A Functional Approach to Judicial Review of PTAB Rulings on Mixed Questions of Law and Fact

Abstract

The Court of Appeals for the Federal Circuit (“Federal Circuit”) has long relied on active appellate review to bring uniformity and clarity to patent law. It initially treated the PTO the same as the federal district courts, reviewing its factual findings for clear error and its legal conclusions de novo. Following reversal by the Supreme Court in Dickinson v. Zurko, the Federal Circuit began giving greater deference to PTO factual findings. But it continued to review the PTO’s legal conclusions de novo, while coding an expansive list of disputed issues in patent cases as legal conclusions, even when they rest on subsidiary factfinding.

Congress expanded the role of the PTO in adjudicating challenges to patent validity in the Leahy–Smith America Invents Act of 2011 (“AIA”), authorizing new adjudicatory proceedings before the Patent Trial and Appeal Board (“PTAB”) as an alternative to federal district court litigation. The AIA provides for Federal Circuit review of PTAB decisions, without specifying standards of review. The scope of review could determine the success of these proceedings as a quicker, cheaper, and more expert alternative to district court litigation of patent challenges. The Federal Circuit applies the same standards of review to PTAB decisions in AIA proceedings that it applies to other PTO rulings, reviewing legal conclusions de novo and factual findings for substantial evidence. It also follows the same characterizations of issues as legal or factual that it has long used in the context of court/court review. In the past, by maximizing the scope of appellate review, these characterizations allowed the Federal Circuit to exercise greater quality control over generalist trial courts with limited competence to resolve patent matters. The net benefits are more dubious as applied to decisions of expert PTAB panels in AIA adjudications. Yet reversal rates at the Federal Circuit are essentially the same for PTAB decisions as for decisions of district courts in patent cases, threatening to frustrate a system designed to improve patent quality while limiting litigation costs.

This Essay reconsiders the proper scope of judicial review of PTAB rulings on two issues that the Federal Circuit codes as legal conclusions with factual underpinnings: nonobviousness and claim interpretation. Drawing on a functional approach to judicial review of mixed questions of law and fact, it argues for more deferential review of PTAB rulings on nonobviousness and claim interpretation given the expertise of the administrative tribunal and the case-specificity of the rulings. The Federal Circuit would do better to confine de novo review to generalizable legal rulings that provide guidance in future matters rather than replicating the work of the PTAB from the appellate bench on routine case-specific rulings.

Keywords: patents, judicial review, standards of review, inter partes review, mixed questions of law and fact, nonobviousness, claim interpretation, administrative tribunal, Patent Trial and Appeal Board

JEL Classification: K4