By Dennis Crouch
I have been repeating this mantra for quite a while – patents are political. In US v. Arthrex, the Supreme Court added an exclamation point. By design, the US governmental system places presidential political appointees at the top of each executive agency, including the US Patent & Trademark Office so that the US President can then be held directly accountable for the successes and failures. Note here that the accountability we’re talking about is political accountability.
The Federalist Papers (Hamilton) repeatedly focused on this issue, albeit not in the patent context: “The blame of a bad nomination would fall upon the President singly and absolutely.” Federalist 77, for example. Now, in the words of the Supreme Court, the Presidentially Appointed USPTO Director “is the boss.”
The Patent statute does not expressly provide for review of PTAB decisions by the PTO Director. In fact, it appears to state the opposite – “Only the Patent Trial and Appeal Board may grant rehearings.” 35 U.S.C. § 6. In Arthrex, the US Gov’t argued that the PTO director has effective authority to control outcomes through a variety of roundabout mechanisms. But, the Supreme Court found those inadequate: “That is not the solution. It is the problem.” The U.S. Constitution calls for a direct line of political accountability between the decisionmaker and the Gov’ts proposed approach blurs the line. Quoting Hamilton again:
It often becomes impossible, amidst mutual accusations, to determine on whom the blame or the punishment of a pernicious measure, or series of pernicious measures, ought really to fall. It is shifted from one to another with so much dexterity, and under such plausible appearances, that the public opinion is left in suspense about the real author.
The Federalist No. 70.
The key holding in Arthrex in this regard is that the USPTO Director now has the final say regarding Office Decisions, including previously unreviewable PTAB inter partes review decisions. Going forth, decisions by APJs in these cases are subject to review of by the Director. “The Director may engage in such review and reach his own decision.”
The practical result is that a political appointee is given direct input on each and every IPR decision. In some ways this is a fairly new thing for the PTO who has endeavored to keep its head down as a bureaucratic agency and create a sense of separation between the merits decisions and agency administration. That has now changed, and the PTO Director now has an express role to play with each and every merits decision. This court-ordered change will be done alongside changes required in the Trademark Modernization Act of 2020 which similarly provides the USPTO Director with authority in certain situations to “reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board.”
The likely outcome here is that there will be an opportunity to petition to the director to reconsider, modify, or set aside a PTAB Final Written Decision at the conclusion of each inter partes review. I expect that in most cases that PTAB Director will not respond or simply issue a denial. And, although the PTO Director may be able to take into account political considerations, any decision must still be not-arbitrary, in accordance with the law, and supported by substantial evidence. 5 U.S.C. § 706.