The Hidden Ideological Stakes of SCOTUS Patent Case

Posted in: Constitutional Law

On Monday the Supreme Court heard oral argument in United States v. Arthrex, Inc., which presents two seemingly technical questions: (1) do administrative patent judges (APJs) hold their office unconstitutionally because they were not appointed by the President and confirmed by the Senate? And if so, (2) what is the appropriate remedy? The details of these issues are, well, technical. Here I shall set aside the remedy question. After explaining so much of the case as minimally necessary for a layperson to grasp what it involves, I shall connect the issues that seemed to trouble the justices to much less arcane and thus much more ideologically divisive matters.

The Appointments Clauses

The Constitution provides that officers of the United States are appointed by the President “by and with the advice and consent of the Senate,” except that “Congress may by law vest the appointment of such inferior officers, as they think proper, in the President alone, in the courts of law, or in the heads of departments.” That language cashes out in the rule that “principal officers”—a term found elsewhere in the Constitution to refer to heads of “executive departments”—must be Senate-confirmed presidential appointees, whereas inferior officers can be appointed by the alternative mechanism. The Court’s cases also recognize a third category of mere government “employees” who may be appointed by other mechanisms.

Because the Constitution does not define any of those terms, litigation has arisen contesting the line between employees and inferior officers as well as between principal and inferior officers. Typically, that litigation occurs as it did in Arthrex: some government actor or body makes a decision with which a party is unhappy; in addition to contesting the substance of the decision, the party argues that the actor or body lacked the authority to take the contested action because of a violation of the Appointments Clause and that the action therefore cannot stand.

Arthrex concerns the appointment of APJs—government officials who sit in panels to conduct hearings within the Patent and Trademark Office (PTO) to determine the validity of challenged patents. Because they are appointed by the Secretary of Commerce—the head of a department of the federal government—they exercise their power validly if they are inferior officers but not if they are principal officers.

During Monday’s oral argument, the lawyers for the federal government and for the private-party petitioners each separately argued that of course APJs are inferior officers, because unlike cabinet secretaries and other agency heads, they do not sit (as one lawyer put it) “at the right hand of the President,” but several levels down.

Arthrex’s lawyer and the Federal Circuit whose judgment he was defending (on substance though not on remedy), disagreed. They relied on the 1997 decision in Edmond v. United States for a rule to the effect that in order to be an inferior officer, an administrative adjudicator’s decisions must be subject to review by a Senate-confirmed (i.e., principal) officer. Because APJ panels’ decisions are not subject to such intra-executive review, the Federal Circuit concluded and Arthrex argued, the APJs are not inferior officers but principal ones whose appointment was therefore unconstitutional.

Rules Versus Standards

The heavy reliance on Edmond is at least a little peculiar. After all, in Edmond, the Supreme Court rejected an Appointments Clause challenge to the Coast Guard Court of Criminal Appeals. Counsel for Arthrex gamely sought to distinguish that case by pointing to review authority there, but as Justice Kagan noted during questioning, that review was quite limited.

Moreover, no prior Appointments Clause case has made principal-officer review of agency adjudication, standing alone, the sine qua non of inferior officer status of the agency adjudicators. On the contrary, in Edmond itself, the Court acknowledged that its “cases have not set forth an exclusive criterion for distinguishing between principal and inferior officers for Appointments Clause purposes.” And that was in an opinion authored by Justice Scalia, who was generally a critic of multi-factor standards as opposed to clear rules.

Nonetheless, in what might be taken as a sign that the conservatives on the current Court hope to prove themselves more Catholic than the Pope, a number of them—especially Justices Thomas, Alito, and Gorsuch—expressed frustration with the seeming indeterminacy of a constitutional test that asks whether a principal officer (and thus the President) exercises sufficient supervision and control of an official to render that official an inferior officer. These justices, and perhaps others, may be attracted to the position on offer from Arthrex because it is more of a bright-line rule than the standard on offer from the United States and the private-party petitioners.

The debate over the relative costs and benefits of bright-line rules versus flexible standards has very deep roots. To vastly over-simplify, in modern times, conservatives have championed rules while liberals have championed standards, although everyone acknowledges that the contest is a matter of degree. No sensible legal system for a reasonably complex society could consist entirely of rules or entirely of standards.

That said, the pro-standards side would seem to be especially strong in this case for two reasons. First, many of the virtues of rules concern their predictability as applied to individual actors subject to them. If the law defines a tax deduction or a crime with a vague standard, millions of people will have to guess at their peril as to what conduct is permitted. By contrast, the test for inferior versus principal officers applies not to individual conduct but to Congress in passing laws. Admittedly, there is value in the Supreme Court telling Congress where the line is, but in this context the mushiness of standards does not implicate the concerns of fair notice in the way it does as applied to conduct rules for millions of individuals.

Second, as Justice Breyer highlighted in his questioning, the federal government is enormously complicated, with personnel serving thousands of different roles. Any bright-line rule defining the line between principal and inferior officers that applies more or less mechanically across all agencies and functions would misfire repeatedly. Do all Assistant United States Attorneys need to be Senate-confirmed because some of their decisions—such as the decision whether to object to evidence offered at trial—are effectively unreviewable? Do relatively junior military officers, who can exercise effectively unreviewable command in the field, do so unconstitutionally because they are not Senate-confirmed? Only a flexible standard can lead to sensible results across such a wide range of circumstances.

Is the Test Backwards?

Yet if the government and the private-party petitioners had the better argument for a standard rather than a bright-line rule, they ran into trouble in a line of questioning from Chief Justice Roberts and others. In order to show that APJs are inferior officers, they emphasized numerous mechanisms by which the PTO Director can effectively direct the decisions of APJs. The Director can determine which decisions shall be precedential, can issue “exemplary” pattern decisions for guidance, can put himself on a rehearing panel, and more. But these mechanisms, Chief Justice Roberts noted, themselves seem like a kind of problematic interference with APJ adjudication.

The private-party petitioners’ lawyer answered that his argument against the Appointments Clause challenge did not rule out the possibility of a due process challenge in a different case. That may have been the best he could do in the moment, but it pointed to a larger problem. The Court should not construe the Appointments Clause in a way that creates or exacerbates a due process violation.

The core difficulty is that the whole inquiry in Arthrex looks upside-down. Under the Court’s precedents, the more political control that is exercised over agency adjudication, the safer the adjudicators are from an Appointments Clause challenge. Yet we ordinarily value an adjudicator’s independence from political control and responsiveness simply to the evidence in the case. Why this strange reversal here?

The short answer is that even though the leading case distinguishing principal from inferior officers—Edmond—also involved adjudication, the line of cases seems better suited to more purely executive action. Conservative justices who want what they call political accountability in an agency through a Senate-confirmed officer answerable to the president are implementing what is sometimes called the unitary-executive theory of Article II. That theory is dubious under the best of circumstances but especially so as applied to adjudication with an agency.

To be sure, many conservatives would be happy to cut back on all agency action—to deconstruct the administrative state, as some right-wing radicals would have it. But it should be far too late in the day for that. Because the twenty-first-century administrative state fits awkwardly with our eighteenth-century Constitution we have no choice other than to retrofit as best we can. A complex advanced society cannot be governed without administrative agencies. Insistence by conservative Justices and others on rigid adherence to a unitary-executive model for all the tasks of agencies should thus be seen for what it is—the velvet glove over the iron fist of those who regard effective government itself as the enemy.

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