[Federal Register Volume 89, Number 74 (Tuesday, April 16, 2024)]
[Proposed Rules]
[Pages 26807-26813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-07759]


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DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Part 42

[Docket No. PTO-P-2024-0014]
RIN 0651-AD79


Rules Governing Director Review of Patent Trial and Appeal Board 
Decisions

AGENCY: United States Patent and Trademark Office, Department of 
Commerce.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The United States Patent and Trademark Office (USPTO or 
Office) proposes new rules to govern the process for the review of 
Patent Trial and Appeal Board (PTAB or Board) decisions in America 
Invents Act (AIA) proceedings by the Under Secretary of Commerce for 
Intellectual Property and Director of the United States Patent and 
Trademark Office (Director). Specifically, the USPTO proposes these 
rules in light of stakeholder feedback received in response to a 
request for comments (RFC). The proposed rules promote the accuracy, 
consistency, and integrity of PTAB decision-making in Leahy-Smith 
America Invents Act of 2011 (AIA) proceedings.

DATES: Comments must be received by June 17, 2024 to ensure 
consideration.

ADDRESSES: For reasons of Government efficiency, comments must be 
submitted through the Federal eRulemaking Portal at 
www.regulations.gov. To submit comments via the portal, one should 
enter docket number PTO-P-2024-0014 on the homepage and select 
``search.'' The site will provide search results listing all documents 
associated with this docket. Commenters can find a reference to this 
notice and select the ``Comment'' icon, complete the required fields, 
and enter or attach their comments. Attachments to electronic comments 
will be accepted in Adobe[supreg] portable document format (PDF) or 
Microsoft Word[supreg] format. Because comments will be made available 
for public inspection, information that the submitter does not desire 
to make public, such as an address or phone number, should not be 
included in the comments.
    Visit the Federal eRulemaking Portal for additional instructions on 
providing comments via the portal. If electronic submission of, or 
access to, comments is not feasible due to a lack of access to a 
computer and/or the internet, please contact the USPTO using the 
contact information below for special instructions.

FOR FURTHER INFORMATION CONTACT: Thomas Krause, Director Review 
Executive; Kalyan Deshpande, Vice Chief Administrative Patent Judge; or 
Amanda Wieker, Acting Vice Chief Administrative Patent Judge, at 571-
272-9797.

SUPPLEMENTARY INFORMATION: The United States Patent and Trademark 
Office proposes new rules governing the process for the review of 
Patent Trial and Appeal Board decisions in AIA proceedings by the Under 
Secretary of Commerce for Intellectual Property and Director \1\ of the 
United States Patent and Trademark Office.
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    \1\ In this notice of proposed rulemaking, references to the 
``Director'' include the Under Secretary of Commerce for 
Intellectual Property and Director of the USPTO, an individual 
serving as the Acting Director or one performing the functions and 
duties of the Director, or an individual designated to fill the 
Director's role in case of a conflict of interest. See Procedures 
for Recusal to Avoid Conflicts of Interest and Delegations of 
Authority, available at https://www.uspto.gov/sites/default/files/documents/Director-Memorandum-on-Recusal-Procedures.pdf. For 
example, if the Director has a conflict that requires the Director 
to be recused, the Deputy Under Secretary of Commerce for 
Intellectual Property and Deputy Director of the USPTO will take the 
required action. If the position of the Deputy Director is vacant, 
or if the Deputy Director also has a conflict, the Commissioner for 
Patents will take the required action, if no conflicts exist for the 
Commissioner.
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    This Notice of Proposed Rulemaking (NPRM) provides that a party to 
an AIA proceeding may request Director Review in that AIA proceeding of 
any decision on institution, any final written decision, or any 
decision granting rehearing of a decision on institution or a final 
written decision. The NPRM also sets forth the timing and format of a 
party's request for Director Review. In addition, the NPRM provides 
that the Director may initiate a review of any decision on institution, 
any final written decision, or any decision granting rehearing of a 
decision on institution or a final written decision on the Director's 
own initiative.
    The NPRM addresses the impact of Director Review on the underlying 
proceeding at the PTAB, as well as the time by which an appeal to the 
U.S. Court of Appeals for the Federal Circuit must be filed.

[[Page 26808]]

Background

Development of This Notice of Proposed Rulemaking

    On September 16, 2011, Congress enacted the AIA (Pub. L. 112-29, 
125 Stat. 284 (2011)). The AIA established the PTAB,\2\ which is made 
up of administrative patent judges (APJs) and four statutory members, 
namely the Director, the Deputy Director, the Commissioner for Patents, 
and the Commissioner for Trademarks. 35 U.S.C. 6(a). The Director is 
appointed by the President, by and with the advice and consent of the 
Senate. 35 U.S.C. 3(a)(1). APJs are appointed by the Secretary of 
Commerce in consultation with the Director. Id. 6(a). The PTAB hears 
and decides ex parte appeals of adverse decisions by examiners in 
applications for patents, applications for reissue, and reexamination 
proceedings, and proceedings under the AIA, including inter partes 
reviews (IPRs), post grant reviews (PGRs), covered business method 
(CBM) patent reviews,\3\ and derivation proceedings, all in panels of 
at least three members. Id. 6(b), (c). Under the statute, the Director 
designates the members of each panel. Id. 6(c). The Director has 
delegated that authority to the Chief Judge of the PTAB. See PTAB 
Standard Operating Procedure 1 (Rev. 15) (SOP 1), Assignment of Judges 
to Panels, available at www.uspto.gov/sites/default/files/documents/SOP%201%20R15%20FINAL.pdf.
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    \2\ The PTAB was previously known as the Board of Patent Appeals 
and Interferences.
    \3\ Under section 18 of the AIA, the transitional program for 
post grant review of CBM patents sunset on September 16, 2020. AIA 
18(a). Although the program has sunset, a few existing CBM 
proceedings, based on petitions filed before September 16, 2020, 
remain pending, for example, on appeal to the United States Court of 
Appeals for the Federal Circuit.
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    35 U.S.C. 6(c) states that ``[o]nly the Patent Trial and Appeal 
Board may grant rehearings'' of Board decisions. In United States v. 
Arthrex, Inc. (``Arthrex''), the Court held that the Appointments 
Clause of the Constitution (art. II, sec. 2, cl. 2) and the supervisory 
structure of the USPTO require the Director, a principal officer of the 
United States, to have the ability to review the PTAB's final written 
decisions in IPR proceedings. See United States v. Arthrex, Inc., 141 
S. Ct. 1970, 1986 (2021). The Court determined that ``35 U.S.C. 6(c) is 
unenforceable as applied to the Director insofar as it prevents the 
Director from reviewing the decisions of the PTAB on [the Director's] 
own.'' Id. at 1987. The Court added that:

this suit concerns only the Director's ability to supervise APJs in 
adjudicating petitions for inter partes review. We do not address 
the Director's supervision over other types of adjudications 
conducted by the PTAB, such as the examination process for which the 
Director has claimed unilateral authority to issue a patent.

    Id. The Court thus held that ``the Director has the authority to 
provide for a means of reviewing PTAB decisions'' in IPR proceedings 
and ``may review final PTAB decisions and, upon review, may issue 
decisions [ ] on behalf of the Board.'' Id. (citations omitted). 
Additionally, the Court in Arthrex made clear that ``the Director need 
not review every decision of the PTAB,'' nor did it require the 
Director to accept requests for review or issue a decision in every 
case. Id. at 1988. Instead, ``[w]hat matters is that the Director have 
the discretion to review decisions rendered by APJs.'' Id. See Arthrex, 
Inc. v. Smith & Nephew, Inc., 35 F.4th 1328, 1338 (Fed. Cir. 2022) 
(noting same); CyWee Group Ltd. v. Google LLC, 59 F.4th 1263, 1268 
(Fed. Cir. 2023) (`` `[T]he Appointments Clause was intended to prevent 
unappointed officials from wielding too much authority, not to 
guarantee procedural rights to litigants, such as the right to seek 
rehearing from the Director.' '' (quoting Piano Factory Grp., Inc. v. 
Schiedmayer Celesta GmbH, 11 F.4th 1363, 1374 (Fed. Cir. 2021)).
    Following the Arthrex decision, in June 2021 the USPTO implemented 
an interim process for Director Review of final written decisions in 
AIA proceedings and published Arthrex Questions and Answers (Q&As), 
which was available on a USPTO web page. On April 22, 2022, the USPTO 
published two web pages to replace the Arthrex Q&As. Specifically, the 
USPTO published an ``Interim Process for Director Review'' web page,\4\ 
setting forth more details on the interim process and additional 
suggestions and guidance for parties who wish to request Director 
Review. The USPTO also published a web page providing the status of all 
Director Review requests, available at www.uspto.gov/patents/patent-trial-and-appeal-board/status-director-review-requests (status web 
page). The status web page includes a spreadsheet that is updated 
monthly and has information about the proceedings in which Director 
Review has been granted. The updated interim process guidance increased 
clarity as the Office continued to update and improve the interim 
Director Review process based on experience and initial stakeholder 
feedback.
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    \4\ This web page was superseded by the ``Revised Interim 
Director Review Process'' web page, discussed below.
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    On July 20, 2022, the USPTO issued an RFC \5\ on Director Review, 
Precedential Opinion Panel (POP) review,\6\ and the internal 
circulation and review of PTAB decisions. 87 FR 43249-52.\7\ The RFC is 
discussed in detail below. The USPTO considered stakeholder comments to 
the RFC as it worked to formalize the proposed rules for Director 
Review. The Office has continued to revise the interim Director Review 
process while also pursuing rulemaking.
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    \5\ Request for Comments (RFC) on Director Review, Precedential 
Opinion Panel Review, and Internal Circulation and Review of Patent 
Trial and Appeal Board Decisions. 87 FR 43249-52 (July 20, 2022).
    \6\ The USPTO established the POP review process in 2018 and set 
forth that process in the Board's Standard Operating Procedure 2, 
revision 10. The POP process was used to establish binding agency 
authority concerning major policy or procedural issues, or other 
issues of exceptional importance in the limited situations where it 
was appropriate to create such binding agency authority through 
adjudication before the PTAB. The USPTO retired the POP process on 
July 24, 2023, in view of recent changes to the interim Director 
Review process.
    \7\ Available at www.federalregister.gov/documents/2022/07/20/2022-15475/request-for-comments-on-director-review-precedential-opinion-panel-review-and-internal-circulation.
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    On July 24, 2023, the USPTO modified the interim Director Review 
process to allow parties to request Director Review of decisions on 
institution in AIA proceedings, and to introduce a process by which the 
Director may delegate review of a Board decision to a Delegated 
Rehearing Panel (DRP). See ``Revised Interim Director Review Process'' 
web page (available at www.uspto.gov/patents/ptab/decisions/revised-interim-director-review-process, also called the Director Review web 
page); ``Delegated Rehearing Panel'' web page (available at 
www.uspto.gov/patents/ptab/decisions/delegated-rehearing-panel). These 
changes were based on the Office's experience with Director Review and 
stakeholder feedback. The USPTO made additional updates to the interim 
Director Review process on September 18, 2023, (updating processes 
related to Director Review of PTAB decisions on remand from the 
Director) and January 19, 2024 (updating processes related to requests 
for rehearing of Director Review decisions).
    The rule proposed in this NPRM is consistent with the interim 
process. If the USPTO issues a final rule, the Director Review web page 
will be updated when the rule becomes effective. After the rule becomes 
effective, any further modifications to the Director Review process 
will be

[[Page 26809]]

consistent with the rule and will be reflected on the Director Review 
web page.

Request for Comments

    As noted above, on July 20, 2022, the Office published an RFC on 
Director Review, POP review, and the internal circulation and review of 
PTAB decisions. 87 FR 43249-52. The RFC included the following 
questions pertinent to Director Review:
    1. Should any changes be made to the interim Director Review 
process, and if so, what changes and why?
    2. Should only the parties to a proceeding be permitted to request 
Director Review, or should third-party requests for Director Review be 
allowed, and if so, which ones and why?
    3. Should requests for Director Review be limited to final written 
decisions in IPR and PGR? If not, how should they be expanded and why?
    4. Should a party to a proceeding be able to request both Director 
Review and rehearing by the merits panel? If so, why and how should the 
two procedures interplay?
    5. What criteria should be used in determining whether to initiate 
Director Review?
    6. What standard of review should the Director apply in Director 
Review? Should the standard of review change depending on what type of 
decision is being reviewed?
    7. What standard should the Director apply in determining whether 
or not to grant sua sponte Director Review of decisions on institution? 
Should the standard change if the decision on institution addresses 
discretionary issues instead of, or in addition to, merits issues?
    8. Should there be a time limit on the Director's ability to 
reconsider a petition denial? And if so, what should that time limit 
be?
    9. Are there considerations the USPTO should take with regard to 
the fact that decisions made on Director Review are not precedential by 
default, and instead are made and marked precedential only upon 
designation by the Director?
    10. Are there any other considerations the USPTO should take into 
account with respect to Director Review?
    11. Should the POP review process remain in effect, be modified, or 
be eliminated in view of Director Review? Please explain.
    12. Are there any other considerations the USPTO should take into 
account with respect to the POP process?
    Id. at 43252.
    The RFC closed on October 19, 2022, and the Office received 
comments from intellectual property organizations, trade organizations, 
other organizations, and individuals. These comments are available at 
www.regulations.gov/docket/PTO-P-2022-0023/comments (collected 
responses to RFC). Responses to the specific questions asked in the RFC 
pertinent to Director Review or POP review are summarized briefly 
below.
    In response to question 2, many commenters suggested that only 
parties to the proceeding should be permitted to request Director 
Review, consistent with the interim process. Some of these commenters 
suggested that limiting Director Review requests to the parties best 
promotes judicial economy and efficiency as the parties are best 
positioned to present the issues on review. Notably, some of these 
commenters also suggested that third parties could still participate 
when appropriate, either through amicus briefing or joinder. Other 
commenters suggested that allowing third-party requests would be 
preferred because PTAB decisions often have broad ramifications that 
affect non-parties.
    In response to question 3, some commenters suggested that Director 
Review should be available for both final written decisions and 
decisions on institution, and especially for denials of institution. 
Some commenters argued that no other review mechanism existed for 
review of decisions on institution.\8\ Other commenters suggested that 
Director Review should be available only for final written decisions, 
in part out of efficiency concerns. One commenter suggested that 
Director Review should be available for ex parte reexaminations and ex 
parte appeals. As discussed above, based on experience and in response 
to stakeholder feedback, the USPTO expanded the interim Director Review 
process to allow parties to request Director Review of decisions on 
institution in AIA proceedings.
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    \8\ POP review was available for decisions on institution at the 
time of the RFC.
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    In response to question 4, commenters were divided as to whether, 
consistent with the interim process, parties should be permitted to 
request either Director Review or panel rehearing, but not both. Those 
in favor of allowing parties to file requests for both types of 
rehearing argued that a decision may include some issues more 
appropriate for the original panel to reconsider, and other issues more 
appropriate for the Director to review. Those in favor of permitting 
parties to request only one form of rehearing argued that this reduces 
duplication, waste, inefficiency, and delay. Moreover, some argued that 
requiring a choice between panel rehearing and Director Review avoids 
potentially conflicting analyses between the Director and the panel.
    In response to question 5, commenters did not agree on the criteria 
that should be used in determining whether to initiate Director Review. 
Some commenters suggested that Director Review should apply to issues 
of policy, while others suggested that policy should be made by formal 
rulemaking only. Similarly, some commenters stated that Director Review 
should be limited to important issues, such as policy, or statutory or 
regulatory interpretation, while others suggested that Director Review 
should consider all panel errors and abuses of discretion.
    In response to question 6, some commenters suggested that the 
Director should apply de novo review for all issues on review. These 
commenters suggested that a standard that is deferential to the Board 
panel would not provide clear guidance. Other commenters favored de 
novo review on the basis that Arthrex requires the Director to 
substitute the Director's own judgment.
    In response to question 7, commenters were divided on the 
appropriate standard for initiating sua sponte Director Review (i.e., 
on the Director's own initiative). Some commenters suggested that the 
same standard of review should apply for all decisions, including sua 
sponte Director Review. The commenters also suggested that the same 
standard of review should apply to issues related to both the asserted 
merits of unpatentability and the Director's discretionary authority to 
institute an AIA proceeding. Several commenters suggested that sua 
sponte Director Review should be limited to extraordinary 
circumstances, including issues of exceptional importance to the USPTO 
or the patent community. One commenter suggested that sua sponte 
Director Review should be limited to extraordinary circumstances and 
only for decisions on institution.
    In response to question 8, some commenters suggested that there 
should be a set time limit on the conclusion of Director Review, in 
particular when the Director reviews a denial of institution. The 
commenters generally suggested the need for certainty regarding timing 
and finality in both the grant of Director Review and the ultimate 
Director Review decision. One commenter suggested that no time limit 
would be necessary.
    In response to question 9, all responsive commenters suggested that 
a Director Review decision should not be precedential by default. Some

[[Page 26810]]

commenters suggested that decisions should be made precedential only 
when needed to ensure consistency and predictability, and only as 
applied to certain issues. Some commenters also suggested a clear 
process with objective criteria for determining when to make cases 
precedential. Other commenters suggested that a Director Review 
decision should never be precedential so as to not supplant rulemaking.
    In response to questions 11 and 12, commenters were divided on the 
status of the POP review process. Commenters in favor of eliminating 
POP review suggested it was redundant with Director Review and that 
issues previously considered by the POP should be considered under 
Director Review instead. Commenters in favor of maintaining POP review 
suggested that it provides input and perspectives from other USPTO 
leaders, which are important for resolving issues of exceptional 
importance, policy, and PTAB procedure.
    Some commenters provided additional considerations for Director 
Review and with respect to the interim process (see questions 1 and 
10). Some suggested that the Director Review process should consider 
AIA and policy goals, for example: (1) promoting transparency, 
consistency, and fairness; (2) improving patent quality and litigation 
efficiency; and (3) broadening access to the patent system while 
safeguarding against low-quality patents and abusive behavior. Others 
suggested that Director Review decisions should explain the basis for 
granting Director Review and provide a reasoned rationale for each 
decision. Still others suggested that the USPTO should clarify the 
criteria used to determine whether to grant Director Review and 
eliminate overlapping and redundant reviews and rehearing.
    The USPTO appreciates the public input provided in response to the 
RFC and has reviewed the individual responses thoroughly. In view of 
the comments, the USPTO's experience with the interim Director Review 
process, and public support for rulemaking with respect to Director 
Review, and in the interest of providing greater clarity, certainty, 
and predictability to parties participating in proceedings before the 
Board, the Office now issues this notice of proposed rulemaking (NPRM).

Proposed Director Review Process

    Under the Director Review process proposed in this NPRM, which is 
consistent with the current interim process, a party may only request 
Director Review of: (1) a decision on whether to institute an AIA 
trial, (2) a final written decision in an AIA proceeding, or (3) a 
panel decision granting a request for rehearing of a decision on 
whether to institute a trial or a final written decision in an AIA 
proceeding. In the course of reviewing such an institution decision, 
final written decision, or panel rehearing decision, the Director may 
review any interlocutory decision rendered in reaching that decision. 
The Director may also grant review of those same decisions sua sponte. 
Third parties may not request Director Review or communicate with the 
USPTO concerning the Director Review of a particular case unless the 
Director invites them to do so.
    Under the interim process, as described on the Director Review web 
page, requests for Director Review of Board decisions on whether to 
institute an AIA trial, or decisions granting rehearing of such a 
decision, are limited to decisions presenting: (a) an abuse of 
discretion, or (b) important issues of law or policy. Issues related to 
both discretion and the asserted merits of unpatentability may be 
raised, subject to limitations (a) and (b) above. Under the interim 
process, requests for Director Review of PTAB final written decisions, 
or decisions granting rehearing of such decisions, are available for 
decisions presenting: (a) an abuse of discretion, (b) important issues 
of law or policy, (c) erroneous findings of material fact, or (d) 
erroneous conclusions of law.
    The interim Director Review process generally follows existing PTAB 
rehearing procedures under 37 CFR 42.71(d). Similarly, as proposed in 
this NPRM, to request Director Review, a party to an IPR, PGR, or 
derivation proceeding must file a request for rehearing pursuant to 
Sec.  42.71(d) and subject to any further instructions provided by the 
Director. The Director Review web page further explains that the 
Director has instructed that parties must both file their rehearing 
request in the Patent Trial and Appeal Case Tracking System and send an 
email to the Director at [email protected].
    Under the process proposed in this NPRM, a party must file a 
request for rehearing by the Director within the time prescribed for a 
request for rehearing under 37 CFR 42.71(d), as appropriate for the 
type of decision for which review is sought. The Director may choose to 
extend the rehearing deadline for good cause. A timely request for 
rehearing by the Director will be considered a request for rehearing 
under 37 CFR 90.3(b)(1) and will reset the time for appeal to the 
Federal Circuit as set forth in that rule until a time after which all 
issues on Director Review in the proceeding are resolved, including any 
ancillary issues.
    As proposed in this NPRM, requests for rehearing by the Director 
are limited to 15 pages (see Sec.  42.24(a)(1)(v)). A Director Review 
request may not introduce new evidence.
    Moreover, under the process proposed in this NPRM, parties are 
limited to requesting either: (1) Director Review, or (2) rehearing by 
the original panel, but may not request both. Requests for both 
Director Review and panel rehearing of the same decision are treated as 
a request for Director Review only, as described on the Director Review 
web page. However, as explained above, parties may request Director 
Review of a decision by a panel granting rehearing of a prior PTAB 
decision. ``[G]ranting rehearing'' here means that the rehearing 
decision modifies the holding or result of the underlying decision in 
some fashion. For example, where a Board panel changes the 
determination of the Final Written Decision for certain claims from 
unpatentable to not unpatentable in a rehearing decision, the 
petitioner may file a Request for Director Review of that new 
determination as to those claims. Rehearing is not ``granted,'' and 
thus a Request for Director Review is not available, for purposes of 
this rule if the panel: (1) provides a decision addressing the 
arguments in the request for rehearing but does not modify the 
underlying holding or result, or (2) denies the request for rehearing 
without further explanation.
    Under the interim process, as explained on the Director Review web 
page, each request for Director Review is considered by an Advisory 
Committee that the Director has established to assist with the process. 
The Advisory Committee has at least 11 members and currently includes 
representatives from various business units within the USPTO who serve 
at the discretion of the Director. The Advisory Committee currently is 
chaired by a Director Review Executive and comprises members from the 
Office of the Under Secretary (not including the Director or Deputy 
Director); the PTAB (not including members of the original panel for 
each case under review); the Office of the Commissioner for Patents 
(not including the Commissioner for Patents or any persons involved in 
the examination of the challenged patent); the Office of the General 
Counsel (which includes the Office of the Solicitor); and the Office of 
Policy and International Affairs. The Advisory Committee meets 
periodically to

[[Page 26811]]

evaluate each request for Director Review.\9\ Advisory Committee 
meetings may proceed with fewer than all members in attendance, as long 
as a quorum of seven members is present.
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    \9\ No member of the Advisory Committee may participate in the 
consideration of a request for Director Review if that member has a 
conflict of interest under the U.S. Department of Commerce USPTO 
Summary of Ethics Rules, available at ogc.commerce.gov/sites/default/files/pto-summary_of_ethics_2022_0.pdf. PTAB APJs who are 
Advisory Committee members will also follow the guidance on 
conflicts of interest set forth in the PTAB's SOP 1, and will recuse 
themselves from any discussion involving cases on which they are 
paneled.
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    The Advisory Committee presents the Director with a recommendation. 
The recommendation includes either a consensus from the various members 
of the Advisory Committee, or notes differing views among the Advisory 
Committee members. The Director also receives each Director Review 
request, the underlying decision, and associated arguments and 
evidence. The Director determines whether to grant or deny the request 
for Director Review, or to delegate Director Review.\10\ The Director 
may also consult others in the USPTO as needed, so long as those 
individuals consulted do not have a conflict of interest. Although the 
Advisory Committee and other individuals in the USPTO may advise the 
Director on whether a decision warrants review, the Director has sole 
discretion to resolve each request for Director Review. The Director's 
decision on each request will be communicated to the parties in the 
proceeding. Furthermore, Director Review grants and delegations will be 
posted on the PTAB website. Other determinations, such as Director 
Review denials, dismissals, and withdrawals, will be cataloged and 
posted on the PTAB website.
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    \10\ The current interim process in place for delegating 
Director Review is presented on the Delegated Rehearing Panel 
website (www.uspto.gov/patents/ptab/decisions/delegated-rehearing-panel). The process for delegation may change in the future, as 
required to accommodate needs of the Director, consistent with all 
applicable law.
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    As proposed in this NPRM, in addition to allowing parties to 
request Director Review of certain decisions, the Director may order 
sua sponte Director Review. Under the interim process, as described on 
the Director Review web page, sua sponte Director Review is typically 
reserved for issues of exceptional importance, and the Director retains 
the authority to initiate review sua sponte of any other issue, as the 
Director deems appropriate. As explained in SOP 4, an internal post-
issuance review team at the PTAB reviews issued decisions and, if 
warranted, flags certain AIA decisions as potential candidates for sua 
sponte Director Review. See PTAB SOP 4, at 1, 5. In addition, as 
described on the Director Review web page, the Director may also 
convene the Advisory Committee to make recommendations on decisions 
that the Director is considering for sua sponte Director Review. If the 
Director initiates a sua sponte review, the parties will be given 
notice and may be given an opportunity for briefing. The public will 
also be notified, and the Director may request amicus briefing. If 
briefing is requested, the procedures to be followed will be set forth.
    As proposed in this NPRM, absent exceptional circumstances (which 
might include a remand from the Federal Circuit for the purpose of 
Director Review), the Director may initiate sua sponte review at any 
point within 21 days after the expiration of the period for filing a 
request for rehearing, pursuant to Sec.  42.71(d), as appropriate to 
the type of decision (i.e., a decision on institution or a final 
written decision) for which review is sought.
    As proposed in this NPRM, a decision on institution, a final 
written decision, or a decision granting rehearing of such decision on 
institution of a final written decision shall become the decisions of 
the agency unless Director Review is requested or sua sponte review is 
initiated. Moreover, upon denial of a request for Director Review of a 
decision denying institution, a final written decision, or a decision 
granting rehearing of a final written decision, the Board's decision 
becomes the final agency decision.
    As proposed in this NPRM, and consistent with the interim process, 
by default a request for Director Review or the initiation of sua 
sponte Director Review resets the time for appeal but does not stay or 
delay the time for the parties to take action in the underlying 
proceeding before the PTAB, unless the Director orders otherwise. As 
also proposed in this NPRM, if the Director grants a Director Review, 
the Director will issue an order or decision that will be made part of 
the public record, subject to any confidentiality requirements. A grant 
of Director Review that is not withdrawn will conclude with the 
issuance of a decision or order providing the Director's reasoning in 
the case.
    As proposed in this NPRM, and consistent with the interim process, 
a party may appeal a Director Review decision of a final written 
decision, or rehearing thereof, to the United States Court of Appeals 
for the Federal Circuit using the same procedures for appealing other 
PTAB decisions under 35 U.S.C. 141(c), 319. Director Review decisions 
on decisions on institution are not appealable.
    As proposed in this NPRM, and in consideration of the objectives of 
the Director Review process, the Director may, at their discretion, 
delegate the review of a Board decision in an AIA proceeding.
    Under the interim process, decisions made on Director Review are 
not precedential by default, but may be designated as precedential by 
the Director. Additional implementation details of the interim process 
are provided on the Director Review web page. If a final rule issues 
and goes into effect, the Director Review web page will be updated or 
replaced with updated guidance on the effective date of such a final 
rule.

Application of Director Review Process to Date

    As of April 1, 2024, the USPTO had received 328 compliant requests 
for Director Review under the interim process. Of those requests, the 
Director Review process was completed for 316 requests. Of the 316 
completed requests, 18 requests were granted, 2 requests were delegated 
to the DRP, 5 requests were withdrawn, and the remaining 291 requests 
were denied. Additionally, sua sponte Director Review was initiated in 
35 cases.
    Since July 24, 2023, when the interim process for Director Review 
was expanded to allow for requests of decisions on institution, the 
majority of requests received have been from decisions on institution. 
Specifically, between July 24, 2023, and April 1, 2024, 27 requests for 
review of final written decisions and 82 requests for review of 
decisions on institution were received.

Discussion of Specific Rules

    The USPTO proposes to add Sec.  42.75, as follows:
    Section 42.75: Proposed Sec.  42.75(a) would set forth the general 
availability of Director Review.
    Proposed Sec.  42.75(b) would set forth the availability of sua 
sponte Director Review.
    Proposed Sec.  42.75(c) would set forth the availability of 
requests for Director Review and request requirements.
    Proposed Sec.  42.75(d) would set forth the finality of decisions 
subject to Director Review.
    Proposed Sec.  42.75(e) would set forth the Director Review 
process.
    Proposed Sec.  42.75(f) would provide for the delegation of a 
review by the Director.

[[Page 26812]]

    Proposed Sec.  42.75(g) would set forth provisions regarding 
communications with the Office.

Rulemaking Considerations

    A. Administrative Procedure Act: The changes proposed by this NPRM 
involve rules of agency practice and procedure, and/or interpretive 
rules, and do not require notice-and-comment rulemaking. See Perez v. 
Mortg. Bankers Ass'n, 135 S.Ct. 1199, 1204 (2015) (explaining that 
interpretive rules ``advise the public of the agency's construction of 
the statutes and rules which it administers'' and do not require 
notice-and-comment rulemaking when issued or amended); Cooper Techs. 
Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (stating that 5 
U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), do not require notice-and-
comment rulemaking for ``interpretative rules, general statements of 
policy, or rules of agency organization, procedure, or practice''); and 
JEM Broadcasting Co. v. F.C.C., 22 F.3d 320, 328 (D.C. Cir. 1994) 
(explaining that rules are not legislative because they do not 
``foreclose effective opportunity to make one's case on the merits'').
    Nevertheless, the USPTO is publishing this proposed rule for 
comment to seek the benefit of the public's views on the Office's 
proposed regulatory changes.
    B. Regulatory Flexibility Act: For the reasons set forth in this 
notice, the Senior Counsel for Regulatory and Legislative Affairs, 
Office of General Law, USPTO, has certified to the Chief Counsel for 
Advocacy of the Small Business Administration that the changes set 
forth in this NPRM would not have a significant economic impact on a 
substantial number of small entities. See 5 U.S.C. 605(b).
    The changes in this NPRM are to expressly set forth the rules 
governing Director Review. The changes do not create additional 
procedures or requirements or impose any additional compliance measures 
on any party beyond the interim process for Director Review, nor do 
these changes cause any party to incur additional costs. Therefore, any 
requirements resulting from these proposed changes are of minimal or no 
additional burden to those practicing before the Board.
    For the foregoing reasons, the proposed changes in this NPRM would 
not have a significant economic impact on a substantial number of small 
entities.
    C. Executive Order 12866 (Regulatory Planning and Review): This 
NPRM has been determined to be not significant for purposes of 
Executive Order 12866 (September 30, 1993), as amended by Executive 
Order 14094 (April 6, 2023).
    D. Executive Order 13563 (Improving Regulation and Regulatory 
Review): The Office has complied with Executive Order 13563 (January 
18, 2011). Specifically, and as discussed above, the Office has, to the 
extent feasible and applicable: (1) made a reasoned determination that 
the benefits justify the costs of the proposed rule; (2) tailored the 
proposed rule to impose the least burden on society consistent with 
obtaining the regulatory objectives; (3) selected a regulatory approach 
that maximizes net benefits; (4) specified performance objectives; (5) 
identified and assessed available alternatives; (6) involved the public 
in an open exchange of information and perspectives among experts in 
relevant disciplines, affected stakeholders in the private sector, and 
the public as a whole, and provided online access to the rulemaking 
docket; (7) attempted to promote coordination, simplification, and 
harmonization across Government agencies and identified goals designed 
to promote innovation; (8) considered approaches that reduce burdens 
and maintain flexibility and freedom of choice for the public; and (9) 
ensured the objectivity of scientific and technological information and 
processes.
    E. Executive Order 13132 (Federalism): This NPRM pertains strictly 
to Federal agency procedure and does not contain policies with 
federalism implications sufficient to warrant the preparation of a 
Federalism Assessment under Executive Order 13132 (August 4, 1999).
    F. Executive Order 13175 (Tribal Consultation): This NPRM will not: 
(1) have substantial direct effects on one or more Indian tribes; (2) 
impose substantial direct compliance costs on Indian tribal 
governments; or (3) preempt tribal law. Therefore, a tribal summary 
impact statement is not required under Executive Order 13175 (November 
6, 2000).
    G. Executive Order 13211 (Energy Effects): This NPRM is not a 
significant energy action under Executive Order 13211 because it is not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy. Therefore, a Statement of Energy 
Effects is not required under Executive Order 13211 (May 18, 2001).
    H. Executive Order 12988 (Civil Justice Reform): This NPRM meets 
applicable standards to minimize litigation, eliminate ambiguity, and 
reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive 
Order 12988 (February 5, 1996).
    I. Executive Order 13045 (Protection of Children): This NPRM does 
not concern an environmental risk to health or safety that may 
disproportionately affect children under Executive Order 13045 (April 
21, 1997).
    J. Executive Order 12630 (Taking of Private Property): This NPRM 
will not affect a taking of private property or otherwise have taking 
implications under Executive Order 12630 (March 15, 1988).
    K. Congressional Review Act: Under the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the USPTO 
will submit a report containing the rule and other required information 
to the United States Senate, the United States House of 
Representatives, and the Comptroller General of the Government 
Accountability Office. The changes in this NPRM are not expected to 
result in an annual effect on the economy of $100 million or more; a 
major increase in costs or prices; or significant adverse effects on 
competition, employment, investment, productivity, innovation, or the 
ability of United States-based enterprises to compete with foreign-
based enterprises in domestic and export markets. Therefore, this NPRM 
will not be a ``major rule'' as defined in 5 U.S.C. 804(2).
    L. Unfunded Mandates Reform Act of 1995: The changes set forth in 
this NPRM do not involve a Federal intergovernmental mandate that will 
result in the expenditure by State, local, and tribal governments, in 
the aggregate, of $100 million (as adjusted) or more in any one year, 
or a Federal private sector mandate that will result in the expenditure 
by the private sector of $100 million (as adjusted) or more in any one 
year, and will not significantly or uniquely affect small governments. 
Therefore, no actions are necessary under the provisions of the 
Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq.
    M. National Environmental Policy Act of 1969: This NPRM will not 
have any effect on the quality of the environment and is thus 
categorically excluded from review under the National Environmental 
Policy Act of 1969. See 42 U.S.C. 4321 et seq.
    N. National Technology Transfer and Advancement Act of 1995: The 
requirements of section 12(d) of the National Technology Transfer and 
Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because 
this NPRM does not contain provisions that involve the use of technical 
standards.

[[Page 26813]]

    O. Paperwork Reduction Act of 1995: The Paperwork Reduction Act of 
1995 (44 U.S.C. 3501-3549) requires that the Office consider the impact 
of paperwork and other information collection burdens imposed on the 
public. This NPRM does not involve an information collection 
requirement that is subject to review by the Office of Management and 
Budget (OMB) under the Paperwork Reduction Act of 1995. In addition, 
this NPRM does not add any additional information requirements or fees 
for parties before the Board. Therefore, the Office is not resubmitting 
collection packages to OMB for its review and approval because the 
revisions in this NPRM do not materially change the information 
collections approved under OMB control number 0651-0069.
    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to, a penalty for 
failure to comply with a collection of information subject to the 
requirements of the Paperwork Reduction Act unless that collection of 
information displays a currently valid OMB control number.
    P. E-Government Act Compliance: The USPTO is committed to 
compliance with the E-Government Act to promote the use of the internet 
and other information technologies, to provide increased opportunities 
for citizen access to Government information and services, and for 
other purposes.

List of Subjects in 37 CFR Part 42

    Administrative practice and procedure, Inventions and patents, 
Lawyers.

    For the reasons set forth in the preamble, the Office proposes to 
amend 37 CFR part 42 as follows:

PART 42--TRIAL PRACTICE BEFORE THE PATENT TRIAL AND APPEAL BOARD

0
1. The authority citation for part 42 is revised to read as follows:

    Authority:  35 U.S.C. 2(b)(2), 3, 6, 134, 135, 143, 153, 311, 
314, 316, 318, 324, 326; Pub. L. 112-29, 125 Stat. 284; and Pub. L. 
112-274, 126 Stat. 2456.

0
2. Add Sec.  42.75 to read as follows:


Sec.  42.75   Director Review.

    (a) Director Review Generally. In a proceeding under part 42, the 
Director may review any decision on institution under 35 U.S.C. 314 or 
324, any final written decision under 35 U.S.C. 318 or 328, or any 
decision granting rehearing of such a decision. In the course of 
reviewing an institution decision, a final written decision, or a 
rehearing decision, the Director may review any interlocutory decision 
rendered by the Board in reaching that decision.
    (b) Sua Sponte Director Review. The Director, on the Director's own 
initiative, may order sua sponte Director Review of a decision as 
provided in paragraph (a) of this section. Absent exceptional 
circumstances, any sua sponte Director Review will be initiated within 
21 days after the expiration of the period for filing a request for 
rehearing pursuant to Sec.  42.71(d).
    (c) Requests for Director Review. A party to a proceeding under 
part 42 may file one request for Director Review of a decision as 
provided in paragraph (a) of this section, instead of filing a request 
for rehearing of that decision pursuant to Sec.  42.71(d), subject to 
the limitations herein and any further guidance provided by the 
Director.
    (1) Timing. The request must be filed within the time period set 
forth in Sec.  42.71(d) unless an extension is granted by the Director 
upon a showing of good cause. No response to a Director Review request 
is permitted absent Director authorization.
    (2) Format and Length. A request for Director Review must comply 
with the format requirements of Sec.  42.6(a). Absent Director 
authorization, the request must comply with the length limitations for 
motions to the Board provided in Sec.  42.24(a)(1)(v).
    (3) Content. Absent Director authorization, a request for Director 
Review may not introduce new evidence.
    (d) Final Agency Decision. A decision on institution, a final 
written decision, or a decision granting rehearing of such decision on 
institution or final written decision shall become the decision of the 
agency unless:
    (1) A party requests rehearing or Director Review within the time 
provided by Sec.  42.71(d); or
    (2) In the absence of such a request, the Director initiates sua 
sponte review as provided by Sec.  42.75(b). Upon denial of a request 
for Director Review of a final written decision or of a decision 
granting rehearing of a final written decision, the Board's decision 
becomes the final agency decision.
    (e) Process. (1) Effect on Underlying Proceeding. Unless the 
Director orders otherwise, and except as provided in paragraph (e)(3) 
of this section, a request for Director Review or the initiation of 
review on the Director's own initiative does not stay the time for the 
parties to take action in the underlying proceeding.
    (2) Grant and scope. If the Director grants Director Review, the 
Director shall issue an order or decision that will be made part of the 
public record, subject to the limitations of any protective order 
entered in the proceeding or any other applicable requirements for 
confidentiality. If the Director grants review and does not 
subsequently withdraw the grant, the Director Review will conclude with 
the issuance of a decision or order that provides the reasons for the 
Director's disposition of the case.
    (3) Appeal. A party may appeal a Director Review decision of either 
a final written decision or a decision granting rehearing of a final 
written decision under 35 U.S.C. 318, 328, and 135 to the United States 
Court of Appeals for the Federal Circuit using the same procedures for 
appealing other decisions under 35 U.S.C. 141(c), 319. Director Review 
decisions on decisions on institution are not appealable. A request for 
Director Review of a final written decision or a decision granting 
rehearing of a final written decision, or the initiation of a review on 
the Director's own initiative of such a decision, will be treated as a 
request for rehearing under Sec.  90.3(b)(1) and will reset the time 
for appeal until after all issues on Director Review in the proceeding 
are resolved.
    (f) Delegation. The Director may delegate their review of a 
decision on institution, a final written decision, or a decision 
granting rehearing of such a decision, subject to any conditions 
provided by the Director.
    (g) Ex parte communications. All communications from a party to the 
Office concerning a specific Director Review request or proceeding must 
copy counsel for all parties. Communications from third parties 
regarding a specific Director Review request or proceeding, aside from 
authorized amicus briefing, are not permitted and will not be 
considered.

Katherine K. Vidal,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.
[FR Doc. 2024-07759 Filed 4-15-24; 8:45 am]
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