The Patent Office Need Not Consider Requests for Director Review of IPR Institution Decisions

IN RE: PALO ALTO NETWORKS, INC.

Before Dyk, Reyna, and Chen.

Summary: The USPTO policy of refusing to consider Requests for Director Rehearing of decisions denying institution of IPR and PGR does not violate the Appointments Clause of the Constitution.

Palo Alto Networks, Inc. (“PAN”) petitioned for inter parties review (“IPR”) of one patent and post-grant review (“PGR”) of another.  While the petitions were pending, the U.S. Patent and Trademark Office (“USPTO”) updated its interim guidance to note that the agency does not accept requests for Director review of institution decisions.  The Patent Trial and Appeal Board denied institution of PAN’s IPR and the PGR.  PAN filed Requests for Director Rehearing seeking review of the non-institution decisions by the Director, but the USPTO refused to consider the requests.  PAN petitioned the Federal Circuit for writ of mandamus, challenging the USPTO policy on which the refusal was based.  

Relying on United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021), PAN argued that the USPTO’s categorical refusal to accept requests for Director review of institution decisions violated the Appointments Clause.  Arthrex found a violation of the Appointments Clause where the Director—an executive officer appointed by the President—lacked control over final written decisions by administrative patent judges—who are inferior officers not appointed by the President.  The Federal Circuit distinguished PAN’s situation from Arthrex because PAN sought review of institution decisions, rather than final written decisions.  No structural impediment prevents the Director from reviewing institution decisions, and the Director has occasionally done so sua sponte.  Thus, the USPTO’s policy of refusing to consider requests for such review did not violate the Appointments Clause.

Editor: Paul Stewart

Written by: Jeremy Anapol & Brianne M. Kingery