TAKEAWAY: The U.S. Supreme Court ruled that Patent Trial and Appeal Board decisions must be subject to review by the USPTO Director.
As originally designed, the USPTO Patent Trial and Appeal Board (PTAB) issued final decisions on patentability of a challenged patent that were reviewable only by the Federal Circuit or via a rehiring at the PTAB. In a 5-4 split decision in United States v. Arthrex addressing constitutionality of how PTAB Administrative Patent Judges (APJs) are appointed, the U.S. Supreme Court (SCOTUS) held that the USPTO Director must have the authority to review such final decisions. Unlike APJs, the USPTO Director is a principal officer under the Constitution, appointed by the President and subject to congressional approval. Chief Justice Roberts wrote that “[t]he structure of the PTO and the governing constitutional principles chart a clear course: decisions by APJs must be subject to review by the director.”
The USPTO has not yet provided guidance as to how the SCOTUS ruling will affect proceedings before the PTAB. For example, rules and further guidance will be required on how the USPTO Director will handle reviews and a backlog of cases remanded by the Federal Circuit before SCOTUS’s decision. An additional question is whether or to what extent there will be changes to the current Precedential Opinion Panel (POP), a panel consisting of the USPTO Director, the Commissioner for Patents, and the Chief Judge of the PTAB with the authority to set precedent for the PTAB.
A new USPTO director has not yet been appointed by President Joe Biden, and it remains to be seen whether current temporary Director, Drew Hirshfeld, will make changes based on the Arthrex decision. Confirmation hearings for a nominee may shift focus to whether he or she intends to step in to overturn PTAB rulings. The PTAB issued 425 final written decisions in 2020, making it unlikely that a single person (i.e., the Director) could thoroughly review each ruling. Accordingly, the USPTO Director may choose to limit the number of rulings selected for review to those meeting yet unknown criteria.
SCOTUS’s Arthrex decision may also have implications for other federal agencies. By providing the USPTO Director the authority to review PTAB decisions, Arthrex may open the door for greater oversight by principal officers generally. Since principal officers are appointed by the presidential administration in power, one concern is that such oversight could become increasingly politically driven.