UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`ZHONGSHAN BROAD OCEAN MOTOR CO., LTD.;
`BROAD OCEAN MOTOR LLC; and
`BROAD OCEAN TECHNOLOGIES, LLC
`
`Petitioners
`
`NIDEC MOTOR CORPORATION
`
`Patent Owner
`
`U.S. Patent No. 7,626,349
`
`Issue Date: December 1, 2009
`Title: LOW NOISE HEATING, VENTILATING AND/OR
`
`AIR CONDITIONING (HVAC) SYSTEMS
`
`PETITIONER’S REPLY IN SUPPORT OF
`
`ITS MOTION FOR REHEARING
`
`PURSUANT TO 37 C.F.R. §42.71(d)
`
`Case No. IPR2015-00762
`
`NY 802685v.1
`
`

`
`TABLE OF CONTENTS
`
`1.
`
`ON BALANCE, CONSIDERATIONS OF EFFICIENCY,
`FAIRNESS, EQUITY AND PUBLIC POLICY SUPPORT
`
`II.
`
`THE EFFECT OF THE YISS UM RESEARCH APPEAL TO
`
`III.
`
`PETITIONER’S SECOND PETITION COMPLIES WITH
`
`35 U.S.C. §§311 & 312(a)(3)(B) .................................................................. ._ 5
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`NY 802685v.1
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`- i -
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`

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`TABLE OF AUTHORITIES
`
`Cases
`
`Chevron, U.S.A., Inc. v. Natural Res. Def Council, Inc.,
`467 U.S. 837 (1984) ........................................................................................... -. .3
`
`In re Cuozzo Speed Tec/13., LLC,
`793 F.3d 1268 (Fed. Cir. 2015)...............
`
`-1
`
`Sony Corp. v. Yissum Research, IPR2013-00327
`
`Versata Dev. Grp., Inc. v. SAP Am., Inc.,
`793 F.3d 1306 (Fed. Cir. 2015) ............................................................................ .- 4
`
`Statutes
`
`35 U.S.C. §312(a)(3)(B) .......................................................................................... .. 5
`35 U.S.C. §316(a)(11)
`2
`
`Regulations
`
`37 C.F.R.
`37 C.F.R.
`
`2
`5
`
`NY 802685v.1
`
`- ii -
`
`

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`Petitioner has received approval to file this Reply in support of its motion for
`
`rehearing of the Decision (Paper 12) denying Petitioner’s Motion for Joinder
`
`1.
`
`ON BALANCE, CONSIDERATIONS OF EFFICIENCY, FAIRNESS,
`EQUITY AND PUBLIC POLICY SUPPORT JOINDER
`
`Public policy considerations and the public interest favors seeing invalid
`
`patents formally invalidated. See, gg, 37 C.F.R. §l.56(a) (“A patent by its very
`
`nature is affected with a public interest. The public is best served
`
`when, at the
`
`time an application is being examined, the Office is aware of and evaluates the
`
`teachings of all information material to patentability.”). All three judges of the
`
`Board panel agreed that Petitioner has established a reasonable likelihood of
`
`prevailing on its challenge of claims 1-3, 8, 9, 12, 16 and 19 as anticipated by
`
`Hideji under 35 U.S.C. §l02(b).
`
`§e_e Decision (Paper 12) at pp. 7-11 and p. 3
`
`(dissent).
`
`Patent Owner’s allegation of prejudice seems to be predicated on its belief
`
`that the case for invalidating the challenged claims under §l02(b) based on Hideji
`
`is stronger than that under §l03 based on the Bessler and Kocybik references.
`
`That is, while Patent Owner found it unnecessary to move to amend the challenged
`
`claims in face of Ground 2 in IPR20l4—0l 121, Patent Owner now contemplates the
`
`need to amend the challenged claims if joinder is granted. E Opposition
`
`(Paper 14) at p. l (“Nidec may then have to amend and much of the work to date
`
`may become moot.”). The relative strength of the ground of invalidity under
`
`NY 802685v.1
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`— l —
`
`

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`§l02(b) based on Hideji supports joinder in view of the public interest in formally
`
`invalidating those patent claims that are, in fact, invalid.
`
`Furthermore, there is no accusation that Petitioner has been dilatory. To the
`
`contrary, Petitioner sought to expedite IPR20l5—00762 from the very beginning.
`
`fifi Order (Paper 9) (granting Petitioner’s request for acceleration of the Patent
`
`Owner’s deadline for filing a Preliminary Response). Patent Owner was able to
`
`file its Preliminary Response, which substantively addressed Hideji, within the
`
`shortened, expedited time period. E Preliminary Response (Paper 10) at
`
`pp. 20-25.
`
`As Patent Owner alludes
`
`to,
`
`the bulk of the discovery in
`
`IPR2014—01121 was directed to the issue of secondary considerations (E
`
`Opposition (Paper 14) at p. 1), which would be absent for the ground under
`
`§102(b) based on Hideji. Patent Owner does not dispute that an IPR trial on the
`
`ground under §102(b) based on Hideji can be completed during a shortened,
`
`expedited time period. Q‘. Opposition (Paper 14) at pp. 1-2.
`
`Turning to the oral argument in IPR2014-01121 scheduled for October 16,
`
`2015, an extension of this schedule is permitted by law and is not a reason for
`
`denying joinder.
`
`_S_@ 35 U.S.C. §316(a)(11) (“may adjust the time periods in this
`
`paragraph in the case of joinder under section 315”); 37 C.F.R. §42.100(c) (“The
`
`time can be extended by up to six months for good cause by the Chief
`
`Administrative Patent Judge, or adjusted by the Board in the case of joinder.”).
`
`NY 802685v.1
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`— 2 —
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`

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`Petitioner is willing to forfeit a reasonable portion of its Discovery/Reply period to
`
`the extent that is deemed necessary to provide Patent Owner with sufficient time to
`
`address the sole ground of unpatentability in the Second ‘349 Petition. Petitioner
`
`will also accommodate any reasonable logistical or scheduling request of Patent
`
`Owner in order to accommodate the joinder of the proceedings.
`
`11.
`
`THE EFFECT OF THE YISSUM RESEARCH APPEAL TO THE
`
`FEDERAL CIRCUIT
`
`In the Yassim Research appeal to the Federal Circuit, the Patent Office filed
`
`an Intervenor Brief stating that it is the Board’s broad interpretation of §315(c) set
`
`forth in Target that the Federal Circuit should defer to, citing Chevron, U.S.A., Inc.
`
`v. Natural Res. Def Council, Inc., 467 U.S. 837, 842-43 (1984), not the narrow
`
`interpretation in Skyhawke.
`
`_S_ee_: Motion (Paper 13) at Att. A, pp. 19-20. Chevron
`
`holds that a court must give deference to an administrative agency’s interpretation
`
`of ambiguous provisions of the statute which it administers. 467 U.S. at 842-43.
`
`Patent Owner’s reliance upon M. Wasserman, The Changing Guard ofPatent Law:
`
`Chevron Deference for the PTO, 54 Wm. & Mary L. Rev. 1959, 1967-76 (2013)
`
`(attached hereto as Attachment B) is misplaced. C_f. Opposition (Paper 14) at p. 4.
`
`At pages 1967-76, this law review article summarizes the lack of deference paid to
`
`the Patent Off1ce’s legal decisions prior to the America Invents Act (“AIA”). S_e§
`
`Attachment B. This law review article goes on to “argue[ ] that an application
`
`administrative law principles
`
`to the new and modified post-grant
`
`review
`
`NY 802685v.l
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`- 3 -
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`

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`proceedings triggers Chevron deference for the PTO’s interpretation of ambiguous
`
`terms of the Patent Act announced during these proceedings.” Attachment B at
`
`pp. 1977-78.
`
`Moreover, in Yissum Research, the Federal Circuit is unlikely to address the
`
`Board’s broad interpretation of 35 U.S.C. §3l5(c).
`
`In the Versata decision relied
`
`upon by Patent Owner, the Federal Circuit explained that its appellate review is
`
`limited to only those issues addressed in the Final Written Decision.
`
`To be clear, it is the merits of the final written decision
`
`that are on appeal; we are not here called upon to review
`
`the determination by the PTAB whether to institute a
`
`CBM review, and indeed the statute expressly instructs
`
`that we may not. . ..
`
`Versata Dev. Grp., Inc. v. SAP Am, Inc., 793 F.3d 1306, 1315 (Fed. Cir. 2015)
`
`(omitting quote of 35 U.S.C. §324(e)); see also In re Cuozzo Speed Techs., LLC,
`
`793 F.3d 1268, 1273 (Fed. Cir. 2015) (“We conclude that §314(d) prohibits review
`
`of the decision to institute IPR even after a final decision”).
`
`Simply put,
`
`in
`
`Versata, the Federal Circuit held that it could review issues addressed in both the
`
`Decision to Institute and the Final Written Decision.
`
`793 F.3d at 1318-23.
`
`In
`
`Yissum Research, on the other hand, the Board’s interpretation of §315(c) was not
`
`addressed in the Final Written Decision.
`
`Compare. Sony Corp.
`
`v. Yissum
`
`Research,
`
`IPR2013—00327, Decision (Paper15) and Final Written Decision
`
`NY 802685v.l
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`- 4 —
`
`

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`(Paper 16). Thus, in Yissum Research, the Federal Circuit is unlikely to even reach
`
`the Board’s broad interpretation of §315(c).
`
`III.
`
`PETITIONER’S SECOND PETITION COMPLIES WITH 35 U.S.C.
`
`§§311 & 312(a)(3)(B)
`
`There is no dispute that Petitioner’s Second Petition complies with the
`
`requirements of 35 U.S.C. §311. Furthermore, Petitioner’s Second Petition fully
`
`complies with §3l2(a)(3)(B). C_f. Decision (Paper 12) at p. 15 n.4, The Board
`
`correctly notes that Petitioner did not have the attesting affidavit upon the
`
`expiration of the one—year time limit in §3l5(b). SQ I_d. at pp. 13-15. The Board
`
`has not pointed to any statute, rule or case law requiring that the Second Petition’s
`
`compliance with §312(a)(3)(B) is to be measured at the expiration of the one—year
`
`limit in §315(b) rather than as of its February 20, 2015 filing. To the contrary, the
`
`one—year limit of §3l5(b) is inapplicable by operation of §3l5(c) and 37 C.F.R.
`
`§42.122(b).
`
`Patent Owner has not pointed to any authority contradicting
`
`Petitioner’s View of §3l5(c) and 37 C.F.R. §42.l22(b). Q‘. Opposition (Paper 14)
`
`at pp. 9-10.
`
`IV.
`
`CONCLUSION
`
`Petitioner respectfully requests that the Board grant the present motion.
`
`Respectfully submitted,
`
`Dated: September 23, 2015
`
`/s/ Steven F. Meyer
`Steven F. Meyer (Reg. No. 35,613)
`
`NY 802685v.1
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`- 5 —
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`

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`ATTAI‘.'.'l-I M l-iNT B
`
`
`M. W_«1SS]';l{_"»'I.='k N THE CHANGING GUARD OF PATENT LAW:
`
`CHEVRON DEFERENCE FOR THE PTO
`
`54 WM. & MARY L. REV. 1959 120131
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`NY 802685v.1
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`

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`William 8: Mary Law Review
`
`Volume 54 I Issue 6
`
`Article 5
`
`'l he Cliaiigiiig Guard ofPatent Law: Chevron
`Deference for the PTO
`
`Melissa F. Wasserman
`
`Repository Citation
`
`Melissa F. Wasserman, The Changing Guard ofPatent Law: Chevron Deferencefor the PTO, S4 Wm. 8:
`Mary L. Rev. 1959 (2013), http: //scholarship.law.wm.edu/wmlr/V0154/iss6/5
`
`Copyright c 2013 by the authors. This article is brought to you by the William 8: Mary Law School Scholarship Repository.
`http://scholarship Iaw.wm edu/wmlr
`
`

`
`THE CHANGING GUARD OF PATENT LAW: CHEVRON
`DEFERENCE FOR THE PTO
`
`MELISSA F. WASSERMAN*
`
`Whereas Congress has increasingly turned to administrative
`agencies to regulate complex technical areas, the patent system has
`remarkably remained an outlier. In the patent arena, the judiciary-
`not a federal agency—is perceived to be the most important expositor
`of substantive patent law standards. Yet, as the criticism toward the
`patent system has grown, so too have the challenges to this unusual
`power dynamic. The calls for institutional reform culminated in late
`2011 with the enactment of the historic Leahy-Smith America
`Invents Act (AIA). Although scholars have recognized that the AIA
`bestows a glut of new powers upon the United States Patent and
`Trademark Office (PTO), this Article contends that commentators
`have failed to recognize the extent to which the AIA alters the fun-
`damental power dynamic between the judiciary and the PTO. By
`anointing the PTO as the primary interpreter of the core patentability
`standards, this Article posits that the AIA rejects over two hundred
`years of court dominance in patent policy.
`Although the patent system has traditionally suffered from a lack
`of serious engagement with administrative law, applying adminis-
`trative law principles to theAlA has tremendous implications for the
`
`* Assistant Professor of Law and Richard W. and Marie L. Corman Scholar, University
`of Illinois College of Law. J.D., New York University School of Law, Ph.D., Princeton
`University. The author would like to thank Michael Abramowicz, Bill Ariaza, Michael
`Burstein, l. Glenn Cohen, Kevin Collins, Rochelle Dreyfuss, Michael Frakes, John Golden,
`Paul Heald, Kristin Hickman, Sapna Kumar, Mark Lemley, Jason Marisam, Rob Merges,
`Lisa Ouelette, Arti Rai, Pam Samuelson, John Siegel, Suja Thomas, Molly S. Van Houweling,
`and the participants at PatCon2, Works-in—Prog'ress Intellectual Property Colloquium 2012,
`Twelfth Annual Intellectual Property Scholars Conference, the Junior Faculty Roundtable
`University of Illinois, faculty workshop at Tulsa University and the University of California
`Berkeley IP Seminar, AALS New Voices in Administrative Law Roundtable, and the
`Advanced Patent Colloquium at Washington University School of Law for useful comments.
`The author would also like to thank Aaron Birk, Joseph Bozdech, Conor Craft, Elizabeth
`Gilbreath, and Erin Solomon for their wonderful research assistance.
`
`1959
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`

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`1960
`
`WILLIAM & MARY LAW REVIEW
`
`[VOL 5421959
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`roles of patent institutions and, as this Article argues, results in a
`normatively desirable outcome. The AL4, by making the PTO the pri-
`mary expositor of the core provisions of the Patent Act, ushers the
`patent system into the modern administrative era—which has long
`recognized the deficiencies associated with judge-driven policy.
`Moreover, the incorporation of administrative law principles into the
`patent system has substantial implications for administrative law
`itself. As this Article attempts to reconcile the distinctive features of
`patent administration with existing administrative law jurispru-
`dence, it provides insight into a prolonged circuit split on the proper
`approach to determining the triggering provisions for formal adjud-
`ication, as well as when a grant of formal adjudicatory authority
`carries with it the ability to speak with the force of law.
`
`

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`2013]
`
`THE CHANGING GUARD OF PATENT LAW
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`TABLE OF CONTENTS
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`INTRODUCTION .
`I. CHEVRONAND THE HISTORICAL LACK OF
`JUDICIAL DEFERENCE To THE PTO .
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`A. Strong Judicial Deference and the
`Supreme Court
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`B. The Historical Lack of-Dejge-rence
`PTO’s Legal Decisions
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`. . . . . .
`II. POSTGRANT REVIEW AND ADMINISTRATIVE LAW .
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`1961
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`1962
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`1967
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`1968
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`1971
`1977
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`1978
`1979
`1984
`1989
`1994
`1998
`2001
`2005
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`. _
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`2007
`. . 2007
`2013
`2018
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`A. Formality and the Postgrant Review
`Proceedings .
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`1.0pposingPresumptions
`2.TheChevronApproach-.--....-..-...........-.
`B.Force-of-LawPrerequisite
`1. Too Big to Delegate .. . . . . .
`2. Is the Lack of Substantive
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`3. Creation of the Federal Circuit
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`C. Rejecting the Dominant Chevron Approach .
`III. NORMATIVE CASE FOR DEFERENCE: COMPARATIVE
`INSTITUTIONAL ANALYSIS .
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`A. Expertise .
`B. Capture and Institutional Bias .
`CONCLUSION .
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`

`
`1962
`
`WILLIAM & MARY LAW REVIEW
`
`[V0l. 5421959
`
`INTRODUCTION
`
`The modern administrative state is built on the premise that
`administrative bodies, as a result of their focus, manpower, and pro-
`ficiency, will reach more effective decisions than their counterparts
`in the judiciary or legislature} Thus, it is hardly surprising that
`Congress has increasingly chosen to delegate broad law-making
`authority to administrative agencies.2 Today, administrative institu-
`tions assume primary interpretative authority over federal statutes
`that regulate fields ranging from the environment,
`to pharma-
`ceutical drugs, to telecommunications. Yet, the patent system has
`remarkably remained an outlier, even though it shares the same
`technocratic attributes as legal arenas that are overwhelmingly
`dominated by agency policy making.
`Although the Patent Act defines the patentability standards in
`broad and vague language,
`the United States Patent and
`Trademark Office (PTO or Agency) lacks robust substantive rule-
`making authority3 and receives no judicial deference for its legal
`interpretations of the Patent Act.4 As a result, the United States
`
`1. See generally JAMESM. LANDIS, THE ADMINISTRATIVE PROCESS 6-46 (Greenwood Press
`1974) (1938); Louis L. Jaffe, In Memoriam, James Landis and the Administrative Process, 78
`HARV. L. REV. 319, 320-21, 327-28 (1964).
`2. See Mistretta v. United States, 488 U.S. 361, 372 (1989) (“[I]n our increasingly
`complex society, replete with ever changing and more technical problems, Congress simply
`cannot do its job absent an ability to delegate power under broad general directives”); see also
`Steven P. Croley, Theories ofRegulation: Incorporating the Administrative Process, 98 COLUM.
`L. REV. 1, 3 (1998) (“In many profound ways,
`the innumerable activities of everyday
`life—working, traveling, transacting, recreating, indeed eating, drinking, and breathing——are
`affected by the work of federal administrative agencies”).
`3. Merck & Co. v. Kessler, 80 F.3d 1543, 1549-50 (Fed. Cir. 1996) (noting that the PTO
`lacks the ability to promulgate rules on the core patentability standards that carry the force
`of law).
`4. See infra notes 58-76 and accompanying text. Although the PTO has begun to exert
`more influence in the development of patent law and policy, the lack ofjudicial deference paid
`to the Agency’s legal interpretations of the Patent Act sets it squarely apart from agencies
`that exercise wide discretion and are afforded strong judicial deference when regulating
`technological
`innovation,
`such as
`the Federal Trade Commission or
`the Federal
`Communications Commission. See, e.g., Clarisa Long, The PTO and the Market for Influence
`in Patent Law, 157 U. PA. L. REV. 1965, 1966-67 (2009) (“[T]he PTO has maneuvered since the
`early 1990s to occupy a more central position in making patent law and policy.”); see also
`Melissa F. Wasserman, The PTO's Asymmetric Incentives: Pressure to Expand Substantive
`Patent Law, 72 OHIO ST. L.J. 379, 387-400 (2011) (arguing that the PTO plays a more
`
`

`
`2013]
`
`THE CHANGING GUARD OF PATENT LAW
`
`1963
`
`Court of Appeals for the Federal Circuit (Federal Circuit), which is
`vested with near-exclusive jurisdiction over patent appeals,
`is
`largely perceived to be “the most important expositor of the sub-
`stantive law of patents in the United States.”5
`Yet, as criticism toward the patent system has grown, so too have
`the challenges to this unusual power dynamic.“ An increasing num-
`ber of commentators believe this lopsided institutional structure is
`the root cause of the patent system’s systemic failures.7 An even
`larger contingency of scholars support reforms that would shift
`greater power to the PTO.8 The cries for institutional reform
`
`prominent role in substantive patent law than is traditionally acknowledged).
`5. Michael J. Burstein, Rules for Patents, 52 WM. & MARY L. REV. 1747, 1757 (2011); see
`also Lee Petherbridge & R. Polk Wagner, The Federal Circuit and Patentability: An Empirical
`Assessment of the Law of Obviousness, 85 TEX. L. REV. 2051, 2053 (2007) (“[T]he Federal
`Circuit is unquestionably the most influential player in the U.S. patent system.'’).
`6. See generally JAMES BESSEN & MICHAEL J. MEURER, PATENT FAILURE: How JUDGES,
`BUREAUCRATS, AND LAWYERS PUT INNOVATORS AT RISK 1-28 (2008); DAN L. BURK & MARK A.
`LEMLEY, THE PATENT CRISIS AND How THE COURTS CAN SOLVE IT 1-6 (2009).
`7. See, e.g., John M. Golden, Patentable Subject Matter and Institutional Choice, 89 TEX.
`L. REV. 1041, 1075 (2011) (noting that courts have struggled with patentable subject matter
`inquiries and that the state of jurisprudence could be improved by granting the PTO rule-
`making authority over patentable subject matter); Joseph Scott Miller, Substance, Procedure,
`and the Divided Patent Power, ADMIN. L. REV., Winter 2011, at 31 (arguing that the courts
`should take a more deferential approach in determining whether a rule is substantive or
`procedural, the result of which would leave the PTO with ample discretion to manage the
`prosecution process); Arti K. Rai, Engaging Facts and Policy: A Multi-Institutional Approach
`to Patent System Reform, 103 COLUM. L. REV. 1035, 1040 (2003) (“The ostensibly discrete
`problems of our patent institutions stem from an initial mistake in institutional design.”);
`Sarah Tran, Administrative Law, Patents, and Distorted Rules, 80 GEO. WASH. L. REV. 831,
`839-40 (2012) (arguing that the Federal Circuit’s overly narrow view ofthe PTO’s rule-making
`powers “has impeded innovation and the express goal of Article I of the U.S. Constitution to
`promote ‘the Progress of Science and useful Arts’" (quoting U.S. CONST. art. I, § 8, cl. 8));
`Wasserman, supra note 4, at 420-29 (arguing that the structural relationship between the
`PTO and the Federal Circuit has inflated the boundaries of patentability).
`8. Scholars have suggested reforms ranging from granting the PTO unlimited substan-
`tive rule-making authority, see Burstein, supra note 5, at 1751 (proposing that Congress
`should grant the PTO substantive rule—making authority so that the Agency would be able
`to pronounce legal rules on the core patentability standards that carry the force of law);
`Golden, supra note 7, at 1041 (“[T]he enterprise of regulating patentable subject matter
`should be primarily entrusted to the USPTO, rather than, as it is now, to the courts"), to
`greater control over its own procedures, see Jonathan S. Masur, Regulating Patents, 2010 SUP.
`CT. REV. 275, 279 (arguing that Congress should reorient patent laws institutional
`arrangements by granting the PTO substantive rule-making authority); Arti K. Rai, Growing
`Pains in the Administrative State: The Patent Office’s Troubled Quest for Managerial Control,
`157 U. PA. L. REV. 2051, 2056 (2009) (arguing that the PTO should have greater control over
`its procedural functions); Tran, supra note 7, at 839-41 (arguing that courts should read the
`
`

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`1964
`
`WILLIAM & MARY LAW REVIEW
`
`[Vol. 54: 1959
`
`culminated in 2011 when Congress enacted the historic Leahy-
`Smith America Invents Act (AIA).9 The AIA provided the first major
`overhaul to the patent system in sixty years and undeniably in-
`creased the stature of the PTO by granting the Agency a host of new
`responsibilities, such as fee-setting authority“) and the ability to
`conduct new adjudicatory proceedings in which patent rights may
`be obtained or challenged.“
`This Article contends, however, that commentators have gener-
`ally failed to recognize the extent to which the AIA alters the
`fundamental power dynamic between the Federal Circuit and the
`PTO. Although scholars acknowledge that the AIA bestows a glut of
`new powers upon the Agency,” they have nearly uniformly con-
`cluded that “Congress stopped short of allowing the PTO to inter-
`pret the core provisions of the Patent Act—those that affect the
`scope of what is patentable.”13 Though Stuart Benjamin and Arti Rai
`
`PTO’s rule-making authority more expansively), to an increased role in determining patent
`validity, see, e.g., Rochelle Cooper Dreyfuss, In Search of Institutional Identity: The Federal
`Circuit Comes ofAge, 23 BERKELEY TECH. L.J. 787, 791 (2008) (noting that one reform to the
`patent system about which most scholars agree is the enactment of a robust postgrant review
`proceeding).
`9. Leahy—Smith America Invents Act (AIA), Pub. L. No. 112-29, 125 Stat. 284 (2011) (to
`be codified in scattered sections of 35 U.S.C.). This Act has been described as “the most
`significant overhaul to our patent system, since the founding fathers first conceived of
`codifying a grand bargain between society and invention.” David Kappos, Re—Inuenting the US
`Patent System, D1REcToR’s F.: A BLOG FROM USPTO’s LEADERSHIP (Sept. 16, 201 1, 5:45 PM),
`http://www.uspto.gov/blog/director/entry/re_inventing_the_us_patent.
`10. AIA§ 10, 125 Stat. at 316-20 (to be codified at 35 U.S.C. § 41) (fee-setting authority).
`11. Id. § 6, 125 Stat. at 299-313 (to be codified at 35 U.S.C. §§ 311-319, 321-329)
`(postgrant review proceedings); id. § 12, 125 Stat. at 325-327 (to be codified at 35 U.S.C. §257)
`(supplemental examination); id. § 18, 125 Stat. at 329 (to be codified at 35 U.S.C. § 321)
`(transitional program for covered business-method patents).
`12. See, e.g., Sarah Tran, Patent Powers, 25 HARV. J.L. & TECH. 610, 626-40 (2012)
`(delineating the new powers the AIA affords the PTO).
`13. Sapna Kumar, The Accidental Agency?, 65 FLA.L. REV. 229, 238 (2013); see, e.g., Tran,
`supra note 12, at 643-44 (noting that while the AIA grants the PTO some additional rule-
`making authority, this new authority does not include the ability to make rules over core
`patentability requirements such as patentable subject matter, novelty, and obviousness);
`Mark A. Lemley, Things You Should Care About in the New Patent Statute (Stanford Pub.
`Law Working Paper No. 1,929,044, 2011), available at http://papers.ssrn.com/sol3/papers.
`cfm?abstract_id=1929044 (delineating the twenty most significant changes in the AIA but not
`mentioning a shift in interpretative authority to the PTO).
`Moreover, even though there is a growing body ofliterature analyzing the postgrant review
`system—which this Article contends is the source of the PTO’s new interpretative
`authority—the vast majority of the scholarship has failed to recognize the potential for a shift
`
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`THE CHANGING GUARD OF PATENT LAW
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`1965
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`have observed that certain congressional bestowals of adjudicatory
`authority may entitle the PTO’s legal interpretations of the Patent
`Act to strong judicial deference,” this Article provides the first in-
`depth exploration of whether the actual powers granted by the AIA
`would result in the PTO becoming the primary interpreter of the
`core patentability requirements. This Article concludes that the AIA
`rejects over two hundred years of court dominance in patent policy
`by anointing the PTO as the chief expositor of substantive patent
`law standards.
`
`In general, the patent system has historically suffered from a lack
`of serious engagement with administrative law,” even though
`Supreme Court intervention in 1999 made clear that standard
`administrative law norms—including the Administrative Procedure
`
`in the power dynamics of the patent system. See, e.g., Michael A. Carrier, Post-Grant
`Opposition: A Proposal and a Comparison to the America Invents Act, 45 U.C. DAVIS L. REV.
`103, 103-06, 134-35 (2011); Bronwyn H. Hall & Dietmar Harhoff, Post—Grant Reviews in the
`US. Patent System—Design Choices and Expected Impact, 19 BERKELEY TECH. L.J. 989, 989-
`90, 1014-15 (2004); Mark D. Janis, Rethinking Reexamination: Toward a Viable
`Administrative Revocation System for U.S. Patent Law, 11 HARV. J.L. & TECH. 1, 3-7, 117-22
`(1997); Gerald J. Mossinghoff & Vivan S. Kuo, Post—Grant Review of Patents: Enhancing the
`Quality of the Fuel oflnterest, 43 IDEA: J.L. & TECH. 83, 83-87, 109-10 (2002).
`14. See Stuart Minor Benjamin & Arti K. Rai, Who's Afraid of the APA? What the Patent
`System Can Learn from Administrative Law, 95 GEO. L.J. 269, 327-28 (2007) (“The various
`postgrant review proceedings that have been proposed would be trial—type procedures on the
`record that bear the hallmarks of formal adjudication—most notably, a proceeding before an
`administrative judge at which the parties present evidence and cross-examination, with the
`judge’s decision based on the record. Such proceedings would have sufficient formality to
`satisfy Mead’s test for application of Chevron deference. Thus, if Congress created these
`procedures and said nothing more, Chevron deference would seem to apply to them.”
`(footnotes omitted)); Arti K. Rai, Essay, Patent Validity Across the Executive Branch: Ex Ante
`Foundations for Policy Development, 61 DUKE L.J. 1237, 1280 (2012) (“In fact, the executive
`branch could also use the postgrant-review authority conferred upon the PTO by the AIA to
`go one step further. As a doctrinal matter, under current Supreme Court precedent
`interpreting the contexts in which Chevron applies, the government could ask for Chevron
`deference toward decisions made in postgrant review proceedings”).
`However, neither of these articles analyzed the language of the AIA, applied or
`acknowledged the three—way circuit split on when formal adjudications are triggered, or
`performed any analysis of when a grant of formal adjudicatory authority carries the ability
`to speak with the force of law.
`15. See, e.g., Benjamin & Rai, supra note 14, at 270 (“In contrast to commentators and
`practitioners in other technically complex areas
`the patent law community has tended to
`pay little attention to administrative law.’’); Adam Mossoff, The Use and Abuse of IP at the
`Birth of the Administrative State, 157 U. PA. L. REV. 2001, 2002 (2009) (“Throughout the
`twentieth century, administrative law and intellectual property law seemed as if they were
`hermetically sealed off from each other in both theory and practice”).
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`1966
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`WILLIAM & MARY LAW REVIEW
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`[Vol. 54: 1959
`
`Act—apply to the PTO.” Applying administrative law principles to
`the AIA provides that the PTO’s legal interpretations of the Patent
`Act, as announced by its new adjudicatory proceedings, are entitled
`to the highly deferential standard of review articulated in Chevron
`U.S.A. Inc. v. Natural Resources Defense Council, Inc.” As this
`Article argues, this deference is a normatively desirable outcome.”
`Making the PTO the primary interpreter of the core patentability
`standards ushers the patent system into the modern administrative
`era, which has long recognized the deficiencies associated with
`judge-driven policy.” This provides the institutional foundation for
`infusing economic policy into the patent system, enabling the tai-
`loring of patentability standards to advance the system’s constitu-
`tionally mandated goal: the promotion of innovation.
`Additionally, the incorporation of administrative law principles
`into the patent system has substantial implications for adminis-
`trative law. As this Article attempts to reconcile the distinctive fea-
`tures of patent administration with existing administrative law
`jurisprudence, it tests, and at times, brings into better focus, the
`contours of this doctrine. This exercise in reconciliation offers in-
`
`sight into a prolonged circuit split on the proper approach to
`determining the triggering provisions of formal adjudication and
`when a grant of formal adjudicatory authority carries the ability to
`speak with the force of law. Even though an agency’s eligibility for
`Chevron deference turns on whether its actions carry the force of
`law, in the adjudicatory context the force-of-law concept has been
`largely undertheorized.2°
`This Article proceeds as follows. Part I provides a brief summary
`of the Supreme Court’s strong judicial deference doctrine and then
`chronicles why the PTO’s patentability determinations have never
`been afforded Chevron deference. Part I concludes by introducing
`
`16. See Dickinson v. Zurko, 527 U.S. 150, 165 (1999) (rejecting the Federal Circuit’s
`application of pre—APA standards to its review of PTO fact—finding).
`17. 467 US. 837, 865-66 (1984).
`18. See infra Part III.
`19. Cass R. Sunstein, Law and Administration After Chevron, 90 COLUM. L. REV. 2071,
`2079 (1990) (“For the twentieth century reformers, courts lacked the flexibility, powers of
`coordination, initiative, democratic accountability, and expertise necessary to deal with
`complex social problems”).
`20. See infra Part II.B.
`
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`THE CHANGING GUARD OF PATENT LAW
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`the Agency’s new adjudicatory proceedings—specifically postgrant
`review and inter partes review.“ Part II analyzes how existing
`administrative law jurisprudence applies to these new proceedings
`and, from a doctrinal standpoint, concludes that the Federal Circuit
`should give Chevron deference to reasonable PTO validity determi-
`nations announced during postgrant or inter partes review. This
`conclusion rests on only two principles: first, that Congress intended
`the PTO’s new adjudicatory powers to be effectuated through formal
`adjudication, and second, this grant of formal adjudicatory authority
`was accompanied with the ability to speak with the force of law.” In
`making this latter argument, Part II begins by developing a concep-
`tual framework to determine when a grant of formal adjudicatory
`authority would be sufficient to infer a delegation of interpretative
`authority, and then it turns to addressing conceivable counterargu-
`ments. Finally, this Part also provides insight into a twenty-five
`year circuit split on determining the triggering provision of formal
`procedures by furnishing a strong theoretical basis for rejecting the
`dominant approach.
`Part III makes the normative justification for Chevron deference.
`This Part maintains that the PTO has a comparative institutional
`advantage over the Federal Circuit and also argues that the Federal
`Circuit does not emerge as a clear winner with respect to the
`comparative risk of interest group influence. Consequently, Part III
`concludes that this shift in the power dynamics between the PTO
`and the Federal Circuit is normatively desirable.
`
`I. CHEVRON AND THE HISTORICAL LACK or JUDICIAL DEFERENCE TO
`THE PTO
`
`The PTO is a federal agency housed in the Department of
`Commerce, wh