How the Timing of Director Review May Affect Co-Pending Litigation

A version of this article was republished on Law360 on September 20, 2024.

Director Review at the Patent Trial and Appeal Board (PTAB) remains a hot topic in patent law. The Director first established an interim process for Director Review in the wake of the Supreme Court’s 2021 decision in United States v. Arthrex,¹ and the USPTO issued a Notice of Proposed Rulemaking, discussed here, that would make Director Review a permanent feature of PTAB trial proceedings. This blog post focuses on the timing of Director Review and how it may affect a co-pending district court litigation.

Timing from panel decision to Director decision

As we previously explained, a party to an AIA proceeding may request Director Review of the Board’s (1) decision whether to institute a trial; (2) final written decision; or (3) decision granting a request for rehearing. The Director may also choose to review any of these decisions sua sponte or may delegate the decision on whether to grant Director Review to the Director Rehearing Panel (DRP).

The time limits for a party filing a request for Director Review are governed by 37 C.F.R. § 42.71(d)(1)–(2). A patent owner seeking to file a request for Director Review of a Board decision granting institution of a post-grant review (PGR) or inter partes review (IPR) must file within 14 days of the entry of the institution decision. 37 C.F.R. § 42.71(d)(1). A petitioner seeking to file a request for Director Review of a Board decision denying institution of a PGR or IPR must file within 30 days of the entry of the decision denying institution. 37 C.F.R.
§ 42.71(d)(2). Either party seeking Director Review of a final written decision must file the request within 30 days of the entry of that final written decision. Id.

Timing following a party’s request for Director Review

Unlike the time limits imposed by rule on the parties, there are no deadlines for the Director to decide whether to grant or deny a party’s request for Director Review. The PTAB’s website on the revised interim Director Review process explains: “The USPTO strives to provide timely consideration of Director Review requests. The amount of time it takes to reach a decision depends on the complexity and number of issues raised.”²

We may glean some clues, however, on timing from the PTAB’s website. The website explains that a request for Director Review goes first to an Advisory Committee, established by the Director, to evaluate and make recommendations. The Advisory Committee includes at least 11 members from business units throughout the Office and “meets periodically” — suggesting that this process consumes some portion of time before the request even reaches the Director. The Director receives the Advisory Committee’s recommendation, along with the request for Director Review and the underlying decision, at the same time. At that point, the Director determines whether to grant or deny Director Review, or whether to delegate further consideration of that decision to the DRP.

We have calculated the average and longest times for a decision on Director Review following a party’s request based on the PTAB’s published “Director Review requests spreadsheet.”³ As of July 15, 2024, the average time for the Director to decide to deny or dismiss a party’s request for Director Review was 50.7 days . The longest time was 189 days (IPR2019-01668). The average time for the Director to decide to grant a party’s request for Director Review was 63 days. The longest time was 128 days (IPR2023-00861).

These statistics show that the Director typically issues decisions denying Director Review faster than she issues decisions granting Director Review. If the Director decides to delegate the decision on whether to grant Director Review to the DRP, the decision takes longer because the process necessarily involves two decisions — the Director’s delegation order to the DRP and the DRP’s decision whether to grant hearing. The average time for the delegation order was 56.5 days, while the average time for the DRP to issue a decision on rehearing following delegation was 107.5 days.

Timing for sua sponte Director Review

As noted above, the Director may also decide to review a panel’s decision sua sponte. There are no rules for when the Director must make this decision after the panel’s underlying decision, but the Office has set the deadline for sua sponte Director Review as “at any point within 21 days after the expiration of the period for filing a request for rehearing pursuant 37 C.F.R. § 42.71(d), as appropriate to the type of proceeding for which review is sought, and before the filing of a notice of appeal under 37 C.F.R. § 90.3.”⁴

For a panel decision granting institution, therefore, the Director should order Director Review (or delegate that decision) sometime between day 14 and day 35 after the panel issues its institution decision. For a panel decision denying institution, the Director should order Director Review (or delegate that decision) between day 30 and day 51 after the panel issues its institution decision. Based on average times⁵ between an institution decision and the Director’s sua sponte grant of review, the Director has mostly been ahead of that schedule, issuing grants on average at 22.7 days. Indeed, almost all of the Director’s sua sponte grants of Director Review originated from underlying panel decisions denying institution, and all those grants occurred before the petitioner’s 30-day period for requesting Director Review under § 42.71(d) had elapsed. 

For a final written decision or adverse judgment, the Director must decide whether to initiate Director Review sua sponte before the dissatisfied party files a notice of appeal to the United States Court of Appeals for the Federal Circuit under 35 U.S.C. § 141(c). This deadline arises because a notice of appeal removes jurisdiction from the Office to the court.⁶ As with decisions denying institution, the Director should grant Director Review of a final written decision/adverse judgment (or delegate that decision) between day 30 and day 51 after the panel issues its decision, but before the dissatisfied party files a Notice of Appeal. See 37 C.F.R. § 90.3(a) (setting filing deadline for notice of appeal to no later than 63 days after the date of the final written decision). For the final decisions (including final written decisions and adverse judgments) from which the Director has granted sua sponte review, the Director granted review at an average of 33.8 days.

Finally, the Office considers a timely request for Director Review equivalent to a request for rehearing under 37 C.F.R. § 90.3(b). This rule resets the time for appeal “to no later than sixty-three (63) days after action on the request.” The time for appeal is tolled until the Director issues a decision denying Director Review. The time for appeal for a final written decision, therefore, is tolled until the Director issues a decision denying Director Review. This addition of time can be an important consideration when deciding whether to request Director Review before proceeding to the Court of Appeals for the Federal Circuit.

Effects on co-pending litigation

In some jurisdictions, District Courts will not stay co-pending litigation until the PTAB institutes a PGR or IPR proceeding. A patent owner might seek Director Review of an institution decision to cast doubt on the institution decision, which in turn might discourage a District Court from granting a stay while the request for Director Review is pending.

Furthermore, a party’s final disposition in patent infringement cases can hinge on the relative timing in which respective decisions are issued from the USPTO and the courts. In Fresenius USA, Inc. v. Baxter International, Inc., the Federal Circuit explained that, if claims asserted in a parallel infringement litigation are cancelled, then “the patentee loses any cause of action based on that claim, and [the] pending litigation in which the claims are asserted becomes moot.” 721 F.3d 1330, 1340 (Fed. Cir. 2013). However, if the patent owner secures a final damages judgment before the asserted claims are cancelled, then “the cancellation . . . cannot be used to reopen [the] final damages judgment ending a suit based on those claims.” Id. Practitioners commonly refer to the resulting efforts by patent owners and patent challengers to be the first to secure a Federal Circuit decision affirming their respective wins as the “race to a final judgment.”

Notably, before the USPTO can issue a certificate of cancellation, a patent challenger must first secure a final written decision of unpatentability from the PTAB and then either prevail on appeal or wait until the time for appeal expires. See 35 U.S.C. § 318. Furthermore, the USPTO may not issue a certificate of cancellation until several months after the Federal Circuit issues a decision affirming the PTAB’s findings.

Accordingly, a patent owner might seek Director Review as part of a strategy to delay the finality of a final written decision, which is useful if a co-pending litigation is not stayed and especially if the litigation has already proceeded to judgment. Based on the current data, seeking Director Review of a final written decision may delay the start of an appeal by about three months (30 days to file the request plus the average time for a ruling denying the request (50.7 days)).

A successful petitioner/appellee has tools to counteract the delay caused by the patent owner’s seeking Director Review where such delay is being used to give the patent owner an advantage in the race to judgment. Depending on the timing of a litigation (District Court or International Trade Commission (ITC) investigation) appeal, the petitioner/appellee may move the Federal Circuit to make the IPR and litigation appeals companion cases, which ensures that the same panel will hear oral argument for them on the same day. Another tool is for the petitioner/appellee to manage the briefing schedule. For example, if the petitioner/appellee has grounds for a cross-appeal, it may file its notice of appeal first, self-expedite its opening brief, and move to expedite the patent owner’s briefing. Although it is challenging for an appellee to expedite the appellant’s briefing, the appellee may still self-expedite its brief, move to expedite, and develop strong grounds to oppose efforts by the patent owner to obtain lengthy extensions of time.

Takeaways

• Timing can be critical when there is a race to final judgment between competing PTAB and District Court/ITC proceedings, so parties should consider the timing of Director Review when formulating a plan.
• The average time for the Director to deny a party’s request for Director Review was 50.7 days.
• The average time for the Director to grant a party’s request for Director Review was 63 days.
• Patent owners unsuccessful at the PTAB may attempt to defer a notice of appeal to the Federal Circuit by requesting Director Review. The request for Director Review tolls the time for filing a notice of appeal.
• Successful petitioners may attempt to ameliorate the impact of such delay by expediting briefing of the PTAB appeal and/or moving the Federal Circuit to make the PTAB and District Court/ITC appeals companion cases.
• Parties may avoid sua sponte Director Review by immediately filing a notice of appeal.