The Federal Circuit remanded Mobility Workx’s (“Mobility”) appeal challenging a final written decision of the Patent Trial and Appeal Board (“PTAB”) back to the U.S. Patent and Trademark Office (“USPTO”) to allow the Acting Director an opportunity to review the final written decision pursuant to newly established USPTO procedures in view an Appointments Clause challenge under the Supreme Court’s Arthrex decision.

But before doing so, the majority, Judges Schall and Dyk, rebuffed Mobility’s due process challenges to the constitutionality of the PTAB. Mobility first contended that Board members have an interest in instituting PTAB proceedings to generate fees to fund the agency and ensure future job stability. The majority rejected that challenge because the USPTO is a fee-funded agency for which Congress annually appropriates funds and because it is the U.S. President, not the USPTO, who submits the USPTO’s budget to Congress, and it is Congress who ultimately sets the USPTO budget.

The majority also rejected Mobility’s contention that individual administrative patent judges (“APJs”) have a personal financial interest in instituting PTAB proceedings to earn better performance reviews and bonuses. The majority concluded that APJs do not have a significant financial interest in instituting AIA proceedings to earn a bonus, noting that bonuses are based on the number of decisional units and not the outcome of those decisions. Addressing the issue that an institution decision would allow an APJ an opportunity to earn more “follow-on” decisional units than a non-institution decision, the majority stated “there has been no showing that APJs institute AIA proceedings to earn sufficient decisional units to qualify for a bonus.” The majority felt that the fact that decisional units could be earned in other ways than “follow-on” units made the “follow-on” issue too remote to constitute a due process violation.

The majority also rejected other constitutional challenges raised by Mobility, including that it was improper for the Director of the USPTO to delegate institution decisions to the PTAB and that the PTAB’s actions constituted an impermissible taking. The majority stated that prior Federal Circuit decisions rejected similar challenges.

Judge Newman, in dissent, questioned the constitutionality of PTAB proceedings, as currently implemented. Judge Newman expressed a desire to address the current structure of the PTAB’s decision making process in view of Arthrex. The dissent questioned whether the USPTO’s current practice of delegating institution decisions to the PTAB is proper, questioning whether the final nonappealable institution decisions require the authority of a principal officer. Judge Newman also noted that allowing the same APJs to issue a final written decision after they earlier penned an institution decision may give rise to an impermissible appearance of prejudging bias. Judge Newman also expressed an opinion that Mobility’s concerns of structural bias due to the PTAB’s fee and compensation structures were not resolved by the majority’s opinion.