The Regulatory Accountability Act of 2017 May Require a Revisit of Recent Precedent

The Regulatory Accountability Act of 2017 is currently pending before the Senate Committee on Homeland Security and Governmental Affairs, which was recently passed by the House of Representatives with a 238-183 vote. If enacted, this bill would repeal the Chevron deference standard (“Chevron standard”), among other reforms, which potentially will require the courts to reconsider and overturn past precedent regarding the patent statute.

The Chevron standard frequently appears in litigations involving federal agencies. This standard is rooted in the U.S. Supreme Court case, Chevron U.S.A. Inc. v. Nat. Res. Def. Council, 467 U.S. 837, 104 S. Ct. 2778 (1984), where the Court held that it should defer to agency interpretations of a statute that is “silent or ambiguous with respect to the specific issue.” Under this bill, courts instead would have to review relevant questions of law in these cases de novo. This bill would affect agency guidance from all federal agencies including the U.S. Food and Drug Administration, Environmental Protection Agency, and the agency most relevant to patent practitioners, the United States Patent and Trademark Office (“USPTO”).

Although it is difficult to determine the reach of the implications from this bill, if enacted, it is possible that patent practitioners could see the effects. For instance, the 2011 America Invents Act gave the USPTO the authority to create inter partes review proceedings, including the rules governing such proceedings, as a forum to challenge patents. One of the rules decided by the USPTO concerned the standard under which inter partes reviews should construe claim language. The USPTO decided that inter partes review should utilize the “broadest reasonable [claim] construction” standard, unlike the district court that examines claims using the narrower “ordinary and customary meaning” standard. Recently, this broader standard was challenged by Cuozzo Speed Technologies LLC at the Supreme Court as too broad of a claim construction standard, thereby making it easier to invalidate patents because a broad reading of the claims results in greater amounts of prior art that can be used to invalidate a patent. The Court relied on the Chevron standard and 35 U.S.C. §316(a)(4) to ultimately reason that the statute gave the USPTO the authority to issue rules “governing inter partes review.” The Supreme Court unanimously concluded that the regulation “represents a reasonable exercise of the rulemaking authority that Congress delegated to the patent office.” If the Regulatory Accountability Act of 2017 is enacted, it could eliminate the deference the Supreme Court gave to the USPTO’s construction of the patent statute, resulting in the possibility that the Federal Circuit and Supreme Court would have to revisit the holding and analysis from Cuozzo Speed Technologies LLC.

Gibbons will continue to monitor and report on the progress of the Regulatory Accountability Act of 2017.