Are Administrative Patent Judges Unconstitutional? A Possible Dissenting View:
My friend and colleague John Duffy has drawn a lot of attention in the blogosphere and in the media for his essay concluding that the way of appointing administrative patent judges is unconstitutional. According to Duffy, the problem is that administrative patent judges of the Board of Patent Appeals and Interferences (BPAI) are appointed by the Director of the Patent and Trademark Office (PTO), whereas under the Appointments Clause they must be appointed by a cabinet officer because they exercise "significant authority pursuant to the laws of the United States . . and must, therefore, be appointed in the manner prescribed by [the Appointments Clause]." Buckley v. Valeo, 424 U.S. 1, 126 (1976). Duffy's argument has drawn a lot of attention, including possible legislative fixes and a pending cert petition.
But I'm not sure Duffy's view is right, and in this post I want to explain why.
My source of doubt is that I'm not so sure that BPAI judges exercize "significant authority" for Appointments Clause purposes. I am no expert in the Appointments Clause, but Duffy's article relies heavily on the analogy between BPAI judges and administrative decisionmakers. Because executive branch judges that rule on administrative claims have been ruled to be covered by the Appointments Clause, so should BPAI judges. This assumption seems to rely on a specific notion of how patent law fits into administrative law: Specifically, executive branch adjudications of patent claims are basically like executive branch adjudications of licenses, welfare benefits, and the like.
But does that analogy hold? I don't think it does. The reason is that patent law takes its operating principles from contract law rather than administrative law. As I argued a few years ago in Rethinking Patent Law in the Administrative State, 42 William & Mary Law Review 127 (2000), which I have just posted to SSRN, modern patent law predates the regulatory state and is based on the model of a unilateral contract offer rather than the exercise of administrative discretion.
I go into detail on this in the article, but here's the basic idea. The patent laws announce a contract offer: Anyone who can create an invention that satisfies the standards of patentability and agrees to disclose the invention to the public in a patent application becomes entitled to the quid pro quo of the patent grant. The filing of a patent application is an attempt to accept the offer. The government's ruling on the patent application reflects the judgment of the offeror as to whether the offer has in fact been been accepted and a contract exists. If the contract exists, the offeror (that is, the government) then bestows the quid pro quo of the property right of a patent. If the offeror concludes that no acceptance occurred and thus no contract exists, then the offeror will award no quid pro quo and the offeree (the applicant) must go to court to sue the offeror for breach of contract (failure to confer the patent).
With this understanding, a BPAI judge's job is conceptually very different from the job of other decisionmakers in the administrative state. The BPAI judge is a representative of the offeror, and the job is to determine if the applicant's conduct satisfied the contract. Although the position is a type of judgeship, the ultimate "decision" is essentially that of a contracting party as to whether a contract was accepted.
This is different from an administrative judge because administrative judges are working within a zone of delegated power. The basic notion of modern administrative law is that executive agencies are given substantive rulemaking power to "do the right thing" within a zone of delegated discretion; the administrative law judge has "significant authority" because he or she exercises that delegated power. But there is no similar delegated power in patent law. The modern patent law system predates the administrative state by several decades, and it is based on a contractual model instead of the later delegated power model. Given that, I'm not entirely sure that BPAI judges exercize "significant authority," and I'm not sure their method of appointment is unconstitutional.
My case is complicated by the fact that in the last few decades, the ossification of administrative law models of agency action has made it common to conceive of all decisions by agencies as the same. The fact that patent law followed different principles has been clouded. As I explain in detail in my William & Mary article, this has led to decisions both by the Supreme Court and the Federal Circuit that have tended to try to push patent law into more of a traditional administrative law model. Professor Duffy relies on these cases in support of his suggestion that the appointment of BPAI judges is unconstitutional by analogy to administrative judge cases. Given these recent cases, one response would be that whatever historical distinction separated patent law from regulatory executive action, the new cases have narrowed that difference enough that it no longer matters.
Perhaps that's right. But at the same time, I think that a great deal of the historical distinction remains. It includes the standards of review for legal issues, which require Chevron deference for regulatory decisions but de novo review for constructions of the requirements of patentability. And given the very high stakes involved in this issue, I think a court should at least want to look more closely at this issue before concluding that the BPAI judges are covered by the Appointments Clause.
But I'm not sure Duffy's view is right, and in this post I want to explain why.
My source of doubt is that I'm not so sure that BPAI judges exercize "significant authority" for Appointments Clause purposes. I am no expert in the Appointments Clause, but Duffy's article relies heavily on the analogy between BPAI judges and administrative decisionmakers. Because executive branch judges that rule on administrative claims have been ruled to be covered by the Appointments Clause, so should BPAI judges. This assumption seems to rely on a specific notion of how patent law fits into administrative law: Specifically, executive branch adjudications of patent claims are basically like executive branch adjudications of licenses, welfare benefits, and the like.
But does that analogy hold? I don't think it does. The reason is that patent law takes its operating principles from contract law rather than administrative law. As I argued a few years ago in Rethinking Patent Law in the Administrative State, 42 William & Mary Law Review 127 (2000), which I have just posted to SSRN, modern patent law predates the regulatory state and is based on the model of a unilateral contract offer rather than the exercise of administrative discretion.
I go into detail on this in the article, but here's the basic idea. The patent laws announce a contract offer: Anyone who can create an invention that satisfies the standards of patentability and agrees to disclose the invention to the public in a patent application becomes entitled to the quid pro quo of the patent grant. The filing of a patent application is an attempt to accept the offer. The government's ruling on the patent application reflects the judgment of the offeror as to whether the offer has in fact been been accepted and a contract exists. If the contract exists, the offeror (that is, the government) then bestows the quid pro quo of the property right of a patent. If the offeror concludes that no acceptance occurred and thus no contract exists, then the offeror will award no quid pro quo and the offeree (the applicant) must go to court to sue the offeror for breach of contract (failure to confer the patent).
With this understanding, a BPAI judge's job is conceptually very different from the job of other decisionmakers in the administrative state. The BPAI judge is a representative of the offeror, and the job is to determine if the applicant's conduct satisfied the contract. Although the position is a type of judgeship, the ultimate "decision" is essentially that of a contracting party as to whether a contract was accepted.
This is different from an administrative judge because administrative judges are working within a zone of delegated power. The basic notion of modern administrative law is that executive agencies are given substantive rulemaking power to "do the right thing" within a zone of delegated discretion; the administrative law judge has "significant authority" because he or she exercises that delegated power. But there is no similar delegated power in patent law. The modern patent law system predates the administrative state by several decades, and it is based on a contractual model instead of the later delegated power model. Given that, I'm not entirely sure that BPAI judges exercize "significant authority," and I'm not sure their method of appointment is unconstitutional.
My case is complicated by the fact that in the last few decades, the ossification of administrative law models of agency action has made it common to conceive of all decisions by agencies as the same. The fact that patent law followed different principles has been clouded. As I explain in detail in my William & Mary article, this has led to decisions both by the Supreme Court and the Federal Circuit that have tended to try to push patent law into more of a traditional administrative law model. Professor Duffy relies on these cases in support of his suggestion that the appointment of BPAI judges is unconstitutional by analogy to administrative judge cases. Given these recent cases, one response would be that whatever historical distinction separated patent law from regulatory executive action, the new cases have narrowed that difference enough that it no longer matters.
Perhaps that's right. But at the same time, I think that a great deal of the historical distinction remains. It includes the standards of review for legal issues, which require Chevron deference for regulatory decisions but de novo review for constructions of the requirements of patentability. And given the very high stakes involved in this issue, I think a court should at least want to look more closely at this issue before concluding that the BPAI judges are covered by the Appointments Clause.