The changing guard of patent law: Chevron deference for the PTO.

AuthorWasserman, Melissa F.
PositionPatent and Trademark Office - Introduction through II. Postgrant Review and Administrative Law A. Formality and the Postgrant Review Proceedings, p. 1959-1989

Whereas Congress has increasingly turned to administrative agencies to regulate complex technical areas, the patent system has remarkably remained an outlier. In the patent arena, the judiciary--not a federal agency--is perceived to be the most important expositor of substantive patent law standards. Yet, as the criticism toward the patent system has grown, so too have the challenges to this unusual power dynamic. The calls for institutional reform culminated in late 2011 with the enactment of the historic Leahy-Smith America Invents Act (AIA). Although scholars have recognized that the AIA bestows a glut of new powers upon the United States Patent and Trademark Office (PTO), this Article contends that commentators have failed to recognize the extent to which the AIA alters the fundamental power dynamic between the judiciary and the PTO. By anointing the PTO as the primary interpreter of the core patentability standards, this Article posits that the AIA rejects over two hundred years of court dominance in patent policy.

Although the patent system has traditionally suffered from a lack of serious engagement with administrative law, applying administrative law principles to the AIA has tremendous implications for the roles of patent institutions and, as this Article argues, results in a normatively desirable outcome. The AIA, by making the PTO the primary expositor of the core provisions of the Patent Act, ushers the patent system into the modern administrative era--which has long recognized the deficiencies associated with judge-driven policy. Moreover, the incorporation of administrative law principles into the patent system has substantial implications for administrative law itself. As this Article attempts to reconcile the distinctive features of patent administration with existing administrative law jurisprudence, it provides insight into a prolonged circuit split on the proper approach to determining the triggering provisions for formal adjudication, as well as when a grant of formal adjudicatory authority carries with it the ability to speak with the force of law.

TABLE OF CONTENTS INTRODUCTION I. CHEVRON AND THE HISTORICAL LACK OF JUDICIAL DEFERENCE TO THE PTO A. Strong Judicial Deference and the Supreme Court B. The Historical Lack of Deference Paid to the PTO's Legal Decisions II. POSTGRANT REVIEW AND ADMINISTRATIVE LAW A. Formality and the Postgrant Review Proceedings 1. Opposing Presumptions 2. The Chevron Approach B. Force-of-Law Prerequisite 1. Too Big to Delegate 2. Is the Lack of Substantive Rule Making Fatal? 3. Creation of the Federal Circuit C. Rejecting the Dominant Chevron Approach III. NORMATIVE CASE FOR DEFERENCE: COMPARATIVE INSTITUTIONAL ANALYSIS A. Expertise B. Capture and Institutional Bias CONCLUSION INTRODUCTION

The modern administrative state is built on the premise that administrative bodies, as a result of their focus, manpower, and proficiency, will reach more effective decisions than their counterparts in the judiciary or legislature. (1) Thus, it is hardly surprising that Congress has increasingly chosen to delegate broad law-making authority to administrative agencies. (2) Today, administrative institutions assume primary interpretative authority over federal statutes that regulate fields ranging from the environment, to pharmaceutical drugs, to telecommunications. Yet, the patent system has remarkably remained an outlier, even though it shares the same technocratic attributes as legal arenas that are overwhelmingly dominated by agency policy making.

Although the Patent Act defines the patentability standards in broad and vague language, the United States Patent and Trademark Office (PTO or Agency) lacks robust substantive rulemaking authority (3) and receives no judicial deference for its legal interpretations of the Patent Act. (4) As a result, the United States Court of Appeals for the Federal Circuit (Federal Circuit), which is vested with near-exclusive jurisdiction over patent appeals, is largely perceived to be "the most important expositor of the substantive law of patents in the United States." (5)

Yet, as criticism toward the patent system has grown, so too have the challenges to this unusual power dynamic. (6) An increasing number of commentators believe this lopsided institutional structure is the root cause of the patent system's systemic failures. (7) An even larger contingency of scholars support reforms that would shift greater power to the PTO. (8) The cries for institutional reform culminated in 2011 when Congress enacted the historic Leahy-Smith America Invents Act (AIA). (9) The AIA provided the first major overhaul to the patent system in sixty years and undeniably increased the stature of the PTO by granting the Agency a host of new responsibilities, such as fee-setting authority (10) and the ability to conduct new adjudicatory proceedings in which patent rights may be obtained or challenged. (11)

This Article contends, however, that commentators have generally failed to recognize the extent to which the AIA alters the fundamental power dynamic between the Federal Circuit and the PTO. Although scholars acknowledge that the AIA bestows a glut of new powers upon the Agency, (12) they have nearly uniformly concluded that "Congress stopped short of allowing the PTO to interpret the core provisions of the Patent Act--those that affect the scope of what is patentable." (13) Though Stuart Benjamin and Arti Rai have observed that certain congressional bestowals of adjudicatory authority may entitle the PTO's legal interpretations of the Patent Act to strong judicial deference, (14) this Article provides the first in-depth exploration of whether the actual powers granted by the AIA would result in the PTO becoming the primary interpreter of the core patentability requirements. This Article concludes that the AIA rejects over two hundred years of court dominance in patent policy by anointing the PTO as the chief expositor of substantive patent law standards.

In general, the patent system has historically suffered from a lack of serious engagement with administrative law, (15) even though Supreme Court intervention in 1999 made clear that standard administrative law norms--including the Administrative Procedure Act--apply to the PTO. (16) Applying administrative law principles to the AIA provides that the PTO's legal interpretations of the Patent Act, as announced by its new adjudicatory proceedings, are entitled to the highly deferential standard of review articulated in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. (17) As this Article argues, this deference is a normatively desirable outcome. (18) Making the PTO the primary interpreter of the core patentability standards ushers the patent system into the modern administrative era, which has long recognized the deficiencies associated with judge-driven policy. (19) This provides the institutional foundation for infusing economic policy into the patent system, enabling the tailoring of patentability standards to advance the system's constitutionally mandated goal: the promotion of innovation.

Additionally, the incorporation of administrative law principles into the patent system has substantial implications for administrative law. As this Article attempts to reconcile the distinctive features of patent administration with existing administrative law jurisprudence, it tests, and at times, brings into better focus, the contours of this doctrine. This exercise in reconciliation offers insight into a prolonged circuit split on the proper approach to determining the triggering provisions of formal adjudication and when a grant of formal adjudicatory authority carries the ability to speak with the force of law. Even though an agency's eligibility for Chevron...

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