USPTO Implements PTAB Director Review Rules

The US Patent and Trademark Office (USPTO) implemented 37 CFR § 42.75 on October 31, 2024, establishing a formal framework for Director Review of Patent Trial and Appeal Board (PTAB) proceedings. During her tenure, Director Kathi Vidal has actively worked to promulgate formal rules to permanently adopt existing interim, pilot, or other informal procedures at the PTAB.

These new rules [1] follow that trend by replacing the interim Director Review process and formalizing the USPTO procedures addressing the US Supreme Court’s June 2021 decision in United States v. Arthrex, Inc., 141 S. Ct. 1970, 1986 (2020), that review by a superior executive officer must be available for final decisions of the more than 200 administrative patent judges (APJs). Otherwise, according to the Court, appointment by the Secretary of Commerce of APJs, whose decisions are insulated from executive review, is incompatible with the Appointments Clause of the Constitution, which grants such authority only to those appointed directly by the president with the advice and consent of the US Congress. [2]

Adopting existing practices, these final rules provide that a party to a proceeding, or the Director sua sponte, can initiate review of (1) a decision on institution, (2) a final decision under 35 USC §§ 318, 328, or 135 (for inter partes review (IPR) or derivation proceedings), or (3) decisions granting a rehearing. Additionally, and in response to comments received after the earlier notice of proposed rulemaking (NPRM), the final rules provide that Director Review is also available for (4) other decisions that may conclude an AIA proceeding such as a dismissal of the proceeding.

USPTO DIRECTOR MAINTAINS SIGNIFICANT FLEXIBILITY IN DIRECTOR REVIEW PROCEDURES

Consistent with the interim process, the Director retains significant flexibility in Director Review procedures under these rules. The Director has discretion to accept a request for review and issue a decision, however, Director Review is first considered by an advisory committee of at least 11 members tasked with presenting a recommendation based on consensus or noting differing opinions.

There are no formal standards by which the Director must conduct the review. The Director may designate a Director Review decision as precedential even though Director Review decisions are by default considered routine decisions. The Director can also review any interlocutory decision by the Board in reaching the decision for which the Director review was initiated.

Furthermore, the Director can delegate review at their discretion, but there is reason to believe that delegation to a Delegated Rehearing Panel under the current Director may occur more often when a more routine error or technical aspect of a PTAB decision is to be reviewed. [3] Nonetheless, the Director is only able to review final decisions in AIA proceedings (e.g., IPRs, post-grant reviews), and not in appeals from ex parte examinations (e.g., reissues, reexaminations).

Despite the overall objective of formalizing Director Review procedures being to promote “the accuracy, consistency, and integrity of PTAB decision-making in AIA proceedings,” responses to comments received after the NPRM underscore both the desire to maintain the Director’s flexibility in the Director Review process and the evolving nature of Director Review procedures. For instance, some commenters proposed adding formal standards of review to the rules, some of which had already been incorporated during the interim Director Review process.

Nonetheless, the USPTO declined to formalize standards of review within the rules, citing that it was not required under Arthrex, the rules as they stand provide the Director with flexibility, and any further guidance on standards of review would be provided on the Director Review webpage.

Similar responses were conveyed for comments requesting standards for determining which Director Review decisions are precedential, comments requesting limiting sua sponte review to issues of exceptional importance, and comments proposing adding time limits on Director Review.

REQUESTS FOR DIRECTOR REVIEW OR REHEARING

Under these rules, parties can file a request for Director Review instead of filing a request for rehearing within the time period set forth in Section 42.71(d), absent grant of an extension for good cause. In addition, the Director can initiate a sua sponte review within 21 days of the expiration of the period for filing a request for rehearing, absent exceptional circumstances. While no time limit for concluding Director Review has been imposed at present, in responding to comments received on the NPRM the Office stressed that “the Director has continued to issue decisions as to whether to grant or deny the request for Director Review, on average, in less than two months.”

If a Director declines review, the decision of the panel of APJs becomes the final agency decision. All Director Review decisions other than decisions on institution are appealable to the US Court of Appeals for the Federal Circuit. A party also has the opportunity to request rehearing of a Director Review decision, albeit only in cases where the party wants to show that the Director has overlooked or misapprehended a matter, and the Director has sole jurisdiction over such a proceeding.

As noted in the Federal Register, as of August 1, 2024, 24 of the 369 completed requests for Director Review under the interim Director Review process were granted, and sua sponte review was initiated in 36 proceedings. Most Director Reviews pertained to institution decisions rather than final written decisions. Regularly updated information about all the proceedings in which Director Review has been granted so far, either based on a party’s request or sua sponte, is made publicly available on the USPTO Director Review status webpage.

Timing and formalities for requesting Director Review are similar to those for requests for rehearing of the decision of a panel of APJs. Under Section 42.71, the request for rehearing “must specifically identify all matters the party believes the Board misapprehended or overlooked, and the place where each matter was previously addressed in a motion, an opposition, a reply, or a sur-reply.” Under Section 37.42, Director Review can be granted for “(a) abuse of discretion or (b) important issues of law or policy, (c) erroneous findings of material fact, or (d) erroneous conclusions of law,” depending on the type of proceeding for which the final decision by the panel of APJs was made.

Ultimately, whether to pursue a request for rehearing under § 42.71 or Director Review under § 37.42 may depend on how a given Director uses their direct and substantial authority over Director Review proceedings, which may become clearer over time as more proceedings are reviewed under the new rules. Further, a different record will be created if a party wishes to keep open the possibility of further appealing the decision after a request for rehearing versus after Director Review.

CONCLUSION

Director Review under 37 CFR § 42.75 provides a now-formalized alternative to requesting panel-level rehearing of PTAB final decisions within the Office. Formalizing Director Review rules also reflects a continuation of the Office’s focus on enshrining informal practices in formal rules. With the large package of proposed rules related to discretionary denial and other areas still outstanding, practitioners should keep a close eye on a final rule to emerge next from that package of proposals.