Affirming on Other Grounds at the Federal Circuit

Droplets v. Iancu (Supreme Court 2018)

A new petition for writ of certiorari questions the extent that the Federal Circuit can affirm a PTAB IPR decision on grounds different than those relied upon by the Board.

The rule in the Federal Circuit yes, affirmance-on-other-grounds is allowed so long as the Federal Circuit does not need to decide new issues of “fact, policy, or agency expertise.”  In re Comiskey, 554 F.3d 967, 974 (Fed. Cir. 2009). The Federal Circuit’s approach is in some amount of tension with the Chenery doctrine of Administrative law which advises courts to “judge the propriety of [agency] action solely by the grounds invoked by the agency.” SEC v. Chenery, 332 U.S. 194 (1947).  Droplets asks the question:

Whether “an agency’s action must be upheld, if at all, on the basis articulated by the agency itself” (State Farm, 463 U.S. at 50), or whether a court can substitute its own views for the agency’s whenever the issue is “legal in nature” (In re Comiskey, 554 F.3d 967 (Fed. Cir. 2009)).

There are a few difficulties with Droplets case here – most pointedly is the fact that the Federal Circuit did not expressly rule on other grounds, but instead affirmed without opinion (R.36).  Here, the Droplets argument comes from a “tacit” admission from the PTO Solicitor that the Board’s basis for its decision was inadequate.

Read the petition: droplets v. iancu–cert.petition–FILED

6 thoughts on “Affirming on Other Grounds at the Federal Circuit

  1. 3

    I’m not sure whether the Supreme Court has said so explicitly, but my understanding is that court of appeals precedent is more or less consistent on the idea that Chenery has a harmless-error exception and generally doesn’t apply to pure issues of law that aren’t delegated to the agency. Fleshman v. West, 138 F.3d 1429 (Fed. Cir. 1998) collects some of the decisions on this point. Sahara Coal Co. v. OWCP, 946 F. 2d 554 (7th Cir. 1991) also notes the harmless-error exception (though the court rejects arguments for applying that exception in the particular case).

    That makes sense, I think. If the agency has made a choice within its area of expertise or delegated discretion, and the reasoning can’t support the result, then it makes sense to remand rather than affirm. The court may think that other reasoning could support the result, but it’s unclear whether the agency policymakers or experts would make that same choice or make some different choice on remand once the legal error is corrected. If the court of appeals concludes, though, that the law requires a certain result (e.g., statute is unambiguous, no reasonable exercise of discretion could lead to anything other than result X), then there’s no point in a remand, and I don’t think Chenery requires an empty formality.

    The more glaring problem with the petition, though, is the one Dennis points out: “the Federal Circuit did not expressly rule on other grounds, but instead affirmed without opinion (R.36).” It’s not exactly the petitioner’s fault that the Federal Circuit didn’t issue an opinion, but that means that the entire petition is based on speculation about what the Federal Circuit actually did. Maybe the Federal Circuit thought the PTAB’s reasoning was good enough. If the Federal Circuit is indeed out of step with other circuits w/r/t Chenery, then another case will come along. The “vehicle” section of the petition is laughable, but having chosen to make this argument, that’s probably the best that can be said. Cert petitions usually face long odds, but this one seems DOA even more so than most.

    1. 3.1

      Great point on the harmless error issue.

      Note that § 706 of the APA provides that “due account shall be taken of the rule of prejudicial error.” 5 U.S.C. § 706. The Fed. Cir. has at times characterized this as a “harmless error rule” (See, e.g., In re Chapman, 595 F.3d 1330, 1338 (Fed. Cir. 2010) (“The judicial review provision of the APA includes a harmless error rule.”)), and indicated that “to prevail the appellant must not only show the existence of error, but also show that the error was in fact harmful because it affected the decision below.” Chapman, 595 F.3d at 1338 (quoting In re Watts, 354 F.3d 1362, 1369 (Fed. Cir. 2004)).

  2. 2

    “Here, the Droplets argument comes from a “tacit” admission from the PTO Solicitor that the Board’s basis for its decision was inadequate.”

    WTF? Why didn’t the CAFC remand back to the PTAB so that panel could rewrite the final order to justify its decision or simply reverse the PTAB?

    What am I missing here?

  3. 1

    You know, the first time I read Comiskey, it bothered me on Chenery grounds, but in the years since I have had several more occasions to re-read Chenery, and I find myself less and less bothered by the admin law aspects of Comiskey. Chenery itself explicitly explains that the reason why affirmances of administrative tribunals are different than affirmances of Art. III courts is that “[i]f an order is valid only as a determination of policy or judgment which the agency alone is authorized to make and which it has not made, a judicial judgment cannot be made to do service for an administrative judgment… [A]n appellate court cannot intrude upon the domain which Congress has exclusively entrusted to an administrative agency.” SEC v. Chenery Corp., 318 U.S. 80, 88 (1943). In other words, the reason that a reviewing Art. III court can only affirm on the basis that the administrative agency decided a case is that we do not want the Art. III branch usurping policy decisions that the Art. I branch has entrusted to the Art. II branch.

    But the Congress has not entrusted any policy decisions regarding substantive patentability to the PTO. Merck & Co. v. Kessler, 80 F.3d 1543, 1549 (Fed. Cir. 1996). Quite the opposite. To the extent that we can identify a body to whom the Congress has entrusted questions of substantive patentability, that body is the CAFC itself. In other words, to say that the CAFC must leave it to the PTO to make substantive patentability decisions in the first instance would be to give effect to the letter of Chenery by vitiating the spirit of Chenery.

    In other words, when thinking about the working of Chenery in the interplay between the PTO and the CAFC, we need to think very carefully about which issues are on appeal. Some issues, such as substantive patentability questions are much more clearly entrusted to the CAFC than to the PTO, and therefore Chenery should be applied less woodenly in appeals regarding those issues. On the other hand, some issues (such as the procedures employed in IPRs/PGRs) are more fulsomely entrusted to the PTO’s discretion in the first instance (35 U.S.C. §§ 316 & 326). A more literal application of the Chenery rule is therefore appropriate where the appeal involves procedural questions from the conduct of the IPR or PGR.

    1. 1.1

      This is a really good point.

    2. 1.2

      But the Congress has not entrusted any policy decisions regarding substantive patentability to the PTO. Merck & Co. v. Kessler, 80 F.3d 1543, 1549 (Fed. Cir. 1996). Quite the opposite. To the extent that we can identify a body to whom the Congress has entrusted questions of substantive patentability, that body is the CAFC itself

      This is legal error.

      Congress has made NO allocation to the judicial branch for writing (or re-writing) substantive patent law on eligibility.

      The opposite is in fact true – when one understands that prior to the 1952 Act, Congress had provided the judicial branch with the authority to set the meaning of “invention” by power of common law rule making.

      That was explicitly taken away in the Act of 1952 when Congress got sick of the anti-patent nature of the Supreme Court in the 1930s and 1940s and opted to replace that power and INSTEAD craft the requirement of non-obviousness.

      I suggest that you bone up on the writings of Judge Rich, the jurist with the best and most complete knowledge of what Congress did in this regard.

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