What Will Arthrex Review Look Like?

01 July 2021 PTAB Trial Insights Blog
Authors: Bradley Roush George E. Quillin

Last week, the Supreme Court issued its decision in United States v. Arthrex, Inc. As explained in more detail in our June 24, 2021 post, after holding that “the unreviewable authority wielded by APJs during inter partes review is incompatible with their ap­pointment by the Secretary to an inferior office,” the Court concluded that “the Director [must] have the discre­tion to review decisions rendered by APJs” in inter partes reviews (IPRs). Slip Op. at 19, 21. Indeed, the Court appears to suggest that the Director’s power to review decisions by the PTAB could be quite broad. For example, the Court explained that “[i]f the Director were to have the ‘authority to take control’ of a PTAB proceeding, APJs would properly function as in­ferior officers” and that “[t]he Director may engage in such review and reach his own de­cision.” Id. at 21-22 (emphasis added). However, because such Director review was not set forth by Congress in the America Invents Act, this naturally raises questions about how this authority will be exercised.     

The PTO just issued guidance for an "interim process for Director review” (discussed in more detail below), but will seek public feedback on the review process. 

One fundamental question is whether parties should have to petition the Director for review of a final written decision. One simple approach may be for the Director to automatically review all decisions and only issue decisions as the Director sees fit. However, such a simple approach could lead to a challenge of whether the Director is properly exercising this review authority.

If the Director does allow for petitions for review, there are several questions about how this process will operate. For example:

  • The interim process is similar to the current process for requesting Precedential Opinion Panel (POP) review—will the final process be? The Director could decide to use the current POP review system except that the Director could be the sole arbiter of such requests. A detailed discussion of the POP review process can be found here.
  • Will the Director be required to explain the basis for denying a petition for review? Summary denials of petitions for review would be an efficient means of resolving the likely flood of petitions. However, this would also likely raise the issue of whether the Director is properly exercising this review authority.
  • Will the Director delegate this review authority to subordinates? As a practical matter, the Director may need to delegate some of this review authority in order to address the potentially large number of petitions for review. However, doing so may raise the same “political accountability” concerns that the Court found to be unconstitutional.

Irrespective of how the Director implements the review process, several other questions will need answers. For example:

  • What standard of review would be applied? As set forth in the PTO’s Arthrex Q&As, at least for the interim process, the review will be de novo and the Director will be able to review any issue, including fact and legal issues.
  • How long will the review process take? 35 U.S.C. § 316(a) requires that absent good cause, “the final determination in an inter partes review be issued not later than 1 year after the date” of the institution decision. It is not clear whether the Director’s review must be completed within one year of institution or if § 316(a) merely applies to the Board’s final written decision. That lack of clarity stems in part from inconsistent terminology. That is, on one hand, if the Director alters the FWD, one could argue that it is the Director’s decision after his review that is the statute’s “final determination.” On the other hand, the Board sometimes exercises its power to alter the FWD on rehearing, yet parties, commentators, the Board, and the courts all seem to treat the original FWD as the statute’s final determination for timeliness purposes.
  • Will the complexity of a new process lead to fewer IPR petitions being granted? Particularly because decisions as to whether to institute IPR are not subject to judicial review, one practical solution to addressing the potentially large number of petitions for review to the Director would be to institute fewer IPRs.

It is also not clear how the review process will impact appeals to the Federal Circuit. For example, unlike the situation with Board rehearings, would a losing party be required to petition for the Director’s review before appealing to the Federal Circuit (i.e., to exhaust all administrative remedies prior to a judicial appeal)? A related question is whether failing to raise an issue in a petition for the Director’s review could waive that issue for appeal.

Moreover, it should also be noted that the Director’s review process could change with each new Director. As the Court stressed the need for a “principal officer” who is appointed by the President and confirmed by the Senate to have this authority, presumably how each Director exercises this authority could, if not constrained by notice-and-comment rulemaking, vary significantly.

With that being said, the PTO has just issued guidance for an “interim process for Director review” which is quite similar to the current POP review process. Under the interim process, a Director review “may be initiated sua sponte by the Director or be requested a party to a PTAB proceeding.” The PTO’s guidance explains that”

“Parties may request Director review of a final written decision in an inter parties review or a post-grant review by concurrently (1) entering a Request for Rehearing by the Director into PTAB E2E and (2) submitting a notification of the Request for Rehearing by the Director to the Office by email to Director_PTABDecision_Review@uspto.gov, copying counsel for all parties by email.”

Importantly, the PTO’s Arthrex Q&As explain that a request for Director review “will be considered a request for rehearing under 37 C.F.R. 90.3(b) and will reset the time for appeal or civil action as set forth in that rule.” However, as the Q&As further explain, this process “is envisioned as an interim procedure that may change based on input from the public and experience with conducting Director reviews.”

Additionally, the Federal Circuit has issued a short order in pending IPR appeals where one of the parties raised an Appointments Clause challenge. That order states:

“(1) Within 14 days from the date of this order, the parties that raised an Appointments Clause challenge shall file a brief, not to exceed 10 pages double-spaced, explaining how they believe their cases should proceed in light of Arthrex. Responses from the other parties, including the United States Patent and Trademark Office, subject to the same length restrictions, are due within 14 days thereafter.

(2) All deadlines and proceedings are stayed.”

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