[co-author: Zack Kalinowski]

The U.S. Supreme Court’s opinion in United States v. Arthrex has shaken up the Patent Trial and Appeals Board but will likely have little effect on case outcomes. Arthrex involved a challenge to the constitutionality of the PTAB’s administrative patent judges. APJs are appointed by the Secretary of Commerce and can be removed only for cause. The APJs conduct inter partes review (IPR), a procedure for challenging a patent’s validity. A dissatisfied party to an IPR can appeal an APJ panel’s final written decision to the Federal Circuit or request rehearing by the PTAB. Critically, before Arthrex, 35 U.S.C. § 6(c) prevented the Director of the U.S. Patent and Trademark Office from rehearing PTAB decisions.

The Court found it troubling that the IPR regime allowed APJs to exercise “significant authority” in determining the validity of a patent without supervision from a higher executive officer. The Appointments Clause of the U.S. Constitution requires principal officers to be appointed by the President; inferior officers may be appointed by an executive department head. The Court noted that inferior officers are supervised by a superior and that the PTO Director supervised APJs extensively except regarding final IPR decisions. Rather than determining whether APJs are inferior or principal officers, the Court made this distinction moot by holding 35 U.S.C. § 6(c) unenforceable insofar as it prevents the Director from granting rehearing. The Court thus remedied the constitutional infirmity without upsetting the overall IPR framework.

The PTO has established interim procedures that implement Arthrex by granting the Director the power to rehear the PTAB’s final written decisions. Director rehearing can be initiated two ways—either “sua sponte by the Director” or by request of a party to the PTAB action. A party seeking rehearing by the Director must enter a “Request for Rehearing by the Director” into the PTAB’s electronic filing system and notify the Director’s office by emailing Director_PTABDecision_Review@uspto.gov. A request is reviewed by an advisory panel of PTO business group members before the Director makes their decision on whether to grant rehearing.

Note that Director rehearing is not available for IPR institution decisions. The Court found that the Director sufficiently supervises the institution of IPR. Thus, a party dissatisfied with an APJ panel’s institution decision can only request a PTAB rehearing.

Again, Arthrex is unlikely to have much effect on IPR outcomes. Requesting rehearing of a final written decision was uncommon before Arthrex, and there is no reason to believe such requests will become more common after Arthrex. Those seeking a rehearing will face an uphill climb to convince the Director to rehear their case. Practically speaking, the Director has little incentive to overturn an APJ panel for a typical IPR. Perhaps the Director would grant rehearing to promulgate policy changes or address considerations typically beyond the purview of an APJ panel. Nevertheless, the reality is that a party on the losing side of a PTAB final written decision will likely find an appeal to the Federal Circuit to be a more effective route for making its case.