“IPWatchdog Founder and CEO Gene Quinn said in April that the…proposals seemed ‘sensible and appropriate’ [but] he would like to see the delegation process fleshed out more. The Final Rule rejected a comment sharing Quinn’s concerns [and] pointed [the commenter] to the Director Review webpage.”
The U.S. Patent and Trademark Office (USPTO) has finalized its rule formalizing the interim Director Review process the Office has been following for Patent Trial and Appeal Board (PTAB) decisions under the America Invents Act (AIA) since the Supreme Court’s Arthrex v. Smith & Nephew decision.
In July 2021, the USPTO announced that it would be implementing an interim rule at the agency in response to the late June 2021 decision in Arthrex v. Smith & Nephew. In the Arthrex ruling, the Court found that the constitutional Appointments Clause violation created by the process for appointing administrative patent judges (APJs) to the PTAB was best cured by review of APJ decisions by the USPTO Director. The interim rule began the process of determining how that review process would play out during the day-to-day operations of the PTAB.
Then, in July 2022, the Office published an official Request for Comments (RFC) on the interim Director Review process, as well as the Precedential Opinion Panel (POP) process and the interim process for PTAB decision circulation and internal PTAB review. USPTO Director Kathi Vidal released updated interim guidance on Director Review and PTAB decision circulation/internal review soon after taking office in April 2022 and accepted preliminary feedback via a dedicated email address, but said the comments received in response to the RFC would officially inform upcoming notice-and-comment rulemaking to formalize these processes, as well as any modifications to the interim processes prior to formalization. In July 2023, the Office officially implemented a revised interim Director review process that included the creation of two new review panels replacing the previous Precedential Opinion Panel (POP) process of Director review.
Today’s final rule largely tracks the NPRM issued in April. The NPRM noted that the comments received in response to the RFC were divided on issues such as whether parties should be permitted to request either Director Review or panel rehearing, but not both; the criteria that should be used in determining whether to initiate Director Review; the standard of review that should be used for Director Reviews; the appropriate standard for initiating sua sponte Director Review; and whether or not to eliminate Precedential Opinion Panel Review (POP) entirely.
There was more agreement on topics like ensuring Director Review decisions are not precedential by default; the need for certainty with respect to timing and finality in both the grant of Director Review and the ultimate Director Review decision; and that a de novo review standard should be applied on review.
According to a press release issued by the USPTO today, the Final Rule explains that parties may request Director Review of a:
- decision on institution
- final decision (defined as a final written decision in an inter partes or post grant review proceeding or a final decision in a derivation proceeding)
- decision granting rehearing of a decision on institution or a final decision
- other decision concluding an AIA proceeding
The rule notes that the Office received a total of 12 comments from 11 organizations on the NPRM. The Office rejected all of them but one, which it adopted in part. Specifically, the final rule was amended to “expressly reference” the derivation statute to clarify that Director Review applies to derivation proceedings. It also now expressly indicates “that Director Review is available for any other decision concluding an AIA proceeding such as, for example, a decision terminating the proceeding, e.g., due to a grant of adverse judgment, or a dismissal of the proceeding.”
According to the rule, the USPTO has received 382 “compliant requests” for Director Review under the interim process, of which the Director Review process was completed for 369 requests. Of those, 24 requests were granted, two requests were delegated to the Delegated Rehearing Panel (DRP), six requests were withdrawn, and the remaining 337 requests were denied.
Sua sponte Director Review was initiated in 36 cases. Furthermore, “since July 24, 2023, when the interim process for Director Review was expanded to allow for requests of decisions on institution, the majority of requests received have been from decisions on institution.” Between July 24, 2023, and August 1, 2024, the Office received 49 requests for review of final written decisions and 115 requests for review of decisions on institution.
In April, IPWatchdog Founder and CEO Gene Quinn said the NPRM proposals seemed “sensible and appropriate” and that there were no red flags. However, Quinn said he would like to see the delegation process fleshed out more. But the Final Rule rejected a comment sharing Quinn’s concerns, which suggested “that the Office provide additional detail regarding the Director’s authority to delegate review under proposed § 42.75(f), the Director’s decision-making process, and the identity of members of the Director’s Advisory Committee.” The Office’s response thanked the commenter for “the thoughtful comment” but pointed to the Director Review webpage which it said “provides details about the Director’s delegation of review, the decision-making process, and the Advisory Committee.”
In today’s notice, USPTO Director Kathi Vidal said the Office is “dedicated to continuing to refine PTAB procedures to make them as fair, transparent, and efficient as possible, for the benefit of all innovators.”
So Long, AFCP 2.0
The Office also announced today that it has chosen to terminate the After Final Consideration Pilot Program 2.0 (AFCP 2.0) “based on feedback received from stakeholders” on the use of the pilot and “openness to pay or defray USPTO costs affiliated with the program,” The pilot will be briefly extended to December 14, 2024, in order to “provide program users with reasonable time to adjust to the upcoming termination.”
According to the notice, the Office’s costs to administer the program are “significant” and feedback on the proposed new fee for participating in AFCP 2.0 for fiscal year 2025 “revealed that the public is not widely receptive to the proposed fee as a condition to continuing the program”.
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