USPTO Proposes Making Director Review Process Official

The U.S. Patent and Trademark Office (USPTO) announced today that it will be publishing a Notice of Proposed Rulemaking (NPRM) tomorrow aimed at formalizing the rules governing Director Review of Patent Trial and Appeal Board (PTAB) decisions under the America Invents Act (AIA).

In July 2021, the USPTO announced that it would be implementing an interim rule at the agency in response to the U.S. Supreme Court’s late June 2021 decision in Arthrex v. Smith & Nephew. In the Arthrex ruling, the Court found that the constitutional Appointments Clause violation created by the process for appointing administrative patent judges (APJs) to the PTAB was best cured by review of APJ decisions by the USPTO Director. The interim rule began the process of determining how that review process would play out during the day-to-day operations of the PTAB.

Then, in July 2022, the Office published an official Request for Comments (RFC) on the interim Director Review process, as well as the Precedential Opinion Panel (POP) process and the interim process for PTAB decision circulation and internal PTAB review. USPTO Director Kathi Vidal released updated interim guidance on Director Review and PTAB decision circulation/internal review soon after taking office in April 2022 and accepted preliminary feedback via a dedicated email address, but said the comments received in response to the RFC would officially inform upcoming notice-and-comment rulemaking to formalize these processes, as well as any modifications to the interim processes prior to formalization. In July 2023, the Office officially implemented a revised interim Director review process that included the creation of two new review panels replacing the previous Precedential Opinion Panel (POP) process of Director review.

According to today’s NPRM, since as of April 1, 2024, the USPTO had received 328 compliant requests for Director Review under the interim process and the process was

completed for 316 requests. Of those, 18 requests were granted, 2 requests were delegated to the “Delegated Rehearing Panel”, 5 requests were withdrawn, and the remaining 291 requests were denied. Sua sponte Director Review was initiated in 35 cases.

The majority of requests for Director Review have been for review of decisions on institution since the interim process was expanded to allow for those on July 24, 2023.  Between then and April 1, 2024, 27 requests for review of final written decisions and 82 requests for review of decisions on institution were received, says the NPRM.

The draft NPRM notes that the comments received in response to the RFC were divided on issues such as whether parties should be permitted to request either Director Review or panel rehearing, but not both; the criteria that should be used in determining whether to initiate Director Review; the standard of review that should be used for Director Reviews; the appropriate standard for initiating sua sponte Director Review; and whether or not to eliminate Precedential Opinion Panel Review (POP) entirely. There was more agreement on topics like ensuring Director Review decisions are not precedential by default; the need for certainty with respect to timing and finality in both the grant of Director Review and the ultimate Director Review decision; and that a de novo review standard should be applied on review.

Ultimately, the NPRM proposals are consistent with the interim guidance and explain that parties may 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.” Third parties may still not participate in Director Review hearings unless invited to do so by the Director. Parties are also limited to requesting either Director Review or rehearing by the original panel, but not both. However, a rehearing decision that changes the determination of the Final Written Decision is eligible for Director Review with respect to the changes on rehearing. Director Review is not available if the panel: “(1) provides a decision addressing the arguments in the request for rehearing but does not modify the underlying holding or result, or (2) denies the request for rehearing without further explanation,” according to the NPRM.

The Director may initiate sua sponte review chiefly for “issues of exceptional importance”  at any point within 21 days after the expiration of the period for filing a request for rehearing.

The NPRM also addresses how the Director Review Advisory Committee works. The Committee is comprised of at least 11 members from different business units and meets to evaluate the Director Review requests, as long as there is a quorum of 7 members. The Advisory Committee recommends cases to the Director and the Director makes the ultimate decision as to whether to grant or deny review, or to delegate it. While the NPRM says in a footnote that the current interim process for delegating Director Review may change in the future, it does not go into detail on that point.

IPWatchdog Founder and CEO Gene Quinn said the NPRM proposals seem “sensible and appropriate” and that there are no red flags. However, Quinn said he would like to see the delegation process fleshed out more. He explained:

“It seems necessary to create some intermediate review of panel decisions to ensure consistency, fix mistakes, and guarantee that precedential opinions are being followed, none of which needs to or should rise to the level of Director Review in the first instance. I’m just not a fan of giving the Director the ability to delegate, without more. I’d like to see an intermediate panel created, which would ordinarily be responsible for fixing mistakes across the entire PTAB. And, in keeping with Supreme Court mandates, ultimately the Director would need to oversee that intermediate panel so she should not be on that panel herself. This would leave the Director available to hear the most important matters where she alone needs to step in, but in a very transparent way create an error-fixing mechanism within the USPTO. This is essential in my opinion because we have learned over the last 12 years that the Federal Circuit is unwilling to provide meaningful oversight, in many circumstances even unwilling to write more than a single one-word decision. The Federal Circuit’s abdication of responsibility makes it all the more important for the USPTO to have true transparency and a robust mechanism of oversight.”

Comments on the NPRM must be submitted within 60 days from the date of publication (April 16) through the Federal eRulemaking Portal by entering the docket number PTO-P-2024-0014 on the homepage and selecting “search.”

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Author: stuartmiles
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