DLA Piper
Director Kathi Vidal of the US Patent and Trademark Office, (USPTO), recently published a new final regulation establishing a process for Director Reviews of certain Patent Trial and Appeal Boards (PTAB) Decisions. This final rule, which is effective October 31, codifies many aspects the interim Director Review procedure, and closely mirrors the USPTO’s April 2024 proposal rule. Additionally, it brings parties clarity to the Director Review process, offers an additional and permanent layer of oversight to PTAB decisions, and grants the director broad latitude and flexibility.
The Arthrex decision and the USPTO’s interim rule on Director Review
In Arthrex, the Supreme Court held that the Appointments Clause of the Constitution was violated by the America Invents Act of 2011 (AIA)’s procedure allowing only the PTAB to grant rehearings of its decisions. The court determined that the PTAB administrative patent judges required more oversight by a president-appointed and Senate-confirmed official when deciding on the validity of patents. This led to the USPTO implementing an interim rule in response to Arthrex. After the promulgation, Director Review was available to be requested by parties or initiated on the director’s initiative. The interim rule outlined the processes for submitting a Director Review request, the impact of a decision upon Director Review and the mechanisms to appeal a Director Review decision. The USPTO has received more petitions for Director Review since July 2023, when Director Review Institution decisions were made appealable. Notably, Director Vidal granted sua sponte review in 36 cases, including one case reviewing the appropriateness of PTAB’s sanctions against a party withholding relevant evidence.
The final rule on Director Review
Effective October 31, 2024, the final rule codifies the director’s ability to review a wide range of appeals from AIA proceedings. According to a September 30, 2024 press release issued by the USPTO, the final rule explains that parties may request Director Review of a(n):
1. decision on institution
2. final decision (defined as a final written decision in an inter partes or post grant review proceeding or a final decision in a derivation proceeding)
3. decision granting rehearing of a decision on institution or a final decision
4. other decision concluding an AIA proceeding
Through codifying the practices, procedures, and timing in AIA proceedings, the final rule brings greater clarity to parties as to when and how they can request director rehearing. The final rule defines “final decisions” as both final written decision under Title 35 of US Code, Sections 328 and 318 for inter partes review, post grant review, and derivation proceedings. The Director Review is only available in AIA trial proceedings and not for ex parte appeals such as appeals from reexaminations or reissues. The final rule also establishes standard procedures for the timing and format of a request for Director review and, notably simplifies the deadline by which an appeal must be filed to the US Court of Appeals Federal Circuit. According to the final rule, a director can delegate a review to another person “subject only to the conditions set by the Director” or order sua sponte director review. While the USPTO explains that sua sponte Director Review is typically reserved for issues of exceptional importance, the director retains the authority to initiate review sua sponte of any issue in the proceeding as they deem appropriate.
The director’s broad authority, although initially creating some uncertainty for parties until the final rule is regularly applied, ultimately grants the director wide latitude and ample flexibility in practice. The final rule does not specify the standard of review that will be applied to Director Review, nor when Director Review decisions are to be considered precedential. It also does not specify the timeframe for Director Review. The USPTO is implementing the final rule. Here are some key takeaways. This flexibility may initially cause some concern until the final rule is routinely implemented in practice. However, parties can appeal to the Federal Circuit any Director Review decision that results in a final determination, a decision granting the right to rehear a final determination, or other appealable decisions concluding the proceeding.
