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Federal Circuit Approves Interim Director Reviews | Jones Day

Federal Circuit Approves Interim Director Reviews |  Jones Day

[co-author: Kaylee Rabatin]*

Federal Circuits decision May 27, 2022 in Arthrex Inc. v. Smith & Nephew Inc. et al.ruled that the patent commissioner, Drew Hirshfeld, was within the bounds of the US Supreme Court USA v. Arthrex decision when exercising its discretion regarding the U.S. Patent and Trademark Office (“USPTO”) director reviews. Arthrex, which was decided in June 2021, stated that any decision of the Patent Examination and Appeals Board (“PTAB”) that the USPTO disagrees with can be reviewed by a presidentially approved and Senate-confirmed (“PAS”) officer; The USPTO Director qualifies as a PAS officer. The Supreme Court remanded the case to the lower court, where Arthrex requested a re-hearing of the USPTO director, who at this time was Hirshfeld, who served as interim director. Hirshfeld’s position as patent commissioner is a non-PAS officer role.

After taking over the role of interim director, Hirshfeld was given the task of performing the non-exclusive duties and functions of the director, which he exercised by rejecting Arthrex’s request for a director’s review. Arthrex then challenged Hirshfeld’s authority as interim director to refuse the hearing, stating that it violated (1) the appointment clause in the US Constitution, (2) the Federal Vacancies Reform Act (FVRA), and (3) the distribution of power in the Constitution. The Federal Circuit did not agree with any of these three proposed violations.

In its analysis of the appointment clause, the Federal Circuit relied heavily on the Supreme Court’s ruling in USA vs. Eaton. The case established that domestic officers in accordance with the appointment clause are allowed to temporarily exercise the authority of an absent PAS officer. Consequently, the Federal Circuit found the case at hand no different than Eatonso that Hirshfeld only performed the director’s duties and functions – in particular by rejecting a request for a hearing – within the limited period between the resignation of former director Andrei Iancu in January 2021 and director Kathi Vidal’s oath in April 2022.

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The court similarly rejected Arthrex’s argument that the FVRA ruled out Hirshfeld’s opportunity to rule on the hearing request, and found instead that the statute did not apply to this case. Chief Justice Kimberly Moore, who wrote in court, explained that the pure language of the FVRA only applies to non-delegable tasks. But this limitation, she noted, does not limit who can perform the delegate tasks of an absent PAS officer. The court then analyzed whether it was a delegable duty for the director to decide re-hearing requests or a duty that only the director could perform. Supreme Court Arthrex the decision proved to be instructive, and ordered that the director in accordance with the Patents Act has discretion to review the decisions of administrative patent judges. The Federal Circuit interpreted this to include the director’s discretion to delegate review of re-examination requests, and thus found that it was a delegable duty.

Finally, the court considered Arthrex’s distribution of power argument. Arthrex claimed that in Hirshfeld’s capacity as commissioner, he could only be removed by the president for trial. Judge Moore quickly noted that the president did not need any reason to remove Hirshfeld from his temporary directorial role and thus the distribution of power remained in balance.

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This case may indicate Federal Circuit approval for the PTO’s current process for managing director reviews.

* Kaylee is a summer employee at Jones Day’s Pittsburgh Office.

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