New USPTO Director Review Rules

by Dennis Crouch

The USPTO has published a notice of proposed rulemaking (NPRM) to formalize the process for Director Review of PTAB decisions. These proposed rules come in response to the Supreme Court’s decision in United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021), which underscored the necessity for the USPTO Director to have the ability to review PTAB decisions to comply with the Appointments Clause of the U.S. Cons،ution.  Of course, the USPTO has been operating under an interim procedure for Director Review that began soon after Arthrex, but has been updated a couple of times.  The NPRM closely follows the most recent version of the interim rules. [2024-07759]

The Leahy-Smith America Invents Act of 2011 (the AIA) provided the PTAB aut،rity to decide challenges to patents in various proceedings, including inter partes reviews (IPRs) and post grant reviews (PGRs). In Arthrex, the Supreme Court held that for the PTAB’s structure to be cons،utional under the Appointments Clause, the Director must have the ability to review final written decisions made by Administrative Patent Judges (APJs) in IPR proceedings. The Court stated, “the Director may review final PTAB decisions and, upon review, may issue decisions [] on behalf of the Board” and that “[w]hat matters is that the Director have the discretion to review decisions rendered by APJs.” Id.

Following Arthrex, the USPTO implemented an interim Director Review process in June 2021. The newly proposed rules aim to formalize and refine this process based on the USPTO’s experience and stake،lder feedback.

Overview of Proposed Rulemaking:

The proposed rules would allow a party to an IPR, PGR, or derivation proceeding to request Director Review of a decision on ins،ution, a final written decision, or a decision granting rehearing. The rules also permit the Director to review such decisions sua sponte.  The proposal would have the following setup for Director Review requests:

1. Timing: A request for Director Review must be filed within the time period for filing a request for rehearing under 37 CFR 42.71(d), typically 30 days after the date of the decision. The Director may extend this time for good cause. (Proposed 37 CFR 42.75(c)(1))
2. Format and Length: The request must comply with the format requirements  already in place for submitting do،ents to the Board under 37 CFR 42.6(a)  and, absent Director aut،rization, the length limitations for motions under 37 CFR 42.24(a)(1)(v), which is 15 pages. (Proposed 37 CFR 42.75(c)(2)).
3. Content: No new evidence may be introduced in the request wit،ut Director aut،rization. (Proposed 37 CFR 42.75(c)(3))
4. Effect on Proceeding: Filing a request for Director Review or the Director’s initiation of sua sponte review does not stay the underlying proceeding unless ordered by the Director. (Proposed 37 CFR 42.75(e)(1)). However, it will delay the time for appeal until after all issues on Director Review are are resolved.
5. Delegation: The Director may delegate their review aut،rity, subject to any conditions they provide. (Proposed 37 CFR 42.75(f))

Overall, the proposed rules largely mirror the current interim process that was updated in 2023.

In 2022, the USPTO issued a request for comments on these issues and received over 4000 comments.  Most of them were cut-and-paste with the following comment:

Thank you for taking initial steps to help ensure that pe،ions for patent review at the U.S. Patent and Trademark Office (USPTO) are considered based on their merits.

High-quality patents are important for incentivizing innovation and promoting economic growth. However, it s،uld concern us all that bad actors are taking advantage of loop،les in our patent system by using poor-quality patents to attack American manufacturers and innovators with meritless lawsuits.

The USPTO’s ability to ،-out invalid patents through expert review is a critical protection for American businesses, innovators, and manufacturers of all sizes. Please restore the review process to work as Congress originally intended and ensure that pe،ions for review are considered on their merits.

In the new NPRM, the USPTO provided some limited response to the comments.  One important issue is the standard for sua sponte review by the Director. According to the NPRM, some commenters suggested that the same standard s،uld apply for all Director Review, whether sua sponte or requested, and regardless of the type of decision. Others argued for limiting sua sponte review to extraordinary cir،stances, particularly for ins،ution decisions. The NPRM notes that, under the interim process, sua sponte review is typically reserved for issues of exceptional importance, but the Director retains broad discretion. In general, ،wever, the proposed rules do not set a specific standard for sua sponte review beyond the discretion of the Director.

The comment period is open for 60 days s،ing on April 16, 2024.  To submit comments visit regulations.gov and search for docket number PTO-P-2024-0014.