Legality of the Matal Appointment: Acting As PTO Director

The following is a guest post by David Boundy – a Cambridge Massachusetts attorney with a specialty at the intersection of patent and administrative law. In 2007-09, David led the teams that quashed the Continuations, 5/25 Claims, IDS, Markush, and appeal rules under the Paperwork Reduction Act.

On other mailing lists, members of the patent bar have expressed concern that the appointment of Joe Matal may be illegal, because it does not follow the succession plain laid out in the Commerce Department Organization order 10-14.04. Some have wondered whether the appointment is illegal, in defiance of law. Would actions taken by Mr. Matal be ultra vires? Would patents signed by Mr. Matal be validly issued?

The DOO is not a statute. It’s not even a regulation. The Administrative Procedure Act, 5 U.S.C. § 553, sets out the “pigeonholes” for classifying rules and their effect. Of those pigeonholes, the DOO is a “statement of policy,” and thus only “hortatory,” not binding against the agency or the public.

Guidance is binding on an agency’s employees when that guidance promises procedural rights in favor of the public (but guidance is not binding against the public, unless it meets all the requirements of Chevron to be an “interpretation of statute or regulation”). Here, I have trouble seeing a procedural right operating in favor of the public that’s violated by appointment of one qualified individual over another, and thus there’s no binding effect for the DOO guidance.

In the guidance alone, I don’t see anything having force of law that could be breached, I don’t see who would have standing to challenge the DoC/PTO’s self-waiver, and I don’t see what remedy a court could order. (The DOO guidance may be a paraphrase or interpretation of a statute governing agency succession—that would be a different matter. I don’t know of such a statute.)

Very likely the law controlling validity of patents signed by Mr. Matal is expressed in Aristocrat Technologies Australia Pty, Ltd. v. International Game Technology, 543 F.3d 657, 663, 88 USPQ2d 1458, 1463 (Fed. Cir. 2008)—once a patent issues, nonstatutory procedural lapses (other than inequitable conduct) merge into the grant, and are not bases for challenging validity.

To be sure, there are procedural issues swirling around the PTO. The PTO’s self-grant of a federal holiday is a statutory issue, and even after an unpublished district court decision in Elm 3DS Innovations LLC v Lee, that’s still an open issue clouding validity of patents. The PTO’s misunderstanding of the legal stature of guidance creates hundreds of millions of dollars of waste, fraud, abuse, and unwarranted burden for the public. The PTO’s neglect of its obligations, and self-granted waivers, under the Paperwork Reduction Act, allow these millions to be hidden from OMB’s oversight authority. Those problems are compounded by the PTO’s failure (indeed, outright refusal stated in Petition Decisions) to implement a 2007 directive from the Executive Office of the President that clarifies the role of guidance, and the legal obligation of agencies to enforce guidance against its own employees and not against the public.

But the skirting of guidance leading to Mr. Matal’s appointment isn’t one of those legal problems. I hope the Patent Bar will join me in welcoming a lawyer into the PTO senior management. Mr. Matal is a lawyer with recent stand-up court experience. I hope that he will translate his experience into infusing the PTO with an appreciation for the importance of procedure, and respect for rule of law, to fair and accurate decisionmaking.

Dennis Crouch

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

65 thoughts on “Legality of the Matal Appointment: Acting As PTO Director

  1. It should be noted that Matal is currently self-described as “performing the non-exclusive duties and functions of the USPTO Director”, and not as the Acting Director. This is possibly because if Matal is nominated to the permanent position, he would have to resign as Acting Director between the nomination and confirmation. 5 USC 3345(b)(1).

  2. The author asserts that the DOO is non-binding because “I have trouble seeing a procedural right operating in favor of the public that’s violated by appointment of one qualified individual over another, and thus there’s no binding effect for the DOO guidance,” and because “Guidance is binding on an agency’s employees when that guidance promises procedural rights in favor of the public.”

    The Under Secretary is supposed to be appointed by the President, by and with the advice and consent of the Senate. It seems like advice and consent of the Senate is almost the definition of a procedural right in favor of the public. Hasn’t the Sec. of Commerce just made an end run around it?

    1. Reality check.

      Patents issue, like Tuesday, on clockwork. Someone has to sign them. That someone has to be someone who wants the job, at least on a temporary basis, and is qualified.

      Reality demands that the law have sufficient flexibility to allow that box to be filled by someone willing to “perform the duties and functions of the Director,” at least on a temporary basis.

      What’s the procedural right in favor of you as a specific applicant, and what’s the injury individuated to you by breach of that procedure? I don’t see it. You’ll have to explain.

  3. OMFG the CAFC just outdid itself this morning in One E-Way v ITC. Nautilus means nothing, apparently. Just make it up as you go because the PTO ain’t watching.

    1. “Because we conclude that the term “virtually free from interference,” as properly interpreted in light of the specification and prosecution history, would inform a person of ordinary skill in the art about the scope of the invention with reasonable certainty, we reverse”

      That sounds like the Nautilus standard right there. Even if they did f up the implementation in that case, the standard remains the same.

      Even so, the term seems meh okish to me. Reasonable certainty is not absolute certainty.

      “One-E-Way, to the contrary, proposed that the term meant “free from interference such that eavesdropping on device transmitted signals operating in the . . . wireless digital audio system spectrum cannot occur.””

      That is probably a bad argument from bad lawlyers. That the court basically, though not entirely, agreed with the general gist of their argument was probably somewhat mistaken. Nevertheless, one of skill in the art would be reasonably certain of the scope of the claim even so.

      Correct decision, maybe slightly wrong grounds. They probably should have just taken the plain language interpretation of the term and been done with it.

      Virtually standard definition:
      “almost or nearly as described, but not completely or according to strict definition.”

      Just attach that to the normal definition of without interference and you have the plain interpretation here it seems. Seems fine.

      1. One of the major activities of patent examiners is the hunt for spurious precision.

        If you doubt that this is a problem, please let me know the time today, to the nearest hundredth of a second, at the precise geographical location of the Marriott Wardman Park Hotel in Washington DC (which I know from AIPLA conferences) when day will become night.

        If you can do that, then you can criticise “virtually free from interference”.

        1. Paul,

          Your hypo is ridiculously easy to answer, given that “night” is defined broadly and (if I wanted to bother) I could easily look up the time when day becomes night for the rather broad timezone in which the Marriott Wardman Park Hotel is located within.

          By the way: link to google.com..69i57j0l2.11200j0j7&sourceid=chrome&ie=UTF-8

  4. Cert granted in Oil States so we can look forward to a very tired horse being put to rest shortly.

    Cue David Boundy to complain about “waste of paper.”

    1. You appear to not understand in the least just what David Boundy is complaining about.

      Please inform yourself prior to playing your ad hominem game.

      Thanks

    2. I agree that the question will be shortly settled, but the Court rarely takes certiorari to the CAFC in order to affirm. The fact that they accepted the case implies that it is more likely than not that IPRs (and PGRs & CBMs) will soon be declared unconstitutional.

      Does anyone know what that means for case where claims have already been held unpatentable, but no pending appeal remains? Is it as if the IPR never happened, or does the PTAB decision remain in effect?

      1. Greg, Art. III and Seventh Amendment rights are both waivable. Those who do not assert their rights have waived them.

        1. Thanks, Ned. That makes sense.

        2. Even if Art. III can be waived, since it is a jurisdictional defense, I believe it can be raised anytime before the patent is invalidated, which includes during appeal – 35 USC 318(b). I suspect there are a lot of IPRs currently on appeal.

          1. Sunny B,

            So you are saying that this is not something that has to be “saved below”…?

      2. I agree that the question will be shortly settled, but the Court rarely takes certiorari to the CAFC in order to affirm.

        True in the general sense. But the result depends on the question and how often it’s asked and who’s asking it.

        In this instance we have a situation where some really rich and entitled people have been whining non-stop since forever about this issue. It’s entirely possible the Supremes are taking the case because this is a case where some fraction of the CAFC, at least, managed to get it right. Why not throw em a cookie and administer another slap in the face to the worst people on the planet (i.e., the patent attorney l 0w lifes who brought this case).

        Does anyone know what that means for case where claims have already been held unpatentable, but no pending appeal remains?

        LOL

        That’s what you choose to focus on? News flash: if you get rid of IPRs but you keep junky logic “on a computer” patents in the system then the system is going to go into rapid meltdown mode.

        I’ve said it before and I’ll say it again: if the maximalists don’t like IPRs, they’re going to like what replaces them even less.

        On the other hand, if all this is just about short-term grifting for the rich entitled class, then who cares what comes next, right? Just grab the cash and run to the bank.

        1. MM, you are doomed to never understand why people fight for basic rights.

          1. you are doomed to never understand why people fight for basic rights.

            Says the guy who’s slurped up more corporate swill from the Fox News pu kkke funnel than any other patent attorney on earth.

            Give us all a break, please. Aren’t there some black people trying to vote somewhere that you need to kick in the face?

            1. I am not going to give you a break MM because you are basically unethical. You really do not have a clue about right and wrong, seriously.

        2. It’s entirely possible the Supremes are taking the case because this is a case where some fraction of the CAFC, at least, managed to get it right.

          As I hope I have made clear already, I think that IPRs serve a salutary function to clear out improvidently granted claims, thus making the patent system overall function better. Therefore, I would be pleased if this is correct. Here’s hoping your optimism is vindicated.

          1. The last time I checked, this isn’t just about IPRs.

            1. Er, yes it is. The Court was precise in saying that it was only taking the first question presented, and the first question presented is “Whether inter partes review… violates the Constitution… .” I suppose that we should probably assume that any holding here would apply with equal force to PGRs (including CBMs) if someone wants to bring that challenge, but the present case really is limited to IPRs.

        3. Depends on who is asking it…?

          Your feelings are noted.

    3. No. 16-712
      Title:
      Oil States Energy Services, LLC, Petitioner
      v.
      Greene’s Energy Group, LLC, et al.
      Docketed: November 29, 2016
      Linked with 16A365
      Lower Ct: United States Court of Appeals for the Federal Circuit
      Case Nos.: (2015-1855)
      Decision Date: May 4, 2016
      Rehearing Denied: July 26, 2016
      Questions Presented

      ~~~Date~~~ ~~~~~~~Proceedings and Orders~~~~~~~~~~~~~~~~~~~~~
      Oct 13 2016 Application (16A365) to extend the time to file a petition for a writ of certiorari from October 24, 2016 to November 23, 2016, submitted to The Chief Justice.
      Oct 14 2016 Application (16A365) granted by The Chief Justice extending the time to file until November 23, 2016.
      Nov 23 2016 Petition for a writ of certiorari filed. (Response due December 29, 2016)
      Dec 12 2016 Waiver of right of respondent Michelle K. Lee, Director, Patent and Trademark Office to respond filed.
      Dec 19 2016 Order extending time to file response to petition to and including January 30, 2017.
      Jan 30 2017 Brief of respondent Greene’s Energy Group, LLC in opposition filed.
      Feb 14 2017 Reply of petitioner Oil States Energy Services, LLC filed.
      Feb 15 2017 DISTRIBUTED for Conference of March 3, 2017.
      Feb 27 2017 Response Requested from Michelle K. Lee, Director, Patent and Trademark Office. (Due March 29, 2017)
      Mar 22 2017 Order extending time to file response to petition to and including April 28, 2017.
      Apr 28 2017 Brief of Federal Respondent in opposition filed.
      May 15 2017 Reply of petitioner Oil States Energy Services, LLC filed.
      May 16 2017 DISTRIBUTED for Conference of June 1, 2017.
      Jun 5 2017 DISTRIBUTED for Conference of June 8, 2017.
      Jun 12 2017 Petition GRANTED limited to Question 1 presented by the petition.

  5. Why is it being reported that Matal, is “politically connected.” What, more than most? Isn’t that an oxymoron? Closing shot by Lee at her successor?

    1. Who’s “reporting” that?

  6. Thanks, Mr. Boundy. This is a helpful explanation of the relevant law on this point.

  7. Credit Acceptance Corp. v. Westlake, tanked under 101 after challenge using the CBM process:

    25. A system for generating financing packages provided by a financing party, for a customer purchase of a product from a dealer’s inventory of a plurality of products, the system comprising:

    a database for storing information related to products in the dealer’s inventory including a dealer cost associated with each product;

    a user terminal, communicatively coupled to said database, for receiving financial information about the customer in relation to said products; and

    a server having access to the data in the database adapted to communicate with the user terminal over a network, whereby the financial information about the customer may be transmitted to the server, the server generating a financing package for each product in the dealer’s inventory and transmit financing terms for each financing package to the user terminal via the network for presentation to the user for immediate purchase,

    wherein the server is further configured such that the financing terms of each
    financing package include an advance amount to be paid to the dealer by said financing party if the customer purchases the product associated with the financing package.

    Let’s just remove all the ridiculous baloney about “what the data means” and see what’s left. This is how it’s done, folks.

    25. A system for generating [data] the system comprising:

    a database for storing information …;

    a user terminal, communicatively coupled to said database, for receiving … information …; and

    a server having access to the data in the database adapted to communicate with the user terminal over a network, whereby the … information … may be transmitted to the server, the server generating [data] for presentation to the user …,.

    That’s it. Everything else is utterly irrelevant b@loney. The claim is ineligible. It’s pure scrivening laid on top of existing technology and that’s true of 99.9999% of the logic patents out there.

    This is easy. If you’re an attorney and you can’t figure out how to tank a “do it on a computer” patent, then you need to get out of the business because none of this is difficult or confusing.

    1. 1) eligibility and patentability are separate things.

      You are confusing (purposefully) the two.

      2) “laid on top of existing technology

      Sounds like you want to make an inherency argument .

      Why not just do so?

      3)”the logic patents out there.

      Yet again with the dissembling on “logic patents.”

      How is your project on obtaining copyright for logic coming along? Yes, that’s right – there is none because were you to ty that, your dissembling would be easily seen.

      Just as it is easily seen with your mindless script reading here.

      1. 1) eligibility and patentability are separate things.

        In fact, they’re related and they always will be.

        You are confusing (purposefully) the two.

        Yes, you are deeply confused. We already knew that. In fact, there’s a cartoon about your confusion. And it’s not funny, as expected.

        Sounds like you want to make an inherency argument .

        Sounds like you don’t know what inherency is.

        How is your project on obtaining copyright for logic coming along?

        How are the orange flying monkeys in your chocolate cream star system coming along? Fun game, “anon.” Let me know when you come down off whatever it is you’re smoking.

        1. Your reply is non-responsive.

          No one said “not related.” That is a meaningless phrase in this context.

          As for inherency, we both know that I know what it means and we both know why you never have the inte11ectual honesty to actually use the proper patent doctrine in your rants.

          Your mindless ad hominem when it comes to copyright of software, and the rather obvious limitation (and that’s being generous) of your “logic” rant is a huge tell that you have no real point.

          1. No one said “not related.” That is a meaningless phrase in this context.

            No more or less “meaningless” than the term “separated,” in this context.

            As for inherency, we both know that I know what it means

            Whose “we”? You and your other self? I’m sure that you don’t know what it means, or at least that you don’t know how to consistently use the term in a meaningful way. That’s me being generous, by the way.

            copyright of software

            Orange monkeys! Chocolate planets! Ad hominababble! Fun game, “anon.” Let me know when you can put together a coherent argument, in English. I’ve been waiting years to see that happen.

            1. Your reply remains non-responsive.

              Try again.

              Hint: try with no ad hominem.

  8. “The PTO’s misunderstanding of the legal stature of guidance creates hundreds of millions of dollars of waste, fraud, abuse, and unwarranted burden for the public. ”

    While technically true, there’s nothing else that can be done in our system of lawl. At least other than just toss caution to the wind and give patents to EVERYBODY! WEEEE!

    1. B$ 6.

      Your F N job is to examine.

      The metric of your job is not your job.

      Do the F N job.

      1. And who set your authority to tell government employees what their job ‘IS’ above the authority of their managers?

        1. Their managers should be saying the same thing Ben.

          You do understand the difference between a job and metrics of that job, right?

      2. I’m not even sure what you’re talking about anon. The subject is the legal “stature” of guidance. Not “muh metrics” and not “my dooties”.

        On the subject of the “stature” of guidance there is nothing else for the PTO to do in the entitlement legal program known as “patents” other than issue some “guidance” or else just hand out patents willy nilly in the areas where “guidance” would otherwise prevent it but for the “guidance”.

        1. The notion of “just hand out” but for guidance shows a serious lack of understanding of what it means to examine.

          1. Well anon, I tend to agree with you that guidance has little to do with the actual examinatin’ function, however we have to consider administrability/consistency etc. And when it comes to that the office as a whole has to do guidance due to real, or imagined in the minds of some employees, big gaping holes in the “lawl”. This is what Bundy is qqing about when it gets applied in real life (because it itself creates waste, as I agree with him) but it is a necessary thing with the corps having gotten so large. Especially when the corps has barely any lawlyers and even fewer lawlyers that are all that good at patent lawl. Michelle etc. can’t just jump down and resolve a 101 issue for a given examiner every minute of every day.

            And further, without guidance in the 101 realm (which is what Bundy is mostly qqin about I’m sure) the office will end up “just handing out patents willy nilly” because of the non-edumacation of the corps.

            1. Well anon, I tend to agree with you that guidance has little to do with the actual examinatin’ function

              Thank you.

              however we have to consider administrability/consistency etc.

              IF you (the royal you) are doing the F N job, then the administrability and consistency will follow.

              due to real, or imagined in the minds of some employees, big gaping holes in the “lawl”

              I will agree that the “lawl” has been throughly savaged by the Supreme Court in their efforts to do more than merely “interpret” and to impose their own policies into the statutory law that Congress has written.

              This is what Bundy is qqing about when it gets applied in real life

              Not so sure about that. It appears that he is taking issue directly with the PTO itself, and not the PTO reacting to anything else with that “anything else” being the issue.

              Read again that second to last paragraph:
              – The PTO’s self-grant
              – The PTO’s misunderstanding
              – The PTO’s neglect
              – Those problems are compounded by the PTO’s failure

              It is you that have moved the goal posts.

              Please move them back.

              1. “IF you (the royal you) are doing the F N job, then the administrability and consistency will follow.”

                Um yes anon, but stamping your feet and saying “do the fn job” doesn’t work, so instead they do this new thing called issuing guidance. It’s mostly for examinators that are not lawlyers with 15 years of experience. And also to help clear up what the administrations o-fficial position on several issues that come up is (they like to call this hur dur “policy” instead of “an official decision by the administration”) and they put that in the guidance as well.

                1. Dwelling on what the guidance IS is no answer to calling you out for the B$ of

                  While technically true, there’s nothing else that can be done in our system of lawl.

                2. ““While technically true, there’s nothing else that can be done in our system of lawl. “”

                  ^Still true. Stamping your feet and screaming for the corps to “do the fn job” is not a valid management technique and it also is not effective. Thus, as I’ve stated, there is nothing else that can be done in our system of lawl.

              2. “Not so sure about that. It appears that he is taking issue directly with the PTO itself, and not the PTO reacting to anything else with that “anything else” being the issue.”

                Perhaps. But I’m not sure how he is drawing a line of distinction there. The reason he isn’t liking the PTO itself is because of the “anything else” that they’ve been doing.

                Further I’m not actually sure if the PTO does misunderstand guidance’s legal binding-ness/stature or whatever. The PTO mgmt understands all too well, at least in recent years I believe, that them issuing guidance is effectively them essentially trying to issue a baby royal decree, and one that they can only expect for the corps to make a reasonable effort at applying. They don’t expect applicants themselves to necessarily like it or believe it is correct. They know it creates some measure of waste, abuse etc. (I don’t know about “fraud” tho).

                1. It is far less on point IF you understand just how he his drawing a line of distinction to the fact that he IS doing so.

                  Your attempt at moving the goalposts does not work.

                  I “get” that you may feel the problem is something different than what Mr. Boundy has stated, but please do realize that difference is very real.

  9. OT but the petition for cert in Oil States (“going for all the marbles” according to SCOTUSblog) was relisted after today’s conference.

    I wonder how much money to date has been spent defending IPRs against half-baked attacks on their “constitutionality” by the least credible attorneys who ever walked the earth? All for the purpose of … what? Re-inflating the bubble back to State Street?

    LOL

    The desperation and greed is breathtaking. But this is kind of expected behavior for the ultra rich entitled class, isn’t it?

    1. It was relisted last week.

      You seem unhinged.

        1. Look at the docket broseph. June 1st conference, with a Monday relist.

          Yesterday was the 2nd conference.

          For reasons that will generously be called unclear, Dennis didn’t think that this was newsworthy.

          1. It’s not newsworthy because we all know how it ends.

            [shrugs]

          2. Thanks for the clarification on the dates, though. Super important to clear that up.

      1. You seem unhinged

        seem…?

      2. Anony, were MM at Runnymede, he clearly would have sided with King John in the face-off with the barons about due process of law. In fact, he would have sneered at the barons as a bunch of rich, entitled white guys.

        If history were filled with people like MM, there would be no liberty.

        1. “In fact, he would have sneered at the barons as a bunch of rich, entitled white guys.”

          Or not, because back then you could be killed for such. #duel #makeduelinggreatagin

          Let’s be honest, half the social drivel that we have going on right now is the direct result of ending dueling.

    2. MM I wonder if you’ve read “Making It”? It’s apparently all about how liberal elites are secritly wanting success, money, power etc. but they also secritly feel bad about it. It was written like 50 years ago, but it seems even more true today than it was then.

      1. I thought “liberals” were poor people without identification, so that there was a perceived need to have IDs to vote…to keep riffraff like that out of the polls. Or is that not true?

        1. Mmmm, sounds like something the “liberal” media told you. Their hypothesis is that there are a bunch of pet poor/non-white people who cannot figure out/afford/don’t care to get an ID. Of course, the actual data on that is shaky at best, though there are scattered anecdots about someone not getting their ID in time to vote for a particular election (because they waited). Further some people, even democrats/liberals often, perceive there to be a need for voter ID laws (though many liberals think that such would be too “oppressive” for aforementioned voters/people they consider to be their pets/vote plantation workers to be worth it, and also it might hurt their turnout) for election integrity. The need for such lawls is not a ginormous one, and they wouldn’t have a huge impact on any given vote, but it becomes an issue because liberals like to shout “raycyst” whenever possible to keep the vote plantation up and running and producing those yummy votes (if black/latina voting for them ever dipped to 30% or so they would not be even close to a viable national party and the screaming raycyst helps keep the ethnicities they desire in line). Votes that they need to power their “muh progress” and their “muh fight agin the patriarchy”.

        2. I engaged in voter suppreshun today tho for governor’s primary tomorrow. I’m hoping to suppress at least a couple of votes.

      2. Rescued from Moderation Heck…

        secretly motivated by a desire for success—money, power, and fame—and were also secretly ashamed of it.

        LOL – it has been amply pointed out that Malcolm has a serious case of cognitive dissonance with being (allegedly) a patent attorney who procures personal property in the form of patents while simultaneously evidencing a sharp disdain for the concept of that personal property and the types of people interested in procuring that type of personal property.

        But enough about Malcolm.

        This was an interesting piece:

        He took away from his Columbia education the belief that being a serious literary critic meant holding in contempt the things that belong to Caesar.

        My own long observations concerning “academia” have been that long ago academia had lost sight of its actual mission of training young minds for critical thinking and instead had turned to training young minds to emote in ways too clever by half with the prevailing (liberal left) groupthink. The lack of meritocracy was very evident way back when I was contemplating a career path through that particular terrain.

  10. Boundy The PTO’s misunderstanding of the legal stature of guidance, and PTO’s failure (indeed, outright refusal stated in Petition Decisions) to implement a 2007 order from the Executive Office of the President, create hundreds of millions of dollars of waste, fraud, and abuse, and unwarranted costs on the public.

    Those alleged costs are, of course, dwarfed by the costs foisted on the public as a result of the unconstitutional and illegal granting of endless reams of logic patents and “think about this new correlation in this prior art context” patents. And the mewling loudmouths who pollute the patent bar are working overtime trying to re-inflate the bubble again. And of course while they’re at it these professional shirtstirrers are going to waste the PTO’s time with accusations of “illegal appointments”. Because these Repukkk/glibertarian types are really concerned about the “rule of law”. Sure they are! They’re very serious people and totally not perpetually whining entitled hypocrites.

    After all, a lot of the costs of addressing the zillions of junk patents being granted go directly into the pockets of patent attorneys so … oh well, bygones! It’ll “trickle down” eventually, right?

    1. “Those alleged costs are, of course, dwarfed by the costs foisted on the public”

      That’s what I was going to bring up.

    2. Your feelings are noted.

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