This week the Federal Circuit rejected a constitutional challenge to the Secretary of Commerce’s appointment of administrative judges to the Trademark Trial and Appeal Board (“TTAB”) at the U.S. Patent and Trademark Office (“USPTO”). The decision comes on the heels of the Supreme Court’s decision in June in Arthrex v. Smith & Nephew, which stated that certain statutory restrictions on the USPTO’s oversight of the administrative judges of the Patent Trial and Appeal Board (“PTAB”) violated the Appointments Clause of the U.S. Constitution.
To provide some background, administrative judges at the TTAB and PTAB adjudicate inter partes challenges to trademark registrations and issued patents, respectively. Article 2, Section 2, Clause 2 of the Constitution, also known as the “Appointments Clause,” confers on the U.S. President the executive authority, with confirmation by the Senate, to appoint all “Officers of the United States.” However, the clause also authorizes Congress to vest appointment powers in “Heads of Departments” for “inferior Officers.”
Both TTAB and PTAB judges have historically been appointed by the Secretary of Commerce as authorized by Congressional statutes. In Arthrex, the Supreme Court reviewed the authority, responsibilities, and oversight of PTAB judges as set out in the Leahy-Smith America Invents Act (“AIA”), which created the PTAB as an adjudicative body of the USPTO about a decade ago. The Supreme Court found that PTAB judges generally “appear to be inferior officers” appropriately appointed by the Secretary of Commerce—except for their “unreviewable authority” to determine patentability in inter partes review and similar proceedings within the USPTO. To remedy the constitutional defect, the Supreme Court struck down 35 U.S.C. § 6(c) of the AIA because it prevented the Director of the USPTO—a presidential appointee under the Appointments Clause—from reviewing decisions of the PTAB.
With this guidance, the Federal Circuit ruled on a similar constitutional challenge to the Secretary of Commerce’s appointment of TTAB administrative judges in Piano Factory Grp., Inc. v. Schiedmayer Celesta GmbH. Despite the similar functions of the TTAB and PTAB, the Federal Circuit found no violation of the Appointments Clause for a few reasons: unlike Section 6 of the AIA, “there are no analogous statutory constraints on the Director’s authority in the trademark context.” Moreover, 15 U.S.C. § 1067 of the Lanham Act specifically includes the Director of the USPTO in the composition of the TTAB and gives the Director broad authority to make rules and regulations governing TTAB proceedings. Section 18 of the Lanham Act also gives the Director broad authority to cancel or to refuse to register a mark. And in 2020, the Trademark Modernization Act explicitly codified and confirmed that the Director has “the authority to reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board.”
Although a petition for writ of certiorari could be filed in the Schiedmayer decision, the Supreme Court’s comments about TTAB appointments in Arthrex suggest that it would deny certiorari or otherwise affirm the Federal Circuit’s ruling. In striking down the provision of the AIA that prevented the Director’s review of PTAB decision, the Arthrex majority reasoned that authorizing review by the Director would “follow the almost-universal model of adjudication in the Executive Branch” and “aligns the PTAB with the other adjudicative body in the USPTO, the Trademark Trial and Appeal Board.”
Schiedmayer arose out of a cancellation action that Schiedmayer Celesta GmbH, a German celesta manufacturer, filed at the TTAB to cancel a U.S. trademark registration for the mark SCHIEDMAYER, owned and used by Sweet 16 Musical Properties, Inc., a Los Angeles piano retailer that affixed the SCHIEDMAYER mark on unbranded pianos. The TTAB granted the request to cancel the registration under Section 2(a) of the Lanham Act on a false association claim. Sweet 16 raised the constitutional challenge on appeal.
