What’s New in Director Review? Lessons From the Delegated Rehearing Panel’s First Decisions.

The Director of the United States Patent and Trademark Office (USPTO) established the interim process for Director Review of Patent Trial and Appeal Board (PTAB) decisions in the wake of the Supreme Court’s 2021 decision in United States v. Arthrex.¹ Since then, the interim process has evolved and expanded. In the summer of 2023, the Director created a new review panel specifically for proceedings under the America Invents Act (AIA) called the Delegated Rehearing Panel (DRP).² But until this year, the DRP had not issued any decisions. This blog post focuses on the DRP’s two new decisions issued in February and March of this year and the lessons we can learn from them.

Delegated Rehearing Panel? It’s coming back to me.

If you are reading this, it is likely because you are keeping up with the latest on Director Review (if not, check out this blog post explaining the revised interim processes for Director Review for a refresher). Here, we give a quick overview of the DRP before we review and analyze the DRP’s first two decisions. It is good to keep in mind, however, that, like Director Review generally, everything about the DRP is an interim process and subject to revision.

In short, any time the USPTO Director believes that review of a panel decision in an AIA proceeding may be appropriate — whether in response to a party request or sua sponte — the Director may choose to grant or deny Director Review herself or delegate that decision to the DRP. If the Director decides to delegate Director Review to the DRP, she will issue a delegation order to the DRP to review the case and to determine whether to grant rehearing.

The Director’s delegation order also orders the Board to identify the composition of the DRP in a separate paper. A DRP consists of three panel members selected from the Chief Judge, Deputy Chief Judge, Vice Chief Judges, and Senior Lead Judges, excepting any judges who served on the original Board panel, who have a conflict with the case, or who advised the Director on the case under consideration.

Once a case is delegated, the DRP reviews the panel’s decision independently, apart from any specific direction contained in the Director’s delegation order. The DRP may request additional briefing and/or order an oral hearing, but the Office guidance states both will be rare. If, for example, the DRP determines that the panel’s decision misapprehended or overlooked a material issue of fact or law, the DRP may choose to issue its own decision or may choose to remand the case to the Board for further proceedings. A party may file one request for rehearing of a DRP decision but may not file a request for Director Review of a DRP decision. The Director retains authority, however, to order sua sponte review of DRP decisions.

The guidance provides little insight as to when the Director will choose the DRP over Director Review but states that delegation to the DRP may be appropriate when “a decision does not present an issue that rises to a level requiring review by the Director but, nonetheless, warrants further consideration within the Board by an independent panel.”³ Thus, we may expect delegation to the DRP for more routine error correction in panel decisions.

The first two DRP decisions have issued, so now we will review them to see what else we can learn.

SynAffix B.V. v. Hangzhou DAC Biotech Co., Ltd., IPR2022-01531

In this proceeding, the panel denied institution of inter partes review (IPR) by adopting, sua sponte, a narrowing claim construction based on two “versions” of prosecution history disclaimer (Paper 17). The petitioner requested Director Review on two issues: (1) important issue of law and policy based on USPTO’s goal to improve the quality of pharmaceutical patents through more proficient examination and review, and (2) abuse of discretion in finding and relying upon alleged prosecution history disclaimer unsupported by record evidence (Paper 18).

The Director delegated review to the DRP (Paper 19), and the Board issued an order identifying the DRP members (Paper 20). The DRP then authorized the patent owner to file a brief responsive to the petitioner’s request for Director Review (Paper 21). The DRP issued a decision on March 4, 2024, granting rehearing, modifying the panel’s claim construction, vacating the underlying decision denying institution, and remanding the case to the panel for further proceedings consistent with the DRP’s decision (Paper 23).

As to the panel’s previous claim construction, the DRP reviewed the prosecution history and agreed with the panel’s finding as to the first “version” of prosecution history disclaimer but not as to the second “version” of prosecution history disclaimer. The first “version” of prosecution history disclaimer related to whether the patent owner had disclaimed a specific compound (compound 55), whereas the second “version” of prosecution history disclaimer related to whether the patent owner had disclaimed certain embodiments (55, 75, 99, 119, and 138).

The DRP determined that it was clear that the patent owner had disclaimed compound 55 through the first “version” of prosecution history disclaimer: “It is clear that the Applicant disclaimed compound 55 of the Specification in order to overcome the anticipation rejection over [the prior art].” But as to the second “version” of prosecution history disclaimer, the DRP was persuaded that the panel’s finding of disclaimer was erroneous because it “misapprehended or overlooked” portions of the prosecution history addressed in additional briefing, including the patent owner’s explicit reliance on some of the allegedly disclaimed compounds (75 and 138) as support for the claim amendment.

Finally, while the DRP did not reach the petitioner’s arguments with respect to a dependent claim, it observed that the panel’s findings about this dependent claim may need to be reconsidered in view of the revised construction of the independent claim.

DK Crown Holdings, Inc. v. Diogenes Limited, IPR2023-00268

In this proceeding, a split panel denied the underlying petition for IPR based partially on the majority’s sua sponte claim construction of “continuously” (Paper 9). The dissenting judge disagreed with the majority’s claim construction. The petitioner then requested Director Review on three issues: (1) whether the majority failed to apply the proper construction for “continuously” and misread the challenged patent’s disclosure to improperly read limitations into the claims, (2) whether the majority improperly limited the claim term at issue to certain scenarios, and (3) whether the majority provided a sufficient factual basis for its determination that the prior art does not satisfy the construction of the claim term at issue (Paper 10).

The Director delegated review to the DRP (Paper 11), and the Board issued an order identifying the DRP members (Paper 12). Of interest here, the DRP rejected the petitioner’s request (through e-mail) to file a motion containing supplemental evidence (Paper 13). The DRP issued a decision on February 21, 2024, granting rehearing, vacating the underlying decision denying institution, and remanding to the original panel for further proceedings consistent with the DRP’s decision (Paper 14).

In its decision, the DRP found that the majority misapprehended the meaning of the claim term “continuously” and misapprehended both the petitioner’s mapping of the claim to the prior art and the scope and content of the prior art. The DRP vacated the panel decision and remanded the case to the original panel to reconsider whether IPR should be instituted consistent with its decision.

The day after the DRP’s decision was issued, the original panel issued an order of the proceeding stating that “the panel will endeavor to issue a decision on institution of the challenged claims as soon as possible, and, in any event, no later than” six months from the date of the DRP decision in accordance with the Board’s Standard Operating Procedure 3 (Paper 15).

Takeaways

• Delegation orders to the DRP: The Director’s delegation orders so far have been, in essence, identical. The Director’s delegation order in the DK Crown Holdings case tells the DRP to review the “fact intensive issues,” whereas the order in the SynAffix case tells the DRP to review the “issues.” The small change in wording may be because prosecution history disclaimer is a question of law⁴ and the SynAffix case may not have had as many fact-intensive questions as the DK Crown Holdings case.
• Timing: The Board considers remands from the DRP to be akin to remands from the U.S. Court of Appeals for the Federal Circuit under Standard Operating Procedure 3.⁵ Although the AIA does not set forth a timeline for Board action following remand from the Federal Circuit, the Board has set a goal to issue remand decisions within six months of receipt of the court’s mandate. Because the DRP does not issue a “mandate,” we should expect a decision from the panel within six months of the DRP’s rehearing decision date when the DRP remands a case back to the panel.
• Availability of further briefing/submission of evidence: Expect the Board to apply a high bar for the submission of additional evidence, as it does with other proceedings. In the DK Crown Holdings case, for example, the DRP denied the petitioner’s request to file a motion for supplemental evidence relating to claim construction, stating that, although the Director’s delegation order authorized the DRP to “request additional briefing if necessary,” it did not specifically provide for the introduction of new evidence into the record at the rehearing stage. The DRP turned to the Trial Practice Guide for guidance and found no good cause to allow for additional evidence because the petitioner had argued in the petition that all claim terms should be given their “plain and ordinarily meaning.” On the other hand, the party opposing rehearing should consider requesting additional briefing if the Director delegates rehearing to the DRP, especially where the request for Director Review stands unrebutted.
• Claim construction: Delegation to the DRP may be particularly useful for petitioners where an institution denial is based on claim construction, especially for a claim construction raised sua sponte by a panel in denying institution. But don’t necessarily expect additional briefing on the issue, especially where the parties did not bring claim construction into dispute at the institution stage.
• Error review: As noted above, the Director’s delegations appear to be to correct errors the Director perceives in Board decisions that are unique to the case and do not rise to the level of affecting Board policy or procedure. That said, delegation to the DRP may be more likely to be granted where mistakes by the Board panel are particularly egregious, for example, where the record evidence clearly and unambiguously contradicts findings or rationale by the panel in perceiving deficiencies in grounds advanced in an IPR petition. We may also expect delegation where the underlying case presents fact- or law- intensive issues that go beyond discretionary issues under 35 U.S.C. §§ 314, 325.

We will continue to monitor DRP decisions and provide updates as necessary