 L.Ed.2d 964 (1995); United States v. Grace, 461 U.S. 171, 103 S.Ct. 1702, 75 L.Ed.2d 736 (1983). All parties and the government agree that this would be an appropriate cure for an Appointments Clause infirmity. This as-applied severance is the narrowest possible modification to the scheme Congress created and cures the constitutional violation in the same manner as Free Enterprise Fund and Intercollegiate. Title 5's removal protections cannot be constitutionally applied to APJs, so we sever that application of the statute.
Severability turns on whether "the statute will function in a manner consistent with the intent of Congress." Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 685, 107 S.Ct. 1476, 94 L.Ed.2d 661 (1987) (emphasis omitted). In Free Enterprise Fund, the Court severed the removal provision because it concluded that "nothing in the statute's text or historical context" suggested that Congress "would have preferred no Board at all to a Board whose members are removable at will." 561 U.S. at 509, 130 S.Ct. 3138. Indeed, we answer affirmatively the question: "Would the legislature have preferred what is left of its statute to no statute at all?" Ayotte, 546 U.S. at 330, 126 S.Ct. 961. It is our view that Congress intended for the inter partes review system to function to review issued patents and that it would have preferred
The narrowest remedy here is similar to the one adopted in Intercollegiate, the facts of which parallel this case. Thus, we conclude that the appropriate remedy to the constitutional violation is partial invalidation of the statutory limitations on the removal of APJs. Title 35 U.S.C. § 3(c) declares the applicability of Title 5 rights to "Officers and employees of the Office." See also Supp. Br. of United States at 9-10 (noting that Title 5 definitions might cover APJs). Title 5 U.S.C. § 7513(a) permits agency action against those officers and employees "only for such cause as will promote the efficiency of the service." Accordingly, we hold unconstitutional the statutory removal provisions as applied to APJs, and sever that application. Like the D.C. Circuit in Intercollegiate, we believe severing the restriction on removal of APJs renders them inferior rather than principal officers. Although the Director still does not have independent authority to review decisions rendered by APJs, his provision of policy and regulation to guide the outcomes of those decisions, coupled with the power of removal by the Secretary without cause provides significant constraint on issued decisions.
The decision to partially invalidate statutory removal protections limits the effect of the severance to APJs and to their removal protections. We are mindful that the alternative of severing the "Officers and" provision from § 3(c) may not have been limited to APJs (there might have been other officers whose Title 5 rights would have been affected) and it might have removed all Title 5 protections, not just removal protections. Severing the application to APJs of removal protections is the narrowest remedy. The choice to sever and excise a portion of a statute as unconstitutional in order to preserve the statute as a whole is limited, and does not permit judicial rewriting of statutes. Booker, 543 U.S. at 258, 125 S.Ct. 738 (to address the constitutional infirmity, we consider "which portions of the . . . statute we must sever and excise as inconsistent with the Court's constitutional requirement"); Ayotte, 546 U.S. at 329, 126 S.Ct. 961 ("[W]e restrain ourselves from `rewrit[ing]. . . law to conform it to constitutional requirements' even as we strive to salvage it"). "`Unless it is evident that the Legislature would not have enacted those provisions which are within its power, independently of that which is not, the invalid part may be dropped if what is left is fully operative as a law.'" Buckley, 424 U.S. at 108-09, 96 S.Ct. 612 (quoting Champlin Refining Co. v. Corporation Comm'n of Oklahoma, 286 U.S. 210, 234, 52 S.Ct. 559, 76 S.Ct. 1062 (1932)). We are not, under the guise of severability, permitted to add exceptions for APJs to the language § 3(c) officer protections. Railroad Retirement Bd. v. Alton R. Co., 295 U.S. 330, 362, 55 S.Ct. 758, 79 S.Ct. 1468 (1935) (when severing a statute, we must avoid "rewrit[ing] a statute"). We hold that the application of Title 5's removal protections to APJs is unconstitutional and must be severed. And we are convinced that Congress would preserve the statutory scheme it created for reviewing patent grants and that it intended for APJs to be inferior officers. Our severance of the limits on removal of APJs achieves this. We believe that this, the narrowest revision to the scheme intended by Congress for reconsideration of patent rights, is the proper course of action and the action Congress would have undertaken.
Because the Board's decision in this case was made by a panel of APJs that were not constitutionally appointed at the time the decision was rendered, we vacate and remand the Board's decision
We agree with Arthrex that its Appointments Clause challenge was properly and timely raised before the first body capable of providing it with the relief sought—a determination that the Board judges are not constitutionally appointed. Our decision in DBC is not to the contrary. In DBC, the Appointments Clause challenge was to the particular APJs who were appointed by the Director, rather than the Secretary. We observed that if the issue had been raised before the agency, the agency could have "corrected the constitutional infirmity." DBC, 545 F.3d at 1379. At that time, there were APJs who had been appointed by the Secretary who could have decided the case and thus the agency could have cured the constitutional defect. In DBC, we observed that in LA Tucker and Woodford, had the issue been raised at the agency, the agency could have corrected the problem. See id. at 1378 (citing Woodford v. Ngo, 548 U.S. 81, 126 S.Ct. 2378, 165 L.Ed.2d 368 (2006); United
The Lucia court explained that Appointments Clause remedies are designed to advance structural purposes of the Appointments Clause and to incentivize Appointments Clause challenges. Lucia, 138 S. Ct. at 2055 n.5. We conclude that both of these justifications support our decision today to vacate and remand. See Collins v. Mnuchin, 938 F.3d 553, 593 (5th Cir. 2019) (recognizing, "the Court has invalidated actions taken by individuals who were not properly appointed under the Constitution."). The Supreme Court held in Freytag that Appointments Clause challenges raise important structural interests and separation of powers concerns. We conclude that challenges under these circumstances should be incentivized at the appellate level and accordingly the remedy provided is appropriate. We have decided only that this case, where the final decision was rendered by a panel of APJs who were not constitutionally appointed and where the parties presented an Appointments Clause challenge on appeal, must be vacated and remanded. Appointments Clause challenges are "nonjurisdictional structural constitutional objections" that can be waived when not presented. Freytag, 501 U.S. at 878-79, 111 S.Ct. 2631. Thus, we see the impact of this case as limited to those cases where final written decisions were issued and where litigants present an Appointments Clause challenge on appeal.
Finally, on remand we hold that a new panel of APJs must be designated and a new hearing granted. See Appellant's Supp. Br. at 12 ("This Court should thus order a remand to a new PTAB panel for a new oral argument.") The Supreme Court has explained that when a judge has heard the case and issued a decision on the merits, "[h]e cannot be expected to consider the matter as though he had not adjudicated it before. To cure the constitutional error, another ALJ . . . must hold the new hearing." Lucia, 138 S. Ct. at 2055. Lucia suggests that the remedy is not to vacate and remand for the same Board judges to rubber-stamp their earlier unconstitutionally rendered decision. Like Lucia, we hold that a new panel of APJs must be designated to hear the inter partes review anew on remand. To be clear, on remand the decision to institute is not suspect; we see no constitutional infirmity in the institution decision as the statute clearly bestows such authority on the Director pursuant to 35 U.S.C. § 314. Finally, we see no error in the new panel proceeding on the existing written record but leave to the Board's sound discretion whether it should allow additional briefing or reopen the record in any individual case.
COSTS
The parties shall bear their own costs.
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