IP Law Daily, PATENT NEWS: USPTO proposes rules formalizing process for Director Review of PTAB decisions, (Apr 16, 2024)
Organizations Mentioned:Arthrex
Formalized process for Director Review, mandated by Supreme Court’s Arthrex decision, would be consistent with USPTO’s interim process established in 2021, as subsequently revised and updated.
Rules proposed by the USPTO would provide guidance on the types of issues the agency’s Director will consider in reviews of decisions made by the Patent Trial and Appeal Board (PTAB) in proceedings under the Leahy-Smith America Invents Act (AIA); the timing and format of Director Review requests; and Director Review of decisions on the Director’s own initiative. According to a Federal Register notice, the proposed rule also addresses the impact of Director Review on underlying AIA proceedings, the timing for appeal to the U.S. Court of Appeals for the Federal Circuit, and the delegation of Director Review (89 Federal Register 26807, April 16, 2024). These rules would formalize the process for Director Review of PTAB decisions initially set up by the USPTO in 2021 in the wake of a Supreme Court decision holding that the review processes set forth by the AIA were constitutionally inadequate under the Appointments Clause.
“Formalizing the Director Review process is part of our comprehensive efforts to work with stakeholders to reshape PTAB procedures and strengthen our processes with integrity, transparency and efficiency for the benefit our entire innovation ecosystem,” said USPTO Director Kathi Vidal.
The USPTO will accept comments on the proposed rulemaking through June 17, 2024.
Constitutional requirement for Director review. The AIA (Public Law 112-29, 125 Stat. 284) established the PTAB in 2011. The PTAB hears and decides ex parte appeals of adverse decisions by examiners in applications for patents, applications for reissue, and reexamination proceedings. It also administers proceedings created by the AIA, including inter partes reviews (IPRs), post grant reviews (PGRs), covered business method (CBM) patent reviews, and derivation proceedings, in panels of at least three members. Panel members are designated by the USPTO Director pursuant to the statute, although the Director has delegated that authority to the Chief Judge of the PTAB. The AIA at 35 U.S.C. § 6(a) provides that only the PTAB may grant rehearings of its decisions. In United States v. Arthrex, Inc., 594 U.S. ___, 141 S. Ct. 1970 (2021), the Court held that the Appointments Clause of the Constitution rendered Section 6(a) unenforceable as to the Director to the extent that it prevents the Director from reviewing the decisions on his or her own. In the Court’s view, the supervisory structure of the USPTO requires the Director, a principal officer of the United States, to have the ability to review the PTAB's final written decisions.
Interim Director Review process. On June 29, 2021, in response to Arthrex, the USPTO implemented an interim process for Director Review. It provided that the Director may initiate Director Review of any PTAB final written decision sua sponte, and a party to a PTAB proceeding may request Director Review of an IPR or PGR final written decision. Current procedures are detailed at the USPTO’s Revised Interim Director Review webpage, which has been updated at least twice since it was posted in 2022. To request Director Review, a party to a final written decision must concurrently: (1) file a Request for Rehearing by the Director in the Patent Trial and Appeal Case Tracking System (P-TACTS); and (2) email the Director. The webpage also indicates that: (1) decisions made on Director review are not precedential by default, and instead are precedential only upon the Director's designation; and (2) final written decisions by the Director after Director review are appealable to the Federal Circuit using the same procedures for appealing Board final written decisions.
The USPTO maintains a webpage providing the status of all Director Review requests. As of March 15, 2024, this webpage indicated that the USPTO had received 375 requests for Director Review under the interim process.
On July 23, 2023, the USPTO announced that it was updating the Director Review option by expanding the process to permit parties to request Director Review. The USPTO updated information as to what types of issues the Director will consider, and it provided additional guidance on the initiation of Director Review at the sole discretion of the Director, remands to PTAB for further proceedings, sanction authority of the Director, and other topics. The update provided the Director the option to delegate review to a new independent panel called the Delegated Rehearing Panel and created a new Appeals Review Panel (ARP), which may be convened by the Director sua sponte, to review PTAB ex parte, reexamination, or reissue appeal decisions.
Proposed formalized process for Director Review. The USPTO’s notice of proposed rulemaking says that the formalized process would be consistent with the current interim process. The proposed rulemaking specifies that a party may only request Director Review of: (1) a decision on whether to institute an AIA trial; (2) a final written decision in an AIA proceeding; or (3) a panel decision granting a request for rehearing of a decision on whether to institute a trial or a final written decision in an AIA proceeding. Parties would be limited to requesting either Director Review or rehearing by the original PTAB panel, but not both.
“In the course of reviewing such an institution decision, final written decision, or panel rehearing decision, the Director may review any interlocutory decision rendered in reaching that decision,” the notice of proposed rulemaking states. “The Director may also grant review of those same decisions sua sponte. Third parties may not request Director Review or communicate with the USPTO concerning the Director Review of a particular case unless the Director invites them to do so.”
With respect to sua sponte review, the notice of proposed rulemaking explains that this type of review is “typically reserved for issues of exceptional importance,” while the Director retains the authority to initiate review of any other issue as she deems appropriate. “If the Director initiates a sua sponte review, the parties will be given notice and may be given an opportunity for briefing,” the notice states. “The public will also be notified, and the Director may request amicus briefing.”
A final written decision, or a decision granting rehearing of such decision on institution of a final written decision, shall become the decisions of the USPTO unless Director Review is requested or sua sponte review is initiated. In addition, upon denial of a request for Director Review of a decision denying institution, a final written decision, or a decision granting rehearing of a final written decision, the Board's decision becomes the final agency decision. A party may appeal a Director Review decision to the Federal Circuit using the same procedures for appealing other PTAB decisions under 35 U.S.C. § 141(c). Director Review decisions on decisions on institution would not be appealable.
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