Fed Circuit makes key ruling on USPTO director reviews
Cybersecurity company wanted to force the USPTO to consider rehearings of inter partes reviews | Window for such director reviews is not ‘nailed shut’ says judge | Case differed from Arthrex.
The US Patent and Trademark Office’s (USPTO) practice of refusing to consider requests for the director to reconsider patent challenge rejections is constitutional, according to the US Court of Appeals for the Federal Circuit.
In the precedential decision, handed down yesterday, August 16, the Federal Circuit denied cybersecurity company Palo Alto Networks' (PAN) bid to force the USPTO to accept and consider its requests for director rehearing of decisions denying institution of inter partes review and post-grant review for patents owned by Centripetal Networks.
The Federal Circuit concluded that the US Supreme Court's 2021 decision in US v Arthrex does not mean the director must review the Patent Trial and Appeal Board’s (PTAB) decisions to accept or reject patent challenges.
In Arth r ex, the Supreme Court concluded that PTAB judges had been appointed unconstitutionally, and to resolve this, the USPTO director must have the power to overturn PTAB final decisions.
Relying on Arthrex, PAN argued that “categorical refusal” to accept requests for director review of institution decisions violates the Appointments Clause of the US Constitution, which vests the US president with the exclusive power to select the principal officers of the US.
Circuit Judge Timothy Dyk, on behalf of the court, said that the case fundamentally differed from Arthrex as there "is no structural impediment to the director’s authority to review institution decisions either by statute or by regulation”.
He added: "Indeed, institution decisions are, by statute, the director’s to make and are only made by the board as a matter of delegated authority.”
According to Dyk, the Arthrex decision “strongly suggests” that delegating the authority to decide on institution to the PTAB, without a mechanism to subsequently request director review, doesn’t present Appointments Clause problems.
In a concurring opinion, Circuit Judge Jimmie Reyna agreed with the panel’s result but said that PAN had failed to meet the high standard for mandamus relief.
“I generally agree that a categorical denial by the director to accept any requests for review raises potential constitutional concerns. But I need not reach that question and its related analysis because two circumstances undercut PAN's claim that the director categorically refuses to accept requests for director rehearing," said Reyna.
He said that, in denying PAN’s requests, the director said she was not accepting requests for review at this time.
“This suggests that there is no ‘categorical refusal’ to accept requests for review, but rather, that the director has exercised her discretion not to invoke her review authority. The window is not nailed shut; it is closed for the moment,” said Reyna.
Additionally, said Reyna, the director has exercised her review authority in two other actions where she granted sua sponte review of determinations denying institution.
He concluded: "In my view, the director’s exercise of discretion to grant review in those two actions pulls the rug out from under PAN’s petition. The agency window is open after all.”
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