USPTO Provides Guidance on Director Review Process Under Arthrex

“Hirshfeld has not been appointed within the meaning of the Appointments Clause, and any action he takes with respect to Arthrex petitions from the PTAB will be void ab initio. Expect litigation on this issue.”– Gene Quinn

Drew Hirshfeld

This week, the U.S. Patent and Trademark Office announced that it would be implementing an interim rule at the agency in response to the U.S. Supreme Court’s late June decision in Arthrex v. Smith & Nephew. Today, the Office held a Boardside Chat with Drew Hirshfeld, Performing the Functions and Duties of the Under Secretary of Commerce for Intellectual Property and Director of the USPTO; Scott R. Boalick, Chief Administrative Patent Judge; Jacqueline W. Bonilla, Deputy Chief Administrative Patent Judge; and Scott C. Weidenfeller, Vice Chief Administrative Patent Judge to explain how the interim process will work and answer questions submitted by the public. Janet Gongola, Vice Chief Judge for Engagement at the PTAB, moderated the panel.

In the Arthrex ruling, the nation’s highest court found that the constitutional Appointments Clause violation created by the process for appointing administrative patent judges (APJs) to the USPTO’s Patent Trial and Appeal Board (PTAB) was best cured by review of APJ decisions by the USPTO Director. The new interim rule begins the process of determining how that review process will play out during the day-to-day operations of the PTAB.

According to a question-and-answer page regarding Arthrex on the USPTO’s website, parties will be able to request Director review of PTAB decisions during the interim phase of the rulemaking process by concurrently entering a Request for Rehearing by the Director into the PTAB End to End (E2E) electronic filing tool and submitting an email notification of the Request for Rehearing to an agency email account dedicated to receiving such notifications. Timely requests must be filed within 30 days of a PTAB final written decision (FWD) pursuant to agency regulations governing motion decisions codified at 37 CFR § 42.71(d). Requests for Director rehearing that are timely filed will reset the timing requirements for appeals of PTAB decisions or civil actions against the agency under 35 U.S.C. §§ 145 and 146 pursuant to agency regulations governing timing for appeals and civil actions codified at 37 CFR § 903(b). Director Review applies only to FWDs and not to institution decisions.

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Void Ab Initio

Perhaps one of the most pressing questions stakeholders have had is whether Hirshfeld himself will decide requests for Director Review, since he is not even an Acting Director, or if he will wait for a Senate-confirmed Director to be in place. Hirshfeld answered this definitively in today’s chat: “Yes, I have every intent to make decisions as Director and won’t be deferring until there’s a political appointee.” Final decisions under Director Review also will be made by the Director, not an advisory panel or other delegated party. While there will be an advisory group put together to make recommendations on review, similar to the Precedential Opinion Panel process, “they’re only a recommending body,” Hirshfeld said.

“While I think Drew Hirshfeld does a great job, and I have no questions about his ability or integrity, the USPTO is making a huge mistake,” said Gene Quinn, President and CEO of IPWatchdog, Inc. He explained:

According to the Supreme Court in Arthrex, Administrative Patent Judges of the PTAB are not considered unconstitutionally appointed inferior officers exceeding their authority if their decisions are subjected to the review of a Director who is nominated by the President and confirmed by the Senate. Hirshfeld does not meet this requirement and cannot cleanse the Appointment Clause violation identified by the Supreme Court. The Supreme Court couldn’t have been more clear: ‘Only an officer properly appointed to a principal office may issue a final decision binding the Executive Branch…’ Hirshfeld has not been appointed within the meaning of the Appointments Clause, and any action he takes with respect to Arthrex petitions from the PTAB will be void ab initio. Expect litigation on this issue.

Lots of Questions and Some Answers

Hirshfeld explained that three principles have guided the USPTO in issuing the interim guidance on Director Review:

  • The Office wanted to provide guidance as quickly as possible, even if not complete. “We’re in the early stages…there’s more to come,” Hirshfeld said. The downside of this is that the Office does not yet have answers to many of the questions raised.
  • Transparency: “We intend to be 100% transparent with every way we’re moving forward to enable the best comments and feedback,” Hirshfeld said.
  • Wanted to also enable parties to request Director review, although not a requirement according to SCOTUS decision – but in interest of having a robust process we wanted it to be an option.

Boalick provided an overview of the process, explaining that the Director can review FWDs of inter partes reviews (IPRs), post grant reviews (PGRs) or covered business method patent proceedings (CBMs) sua sponte, or parties can request review. If the Director sua sponte implements review, parties will be given notice and an opportunity for briefing if the Director deems it helpful. Decisions will be reviewed de novo.

If Director Review is not granted and panel rehearing is not granted, only appeal to the Federal Circuit is available (see chart).

If Director Review is instituted, the Director can grant, deny or remand. If remanded, another decision will issue and then the original options are available to the parties.

With respect to procedural questions such as whether non-requesting parties will be able to file a response, if there will be oral argument, and whether amicus briefs will be allowed in Director Review proceedings, none of these is a matter of right, but the Director may choose to allow them. The Director also will not be bound by PTAB/ POP precedent and has full discretion to create new precedent. “The intent is not to go rogue and crazy, but where procedures might need to be updated this is a vehicle,” Hirshfeld said.

As to how the Office and PTAB will handle Director Review requests in the event they are flooded with them, Boalick and Hirshfeld said they will simply follow the same approach they took following SAS Insitute v. Iancu, which Boalick said forced the PTAB “to redo 40% of our docket.” “We’ll just reallocate resources. Essentially, in SAS, we allocated resources to get through the bubble without affecting pendency,” Boalick said.

Hirshfeld added that the Office will make sure to be cognizant of speed and timing and adjust resources on the group as necessary. “We’ve been thinking about this and preparing for every scenario,” he said.

As far as cases that raise Arthrex, which have been held in abeyance pending the Supreme Court decision, the Board will not be taking action yet, Boalick said, and he does not expect that the parties will take action yet either. The large majority of such cases were remanded by SCOTUS orders subsequent to the Arthrex ruling, though the Office is awaiting the Court’s action on one pending petition.

With respect to cases on appeal at the CAFC where a party has raised an appointments clause challenge, there are two such cases in which the CAFC has asked parties to file briefs on how they wish to proceed. The USPTO’s briefs in those cases are due July 21-22 “so stay tuned for our position,” Boalick said.

Send Your Input

Several requests for Director Review have already been filed and the USPTO is evaluating them, said Weidenfeller. The Office intentionally has not addressed how the Director will decide which cases to review or what the criteria will be. The POP was for a specific purpose, to consider issues of exceptional importance,” Hirshfeld explained.  “This is much broader, so there’s no particular standard. But the more refined your argument the better.”

Hirshfeld repeatedly emphasized that the guidance is interim and subject to updates. Stakeholders should submit feedback and questions on Director Review to Director_Review_Suggestions@uspto.gov and general Arthrex-related questions via email to trials@uspto.gov.

Today’s presentation is available here now and the video, when available, will be on the Boardside Chat page of the USPTO website.

 

The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

Eileen McDermott

Steve Brachmann is a freelance journalist located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He writes about technology and innovation. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients and is available for research projects and freelance work.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 3 Comments comments. Join the discussion.

  1. Anon July 1, 2021 7:21 pm

    Bingo, Gene.

  2. Pro Say July 1, 2021 9:01 pm

    “‘We’ll just reallocate resources.'”

    Sorry, but no. That’s not going to work.

    SCOTUS was clear. Only the Director — a Senate-approved Director — can review (not rubber-stamp) PTAB decisions.

    SAS? This is not SAS. Far from it.

    Any attempted “reallocation” of decisional authority to anyone — or multiple someones — is (like Drew rendering decisions) also void ab initio.

    Without Congress stepping in to fix the mess SCOTUS has created, that light at the end of the tunnel is a speeding train headed straight for the Patent Office.

    So how’s that, “quicker, easier, cheaper” PTAB option working out for everyone?

    Because guess what folks. It’s about to get a whole lot messier.

    And a whole worse.

  3. Patent Investor July 2, 2021 12:15 pm

    Would this not qualify as an intervening change in controlling law and thus allowing all PTAB cases currently at the CAFC a right to Director review (which I agree cannot possibly be Hirschfeld)?

    SCOTUS came up with its own constitutional violation and changed the law to remedy it. In 10 years of the AIA, I have found no case where the ALJ’s were claimed to be inferior officers exceeding their constitutional authority.

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