Context: The United States Patent & Trademark Office (USPTO) has the authority to make agency rules laying out how to apply the statutes governing its work, such as with respect to the Patent Trial & Appeal Board (PTAB) (eCFR link). Over the last five to eight years, that rulemaking has been the subject of heated debate.
What’s new: On Friday (June 28, 2024), the Supreme Court of the United States (SCOTUS) handed down its decision in Loper Bright Enterprises v. Raimondo (PDF), upending the Chevron doctrine from the 1980s that entitled government agencies to deference when interpreting the statutes governing them.
Direct impact: Patent practitioners have since been speculating about what USPTO rules might be overturned by the courts of law. There is ample consensus that various challenges to the USPTO’s rules will be brought in the years ahead.
Wider ramifications: The USPTO is only one of many federal government agencies to be impacted by Loper Bright, but it will likely be among the most strongly affected ones.
The pro-Chevron argument that government agencies have the specialized knowledge to interpret ambiguous statutes or close any gaps undoubtedly applies to the field of patent law in particular. But so do two pro-Loper arguments:
- Giving too much rulemaking power to agencies can lead to institutionalized excess.
- Agency rules can change often even if the underlying statutes don’t change. Patent practicioners have seen how then-Director Iancu promulgated various rules that constituted a sea change (such as with respect to discretionary denials of PTAB IPR petitions), only for Director Vidal to dial back. Judicial interpretations can also change, but not that frequently and radically.
The Loper side won because all six Republican appointees voted in favor, and the three Democratic appointees could merely file a dissent. The dissenting judges and many public commentators have expressed concerns over what they consider a blow to stare decisis, the principle that judges generally stick to their predecessors’ decisions. To meet all of the criteria for overruling earlier decisions, the conservative majority exercised restraint: since 2016 they’ve sidelined Chevron, which now enables them to describe it as a “decaying husk.” They were strategically biding their time to do this.
Government agencies are now merely entitled to the courts’ “respect” (which is a whole lot less than deference).
We could speculate about a lot of potential Loper Bright challenges to USPTO rules. Patent practitioners are talking about discretionary denials, the appealability of PTAB decisions, claim construction standards pre-grant vs. post-grant, the terminal disclaimer rule on which the USPTO is presently working, and probably more.
ip fray will discuss specific challenges when they are brought. It probably won’t take long.
For several years, this means an unprecedented (at least in recent history) period of legal uncertainty for the USPTO’s rules. Some litigants will regard it as an opportunity, and others as an unwanted additional risk factor.
The United States Court of Appeals for the Federal Circuit has just become even more powerful than it already was, given that SCOTUS will rarely take on cases involving the USPTO’s rules.
After the first few years, however, there is hope that there will be even greater stability than in recent years where depending on what party was in power and who became USPTO Director, the pendulum would swing aggressively in one director or the other. (This does not mean to say that Director Vidal went as far in her direction as then-Director Iancu did in his.)