Hearing of the Courts, Intellectual Property, and the Internet Subcommittee of the House Judiciary Committee - Opening Statement of Rep. Johnson, Hearing on Patent Trial & Appeal Board & the Appointments Clause: Implications of Recent Court Decisions

Hearing

Rep. Hank Johnson (GA-04), Chairman of the Judiciary Subcommittee on Courts, Intellectual Property and the Internet (IP), issued the following opening statement at Tuesday's hearing on: "The Patent Trial and Appeal Board and the Appointments Clause: Implications of Recent Court Decisions."

"The Leahy-Smith America Invents Act of 2011 was a sea change in patent law. One of the biggest changes was the creation of a new way for the Patent and Trademark Office to reconsider whether it had properly issued a patent, called inter partes reviews, or IPRs, before the Patent Trial and Appeal Board, or PTAB. Such IPR challenges have become central to the adjudication of patent disputes.

"There have been almost 10,000 challenges brought since the PTAB was created in 2012 with between 100 and 150 new filings each month. The IPR process in its current form has its critics and its defenders. But that is not why we are here today.

"Rather, we are here because of a more fundamental issue: whether the PTAB, as currently configured, is constitutional. A recent court decision, Arthrex v. Smith & Nephew, found that it is not -- that the administrative patent judges, or APJs, who comprise the PTAB were appointed to their positions in violation of the Constitution's Appointments Clause. The court further concluded that the constitutional violation could be remedied by removing the civil service protections afforded to APJs. According to the court, this makes the APJs clearly inferior officers, in line with the way that they are currently appointed.

"The court stated that it believed Congress would have preferred this approach had it known about the Appointments Clause issue when it passed that America Invents Act. Speaking for myself, I find it inconsistent with the idea of creating an adjudicatory body to have judges who have no job security. It goes against the idea of providing independent, impartial justice if a judge is thinking about his or her livelihood while also weighing the facts of a case. Many Article I judges have fixed-year terms -- and Article III judges have life tenure -- for this reason.

"I recognize, however, that the Arthrex court was in a difficult position with limited options after identifying a constitutional defect. But that is why I felt that it is crucial that we have a hearing on this topic immediately, so Congress can be in possession of the facts and ready to act. We need to learn more about the impact of this decision on existing cases, and the likelihood of the decision being upheld or modified by either the en banc Federal Circuit or the Supreme Court. And most importantly, we need to begin to consider whether Congress must get involved to provide a sensible solution.

"Frankly, I worry that we cannot trust the courts to fix this. We are living through an era where the Supreme Court is taking increasingly extreme positions about the constitutionality of the administrative structures that have existed since the New Deal. These decisions second-guess the legislative process and the solutions Congress has worked hard to pass in order to handle the realities and complexities of our modern society. Notwithstanding that trend, I believe it is our responsibility to consider a legislative fix to the Appointments Clause problem that preserves both due process and the careful balances struck by the America Invents Act.

"I am pleased that we have a panel of legal scholars and distinguished practitioners. Thank you for being here today, and I look forward to your testimony."

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