Rules Governing Director Review of Patent Trial and Appeal Board Decisions

<RULE> DEPARTMENT OF COMMERCE <SUBAGY>Patent and Trademark Office</SUBAGY> <CFR>37 CFR Part 42</CFR> <DEPDOC>[Docket No. PTO-P-2024-0014]</DEPDOC> <RIN>RIN 0651-AD79</RIN> <SUBJECT>Rules Governing Director Review of Patent Trial and Appeal Board Decisions</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> United States Patent and Trademark Office, Department of Commerce. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The United States Patent and Trademark Office (USPTO or Office) is adding a new rule to govern the process for the review of Patent Trial and Appeal Board (PTAB or Board) decisions in Leahy-Smith America Invents Act (AIA) proceedings by the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (Director). The new rule promotes the accuracy, consistency, and integrity of PTAB decision-making in AIA proceedings. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective October 31, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Thomas Krause, Director Review Executive; Kalyan Deshpande, Vice Chief Administrative Patent Judge; or James Worth, Acting Senior Lead Administrative Patent Judge, at 571-272-9797. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Executive Summary</HD> Following the decision of the U.S. Supreme Court in <E T="03">United States</E> v. <E T="03">Arthrex, Inc.,</E> 141 S. Ct. 1970, 1986 (2021) (“ <E T="03">Arthrex</E> ”), on June 29, 2021, the USPTO implemented an interim process for Director Review of final written decisions in AIA proceedings. To promote the accuracy, consistency, and integrity of PTAB decision-making in AIA proceedings, the USPTO then issued an updated “Interim Process for Director Review” on April 22, 2022. The updated interim process set forth guidance for parties who wished to request Director Review. This guidance increased clarity as the Office continued to update and improve the process based on experience and initial stakeholder feedback. The USPTO subsequently issued a Request for Comments (RFC) seeking public input on Director Review. 87 FR 43249-52 (July 20, 2022); 87 FR 58330 (Sept. 26, 2022) (extending comment period). Based on experience and in light of stakeholder feedback received in response to the RFC, on July 24, 2023, the USPTO modified the interim Director Review process to allow parties to request Director Review of decisions on institution in AIA proceedings. The USPTO then issued a Notice of Proposed Rulemaking (NPRM) on April 16, 2024, taking into consideration the feedback received in response to the RFC. Following the proposed rule and solicitation of public comments, 89 FR 26807 (Apr. 16, 2024), this final rule implements, in regulation, key aspects of the processes used for Director Review. This final rule provides that a party to an AIA proceeding may request Director Review in that proceeding of any: (1) decision on institution, (2) final decision, <SU>1</SU> <FTREF/> (3) decision granting rehearing of a decision on institution or a final decision, or (4) other decision concluding an AIA proceeding. In addition, the final rule provides that the Director may sua sponte (on their own initiative) initiate a review of such decisions. The final rule also sets forth the timing and format of a party's request for Director Review. The final rule addresses the impact of Director Review on the underlying proceeding at the PTAB, as well as the time by which an appeal to the U.S. Court of Appeals for the Federal Circuit must be filed. The final rule also provides that the Director may delegate a review. <FTNT> <SU>1</SU>  As discussed below, as used in the final rule, “final decision” is defined as both final written decisions under 35 U.S.C. 318, 328, for inter partes review and post grant review proceedings, and also final decisions under 35 U.S.C. 135, for derivation proceedings. </FTNT> <HD SOURCE="HD1">Background</HD> On September 16, 2011, Congress enacted the AIA (Pub. L. 112-29, 125 Stat. 284 (2011)). The AIA established the PTAB, <SU>2</SU> <FTREF/> which is made up of administrative patent judges (APJs) and four statutory members, namely the Director, the Deputy Director, the Commissioner for Patents, and the Commissioner for Trademarks. 35 U.S.C. 6(a). The Director is appointed by the President, by and with the advice and consent of the Senate. 35 U.S.C. 3(a)(1). APJs are appointed by the Secretary of Commerce in consultation with the Director. <E T="03">Id.</E> section 6(a). The PTAB hears and decides ex parte appeals of adverse decisions by examiners in applications for patents, applications for reissue, and reexamination proceedings, and conducts proceedings under the AIA, including inter partes reviews (IPRs), post grant reviews (PGRs), and derivation proceedings, all in panels of at least three members. <E T="03">Id.</E> sections 6(b), (c). Under the statute, the Director designates the members of each panel. <E T="03">Id.</E> section 6(c). The Director has delegated that authority to the Chief Judge of the PTAB. See PTAB Standard Operating Procedure 1 (Rev. 16) (SOP 1), Assignment of Judges to Panels, available at <E T="03">www.uspto.gov/sites/default/files/documents/sop1_r16_final.pdf.</E> <FTNT> <SU>2</SU>  The PTAB was previously known as the Board of Patent Appeals and Interferences. </FTNT> 35 U.S.C. 6(c) states that “[o]nly the Patent Trial and Appeal Board may grant rehearings” of Board decisions. In <E T="03">Arthrex,</E> the Supreme Court held that the Appointments Clause of the Constitution (art. II, sec. 2, cl. 2) and the supervisory structure of the USPTO require the Director, a principal officer of the United States, to have the ability to review the PTAB's final written decisions in IPR proceedings. See <E T="03">Arthrex,</E> 141 S. Ct. at 1986. The Court determined that “35 U.S.C. 6(c) is unenforceable as applied to the Director insofar as it prevents the Director from reviewing the decisions of the PTAB on [the Director's] own.” <E T="03">Id.</E> at 1987. The Court added that: <EXTRACT> <FP>this suit concerns only the Director's ability to supervise APJs in adjudicating petitions for inter partes review. We do not address the Director's supervision over other types of adjudications conducted by the PTAB, such as the examination process for which the Director has claimed unilateral authority to issue a patent.</FP> </EXTRACT> <E T="03">Id.</E> The Court thus held that “the Director has the authority to provide for a means of reviewing PTAB decisions” in IPR proceedings and “may review final PTAB decisions and, upon review, may issue decisions . . . on behalf of the Board.” <E T="03">Id.</E> Additionally, the Court in <E T="03">Arthrex</E> made clear that “the Director need not review every decision of the PTAB,” nor did it require the Director to accept requests for review or issue a decision in every case. <E T="03">Id.</E> at 1988. Instead, “[w]hat matters is that the Director have the discretion to review decisions rendered by APJs.” <E T="03">Id.; see Arthrex, Inc.</E> v. <E T="03">Smith & Nephew, Inc.,</E> 35 F.4th 1328, 1338 (Fed. Cir. 2022) (noting same); <E T="03">CyWee Grp. Ltd.</E> v. <E T="03">Google LLC,</E> 59 F.4th 1263, 1268 (Fed. Cir. 2023) (“[T]he Appointments Clause was intended to prevent unappointed officials from wielding too much authority, not to guarantee procedural rights to litigants, such as the right to seek rehearing from the Director.” (quoting <E T="03">Piano Factory Grp., Inc.</E> v. <E T="03">Schiedmayer Celesta GmbH,</E> 11 F.4th 1363, 1374 (Fed. Cir. 2021)). Following the <E T="03">Arthrex</E> decision, on June 29, 2021, the USPTO implemented an interim process for Director Review of final written decisions in IPR or PGR proceedings and published <E T="03">Arthrex</E> Questions and Answers (Q&As), available on a USPTO web page. <SU>3</SU> <FTREF/> On April 22, 2022, the USPTO published two web pages to replace the <E T="03">Arthrex</E> Q&As. Specifically, the USPTO published an “Interim Process for Director Review” web page, <SU>4</SU> <FTREF/> setting forth more details on the interim process and additional suggestions and guidance for parties who wish to request Director Review. The updated interim process guidance increased clarity as the Office continued to update and improve the interim Director Review process based on experience and initial stakeholder feedback. The USPTO also published a web page providing the status of all Director Review requests, available at <E T="03">www.uspto.gov/patents/patent-trial-and-appeal-board/status-director-review-requests</E> (status web page). The Director Review status web page includes a spreadsheet that is updated monthly and presents additional information about the proceedings in which Director Review has been granted. <FTNT> <SU>3</SU>  This web page was superseded by the “Revised Interim Director Review Process” web page, discussed below, but remains available at <E T="03">www.uspto.gov/patents/patent-trial-and-appeal-board/procedures/arthrex-qas.</E> </FTNT> <FTNT> <SU>4</SU>  This web page was also superseded by the “Revised Interim Director Review Process” web page. </FTNT> On July 20, 2022, the USPTO issued an RFC  <SU>5</SU> <FTREF/> on Director Review, Precedential Opinion Panel (POP) review, <SU>6</SU> <FTREF/> and the internal circulation and review of PTAB decisions. 87 FR 43249-52. <SU>7</SU> <FTREF/> Based on experience and in light of stakeholder feedback received in response to the RFC, on July 24, 2023, the USPTO modified the interim Director Review process to allow parties to request Director Review of decisions on institution in AIA proceedings, an ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 62k characters. 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