By Andrew Chung
(Reuters) – The U.S. Supreme Court on Monday reined in the power of in-house judges serving on a U.S. Patent and Trademark Office tribunal that has gained a reputation for canceling patents, ruling that the way they are selected is unconstitutional.
The justices, in a 5-4 ruling authored by Chief Justice John Roberts, upheld a 2019 lower court ruling that the judges on the Patent Trial and Appeal Board were appointed in a way that violates a U.S. Constitution provision intended to ensure accountability for powerful government officials. The U.S. government had appealed the lower court ruling.
Privately held Florida-based Arthrex Inc had brought the challenge after the tribunal’s partial cancellation of one of the company’s patents amidst the company’s dispute with British-based rival Smith & Nephew PLC.
While the court’s majority in the decision found that the patent judges had been improperly appointed, a different majority of justices also concluded that the problem could be fixed under the Constitution by ensuring decisions by the judges can be reviewed by the agency’s director.
The ruling indicates that the tribunal’s current structure failed to provide for enough direct review of the patent judges – who have power to invalidate issued patents – by their superiors who are accountable to the U.S. president to satisfy constitutional requirements.
The solution prescribed by the justices would allow the tribunal to continue to operate, though the Patent and Trademark Office has already said more than 100 cases will have to be reconsidered.
The board, an administrative court run by the Patent and Trademark Office, takes a second look at patents issued by the agency and often cancels them, much to the dismay of some inventors. The tribunal, created by Congress in 2011, adjudicates the validity of hundreds of patents annually and has invalidated more than 2,000 patents.
The tribunal’s reviews have become a quick and cheap way for companies that are prime targets for infringement suits, such as such as Apple Inc and Alphabet Inc’s Google, to try to invalidate patents. Litigation before the tribunal is seen by many companies as a more efficient alternative to resolving cases in federal court.
(Reporting by Andrew Chung in New York; Editing by Will Dunham)
