Guest Post by Professor John F. Duffy, University of Virginia School of Law
[PDF of this Post with the Delegation of Authority: Download Michelle Lee2]
This title of this post, which addresses the legality of Michelle Lee’s recent appointment within the PTO, needs a bit of explanation. The first two names in the title are not surprising because those two are at the center of the ongoing controversy. On December 11, 2013, Michelle Lee was appointed by the Secretary of Commerce to be Deputy Director of the PTO and Deputy Under Secretary of Commerce for Intellectual Property. Hal Wegner, the prominent patent commentator, has argued in a series of widely distributed papers that Lee’s appointment was unlawful.
The third name is the surprising one. What does former Professor, now Justice, Antonin Scalia have to do with the controversy over Michelle Lee’s appointment? The short answer is that the work of Professor Scalia, when he was a professor, is what convinces me that Hal Wegner is absolutely right to devote significant attention to the issue, but absolutely wrong in concluding that Lee was improperly appointed. Let me explain.
First off, it is worthwhile to summarize the timeline of relevant events and Hal Wegner’s argument against the legality of Lee’s appointment. After David Kappos left the position of PTO Director on February 1, 2013, his Deputy Director, Teresa Rea, assumed all the powers of the Director pursuant to 35 U.S.C. § 3(b)(1). Ms. Rea served as Deputy Director until her departure on November 21, 2013. Secretary of Commerce Penny Pritzker appointed Lee Deputy Director on December 11. If Lee is validly appointed, then she like Rea has authority under § 3(b)(1) to exercise the powers of the Director while that office is vacant.
Wegner begins his argument against the legality of Lee’s appointment by noting that the Secretary of Commerce has statutory authority to appoint a Deputy Director of the PTO only “upon nomination by the Director [of the PTO].” 35 U.S.C. § 3(b)(1). At the time of Lee’s appointment, the PTO did not have a PTO Director to make such a nomination. As just mentioned, all functions and powers of the PTO Director devolve by statute (§ 3(b)(1)) to the PTO Deputy Director in the case of a vacancy in the Director’s office, but of course at the time of the appointment of Lee, the Deputy Director’s position was also vacant. Thus, because the PTO lacked both a Director and Deputy Director (so Wegner’s argument goes), no person could properly make a “nomination” of Lee, and because a nomination is a statutory prerequisite for appointment, the appointment is not valid. Wegner has even gone so far as to say: “Why would a person of heretofore spotless reputation and noted achievement [i.e., Lee] accept an appointment in violation of the strict statutory wording that the appointment is only ‘upon nomination by the Director,’ 35 USC § 3(b)(1), at a time when there is no Director?”
In sum, Wegner’s argument about the legality of Lee’s appointment turns on the absence of a proper statutory nomination. Here’s where the work of Professor Scalia comes in.
Years ago, when I was leaving law practice to begin a career in teaching, I asked Justice Scalia (my old boss) if he had any advice or suggestions about teaching administrative law—a subject that I intended to teach and that he had taught both here, at the University of Virginia, and at the University of Chicago. In response, he gave me a real treasure: a copy of a 900+ page, unpublished manuscript of an administrative law casebook that he had coauthored and had used when he was teaching the subject.
Scalia’s unpublished casebook taught me two things relevant to this current controversy about Michelle Lee’s appointment. First, the casebook devotes a great deal of attention—about the first fifth of the book—to basic structural issues concerning delegations of power and the appointment and removal of officers. That was much more attention, and much more prominent attention, than had been afforded to such issues in the administrative law casebook that I had used as a student. I have come to think, however, that Professor Scalia’s approach is quite wise.
Administrative law is, at its core, all about the allocation of power. Thus, a great deal of attention should be devoted to understanding the law governing both proper delegations of power and the proper recipients of those delegations. For that reason, I applaud Hal Wegner’s attention to the issue of whether Michelle Lee is lawfully appointed to be a proper recipient of the PTO’s important statutory powers.
The second lesson I learned from Scalia’s administrative law casebook, however, tells me that Hal Wegner is not correct in concluding that Lee was invalidly appointed. Within the section of his manuscript devoted to delegation and appointment issues, Scalia and his coauthor (the great constitutional law scholar David Currie) devoted an entire chapter to the topic of “Delegation Within the Executive Branch.” That chapter was the most surprising to me when I first received the book, for it includes a whole set of cases on a topic that is almost unmentioned in modern administrative law courses: the ability of the President and other Executive Branch officers to delegate their powers to subordinates. And it is that vein of authority on inter-executive delegations that demonstrates the flaw in Wegner’s argument.
The law on inter-executive delegations of authority has an overarching theme, which is that most executive branch officers may delegate their powers to subordinate officers. Nondelegable executive powers are very much the exception, and the PTO Director’s power to nominate a candidate for appointment as Deputy is not such an exception.
Wegner’s argument about Lee’s appointment assumes that the statutory power of the PTO Director to nominate a candidate for Deputy Director must be exercised by the PTO Director or someone who is expressly authorized by statute to act as the PTO Director (i.e., the Deputy Director). In other words, Wegner assumes that the Director's deputy-nomination power is nondelegable. That assumption is wrong.
The heads of most executive branch agencies have very broad statutory authority to delegate their powers. The PTO is no exception. The Patent Act expressly gives the Director the power to “delegate to [other PTO officers] such of the powers vested in the Office as the Director may determine.” 35 U.S.C. 3(b)(3)(B). Supreme Court precedent establishes that such a general authorization for an executive branch agency head “permit[s] the delegation of any function vested in the [agency head] under the Act unless a specific limitation on that delegation authority appears elsewhere in the statute.” Touby v. United States, 500 US 160, 169 (1991).
The Supreme Court’s Touby case is interesting because it involved the delegation of a very substantial power—the Attorney General’s power under the Controlled Substances Act to add new drugs to the list of drugs the possession of which could result in criminal prosecution (e.g., cocaine, heroin, etc.). In other words, it was the power to create new criminal prohibitions through administrative rulemaking rather than through legislative action. So substantial was this power that most of the Court’s opinion was devoted to addressing the constitutional limits on congressional power to give that power to any Executive Branch officer. However, once the Court sustained the constitutionality of the statute giving the Attorney General the power to criminalize new conduct, the Court devoted a mere two paragraphs to upholding the Attorney General’s delegation of the power to the Administrator of the Drug Enforcement Administration (DEA). See Touby, 500 U.S. at 169 (sustaining the Attorney General’s delegation power in 29 C.F.R. §0.100(b) to the DEA Administrator).
The Attorney General’s power to delegate under the Controlled Substances Act is highly similar to the PTO Director’s similar power under the Patent Act. The Attorney General is authorized to delegate “’delegate any of his functions under [the Controlled Substances Act] to any officer or employee of the Department of Justice.’” Id. (quoting 21 U. S. C. § 871(a)). After articulating the legal standard that such executive delegation power applies “unless a specific limitation on that delegation authority appears elsewhere in the statute,” id., the Court merely looked to see whether the statute imposed any limitation on the Attorney General’s power to delegate to another officer the power to add new drugs to the schedule of controlled substances. Finding no such limitation, the Court unanimously sustained the Attorney General’s delegation.
A similar analysis here means that the PTO Director can delegate the deputy-nomination function, for the Director has a general power to delegate, and the statute creating the Director’s deputy-nomination power (35 U.S.C. § 3(b)(1)) also contains no restriction on delegation.
Touby cited and distinguished an earlier case—United States v. Giordano, 416 US 505 (1974)—which shows an exception that proves the general rule. There the Government argued that “Congress characteristically assigns newly created duties to the Attorney General rather than to the Department of Justice” and that the Attorney General could delegate any of those functions to other officers in the Department of Justice through his general power to delegate contained in 28 U.S.C. § 510. The Supreme Court considered that argument to be, “[a]s a general proposition, … unexceptionable.” Giordano, 416 U.S. at 514.
With respect to the specific power at issue in Giordano, however, the statute vesting the power with the Attorney General expressly addressed the issue of delegation and “specifically limited [the Attorney General] to delegating his authority to “‘any Assistant Attorney General specially designated by the Attorney General.’” Giordano, 416 U.S. at 514 (quoting 18 U.S.C. § 2516). The Court also cited another statute that both required a particular function to be exercised by the Attorney General or the Deputy Attorney General and expressly stated that the “‘function … may not be delegated.’” Id. (quoting 18 U. S. C. § 245(a)). Statutes containing such language do supersede and limit general powers of executive delegation, but again, nothing like that language is contained in the statute authorizing the PTO Director to nominate a Deputy Director.
In sum, the law governing inter-executive delegation is very clear, and the PTO Director’s function of nominating a Deputy Director is fully delegable to any other officer in the PTO. According to the PTO’s previous public statements, all of the functions of the PTO Director had been delegated to the Commissioner of Patents, Peggy Focarino, and Commissioner Focarino nominated Michelle Lee. See https://patentlyo.com/patent/2013/12/michelle-lee-director.html. In a blog posting and widely distributed email, Hal Wegner described this PTO position to be “[r]emarkable” and “bizarre” because it means that Ms. Lee was nominated by a “Commissioner who has no statutory authority to make such a nomination.” See http://www.laipla.net/commissioner-focarino-nominated-acting-under-secretary-michelle-lee/. I, however, have quite the opposite reaction. With two small caveats discussed below, I view the PTO’s position to be completely un-remarkable and un-bizarre; it is instead merely a reflection of the general rule that executive functions usually can be delegated to other officers within the agency.
The two caveats are, I think, minor in this particular situation. First, the Appointments Clause of the Constitution does place limits on inter-executive delegation, for only constitutionally appointed “Officers of the United States” may exercise a power that qualifies as a “significant authority pursuant to the laws of the United States.” Buckley v. Valeo, 424 U.S. 1, 126 (1976). Thus, significant powers cannot be delegated to non-officers within the PTO.
It is an interesting question whether the PTO Director’s deputy-nomination function qualifies as a “significant authority.” Typically, powers to make mere recommendations are not considered to be “significant authority,” but usually such recommendations are not binding in any way. (Thus, if a nonofficer recommends option A, the officer receiving the advice can usually reject A and adopt options B, C, D, E, etc.) The PTO Director’s deputy-nomination function might be a bit more significant because once person A is nominated, the Secretary of Commerce may be constrained either to accept A or to reject A and then await another nomination. If the deputy-nomination function does constrain the Secretary’s appointment power, then the nomination function may constitute “significant authority” within the meaning of Buckley v. Valeo. But even if so, the delegation to the Commissioner of Patents presents no problem because the Commissioner of Patents is properly appointed as an “Officer of the United States” (albeit an inferior officer) through the constitutionally acceptable process of appointment by a “head of Department.” U.S. Const. art. II, § 2, cl. 2; see also 35 U.S.C. § 3(b)(2)(A) (lodging the appointment of the Commissioner of Patents in the Secretary of Commerce).
The second caveat is that the deputy-nomination power must have been actually delegated to Commissioner Focarino. When a PTO Director leaves office (as David Kappos did on February 1, 2013), the Deputy Director assumes all the Director’s powers the automatic operation of 35 U.S.C. § 3(b)(1). By “automatic operation,” I mean that departing Director does not have to sign any document delegating his powers because § 3(b)(1) immediately vests the Deputy Director with all of the Director’s powers as soon as the vacancy occurs. When a Deputy Director departs while the Director’s office is vacant (as when Ms. Rea departed on November 21, 2013), no statute automatically authorizes anyone in the PTO to assume the PTO Director’s duties. Thus, the departing Deputy Director must sign an order delegating the powers before she leaves.
In this case, however, such a delegation did occur. On November 15, 2013, soon-to-depart Deputy Director Rea delegated to the Commissioner of Patents Focarino all of the “non-exclusive functions and duties” assigned to the PTO Director or to the Deputy Director, with the delegation to take effect whenever the offices of Director and Deputy Director are both vacant. See Delegation to Perform Non-Exclusive Functions and Duties (attached at the end of this paper). That delegation is properly limited to the non-exclusive functions of the Director and Deputy Director—i.e., it does not extend to any non-delegable functions. I’m not sure whether there are any such non-delegable functions assigned to the Director or Deputy Director, but I am certain that the Director’s deputy-nomination is surely one of the delegable functions.
Hal Wegner has also cited the Vacancies Act, 5 U.S.C. § 3345 et seq., as providing support for his conclusion about the illegality of Michelle Lee’s appointment, but once again, his analysis of the Vacancies Act suffers from his assumption that the powers of the PTO Director are nondelegable, which is not correct.
It is true that the Vacancies Act imposes strict limitations on the ability of other officers “to perform the functions and duties of any office of an Executive agency,” 5 U.S.C. § 3347(a), but the Act also expressly defines “function and duty” very narrowly to encompass only a statutory or regulatory function that is required “to be performed by the applicable officer (and only that officer),” id. § 3348(a)(2)(A)(ii) & (B)(ii) (emphasis added). In short, the Vacancies Act’s restrictions apply only to the nondelegable duties of the vacant office. As the Department of Justice’s Office of Legal Counsel has noted in its advice about the Vacancies Act, “[m]ost, and in many cases all, the responsibilities performed by a [Senate confirmed] officer will not be exclusive, and the [Vacancies] Act permits non-exclusive responsibilities to be delegated to other appropriate officers and employees in the agency.” See Office of Legal Counsel, Guidance on Application of Federal Vacancies Reform Act of 1998 (available at http://www.justice.gov/olc/finalqa.htm (question 48)). As discussed above, the PTO Director’s deputy-nomination function is surely delegable, and thus the Vacancies Act does not bar Commissioner of Patents Focarino from exercising it (as she apparently has in nominating Michelle Lee).
If I am right in my conclusion that Michelle Lee has been properly nominated, and therefore properly appointed, as the new PTO Deputy Director, then the Vacancies Act does tell us one other important fact. Ms. Lee may continue to serve as Deputy Director—and to exercise all the powers of the Director pursuant to § 3(b)(1)—without any particular time limit.
Normally, the Vacancies Act imposes a time limit of 210 days on the ability of a “first assistant” to serve in an “acting capacity” in an office requiring Senate confirmation. 5 U.S.C. §§ 3345 & 3346. Since that 210-day period (roughly 7 months) commences with the vacancy in the relevant office (here the vacancy in PTO Director’s office), the time period would have already expired since David Kappos left office on February 1, much more than 7 months ago. But the Vacancies Act expressly states that its time limits and other restrictions are inapplicable where “a statutory provision expressly … designates an officer or employee to perform the functions and duties of a specified office temporarily in an acting capacity.” 5 U.S.C. 3347(a)(1). Because § 3(b)(1) of the Patent Act expressly vests the Deputy Director “with the authority to act in the capacity of the Director in the event of the absence or incapacity of the Director,” the Deputy Director—first Teresa Rea, now Michelle Lee—can continue to act in the capacity of Director without a time limit. Indeed, this has to be true or else even Teresa Rea’s service as acting Director (which extended for more than nine months) would have been unlawful.
The Deputy Director’s ability to continue exercising the Director’s powers under § 3(b)(1) should not be viewed as an improper circumvention of the Senate’s role in the appointments process. There is certainly no constitutional problem. The PTO Director, even though currently subject to appointment by the President with the advice and consent of the Senate, is undoubtedly an “inferior officer” because the position is subordinate to the Secretary of Commerce, and Congress may by law vest the appointment of an inferior officer in the Head of a Department such as the Secretary of Commerce. (Indeed, if the PTO Director were not an inferior officer, then it might very well be unconstitutional for the Deputy Director to exercise the Director’s powers for any length of time.) Nor it is troubling as a statutory matter that the Deputy Director can exercise the Director’s powers for a potentially long period of time. As the Vacancies Act shows, Congress clearly understands how to place time limits on the ability of deputies to act with the powers of a vacant office. But Congress included no such limit in § 3(b)(1), and the Vacancies Act expressly provides that its strict time limits are inapplicable to such statutes.
In closing, I would be remiss if I were not to give Hal Wegner some additional words of praise. I have already complimented Wegner for bringing a proper level of attention to the important issue whether the powers of the PTO are being exercised by a lawfully appointed officer. While I disagree with Wegner’s legal conclusion—and to be clear, I think there’s no doubt that Michelle Lee is properly appointed as the PTO’s new Deputy Director—I nonetheless do agree with Wegner that there’s something deeply wrong as a matter of policy (though not legality) with the current situation.
With its appointment of Michelle Lee as Deputy Director, the Obama Administration must have determined that Ms. Lee is fully qualified and capable of exercising all the powers of the Director, because that is precisely what she will be doing as Deputy Director given the vacancy in the Director’s position. Why then not nominate her to be Director? Surely, it cannot be that the Administration fears a tie-up in the Senate. Now that the so-called “nuclear option” has been exercised, filibusters of executive nominations are not a threat, so the Administration could expect a relatively swift confirmation. If the Administration intends to continue seeking another nominee for the position, that seems to be really bad treatment of the new Deputy Director. Any new Director would surely want to name his or her own Deputy, and so another nominee will bring the possibility of at least a substantial demotion of the current Deputy. Confidence in an agency’s leadership cannot be conveyed—both inside and outside of the agency—when the agency’s current leader appears to have only the contingent and begrudging support of the Administration.
It also cannot escape notice of anyone that the USPTO has never had a woman as a permanent head (as opposed to an acting head). News reports have speculated that “that the administration favours the appointment of the first woman permanent Director of the USPTO.” See “The USPTO Director job has never been more important, so keep a close eye on who gets it,” Intellectual Asset Management (available at http://www.iam-magazine.com/blog/Detail.aspx?g=d05df489-6d03-418d-9bcb-d07b3152cc0b). If that is so, the Administration is certainly doing a poor job of it, for the Administration appears to be in the process of passing over multiple highly qualified women. Deputy Director Teresa Rea was highly qualified and served as acting director for more than nine months. She was not nominated for the permanent position and has now left the agency. Perhaps passing on one qualified female candidate can be explained by a variety of circumstances, but the Administration now has another highly qualified woman who will in fact be running the agency. If the Administration balks at nominating her for the top job, the agency will face the prospect of having several qualified women serve as mere “temps” while the job search drags on. Such a process would, to put it mildly, seem like a suboptimal way to demonstrate the Administration’s enthusiasm for having a woman as the head of this important agency with its jurisdiction over matters of science, technology and innovation.