Guest Post: Why Administrative Law Matters to Patent Attorneys—In re Cuozzo Speed Technologies LLC

by David Boundy

Many patent attorneys—including me—went through law school thinking “Administrative law?  What do I care?”  Administrative law matters; it is as important to intra-PTO litigation and to Federal Circuit appeals as the Federal Rules of Civil Procedure are during district court proceedings.

Administrative law provides a rich set of tools to for a party to guide rational agency decision making while a proceeding is in progress, and to challenge adverse decisions on judicial review.  Administrative law tools can:

  • require the agency to follow its own regulations as written, without ad hoc “interpretation” or creation of on-the-fly rules,
  • require the agency to consider all relevant evidence and arguments,
  • establish jurisdiction for judicial review,
  • on judicial review, obtain favorable standards of review by slotting issues into exceptions to the high deference normally accorded agency action,
  • turn weak policy-based arguments into strong arguments based on statute and Supreme Court authority,
  • challenge the agency’s evidentiary and factual rulings on standards that are often far more favorable than the standard of review applied to Article III courts—indeed, the standard of review in some instances can be less deferential than the standard applicable to jury findings,
  • adduce new evidence on appeal,
  • limit the agency’s ability to wiggle out of a case by requesting remand, and instead force the issue to a binding judgment against the agency, and
  • confine the arguments that the agency can make to defend its action, and
  • require the agency to meet the requirements of the Administrative Procedure Act and other relevant laws when promulgating its regulations or guidelines.

Competence in administrative law is essential in complex patent prosecution, ex parte appeals, PTAB trials, and appeals to the Federal Circuit from PTO and ITC actions.

The Administrative Law Requires Courts to Accept Jurisdiction to Review Agency Non-Compliance with Their Own Regulations

For example, last Wednesday, the Federal Circuit in In re Cuozzo Speed Technologies, LLC ruled that the court has no jurisdiction to review decisions by the Patent Trial and Appeal Board (PTAB) whether to institute an Inter Partes Review (IPR). An argument based on administrative law would have established the Federal Circuit’s jurisdiction, but that argument was not raised.

The Federal Circuit’s holding was so broad as to oust the court of jurisdiction to review whether the PTAB’s decision was made on criteria contrary to statute or the regulations that the PTAB promulgated for itself.  The court read 35 U.S.C. § 314(b) so broadly as to insulate from judicial review all decisions to institute or not institute an IPR, in all circumstances.

But the administrative law requires a court to exercise jurisdiction to review agency compliance with the agency’s own regulations and guidance, and to set aside agency action issued “without observance of procedure required by law.”[1]  The Supreme Court has addressed the following fact pattern on about a dozen occasions.  An agency acts outside its procedures.  The aggrieved party sues.  The agency points to a statute that precludes review, and asks the court to deny jurisdiction on that basis.  In every such case, the Supreme Court holds that even if a statute purports to preclude review, jurisdiction remains to review the agency’s procedures, to assess whether the agency action was “without observance of procedure required by law.”  “Only in the rare—some say non-existent—case  … may review for ‘abuse’ be precluded.”[2]  The Court holds that preclusion statutes must be read narrowly, to preclude review only of the ultimate decision on the merits, leaving intact jurisdiction to review whether the agency departed from procedural requirements.  The Supreme Court has applied this principle to statutes even broader and clearer than § 314(b), and to government interests far more fundamental.  It is a very strong principle.

Had that administrative law argument been raised, the Federal Circuit would unquestionably have accepted jurisdiction in Cuozzo.

The Administrative Law Confines the Board’s Discretion to Deny Motions to Amend During IPR’s

Cuozzo’s brief argues that the Board erred in denying a motion to amend claims.   The argument cites no authority.  This argument could have been converted from a weak argument to a very strong one, by grounding it in the administrative law.

When an agency promulgates a regulation, it is required to explain the regulation in a Final Rule notice in the Federal Register.  Any gloss put on the regulation in that notice binds the public under Chevron[3] deference (though the many exceptions to Chevron are far less known).  This gloss is binding on the agency as well—an agency can’t twist its regulations like a nose of wax.  Nor can an agency move regulatory burden from one regulation to another, like a confidence man moving a pea from under one shell to another, by giving inconsistent rationales and interpretations for regulations.

In promulgating the IPR regulations, the PTO justified its choice of a “broadest reasonable interpretation” standard for claim construction by pointing to “a party’s ability to amend claims to avoid prior art—which exists in these proceedings (§ 42.221).”[4]  But the PTAB almost never grants these motions to amend.[5]  Thus, as a practical matter, the agency’s basis for adopting “broadest reasonable interpretation” is illusory.  The administrative law does not allow agencies to have things both ways—the PTO can’t both uniformly deny motions to amend and point to that “right” as justification for broadest reasonable interpretation.

The strong argument is based in administrative law.  While most “arbitrary and capricious” cases are hard, a few subcategories are easy.  PTAB decisions frequently raise issues that can be slotted into these easy subcategories for appeal.

The PTAB’s Trial Regulations Were Issued with Insufficient Attention to Rulemaking Procedure

Cuozzo also affirms the PTO’s choice of “broadest reasonable interpretation” as the standard for claim construction. However, the PTO’s “broadest reasonable interpretation” rule—like many of the PTO’s other regulations—is subject to challenge because the PTO was less than rigorous in following rulemaking procedure.

Agency rulemaking is governed by a number of statutes, including the Administrative Procedure Act, Regulatory Flexibility Act, Paperwork Reduction Act, Information Quality Act, E-Government Act of 2002, Independent Offices Appropriations Act, regulations on Information Collections, guidelines on Information Quality, and Executive Order 12,866.  These laws require specific procedures, disclosures, and analyses.  For example, they require an agency to disclose its assumptions, factual and statistical information and models and their underlying support on the agency’s web site.  The agency must ask specific questions to seek comment.  The agency must show cost-benefit analyses to asses effect on small entities and overall economic effect, and must show that the agency has sought to minimize (not just reduce, but minimize) paperwork burdens.  The agency must show its work, and provide supporting evidence, similar to that required for a peer-reviewed journal article.

The Paperwork Reduction Act is especially interesting, because it is little known and exceptionally powerful.  As you may recall, the PTO had to stand down on its Appeal regulation on the morning it was to go into effect because the Office of Management and Budget withheld the PTO’s power to enforce those regulations, after a number of letters pointed out PTO violations of the PRA.  (I had a little influence in that outcome.)  Likewise, OMB directed PTO to stand down on the Continuations, 5/25 Claims, and IDS regulations (I also had something to do with that).

During the rulemaking process for the PTO’s AIA regulations, several of the comment letters noted procedural deficiencies in the PTO’s Notices of Proposed Rulemaking and its supporting materials.  The letters warned that these deficiencies would expose the PTAB’s decisions to challenge because the PTAB’s regulations were not validly promulgated.  The oversights were not corrected before the final regulations were published.

Many PTAB decisions present winnable issues for appeal based on faulty procedure during rulemaking.  Cuozzo likely could have been such a case, but administrative law opportunities were missed.

Conclusion

Some administrative law statutes permit issues to be raised at any time, and such issues have been successfully raised for the first time in courts of appeals.  Unfortunately, in Cuozzo, these administrative law arguments weren’t squarely raised.  The lesson of Cuozzo is that patent attorneys—especially those that practice in contested cases before the PTAB and in appeals to the Federal Circuit—need to know the administrative law as well as they know the patent law.

= = = = =

David Boundy is a patent attorney in Cambridge Massachusetts, specializing at the intersection of administrative law and patent law.  While Vice President for Intellectual Property at Cantor Fitzgerald, in 2006-10 Mr. Boundy led teams that advocated with the Office of Management and Budget in the Executive Office of the President for the withdrawal by the PTO of the Continuations, 5/25 Claims, IDS, and Appeal rules.  Mr. Boundy consults and provides legal services on administrative law issues for intra-PTO trials and judicial review cases.

= = = = =

[1] 5 U.S.C. § 706(2)(D).

[2] Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 672 n.3 (1986)

[3] Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

[4]  Patent and Trademark Office, Changes to Implement Inter Partes Review Proceedings, Post-Grant Review Proceedings, and Transitional Program for Covered Business Method Patents; Final Rule, 77 Fed. Reg. 48680, 48693 (Aug. 14, 2012).

[5] Richard Neifeld, “Kill Rate of the Patent Death Squad, and the Elusory Right to Amend in Post-Grant Reviews,” Intellectual Property Today, (April 2014), at http://www.neifeld.com/pubs/Kill%20Rate%20of%20the%20Patent%20Death%20Squad%20-%20Part%20I.pdf

74 thoughts on “Guest Post: Why Administrative Law Matters to Patent Attorneys—In re Cuozzo Speed Technologies LLC

  1. Hey David, I just noticed that you live in Cambridge. So does my daughter. Her husband just sent me a photo taken yesterday where the snow level right out front by the sidewalk is at least 4-5 inches above her head.

    Doing a lot of shoveling lately?

    1. No, no shoveling. I am leaving my car EXACLY where it is.

      After the first storm, it was covered all except the passenger side window. Driver side totally covered.

      After the second storm, the passenger side rearview mirror was sticking out.

      After the third storm, TOTALLY covered. A nice passer-by wrote CAR in the snow so people wouldn’t shovel onto it.

      We have great public transportation here. So I just won’t drive til it melts its way out. I bought a new battery a few months ago, so it’ll be fine.

      Some of the snow piles are twice my height. Along Stuart St, one of the main east-west streets, I took some pictures. The plow moraine — that is, a continuous wall of snow — is more than twice the height of the parking meters peeking out.

      Yeah, it’s pretty darn snowy here.

  2. Hey Rick, long time.

    In your linked article, you say in footnote 3,

    “The phrase, ‘Patent Death Squad,’ is based upon a remark made by the chief judge of the Court of Appeals for the Federal Circuit at the 2013 annual conference of the AIPLA, when discussing post-grant review proceedings. AIPLA officials at the same meeting later applied the term to the members of AIPLA’s committee on “USPTO Inter Partes Patent Proceedings.”

    With respect to the latter committee, can you elucidate what that committee’s charter was an why it appears that the AIPLA is having buyer’s remorse.

  3. Boundy: Agency rulemaking is governed by a number of statutes, including the Administrative Procedure Act, Regulatory Flexibility Act, Paperwork Reduction Act, Information Quality Act, E-Government Act of 2002, Independent Offices Appropriations Act, regulations on Information Collections, guidelines on Information Quality, and Executive Order 12,866. These laws require specific procedures, disclosures, and analyses. For example, they require an agency to disclose its assumptions, factual and statistical information and models and their underlying support on the agency’s web site. The agency must ask specific questions to seek comment. The agency must show cost-benefit analyses to asses effect on small entities and overall economic effect, and must show that the agency has sought to minimize (not just reduce, but minimize) paperwork burdens. The agency must show its work, and provide supporting evidence, similar to that required for a peer-reviewed journal article.

    David, since you appear to be an expert on this topic, can you let everyone know how the non-patent wielding public (i.e., the vast majority of the public) served by the agency can use these the laws to compel the PTO to reveal the decision-making process that led it to grant more invalid patents over a ten year period than it had in the previous fifty years?

    1. ” PTO to reveal the decision-making process that led it to grant more invalid patents over a ten year period than it had in the previous fifty years?”

      No mystery there, it’s all this requirement for evidences re 102/103, the previously boinked standard for 112 2nd, and the federal circuit’s tomfoolery with 101.

        1. I doubt seriously that MM has any complaints with my personal performance in the scheme. I have yet to hear about anyone btching about my art having particularly low quality or over-issuance of invalid patents in my art.

  4. Still hammering away at admin law Boundy? Good for you. Some years ago you and I were the only ones on here who appreciated its significance. In fact, there was nobody in my local patent bar who understood it, either, and I received many blank stares when raising admin issues.

    My practice has taken me away from patent law for a time, which was why I declined your overtures some years back–but it is nice to see that you have kept the torch lit, and burning brightly. I will likely have to step back into the pool for a few years, so I thank you for keeping these issues alive.

  5. This was one of the benefits of a legal education at Franklin Pierce Law Center. Prof. Thomas Field (former patent agent) taught the required Administrative Process class, but with an emphasis on IP and technological regulation.

  6. David: I completely agree that Admin law is very useful, but I disagree that it would have made much difference in this case. The Congressional grant of authority was more specific than in other situations that have been overturned, and the current Federal Circuit seem more deferential to the PTO (e.g. Chief Judge is former agency lawyer, former PTO solicitor is on the bench).

    In conclusion, I would have made the admin law argument, but I don’t think it would have been decisive.

  7. Interesting article, David.

    I’m curious: are there any situations where some sort of administrative law may be violated where you would recommend not proceeding with an appeal based on those grounds?

    For instance, I note that you didn’t comment on the merits of Cuozzo’s patent claims, which were minimal (to put it kindly).

    Would you recommend that people pursue the options you’ve outlined regardless of the merits of the underlying patent claims? Or is that factor irrelevant to the decision, in your opinion?

    1. I never recommend a procedural challenge when the merits are dead on arrival (and indeed, have often counseled against it). I don’t recommend that a client should throw good money after bad. As the Supreme Court said, “Procedure is the means; full, equal and exact enforcement of substantive law is the end.”

      Procedure is directed at helping the parties and tribunal to ask the right questions. Asking the right questions is essential to getting the right answer. Often an answer that seems so obvious to the PTO is just plain wrong because the examiner/APJ/Petitions Examiner isn’t asking the right questions or isn’t paying attention to “inconvenient” evidence. That’s where the administrative law becomes powerful.

      1. Thanks, David.

        As I’ve often reminded “anon”, filing a lawsuit just because one can win the lawsuit without any regard to the bigger picture is something that a hack does. Intelligent attorneys know better.

        1. Move the goalposts back Malcolm.

          Contrast “because one can win

          with

          when the merits are dead on arrival” – i.e., cannot win.

          Let’s leave the dissembling spin out of this, shall we?

  8. Will somebody please cite one case, any case, where the Supreme Court upheld a statute denying review of an agency action of enforcement, as opposed to denial of enforcement?

    I had a discussion with Jonathan in another thread where we seemed to be talking past each other. I’ve seen in two cases, namely Crowell v. Benson, and Heckler v. Cheney, where the Supreme Court in dicta that said that a statute that would deny review of jurisdictional facts and law would be unconstitutional, and proceeded to review assertions of jurisdiction de novo under both fact and law regarding jurisdictional facts. And yet, both Jonathan and now David Boundy both state that Congress can deny review by statute of assertions of jurisdiction by an agency. However, neither one references any case that actually upheld such a statute is constitutional. But as I said, there are cases which in dicta opine that such a statute would be unconstitutional for at least a denial of due process.

    I do not know of a single case that has purported to overrule Crowell v. Benson on this point. I doubt if such a case exists.

    Also, if anybody knows, what is the source of the aphorism that so often appears in cases that subject matter jurisdiction is always reviewable? This is the same thing but stated in a different way.

    The bottom line: it appears to be that Congress does not have the power to deny review of jurisdictional facts. Crowell v. Benson. But posters here insist that Supreme Court authority to the contrary exists. Name one.

    1. Ned, you are raising a different issue here, namely constitutionality, not the APA. But that challenge would require even stronger proofs – of a complete lack of jurisdiction of the agency over the subject matter – which were not the facts provided in this case or even alleged. Furthermore, if those were the facts, mandamus would be clearly available.
      Furthermore, and most importantly, the IPR statute in question is to prevent interlocutory appeal delays of the initiation of IPRs, not to prevent any normal appeals from IPR PTAB decisions, including any jurisdictional challenges.

      1. Paul, may I politely suggest that you are wrong on the holding of Cuozzo. It bars from the appeal all institutional issues. ALL.

        You should also that the Federal Circuit has already held that mandamus will not lie to challenge any interlocutory decisions by the Board.

        This means, that naked violations of the law can only be reviewed by mandamus after a final written decision and only if the patent owner appeals an adverse decision on the merits.

        In other words, if a party is clearly estopped, and the patent owner must proceed with the IPR regardless, but wins, there is no review of the illegal action by the Board. This is such a remarkably bad outcome for patent owners asked to be beyond the pale of ordinary norms of justice. Congress could not have intended this result. Furthermore, I think the Federal Circuit is bucking for another bruise by the Supreme Court if he continues with this.

        1. Ned,
          A good start is Hart, The Power of Congress to Limit the Jurisdiction of Federal Courts: An Exercise in Dialectic, 66 Harv. L. Rev. 1362, 1375-1378, 1388-1391 (1953). Three decisions of the Supreme Court have assumed that the APA is an independent grant of subject-matter jurisdiction. See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410 (1971); Abbott Laboratories v. Gardner, 387 U.S. 136, 141 (1967); and Rusk v. Cort, 369 U.S. 367, 372 (1962). However, the SC found later that the judicial review provisions of the APA are not jurisdictional, Califano v. Sanders, 430 U. S. 99 (1977). Thus, I think the proper and only way to go about the denial of instituting an IPR is to go to the district courts under 28 U. S. C. § 1331 to review the IPR denial order for compliance with federal law. Just an idea, Jonathan

          1. Jonathan, I will look at these cases but I think again that we are not communicating.

            1. I am not looking for any cases concerning “merits.” These can be committed to the discretion of the agency.

            2. I am not looking for any case on refusing to institute agency action or review, e.g., refusing to instituting an IPR.

            3. I am looking for one case where the agency asserted jurisdiction without statutory jurisdiction, and a review statute was construed to forbid review. (The consequence of this would be appalling — just think about it for a second: Congress passes a clear air act, prevents review of assertions of jurisdiction, and the next thing we see is the clean air an agency banning junk food on the grounds that kids who eat junk food breathe more CO2. Another example would be for the FCC banning the use of advertising on the internet because they have some authority over broadcasting over the public airways.)

            I think Crowell v. Benson and Heckler are both squarely on point that assertions of jurisdiction were reviewable — Crowell going so far as to say the court could review jurisdictional facts de novo.

            I’m sorry beating this horse once more, but I am pretty sure we are not communicating.

            1. Ned —

              For your point 3, I know of no such case, and would be EXTREMELY surprised if one existed. There would be no such case before 2005, because courts understood they had authority to rule on jurisdiction de novo.

              After 2005, the flow of authority to define an agency’s jurisdiction is refined a bit, as I describe in my posts 7.6 and 7.6.1.1.

        2. Ned,

          Here are some very early SC examples:

          Quinby v. Conlan, 104 U.S. 420 (1881) (“It would lead to endless litigation, and be fruitful of evil, if a supervisory power were vested in the courts over the action of the numerous officers of the Land Department, on mere questions of fact presented for their determination.”);
          Bartlett v. Kane, 57 U.S. 263 (1853) (noting “general principle, that when power or jurisdiction is delegated to any public officer or tribunal over a subject-matter, and its exercise is confided to his or their discretion, the acts so done are binding and valid as to the subject-matter”);
          United States v. Morris, 23 U.S. 246 (1825) (“It is not competent for any other tribunal, collaterally, to call in question the competency of the evidence, or its sufficiency, to procure the remission The Secretary of the Treasury is, by the law, made the exclusive judge of these facts, and there is no appeal from his decision. . . . It is a subject submitted to his sound discretion.”);

          There is a long line of SC cases in which appellate judicial review of a final agency actions was not available.

          Jonathan

      2. Out of curiosity, is there some provision in the body of administrative law (APA or otherwise) that prevents subsequently enacted statutes from revoking subject matter jurisdiction relating to judicial review of administrative actions? In other words, is there something that prevents 314(b) from being construed as superseding the APA, leaving Ned’s Constitutional question as the only question?

        1. APoTU, that’s 314(d), not (b).

          But the point you raise is the one I am raising. The Feds have held that decisions TO institute, regardless of how off the wall they are, are, by statute, not reviewable either at institution or upon final review. As I said, the petitioner might be barred statutorily on any number of grounds, e.g., the institution decision might be based on public use evidence in violation of the statute — or the institution decision might be made on prior art of the PTO’s own research. None of this ultra vires behavior is reviewable at all. The Federal Circuit has abdicated review — and will only look at violations with a mandamus. But at the end? Why at the end, when the violation occurred at the beginning and by waiting, the patent owner will have lost entirely the benefit of the estoppel or such, for example, that was intended to bar the IPR entirely.

        2. 5 U.S. Code § 559 – Effect on other laws; effect of subsequent statute

          This subchapter, chapter 7 … do not limit or repeal additional requirements imposed by statute or otherwise recognized by law. … Subsequent statute may not be held to supersede or modify this subchapter, chapter 7 … except to the extent that it does so expressly.

    2. NH: Also, if anybody knows, what is the source of the aphorism that so often appears in cases that subject matter jurisdiction is always reviewable? This is the same thing but stated in a different way.

      Here’s a 1990 6CA case discussing at length, including USSCt cites.
      Von Dunser v. Aronoff
      link to law.justia.com

      Adopted by 4CA 1995, O’Brien v. Lowe
      link to openjurist.org

    3. Ned, are you either misreading or miswriting? I didn’t say “Congress can deny review by statute of assertions of jurisdiction by an agency.” I don’t think I said that at all. To the degree I understand your sentence (and to be fair, I don’t), I think I said the opposite.

      Going outside my post (and going slightly tangential to you), every statute that grants jurisdiction to an agency sets limits on that jurisdiction. And of course agency action that oversteps jurisdiction is reviewable for that overstep. § 706(2)(D).

      1. 5 USC 701(a)(1) (along with 35 USC 314(d)) seems to make review under 5 USC 706(2) inapplicable in the case of IPR institution decisions.

        1. I agree with you, to the extent that all you’re saying is that the ultimate decision is unreviewable. On its face, § 314(d) says that and only that.

          However, 314(d) says nothing about procedural issues underlying the decision, and the Supreme Court has been clear that they are reviewable. That’s the whole point of the first section of my article.

          1. In the case of Cuozzo, what procedural issues do you think would be reviewable? There’s not a lot to review before the institution decision happens – perhaps denial of miscellaneous motions – and nothing of this sort was adverse to Cuozzo in that particular IPR. Are you referring to the rulemaking underlying the pre-institution portion of the IPR procedure?

            I skimmed Bowen, and it looks like the fact pattern was much less clear than in Cuozzo. The government argued two things in Bowen:

            1. The presence of a statute authorizing review of particular agency decisions implicitly prohibits review of other decisions made by that agency under the same title.

            2. The presence of an incorporative statute that points to a related statute which happens to prohibit review of agency decisions under a general federal question jurisdiction statute likewise prohibits review of agency decisions under the instant statute. (That’s my best interpretation of it – it’s pretty convoluted.)

            These two justifications basically rely on creative interpretations of the statute, so it’s not surprising that the Supreme Court wasn’t convinced. On the other hand, 35 USC 314(d) is much clearer. It expressly and plainly says that the decision to institute an IPR is not reviewable. The Supremes say in Bowen that clear and convincing evidence is required to conclude that a statute prohibits judicial review of a particular agency action; I find it difficult to read 314(d) and reach a conclusion that Congress meant anything else.

            1. PoTU:

              Do you understand that the ultimate decision (in this case, the decision to institute or not institute) and the underlying procedural and jurisdictional issues are two different “actions” for administrative law purposes? Two different jurisdictional bases, sometimes two different paths of review up through the agency and the courts…

              Once you understand that, then everything clarifies.

              1. To be honest, that’s a point that I don’t currently understand, but I’m not an attorney, so it may be a subtlety I haven’t been exposed to before. I’d be interested in reading more about it, though, if you could point me in the right direction.

    4. Ned,

      In Craig v. Leitensdorfer, 123 U.S. 189, 211 (1887), Justice Matthews said re “Article III courts have no right to control, to reserve, and to dictate the procedure and action of executive officers . . . . Such a function is not judicial; it is administrative, executive and political in nature. The abstract right to interfere in such cases has been uniformly denied by judicial tribunals, as breaking down the distinction so important and well defined in our system between the several, separate, and independent branches of the government.”
      Similar and in this famous later patent case, Postum Cereal Co. v. Cal. Fig Nut Co., 272 U.S. 693 (1927), as well as in other later SC cases, the SC held that an Article III court could not review by appeal a judgment of an Article I or legislative court without impairing the independence of the judicial authority. Again, these two and other (many SC) cases indicate that judicial review of a final agency action is not a given. I think the presumption of judicial review of an agency action should be tied to the applicability of the “clear statement” rule.

      Jonathan

      1. Jonathan —

        These pre-1948 cases retain very little vitality after the Administrative Procedure Act. Courts absolutely have discretion to review action (unless there’s a preclusion statute)–courts give deference, but have jurisdiction to review.

    5. Ned —

      Did I read the right point of Cowell v Benson? Crowell only says that a review of jurisdictional facts is permissible, not that it’s constitutionally mandatory. I don’t recall seeing such a case, but it seems to me that a court would always have jurisdiction to review an agency’s assertion of jurisdiction–not as a matter of constitutional law, but as a matter of APA § 706(2)(D), unless there were a very specific preclusion statute.

      Crowell also holds that no statute could preclude review of constitutionality of agency action, but that doesn’t seem to be what you’re after here.

      Heckler v. Chaney seems to be irrelevant—it’s only about the agency’s own jurisdiction (not judicial review to review agency action), and Article III jurisdiction to review an agency’s discretion to pick and choose where not to exert its enforcement resources.

      In 2005, the Supreme Court really upset the apple cart in the area of judicial review of an agency’s claim of jurisdiction, in National Cable & Telecommunications Ass’n v. Brand X Internet Services, 545 U.S. 967 (2005). Brand-X says a court must give Chevron deference to the agency’s interpretation of its own jurisdictional statut (and, one assumes, Overton Park deference to the agency’s findings of fact). Even there, it’s a question of how much deference an Article III court gives an agency, not whether the Article III court has jurisdiction.

      1. David, I have no doubt that Congress may delegate to an agency substantive rule-making power, and that the agencies interpretation of it own statute must be given deference if that power were so granted.

        But, in the case of the PTO, Congress has never granted the PTO substantive power except to define “technology” in CBM post grant reviews. Thus PTO actions are presumptively reviewable for legal error, including assertions of jurisdiction. The way I read the cases, is that an agency cannot be the “final” arbiter of its own jurisdiction, because that is a judicial function, thereby raising serious Articlie III issues.

        Now, if Congress did in fact remove from court review all matters pertaining to jurisdiction, leaving only a review of the merits, then Congress would usurp the judicial function whereby the courts, not are the final arbiters. I cannot find a single case where any court has held that congress may do such a thing, and the Supreme Court certainly has never done so.

        But Cuozzo seem to hold that Congress did just that with 314(d), leaving review by mandamus as the only recourse.

        1. Your 2nd paragraph, first sentence: AIA § 18(d)(2) is not the relevant grant of rulemaking authority for IPRs. 35 U.S.C. § 316(a) grants rulemaking authority for IPR’s in an awful lot of procedural categories.

          Your 2nd paragraph, 2nd and 3rd sentence: I concur, except that under Brand-X, the agency gets first whack at determining its own jurisdiction, and then a court must give Chevron deference, but court has final say.

          Your 3rd paragraph: your “if” is incorrect, so the rest of the paragraph is not relevant.

    6. I found an interesting law review discussing the issue I raise: Schwartz, Bernard. “Does the Ghost of Crowell v. Benson Still Walk.” U. Pa. L. Rev. 98 (1949): 163. link to scholarship.law.upenn.edu

      “No tribunal of inferior jurisdiction can by its own decision
      finally decide on the question of the existence or extent of such
      jurisdiction: such question is always subject to review by the
      High Court, which does not permit the inferior tribunal either to
      usurp a jurisdiction which it does not possess, whether at all or
      to the extent claimed, or to refuse to exercise a jurisdiction which
      it has and ought to exercise. Subjection in this respect to the
      High Court is a necessary and inseparable incident to all tribunals
      of limited jurisdiction; for the existence of the limit necessitates
      an authority to determine and enforce it: it is a contradiction in
      terms to create a tribunal with limited jurisdiction and unlimited
      power to determine such limit at its own will and pleasure-such
      a tribunal would be autocratic, not limited-and it is immaterial
      whether the decision of the inferior tribunal on the question of
      the existence or non-existence of its own jurisdiction is founded
      on law or fact…”

      The article cites to Social Security Bd. v. Nierotko, 327 U.S. 358, 66 S. Ct. 637, 90 L. Ed. 718 (1946), which at 369 holds,

      “Administrative determinations must have a basis in law and must be within the granted authority. Administration, when it interprets a statute so as to make it apply to particular circumstances, acts as a delegate to the legislative power. … An agency may not finally decide the limits of its statutory power. That is a judicial function.”

      Among the case the Court cites is American School, 187 US 92, 109-110 (1902):

      “The facts, which are here admitted of record, show that the case is not one which by any construction of those facts is covered or provided for by the statutes under which the Postmaster General has assumed to act, and his determination that those admitted facts do authorize his action is a clear mistake of law as applied to the admitted facts, and the courts, therefore, must have power in a proper proceeding to grant relief. Otherwise, the individual is left to the absolutely uncontrolled and arbitrary action of a public and administrative officer, whose action is unauthorized by any law and is in violation of the rights of the individual. Where the action of such an officer is thus unauthorized he thereby violates the property rights of the person whose letters are withheld.”

      Crowell v. Benson itself holds,

      “The recognition of 57*57 the utility and convenience of administrative agencies for the investigation and finding of facts within their proper province, and the support of their authorized action, does not require the conclusion that there is no limitation of their use, and that the Congress could completely oust the courts of all determinations of fact by vesting the authority to make them with finality in its own instrumentalities or in the Executive Department. That would be to sap the judicial power as it exists under the Federal Constitution, and to establish a government of a bureaucratic character alien to our system, wherever fundamental rights depend, as not infrequently they do depend, upon the facts, and finality as to facts becomes in effect finality in law.” 285 US 22, at 57.

        1. Does that not depend on whether you consider the APA the floor or the ceiling codifying the power of the Art III branch to review agency jurisdiction?

  9. The Administrative Procedure Act (APA) is the federal statute that governs administrative agencies of the federal government, which includes the PTO as emphasized by the Sup. Ct. in In re Zurko. That is, it is statutory. So is 35 U.S.C. § 314(b), which is later and more specific and therefor controls. The Federal Circuit in In re Cuozzo Speed Technologies, LLC did not say there was no recourse to violations of other statutory provisions for IPRs or clear violations of PTO regulations. It held in view of this appeal-prohibition statute, a normal appeal is not available and a mandamus action would need to be used. Furthermore, no substantive harm to the patent owner was shown for the specific fact alleged. All the prior art relied upon by the PTAB was cited in the IPR petition. There was no statutory or regulatory requirement for every prior art patent to be cited against every contest claim to which it might apply.

    1. Paul, let us assume that company X loses an IPR. Then company X changes his name to company Y, and files a second IPR. I would think that such an IPR would be in violation of the statutory estoppel provisions. But what if the Board authorized the IPR to proceed regardless, holding that the change in name was sufficient.

      Under the reasoning of the Federal Circuit in Cuozzo, this flagrantly illegal action by the PTO would be totally unreviewable except by mandamus and then only if the patent owner loses on the merits. I find the reasoning of the Federal Circuit in this regard remarkably opaque.

        1. David, clearly the assertion of jurisdiction in the example is ultra vires, why is it a procedural violation and not a legal violation?

          1. I’m not sure this question is well framed. Surely “procedural” is one kind of “legal?” Is there an either/or relationship?

            Agency exercise of power beyond its jurisdiction is reviewable because § 706(2)(D) says it is. I don’t understand your distinction between “procedural” and “legal” or why it matters.

          1. …and sometimes strict results under unreasonable “construction” of the statutes (read that as implicit and explicit judicial insertions)…

            😉

    2. P.S. It was also noted that [unlike the successful judicial challenge to the Dudas-Toupin attempted PTO rule package] the IPR statute provides a statutory basis for substantive rule-making for IPRs. I would be interested in comments on that asserted distinction from an administrative law standpoint?

      1. The asserted distinction just raises the stakes from an Agency operating (or attempting to operate) outside its boundaries to the Congress operating (or writing law for another branch to operate) outside of Congress’es authority.

        It would not be the first time that a congressional law has been ruled unconstitutional and thrown out.

        Of course, here with the AIA, we have the Titanic/Chaebol effect in play…

    3. Thanks Paul. It goes the other way — mandamus is only available when there is no other remedy available by law. The Federal Circuit just plain goofed when it said that the existence of mandamus creates a carveout from classic appeal under the APA.

      The later part of your post is a bit off the point as well–whether the decision was right on the merits at the end of the case is irrelevant to the jurisdictional issue at the beginning of the case.

      1. Dave, your second paragraph was not a point I was arguing for – of course if there was an actual lack of subject matter jurisdiction it is not waived and a decision made without jurisdiction is invalid.

  10. I have been consulting on IP issues for many years, but I am not a lawyer. Recently I have begun to suspect that a couple of patent applications have dropped down the SAWS black hole. Should I recommend that the prosecutors look into administrative law implications?

    1. The seemingly easy answer is that since you are not an attorney, you should not be giving legal advice.

      Here in the States, we frown on the unauthorized practice of law.

      1. I have told you before. I don’t do legal although I have been thinking of taking the patent bar. I explain technologies to lawyers. Long ago the director of my department at Bell Labs decided I had a flair for explanation and realized

        1) that I had an encyclopedic knowledge of technologies since the Greco-Roman period and

        2) that I have grammar knowledge comparable to Chomsky.

        I have been assisting lawyers that needed technological help (and occasionally grammatical assistance) ever since.

        1. I think it is awesome that you do so (no snark).

          But you do have a tendency to get muddled as to the boundaries of law (for example, your 101 philosophical missives often dive incorrectly way past law).

          Personally, I think that you would make a fine attorney, and pursuing law may enable you to see the world is not made up of nails to match your current philosophical hammer.

    2. In direct response to your question, yes, if your patent attorneys aren’t clever enough to do so on their own, you should tell the patent attorneys to at least look into the admin law aspect of a case that you think may have dropped into the jaws of SAWS. Including whether or not it makes sense for them to think about the admin law implications of a case falling into SAWS before there’s definitive proof that that has actually happened.

      1. NSLA,

        You are too clever by half, as the very choice of your moniker, drenched in snark, is a FAIL

        and

        You fail I recognize that a certain level of snark is fitting

        and

        You fail to recognize that I already provided the answer you provided

        and

        You failed to recognize that I also paid Joachim a compliment

        and

        You failed to recognize the valid point I raised as to Joachim’s tendencies not to recognize the boundary of law.

        Other than that, you also fail to recognize that the nature of the secrecy of SAWS rather eliminates your desire for “definitive proof,” which is kind of the point of all the calling for the antiseptic of sunshine (and for the agency to abide by its owns rules, such as 37 C.F.R. 2).

        You kind of overlooked that in your rush to be snarky.

        Snark, without making valid points, is no way to go through life son.

  11. The sad thing (to me), is that the law IS the law, and it should not take an argument from counsel to prompt or remind any judge to apply the correct governing law. Does counsel have to remind judges of each foundational Constituional point in every decision? There is – and should be – a certain onus on judges to already know, understand, and apply (without being reminded by counsel) the correct controlling law.

    1. Sadly, the law is complex. Judges are no more omniscient and able to recall every possible legal principle than other mortals (and certainly not to match up facts to those principles). Parties have weeks to think things through to choose and organize; judges are much more time pressured.

      Parties have to brief the right issues, and do so in a way that simplifies and genuinely helps the tribunal.

      1. While I do see what you are saying, and counsel should be pursuing the best case (including admin law positions), I am not as generous as you as to excusing the responsibilities of the court – and certainly not on “time” issues. The Court is afforded a great deal of respect / I expect that respect to be earned. This point I present is where that respect is earned (or, as the case may be, lost).

        Getting to wear the robes brings great power. As my Uncle Ben always told me, with great power comes great responsibility.

  12. Ya’ need to author a hornbook on AL the PL interface, David. (Pardon my ignorance if you already have.)

    A couple questions float to the surface of my sleep-deprived brain:

    [1] Given that these powerful administrative attacks on the Dyk/Clevenger opinion were not raised by counsel and were not discussed in the opinion, will the opinion serve as precedent in future cases to defeat counsel who do raise the issues?

    For instance, I would presume that Dyk/Clevenger’s position on BRI would have to discuss the administrative points you raise re: BRI (the PTO is not permitted to “have things both ways”) in order for the opinion to be used against future counsel who do raise the issue.

    (Newman does discuss BRI at length, but not the prohibition of the both ways approach, at least not directly. She says BRI was approved by CAFC based on “unfettered opportunity to amend.” Unfettered? Some of these judges and justices are still living in the good ole’ days before “compact prosecution” twisted the whole process.)

    [2] Can the administrative law issues you point out now be raised in seeking en banc review, or during en banc (and perhaps head off a malpractice action against Cuozzo’s counsel)?

    Some of these issues seem to go to subject matter jurisdiction (or be analogous thereto), which can be “raised” any time, but “raised” generally means a litigant argues that the court does not have jurisdiction, not that the court does have it.

    1. Excellent post. Understandable frustration with the patent bar. I would go so far as to suggest that practitioners start flagging the issues at least as tack on arguments at some point in the IPR process – otherwise you are going to run into the waiver argument from the solicitors office (not that they will always win – but they will make the argument). I am surprised that the bar is not making more facial challenges, see Patlex v Mossinghoff for the jurisdictional hook, and instead buying into the need for administrative exhaustion before a rule/statute can be challenged. That is not what Patlex holds.

      The IPR process is rife with substantive issues papered over under the guise of procedure. Not least of which is affidavit expert testimony – just mind blowing to me that a substantive right can be adjudicated on an affidavit with no cross and no observation of witness demeanor. This strikes at the heart of the protections afforded under the 7th Amendment.

      1. “The IPR process is rife with substantive issues papered over under the guise of procedure. Not least of which is affidavit expert testimony – just mind blowing to me that a substantive right can be adjudicated on an affidavit with no cross and no observation of witness demeanor.”

        Those things may have been true of the defunct inter partes reexaminations. But the IPR procedures require that the affiant be available for cross, and further allow for observation of witness demeanor, such as by video-recorded or live testimony.

      2. iwasthere, it does seem odd that one must go through an IPR, and lose, before one can challenge the IPR on subject matter jurisdictional grounds.

        The PTO seems adamant that nothing stand in the way of the IPR freight train. If the Board errors, take it up with the Federal Circuit, but only after a final written decision.

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