Patent Law’s Deference Paradox

By Paul R. Gugliuzza. Full Text. 

Courts frequently defer to the decisions of administrative agencies, particularly when the decision is thoroughly deliberated and within the agency’s realm of technical and legal expertise. Conversely, when an agency gives little thought to a matter or brings no special knowledge to bear, the agency gets little or no deference. Patent law, however, does it backwards. The decision of a single examiner at the Patent Office to grant a patent—a decision made under significant time pressure and with incentives skewed in the applicant’s favor—receives substantial deference when the patent’s validity is later challenged in court as a defense to an infringement lawsuit. Issued patents are, by statute, presumed to be valid, so the challenger must prove the patent is invalid by clear and convincing evidence. But when a panel of expert administrative judges at the Patent Office has reassessed the validity of an issued patent in trial-like, adversarial proceedings, a de novo standard of review often applies when the Patent Office’s decision is appealed to the Federal Circuit.

This Article identifies and critiques patent law’s deference paradox, under which the Patent Office’s least deliberate decisions receive the most judicial deference and its most deliberate decisions get the least deference. Two reforms would eliminate this paradox. First, the presumption of validity should be weakened by the courts or eliminated by Congress. Second, the Supreme Court and the Federal Circuit should stop describing patent validity as a question of law, which is what causes the Patent Office’s validity rulings to be reviewed de novo on appeal. Instead, those courts should hold that an invention’s patentability is a mixed question of law and fact because it mainly involves applying the law to the facts of a particular case.

These changes would meaningfully improve the patent system. Doctrinally, they would simplify patent law’s deference framework by granting all of the Patent Office’s patentability determinations the same, sliding-scale deference under the Supreme Court’s decisions in Skidmore v. Swift & Co. and United States v. Mead. As a matter of policy, this framework would better reflect how the patent system actually works: Initial examination is perfunctory, so examiners’ decisions to grant patents should be closely scrutinized when a defendant accused of patent infringement argues, in court, that the patent is invalid. Post-issuance administrative review at the Patent Office, on the other hand, is increasingly elaborate and now often substitutes for court litigation over patent validity, so the Office should receive deference when its expert administrative judges have reassessed the validity of an issued patent and either confirmed or canceled it.

Importantly, these reforms are realistic. The Supreme Court’s most recent decision on the standard of proof for patent invalidity in litigation, despite reaffirming the clear and convincing evidence standard, actually gives lower courts significant leeway to weaken the presumption of validity. As for the Patent Office, though a de novo standard of review remains on the books, recent Federal Circuit decisions are taking the first steps toward a more deferential approach by cautiously recognizing the fact-driven nature of many patent validity determinations.