The US Supreme Court issued a ruling last week that's expected to curtail the power of federal agencies.
On Friday, June 28, the Supreme Court determined in Loper Bright Enterprises v Raimondo that the Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its authority.
SCOTUS added that courts may not defer to an agency's interpretation of the law simply because a statute is ambiguous.
This ruling overturned a 1984 SCOTUS case Chevron v Natural Resources Defense Council, which stated that courts should defer to an agency's reasonable interpretation of an ambiguity in a law that's enforced by the agency.
But the Supreme Court, in its latest decision, stated it wasn't calling into question prior cases that relied on the Chevron framework.
It appears, going forward, however, that courts should now rely on the Skidmore standard for deference, as set out in the 1944 SCOTUS case Skidmore v Swift.
Under this analysis, courts decide how much they should defer to an agency based on the thoroughness of the bureau's consideration, the validity of its reasoning, and its consistency.
Last week’s Loper decision is expected to implicate numerous agencies and areas of law – and the intellectual property field is no exception.
Managing IP interviewed four lawyers about what this could mean for IP, USPTO policies, and litigation strategies.
Making it easier
The decision, say sources, is likely to give stakeholders more ammunition to challenge USPTO policies that they don't like and that they don't believe fall under the office's authority.
One of the more controversial USPTO memos of this year has been its proposal to change its terminal disclaimer policy.
The USPTO released a notice of proposed rulemaking in May that, if adopted, would subject patentees to more risk if they filed terminal disclaimers.
Applicants file terminal disclaimers – statements in which patentees give up part or all their patent term – to overcome obviousness-type double patenting rejections.
The office's proposal states, however, that terminal disclaimer filers must agree that the patent with the disclaimer will not be enforced if any claim in the original patent is invalidated by prior art.
Jonathan Stroud, general counsel at Unified Patents in Washington DC, says this proposal has received a lot of pushback from the pharmaceutical lobby as well as patent attorneys.
"They're extremely upset about the [proposed] terminal disclaimer rules. Most people agree that there will be a court challenge," he says.
"By getting rid of the Chevron deference barrier, it's going to make it much easier for pharma or bio or whoever it ends up being [that brings this challenge]."
A proposal related to the Patent Trial and Appeal Board (PTAB) could also be more easily challenged by citing Loper.
The USPTO released a notice of proposed rulemaking (NPRM) focused on the PTAB in April.
The document outlined proposed rules for discretionary denials at the USPTO, which is when the board declines to hear a PTAB case for procedural issues rather than because of the merits of the arguments.
Stroud says that if the NPRM goes into effect, a motivated party could challenge it in court.
"I think they'd be much more likely to get a district court judge to enjoin the regulation," he says.
ITC implications
The Loper ruling could also have implications for the US International Trade Commission (ITC) and its interpretation of laws.
For example, Section 1337 under Title 19 of the US Code allows the ITC to block the importation of "articles that infringe" a US patent.
The ITC has interpreted this to mean that it can block imports of items that don't infringe a patent until after importation when they're used to induce infringement. Inducing infringement refers to situations when someone helps somebody else infringe a patent.
In 2015 Suprema v ITC, the Court of Appeals for the Federal Circuit relied on Chevron to determine that this was a reasonable interpretation of the law.
Matt Rizzolo, partner at Ropes & Gray in Washington DC, says: "That's an area, where if it's stripped of that deference, it's possible that a future Federal Circuit [panel] could come to a different conclusion."
That said, just because agencies are given less deference, doesn't mean that all their new policies will be struck down, of course.
Anna Chauvet, partner at Finnegan in Washington DC and former associate general counsel for the US Copyright Office, notes that the Copyright Office is asked to consider and decide novel questions of the law quite frequently.
She notes that under the Skidmore standard, courts can still consider Copyright Office information as guidance.
"Because it has so much experience interpreting novel questions of copyright law, its guidance can be particularly useful to courts," she adds.
Broader strategy
It's hard to predict all the IP policies that will be affected by this ruling, but counsel and companies will be taking it into account going forward.
Rizzolo at Ropes & Gray says this SCOTUS decision will be useful if he's in a situation where he believes that an IP agency is advancing a position that's contrary to the statute and to his client's interests.
Mercedes Meyer, shareholder at Banner Witcoff in Washington DC, says she doesn't expect that she'll need to recommend relying on this recent ruling to clients.
"Many of my clients will deliberate and move forward from a policy perspective without any input from me," she says.
"Litigation is an investment, ultimately. If you take a litigation forward against the US government, you have to have some basis for why you think it would be successful to spend all that money. This decision will provide [parties] with a better feeling that they might win," she says.
IP agency policies usually annoy somebody.
While cases against the US government still may not be easy to win, disgruntled parties will want to familiarise themselves with the Supreme Court’s latest take.
