(August 17, 2023) - David McCombs, Eugene Goryunov and Jonathan Bowser of Haynes Boone discuss the U.S. Patent and Trademark Office Director review of Patent Trial and Appeal Board decisions, taking particular note of the expansion of the Director review process to cover institution decisions.

In United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021), the U.S. Supreme Court held that the U.S. Patent and Trademark Office (USPTO) Director must have the authority and opportunity to review a Patent Trial and Appeal Board (PTAB) final written decision before it becomes the decision of the agency. In response to Arthrex, the PTAB implemented an interim Director review process. "USPTO implementation of an interim Director review process following Arthrex." Nearly two years later, the USPTO expanded the scope of the Director review process. "Revised Interim Director Review Process," available at: https://bit.ly/3Orn6O8.

The purpose of Director review is to resolve issues that implicate the resolution of the specific case or would address broader legal issues. Director review may be initiated sua sponte by the Director or requested by a party to a PTAB proceeding. While the original Director review process was limited to review of final written decisions, the revised process allows parties to seek review of the PTAB's "(1) decision whether to institute a trial, (2) final written decision, or (3) decision granting a request for rehearing." Expansion of the Director review process to cover institution decisions is a big deal.

A request can be made for any issue(s) addressed in a PTAB institution decision, final written decision, or rehearing decision. If the request is directed to the PTAB's decision whether to institute a trial or a decision granting rehearing of such a decision, the review "shall be limited to decisions presenting (a) an abuse of discretion or (b) important issues of law or policy." Both "discretionary and merits-based issues may be raised" in the review request and issues of law or policy are reviewed "de novo."

On the other hand, if the request is directed to the PTAB's final written decision or a decision granting rehearing of such a decision, the review shall be limited to decisions presenting (a) an abuse of discretion, (b) important issues of law or policy, (c) erroneous findings of material fact, or (d) erroneous conclusions of law. All issues raised are reviewed "de novo."

It is expected that most Director reviews will be conducted upon request by one of the parties to a PTAB proceeding, but the Director has the authority to sua sponte initiate a review. In the case of sua sponte initiation, the PTAB will issue a notice to the parties informing them that a Director review will be initiated prior to either party filing of a notice of appeal or the lapse of the time for filing such a notice, whichever is sooner.

As a general matter, Director review is intended to review the record to decide whether a particular PTAB panel's decision should be sustained. The Director may, however, elect to accept briefing by the parties on the subject of the review and, where appropriate, order oral argument.

To request Director review, a party (and only a party) to the proceeding must concurrently (1) file a Request for Rehearing by the Director and (2) send a notification of the Request for Rehearing by the Director by email to [email protected], copying counsel for all parties. The page limit for the request is 15 pages.

The deadline for filing a Director review request is the same as filing a request for rehearing: within 30 days of entry of a final written decision, within 30 days of entry of a decision denying institution, or within 14 days from the entry of a decision whether to institute trial. 37 C.F.R. §§ 42.71(d)(1)-42.71(d)(2). The Director has the authority to extend the request deadline for good cause, and a request for Director review resets the time for appeal or civil action.

Once a party has requested review, a Director-created Advisory Committee will advise the Director on whether the decision merits review. Director review begins when the Director (with the help of the Committee) has either approved a party's request or initiated review sua sponte. As with sua sponte Director review, parties may not include new evidence or arguments in a request, but the Director may ask for additional briefing, allow the submission of new evidence, and even order oral argument, when appropriate. Third parties are not permitted to request Director review or participate in the review process, unless the Director specifically invites a third party to participate.

It is important to note that a granted Director review does not automatically stay the underlying proceeding. The Director may, however, stay the case if necessary. In any case, the Director maintains authority over all issues in the case during the pendency of review but may, where appropriate, delegate authority to the PTAB panel to handle routine interlocutory matters or attend to matters outside of the intended scope of review.

A decision from the Director review process of a final written decision is appealable as any other PTAB final written decision. But a decision reviewing a decision on institution is not appealable. The revised process allows a party to seek rehearing of a Director review decision, regardless of the decision the Director reviewed. The moving party must show that the Director's decision "should be modified" but the USPTO notes that rehearing requests "should be rare…and only for very focused purposes."

Since its inception, Director review decisions have been entered in 25 cases, with some cases receiving multiple decisions. https://bit.ly/3QL4KKK. The USPTO has yet to finalize the Director review process and issue a final set of rules and procedures governing its administration. Practitioners should nevertheless monitor how the Director is addressing cases to make sure they are up to speed on the current state of the law and application of various USPTO procedures.

This article reflects only the present personal considerations, opinions, and/or views of the authors, which should not be attributed to any of the authors' current or prior law firm(s) or former or present clients.