Interim Director Hirshfeld’s Authority to Review Upheld

On May 27, 2022, in Arthrex Inc. v. Smith & Nephew Inc., Case No. 18-2140, the Federal Circuit upheld the ability of Acting Director Drew Hirshfeld to issue Director review decisions, despite being a temporary leader who was not appointed by the President and confirmed by the Senate.  The Federal Circuit based their opinion on U.S. v. Eaton, 169 U.S. 331, a Supreme Court opinion from 1898, which held that “an inferior officer ‘charged with the performance of the duty of [a] superior for a limited time, and under special and temporary conditions,’ need not be Presidentially appointed and Senate confirmed.”  The Court reasoned that if this was not allowed, the “discharge of administrative duties would be seriously hindered.”  The Federal Circuit further noted that the Supreme Court’s opinion in the current case ordered “a remand to the Acting Director for him to decide whether to rehear the petition filed by Smith & Nephew.”

 

PTAB’s Position: No Director Review of Institution Decisions

On May 27, 2022, the PTAB argued in a pending Federal Circuit appeal, In re: Palo Alto Networks Inc., Case No. 22-145, that institution decisions are not subject to the Director review procedure established after the Supreme Court’s U.S. v. Arthrex decision.  This has been the policy of the patent office since the Director review procedure was put into place, as outlined in the interim procedure set up under Acting Director Hirshfeld, and continued under the new Director Vidal.  While Director review of institution decisions cannot be requested at this time, Director Vidal has maintained the discretion to reverse any institution decisions sua sponte after issuance.

In describing why institution decisions are different than final written decisions and therefore not subject to Director review, the PTAB argued that “the decision whether to institute inter partes or post-grant review is not an adjudication of patent rights, does not alter the legal status of any patent, and does not bind the parties in any other subsequent or ongoing administrative or judicial proceedings.”  Additionally, unlike final written decisions which were assigned by Congress to the Board, institution decisions are assigned to the Director, and there is “[n]o issue of political accountability … implicated when the Director delegates that authority to the Board.”

It is possible the PTAB’s position could change in the future, as Director Vidal has indicated that she will solicit public input prior to writing any formal rules on the Director review procedure.