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Chairman Nadler Statement for Subcommittee Hearing on "The Patent Trial and Appeal Board and the Appointments Clause: Implications of Recent Court Decisions"

Washington, November 19, 2019

Washington, D.C. – Today, House Judiciary Committee Chairman Jerrold Nadler (D-NY) delivered the following opening statement for the Subcommittee on Courts, Intellectual Property, and the Internet hearing on "The Patent Trial and Appeal Board and the Appointments Clause: Implications of Recent Court Decisions":

"Thank you, Mr. Chairman, for holding this important hearing today. I find it remarkable—after the years spent working on the 2011 America Invents Act, which created the Patent Trial and Appeal Board, or PTAB, the many cases that have gone before the PTAB and then to federal court, and an earlier constitutional challenge to the PTAB that the Supreme Court rejected—that we should find ourselves here today with the constitutionality of the PTAB’s structure in question once again.

"This length of time has allowed PTAB proceedings to become an established part of the patent enforcement landscape. That makes the Arthrex decision—which found that administrative patent judges, or APJs, performed the duties of a principal officer, but were appointed in a manner suitable only for inferior officers—particularly disruptive.

"While the Arthrex court tried to limit the disruption by providing its own court-ordered fix of removing the civil service protections for APJs and by articulating which open cases should be entitled still to raise the issue, it is clear that both of these points will be further litigated. In fact, they already have been: the appellant in a case heard after Arthrex, also raising an Appointments Clause challenge, contended that the Arthrex court’s remedy of removing civil service protections was not sufficient, and that the PTAB as currently configured should be declared unconstitutional in its entirety.

"While I take no position on a suitable remedy, I do have concerns with the current 'remedy' of removing APJs’ civil service protections. The apparent thinking behind this solution to the Appointments Clause problem was that such a change would make APJs clearly subordinate to, and incentivized to be aligned with, the policy guidance of the only official at the Patent Office who is Presidentially-appointed and Senate-confirmed, and therefore a principal officer—the Director.

"While this may be true, I question whether this is the right way to achieve the apparent objective behind Appointments Clause jurisprudence, namely to ensure that there is an official sufficiently accountable to the President who signs off on important executive branch decisions.

"I say this because it makes the Director’s influence on administrative patent judges indirect. The judges are likely to try to discern what the Director wants, particularly if a novel question arises and there is no guidance, and litigants will be left wondering if the decision they receive truly represents the impartial weighing of facts and evidence under the law.

"The extent to which the Director’s views are incorporated into any decision will not be transparent, and that is generally not consistent with the way that adjudicatory tribunals are structured. It may be that, under the Constitution, the Director must be entitled to have a level of review or influence over any case finally decided by PTAB. But it is not clear that this is the best way of allowing that sort of review to happen.

"That is why I am grateful that we have with us today experts in patent law and administrative law, as well as individuals familiar with the complexities of the PTAB and patent litigation more generally.

"If the court’s ability to fix this constitutional defect turns out to be this constrained, I believe it is wise for Congress to begin to think about what it must do in response.I look forward to hearing from our witnesses and I yield back the balance of my time."

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