Malacar, the ancient dragon who serves as Director of the Patent Office, oversees the entire examination system. This chapter explores the broad authority granted to the USPTO Director under 35 U.S.C. § 3, the structure of post-grant proceedings including inter partes review (IPR) and post-grant review (PGR), and the role of the Patent Trial and Appeal Board (PTAB) in reviewing examiner decisions and adjudicating challenges to issued patents.
The chapter examines the constitutional questions raised by administrative patent adjudication, including the Appointments Clause issues addressed in *United States v. Arthrex* and the Article III concerns from *Oil States Energy Services v. Greene's Energy*. Malacar's absolute authority over the examination system parallels the Director's sweeping statutory powers, while also highlighting the constitutional limits on administrative patent review.
This chapter teaches the Director's rulemaking authority, the PTAB structure and procedures, the differences between ex parte appeals and inter partes proceedings, and the standards for instituting IPR/PGR challenges to issued patents.
The USPTO Director wields broad power over patent system:
PTAB serves as administrative tribunal within USPTO:
Applicants can appeal examiner rejections to PTAB:
Third parties can challenge issued patents through IPR:
Broader challenge mechanism available only for AIA patents:
Why petitioners choose PTAB vs. court:
IPR/PGR filing creates strategic consequences:
PTAB authority has faced constitutional scrutiny:
Question: The Director has broad authority to establish regulations under § 3. What limits exist on this rulemaking power? Could the Director, for example, create a rule that no patents shall issue on software inventions?
Analysis Points:
Question: You represent a defendant in patent infringement suit. Patent has broad claims that likely read on your product, but you've found potentially invalidating prior art (patents and publications). Should you file IPR or defend in district court? What factors matter?
Analysis Points:
Question: Why did Congress create such a short 9-month window for PGR (§ 321(c)) compared to the longer availability of IPR? What policy objectives does this serve?
Analysis Points:
Question: Before *Arthrex*, APJs could issue final decisions canceling patent claims without any review by a principal officer. Why did this violate the Appointments Clause? How did making APJ decisions reviewable by the Director fix the problem?
Analysis Points:
Question: In the narrative, Malacar (Director) has seemingly absolute authority over the examination system. Does the real USPTO Director have similarly broad power? What checks exist?
Analysis Points:
Arthrex, Inc. owned a patent on surgical knotless suture anchors. Smith & Nephew, Inc. filed an inter partes review (IPR) petition challenging the patent. A panel of three Administrative Patent Judges (APJs) at the PTAB held claims unpatentable. Arthrex appealed to the Federal Circuit, arguing that the APJ appointment structure violated the Appointments Clause of the Constitution.
APJs were appointed by the Secretary of Commerce (not the President with Senate confirmation). Under the pre-*Arthrex* statutory scheme, APJ decisions were final and unreviewable by the Director - APJs exercised significant authority without supervision by a principal officer.
Does the PTAB's structure - where APJs are appointed by the Secretary of Commerce but issue final decisions without any review by the Director - violate the Appointments Clause?
YES. The Supreme Court held 5-4 that unreviewable authority wielded by APJs was incompatible with their appointment by a department head under the Appointments Clause.
Remedy: Rather than invalidate the entire IPR system, the Court severed the statutory provisions that made APJ decisions unreviewable, allowing the Director to review PTAB decisions.
Chief Justice Roberts wrote for the majority:
Appointments Clause framework:
APJs wield significant authority:
Lack of supervision problem:
Remedy - severing unreviewability:
Case remanded to Director for consideration whether to review the PTAB's decision in this case. IPR system preserved but Director given review authority.
This case fundamentally reshaped PTAB structure:
Malacar's (Director's) oversight of all Guardian Queen examiners and PTAB-equivalent tribunal mirrors the constitutional requirement that a principal officer (removable by President) must supervise administrative adjudication. The "absolute authority" Malacar wields isn't unlimited - it exists within statutory and constitutional bounds, just as the Director's power is cabined by separation of powers.
Before *Arthrex*, examiners (APJs) could make final unreviewable decisions. This was like Guardian Queens operating independently without Director oversight. *Arthrex* required Director supervision - Malacar must be able to review and override Guardian Queen decisions to maintain constitutional structure.
(a) UNDER SECRETARY AND DIRECTOR.—
(1) IN GENERAL.—The powers and duties of the United States Patent and Trademark Office shall be vested in an Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (in this title referred to as the "Director"), who shall be a citizen of the United States and who shall be appointed by the President, by and with the advice and consent of the Senate. The Director shall be a person who has a professional background and experience in patent or trademark law.
(2) DUTIES.—
(A) The Director shall be responsible for providing policy direction and management supervision for the Office and for the issuance of patents and the registration of trademarks. The Director shall perform these duties in a fair, impartial, and equitable manner.
(B) The Director may establish regulations, not inconsistent with law, which—
(i) shall govern the conduct of proceedings in the Office;
(ii) shall be made in accordance with section 553 of title 5;
(iii) shall facilitate and expedite the processing of patent applications, particularly those which can be filed, stored, processed, searched, and retrieved electronically, subject to the provisions of section 122 relating to the confidential status of applications;
(iv) may govern the recognition and conduct of agents, attorneys, or other persons representing applicants or other parties before the Office, and may require them, before being recognized as representatives of applicants or other persons, to show that they are of good moral character and reputation and are possessed of the necessary qualifications to render to applicants or other persons valuable service, advice, and assistance in the presentation or prosecution of their applications or other business before the Office;
(3) CONSULTATION.—The Director shall consult with the Public Advisory Committees established in section 5 on a regular basis on matters relating to the policies, goals, performance, budget, and user fees of the Office.
(4) PUBLIC INFORMATION.—The Director shall publish in the Federal Register the policies established by the Director in the exercise of the authority under paragraph (2)(B).
(a) IN GENERAL.—There shall be in the Office a Patent Trial and Appeal Board. The Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative patent judges shall constitute the Patent Trial and Appeal Board. The administrative patent judges shall be persons of competent legal knowledge and scientific ability who are appointed by the Secretary, in consultation with the Director.
(b) DUTIES.—The Patent Trial and Appeal Board shall—
(1) on written appeal of an applicant, review adverse decisions of examiners upon applications for patents pursuant to section 134(a);
(2) review appeals of reexaminations pursuant to section 134(b);
(3) conduct derivation proceedings pursuant to section 135; and
(4) conduct inter partes reviews and post-grant reviews pursuant to chapters 31 and 32.
(c) 3-MEMBER PANELS.—Each appeal, derivation proceeding, post-grant review, and inter partes review shall be heard by at least 3 members of the Patent Trial and Appeal Board, who shall be designated by the Director. Only the Patent Trial and Appeal Board, or a duly designated panel thereof, may grant rehearings.
(a) IN GENERAL.—Subject to the provisions of this chapter, a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent. The Director shall establish, by regulation, fees to be paid by the person requesting the review, in such amounts as the Director determines to be reasonable, considering the aggregate costs of the review.
(b) SCOPE.—A petitioner in an inter partes review may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.
(c) FILING DEADLINE.—A petition for inter partes review shall be filed after the later of either—
(1) the date that is 9 months after the grant of a patent; or
(2) if a post-grant review is instituted under chapter 32, the date of the termination of such post-grant review.
(a) THRESHOLD.—The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.
(b) TIMING.—The Director shall determine whether to institute an inter partes review under this chapter pursuant to a petition filed under section 311 within 3 months after—
(1) receiving a preliminary response to the petition under section 313; or
(2) if no such preliminary response is filed, the last date on which such response may be filed.
(d) NO APPEAL.—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
(a) INFRINGER'S CIVIL ACTION.—
(1) INTER PARTES REVIEW BARRED BY CIVIL ACTION.—An inter partes review may not be instituted if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.
(2) STAY OF CIVIL ACTION.—If the petitioner or real party in interest files a civil action challenging the validity of a claim of the patent on or after the date on which the petitioner files a petition for inter partes review of the patent, that civil action shall be automatically stayed until either—
(A) the patent owner moves the court to lift the stay;
(B) the patent owner files a civil action or counterclaim alleging that the petitioner or real party in interest has infringed the patent; or
(C) the petitioner or real party in interest moves the court to dismiss the civil action.
(b) PATENT OWNER'S ACTION.—An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).
(e) ESTOPPEL.—
(1) PROCEEDINGS BEFORE THE OFFICE.—The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
(2) CIVIL ACTIONS AND OTHER PROCEEDINGS.—The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.
(a) IN GENERAL.—Subject to the provisions of this chapter, a person who is not the owner of a patent may file with the Office a petition to institute a post-grant review of the patent. The Director shall establish, by regulation, fees to be paid by the person requesting the review, in such amounts as the Director determines to be reasonable, considering the aggregate costs of the post-grant review.
(b) SCOPE.—A petitioner in a post-grant review may request to cancel as unpatentable 1 or more claims of a patent on any ground that could be raised under paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent or any claim).
(c) FILING DEADLINE.—A petition for a post-grant review may only be filed not later than the date that is 9 months after the date of the grant of the patent or of the issuance of a reissue patent (as the case may be).
Primary Statutes Taught in Chapter 5:
Related Concepts: