U.S. patent board is unconstitutional, but problem can be fixed - appeals court

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(Reuters) – A federal appeals court on Thursday declared unconstitutional the structure of the federal tribunal that reviews the validity of patents, but said the problem could be fixed by severing a law restricting the removal of administrative patent judges.

In a 3-0 decision, the U.S. Federal Circuit Court of Appeals said the impact of its decision would be “limited” to cases in which the tribunal, the Patent Trial and Appeal Board, had issued final written decisions, and litigants challenged on appeal the constitutionality of how its judges were appointed.

Thursday’s decision came in an appeal by medical device company Arthrex Inc of a decision by the three-judge patent board panel that some claims related to its patent for a knotless suture securing assembly were unpatentable.

The appeals court said the case, brought by rival Smith & Nephew and its ArthroCare unit, should be heard by a new panel.

The competitors had warned in court papers that a more far-reaching decision could “open the floodgates” for patentees to appeal adverse rulings from the patent and “get a do-over.”

The patent board is run by the U.S. Patent and Trademark Office. Some conservatives supported the board’s creation in 2011 as a means to rein in trial lawyers and “patent trolls” seeking licensing fees, but they have become critical of decisions favouring big business over smaller rivals.

(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)

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