New Patent Office Director Takes Heightened Role in Patent Reviews

Action: The new head of the US Patent and Trademark Office (USPTO) recently announced that he will personally determine whether to institute trial proceedings for key patent challenge processes. USPTO has also issued a proposed rulemaking intended to make it harder to initiate inter partes reviews of patents.

Trusted Insights for What's Ahead^®

• In a recent memo, the USPTO Director informed Patent Trial and Appeal Board (PTAB) judges that he would assume responsibility for determining whether the inter partes reviews (IPRs) and post-grant reviews (PGRs) used to challenge patents would be referred to the PTAB for trials based on the merits and other non-discretionary considerations. This action follows a similar earlier change instituted in March by the Director’s predecessor which placed the Director in charge of discretionary decisions about whether to proceed with a PTAB trial. Both determinations were previously made by panels of PTAB judges
• The PTAB and its IPR and PGR processes were introduced by the America Invents Act (AIA) of 2011, replacing previous mechanisms for challenging issued patents. Through IPR and PGR, Congress intended to make the patent challenge process more efficient, protect patent holders against spurious challenges, and reduce Court burden. However, some critics argue that the processes disadvantage patent holders, create uncertainty about patent validity, and discourage investments in innovation.
• The AIA assigns the USPTO Director responsibility for determining whether to proceed with a PTAB trial based on discretionary or merit-based factors. The Director previously delegated this role to a panel of PTAB judges who considered both sets of factors together.
• USPTO believes that separating the considerations and assigning decision-making authority to the Director will “improve efficiency, consistency, and adherence to the statutory requirements for institution of trial [under IPR and PGR].” However, some observers have criticized the change for a perceived lack of transparency, citing the Director’s recent denial of 13 IPR petitions without explanation.
• In an open letter outlining his priorities, the Director stated that granting more decision-making authority to the Director would increase accountability and ensure the patent system is fair and predictable.
• USPTO has also announced plans to layoff about 1% of its workforce adding to existing concerns about the significant backlog of patent cases.
• What this means for business: The new process will likely result in fewer patent challenge petitions being granted trials, a potential benefit for patent-holders. However, the changes may also limit the avenues by which petitioners can challenge patents, make review processes less predictable, and disadvantage entities with fewer legal resources.