By Kevin E. Noonan —

The advent of a new administration always carries with it changes in how the laws are executed and applied, and patent law is both no exception and tends (at least in recent years) to appear to be fraught with dramatic changes in emphasis (at least on certain aspects of the law). This can be appreciated by a consideration of Director Dudas and the (infamous) “claims and continuation” rules fracas in the mid-aughts; a return to the Office’s more convention role of modulating application of legal precedent under Director Kappos; the more stringent application of the Mayo/Alice principles to subject matter eligibility under Director Lee; changes in such applications under Director Iancu; and DEI efforts and cooperation with FDA over drug patents under Director Vidal.

Under the second Trump administration, the sea change in inter partes review (IPR) before the Patent Trial and Appeal Board (involving Director discretionary denials of such challenges) began this spring under Interim Director Stewart, and with confirmation of Director John Squires these changes have increased in significance and extent.

On Friday, October 17, the Office released a Memorandum to all PTAB judges and an Open Letter to “Colleagues, Inventors, and Americans” announcing that from October 20, the Director will determine whether to institute IPR proceedings  and post-grant review (PGR) proceedings under the statutory authority provide by 35 U.S.C. §§ 314 and 324, respectively.*  According to the Letter, Congress has vested the Director with sole statutory authority to render such decisions, despite provisions under 35 U.S.C. § 3(b)(3)(B) for the Director to be able to delegate such authority, which has been the practice since IPRs and PGRs were instituted under the Leahy-Smith America Invents Act in 2012.  Such delegation typically has been to three-judge panels of PTAB judges (although expanded panels, including the Director and other PTO officials have made such decisions from time to time, there having been 21 instances to date).

The Letter announces that “initial operational choices” had been the reason for delegation by earlier Directors, but that “experience has raised structural, perceptual, and procedural concerns inconsistent with the AIA’s design, clear language, and intent” and as a consequence the public’s “rightful expectation of impartiality” had been affected (negatively, presumably)(emphasis in Letter). These concerns included a seeming preference for IPRs over PGRs and a “very high” rate of invalidation. The Letter includes as additional concerns that there was a “perception of self-incentivization” (i.e., creating an appearance that institution decisions were made for the Board to “fill[] its own docket” (although the Letter is quick to emphasize that this perception “may be unfounded”). Further, so-called “bifurcated processes” (i.e., a preliminary review prior to Board referral), which the Letter asserts were both smart and necessary at the beginning of the AIA’s post-grant review regime were not intended to be permanent and “appears to have inadvertently produced extraordinarily high institution rates” (~95%). The Letter also makes the point that Congress had charged the Director to make institution determinations by statute and this mandate should not be easily circumvented.

The benefits of these changes enumerated in the Letter are said to include “eliminat[ing] the appearance of self-interest,” “remov[ing] perceived referral-signal bias,” “enhanc[ing] transparency and public trust,” and “re-align[ing] the duties and responsibilities of the Director as a “Presidentially appointed and Senate-confirmed officer.”

The Letter concludes with the following exhortation:

In closing, the mission of America’s Innovation Agency is to lead the world in intellectual property protection. We can do so and serve the public interest only by maintaining a patent system that is fair, predictable, and respected. Returning institution authority to the Director bolsters our mission because it restores the statutory framework mandated by Congress in the America Invents Act.

The contents, proposals, and changes in the other announcements will be the subject of following posts.

* 35 U.S.C. § 314 reads in pertinent part:

The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition . . . shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.

35 U.S.C. § 324:

The Director may not authorize a post-grant review to be instituted unless the Director determines that the information presented in the petition . . . shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.