Sapna Kumar: The Accidental Agency?

Has the Court of Appeals for the Federal Circuit stripped the Patent Office of its administrative power? Professor Sapna Kumar’s article, The Accidental Agency (forthcoming Florida Law Review), explains how the Federal Circuit has essentially become the head of an executive agency. By interpreting the Administrative Procedure Act (“APA”) narrowly, disregarding Supreme Court precedent, and interpreting more appellate issues as questions of law, the Federal Circuit has become the de facto administrator of the Patent Act.

The Federal Circuit has not assumed this substantive rule making authority by chance. The Article does an excellent job of explaining the historical factors that have led to the Federal Circuit’s unique power over patent law. Professor Kumar steps through the development of the APA, highlighting how the Statute established uniform standards of review for agency actions. Overtime, the APA became valued for instituting uniformity in the treatment of agencies, evolving into a tool for limiting judicial interference of agency authority. But major changes to patent law would undermine the APA’s effectiveness.

The Patent Act of 1952 failed to grant the Patent Office explicit substantive rule making authority. Consequently, the Court of Customs and Patent Appeals (“CCPA”) took the opportunity to make key choices regarding the Statute’s implementation, shifting power and opporunities to receive deference away from the Patent Office. Notably, when the Federal Circuit was created, it adopted the CCPA’s caselaw, as well as its non-deferential approach to Patent Office decisions.

The Federal Circuit continues to find new ways to grant little deference to the Patent Office. By construing mixed questions of fact and law, such as claim construction, as pure questions of law, the Court is able to review agency decisions de novo. Professor Kumar contends that by construing mixed questions as pure law, the Federal Circuit acts more like the head of an agency than like an Article III court. By expanding the use of de novo review, the Federal Circuit substitutes its own judgment for that of the Patent Office, taking for itself power that Congress properly delegated to the executive branch.

Recent Supreme Court rulings have checked the Federal Circuit’s substantive rule making authority. Cases like ebay, Medimmune, KSR, and Bilski illustrate the Supreme Court’s reluctance to endorse mandatory, bright line rules. Professor Kumar argues that this uneasiness with judicial substantive rule making can be attributed to several factors: (1) Article III judges are less accountable to public dissatisfaction; (2) there is limited means for public influence when creating new guidelines; and (3) the Federal Circuit has limited resources to guide it in creating new bright line rules.

Ultimately, the Federal Circuit has had to balance its mandate to unify patent law with its role as an appellate court. But if power shifts away from the Federal Circuit, is the Patent Office ready to assume more responsibility? The America Invents Act granted the Patent Office substantial discretion to prioritize applications and weed out low quality patents using new or refined processes such as the post-grant review, inter partes review, and supplemental examination. See Sarah Tran, Policy Tailors and the Rookie Regulator, (March 2012) (forthcoming UC Davis Law Review, 2012-2013) (arguing that the PTO is well positioned to tailor patent policy to the varying needs of different industries and that the agency should not be underappreciated as an institution capable of implementing sound policy initiatives). Unfortunately, the patent reform legislation side stepped the issue of Federal Circuit deference to Patent Office decisions. Therefore, the Supreme Court will likely be active in regulating the relationship between the Federal Circuit and the Patent Office.

Posted by Bryan Parrish (bparrish@smu.edu), a registered patent agent, research assistant to Sarah Tran, and a 2014 Juris Doctor candidate at SMU Dedman School of Law.