How Eliminating Agency Deference Might Affect PTAB And ITC

More than 30 years ago, in Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc., the U.S. Supreme Court held that, with regard to judicial review of an agency's construction of a statute which it administers, if Congress has not directly spoken to the precise question at issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. And, 20 years ago, in Auer v. Robbins, the Supreme Court extended this "Chevron deference" principle to an agency's interpretation of its own rules and regulatory schemes. These two decisions — Chevron and Auer — have had widespread implications in administrative law, including with respect to deference afforded the U.S. Patent and Trademark Office in creating and interpreting its own rules. Indeed, just last year, the Supreme Court upheld the USPTO's application of the broadest reasonable interpretation standard in inter partes review as a "reasonable exercise" of authority under Chevron.

Now, with a Republican-controlled government, Chevron and Auer have gotten a lot of attention as symbols of an overly regulated state. Newly sworn-in Supreme Court Justice Neil Gorsuch penned a now-famous concurrence in August 2016 questioning whether Chevron and other deference doctrines are consistent with constitutional separation of powers. More recently, the U.S. House passed legislation, introduced by Rep. Bob Goodlatte, R-Va., to eliminate many applications of Chevron and Auer deference, effectively along party lines. This article examines the potential impact on patent law if Chevron and Auer deference are eliminated, with particular focus on post-grant review proceedings before the Patent Trial and Appeal Board and Section 337 investigations before the U.S. International Trade Commission.

Chevron and Auer: Deference to Administrative Agencies

The Supreme Court has "long recognized that considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer."1 In the landmark Chevron decision, the Supreme Court adopted a two-part test to determine whether an agency is entitled to deference in its statutory interpretations. First, the court must determine "whether Congress has directly spoken to the precise question at issue."2 "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress."3 However, if the court determines "the statute is silent or ambiguous with respect to the specific issue," the court continues to a second step and asks "whether the agency's answer is based on a permissible construction of the statute."4

Subsequently, the Supreme Court in Auer applied Chevron deference to interpretations of an agency's own regulations, holding that an agency's interpretation is "controlling unless 'plainly erroneous or inconsistent with the regulation.'"5

More recently, some justices have begun to question agency deference. For example, in his 2013 dissent in Decker, Justice Antonin Scalia — who authored Auer — queried: "For decades, and for no good reason, we have been giving agencies the authority to say what their rules mean, under the harmless- sounding banner of 'defer[ring] to an agency's interpretation of its own regulations.'"6 Supreme Court Justice Neil Gorsuch has also questioned Chevron in a concurrence recently penned while on the Tenth Circuit. He stated, "the fact is Chevron and Brand X permit executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers' design."7 Nonetheless, Chevron and Auer remain the law, and courts frequently give considerable deference to and uphold (at times questionable) agency interpretations. As Justice Anthony Kennedy writing for the majority in Decker put it: "It is well established that an agency's interpretation need not be the only possible reading of a regulation — or even the best one — to prevail."8

Congressional Action: The Regulatory Accountability Act of 2017

On Jan. 11, 2017, the House passed, by a 238-183 vote, the Regulatory Accountability Act of 2017, which, among other reforms, is intended to eliminate Chevron and Auer deference.9

The current proposed legislation provides that the reviewing court shall "decide de novo all relevant questions of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies."10 And, it...