Kavanaugh’s Views on Agency Powers Could Affect Patent Office, FCC

U.S. Supreme Court nominee Brett Kavanaugh’s views on administrative power could be decisive in future challenges to the authority of agencies such as the Patent and Trademark Office and the Federal Communications Commission.

Kavanaugh has a 12-year record of rulings on the U.S. Court of Appeals for the D.C. Circuit, which has a specialized docket that includes many cases about the authority of administrative agencies. His conservative views on the issue could help patent owners looking to curb administrative validity challenges at the patent office.

Views on patent rights aren’t necessarily conservative or liberal issues—Republican Congressman Darrell Issa and President Barack Obama both supported the 2011 America Invents Act. But conservatives have long been critical of federal agencies’ administrative powers, which form the basis of government regulations from from the Environmental Protection Agency, the FCC and other parts of the executive branch.

“Skepticism of administrative power has been a cause célèbre among Federalist Society types and movement conservatives,” Q. Todd Dickinson, senior partner at Polsinelli and former PTO director, told Bloomberg Law.

Administrative Patent Law

Kavanaugh has insisted agencies abide by the laws and restrictions set by Congress, and his experience at the D.C. Circuit will come in handy in resolving disputes about the patent reviews, Igor Timofeyev, a patent partner with Paul Hastings LLP, told Bloomberg Law.

Congress created the patent office validity challenges, including the popular inter partes reviews, under the America Invents Act, as a faster and cheaper way to invalidate weak patents. The procedures are popular with tech companies such as Alphabet Inc.’s Google, which regularly files challenges. But patent owners in the pharmaceutical and biotech industries say the procedures undermine their rights and discourage investment and innovation.

Many conservatives say federal agencies wield too much power in making rules and quasi-judicial decisions, but aren’t bound by the same procedures governing Congress or the courts. For example, the Patent Trial and Appeal Board, the body that hears and decides the administrative challenges, have seen their decisions thrown out by the U.S. Court of Appeals for the Federal Circuit, the court that handles all patent appeals, because it didn’t sufficiently explain its reasoning.

“The general question of allocating authority between agencies and courts and who gets to decide legal questions is huge,” Jeffrey Pojanowski, professor at the University of Notre Dame’s Law School, told Bloomberg Law.

In Soundexchange v. Librarian of Congress, Kavanaugh joined the court in 2009 to affirm the copyright board’s rates for songs played on satellite radio stations. But he wrote a short concurring opinion, saying the board’s judges should be confirmed by the Senate because they’re principal officers of the government. But Kavanaugh suggested that the board is unconstitutional since its judges are not confirmed by the Senate, .

Patent owners are fighting similar battles. The Supreme Court in April rejected an argument that patents can only be invalidated by a court created under Article III of the Constitution, and not by an administrative agency. Justice Clarence Thomas, who wrote the 7-2 decision, emphasized the decision only deals with the Article III argument, leaving open other avenues of attack.

Other attacks on the proceedings are making their way through the courts. For example, in TradeStation Group v. Trading Technologies, a patent owner told the Federal Circuit that it intends to challenge the constitutionality of using inter partes reviews to invalidate patents that were granted before the America Invents Act took effect.

Deference in Doubt?

Central to the debate over administrative power is the question of Chevrondeference, the legal principle that courts should defer to federal agencies in interpreting ambiguous laws passed by Congress. A rollback of the doctrine could weaken the authority of all agencies, not just the patent office.

Kavanaugh’s most notable opinion knocking Chevron deference came in a 2017 dissent in a net neutrality case. He argued in United States Telecom Ass’n v. FCC that the Obama-era rules, which prohibited internet service providers like AT&T Inc. or Comcast Corp. from blocking or slowing internet content, were unlawful. Congress hadn’t expressly given authority to the FCC to create the “major rules,” he wrote.

“Clearly there is a bulls-eye on the back of the concept of Chevron deference amongst the new conservative movement,” former FCC Chairman Tom Wheeler (D) told Bloomberg Law.

Justice Neil Gorsuch, Trump’s previous nominee to the Supreme Court, has been openly skeptical toward Chevron deference. If Kavanaugh is appointed, he will likely have an ally.

Kavanaugh has been on the “cutting edge” in getting the courts to defer less to executive agencies, Berin Szoka, president of the policy group TechFreedom, told Bloomberg Law. This could put agencies under Trump and subsequent administrations on a tight leash as they try to establish their policies into regulations, he said.

If the Chevron doctrine is weakened, the question of who has the authority to interpret ambiguous laws passed by Congress will emerge, Tejas N. Narechania, faculty director for Berkeley Center for Law & Technology, said in an email to Bloomberg Law.

Chevron delegates that power to expert agencies who are accountable to the Executive, and, ultimately, the voting public,” Narechania said. “Courts are neither expert nor directly accountable to the voting public.”

The patent office is also caught up in the Chevron debate.

In Aqua Prods., Inc. v. Matal, the full Federal Circuit in 2017 rejected administrative rules about how patent owners can amend their patents in an inter partes review. In five decisions spanning 149 pages, a majority of the judges agreed that the patent office’s approach was wrong. But they disagreed as to whether Chevron deference could apply if the patent office tried to reinstate the same rules later.

In a sense, Aqua Products highlights the growing importance of administrative law to patent practice. The Federal Circuit heard nearly 600 appeals from the patent office in 2017, and just over 500 from district courts, according to the court’s data.

In 2011, the year before inter partes reviews became available, it had fewer than 150 appeals from the patent office, and about 450 cases from district courts.

“The Federal Circuit is really learning to do what the D.C. Circuit has been doing for a long time,” Timofeyev said. “The D.C. Circuit has really refined a lot of the administrative law doctrines, to make sure that the agencies act in a logical and transparent way.”

Kavanaugh’s experience on these issues could prove to be quite important in the patent world, he said.

To contact the reporter on this story: Peter Leung in Washington at pleung@bloomberglaw.com; Michaela Ross in Washington at mross@bloomberglaw.com

To contact the editor responsible for this story: Rebecca Baker at rbaker@bloomberglaw.com