Chevron Overruled, but PTAB Likely to Emerge Unscathed

Administrative agencies long enjoyed deference from the courts under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). Chevron required courts to give leeway to agencies interpreting ambiguous statutes. On June 28, the Supreme Court overturned Chevron with its decision in Loper Bright Enterprises v. Raimondo, 603 U.S. ___ (2024).

The United States Patent and Trademark Office (“Office”) was one such agency, and Chevron theoretically required courts to defer when reviewing its regulations, including those governing PTAB practice. But few if any aspects of PTAB practice owe their existence to Chevron because the Court of Appeals for the Federal Circuit (“Federal Circuit”) has avoided Chevron deference in the past several years. Pending regulations may be marginally more vulnerable to attack, but the decision should not come as a surprise that changes the Office’s course. In short, Loper Bright does not portend a barrage of new challenges or sweeping changes to PTAB practice, the way it might elsewhere.

No existing regulations have been upheld based on Chevron deference

Over the past several years, the Supreme Court and the Federal Circuit (which has exclusive jurisdiction over PTAB appeals) have carefully avoided relying on Chevron deference to uphold PTAB regulations.

In the PTAB’s early years, shortly after the 2011 America Invents Act created the tribunal, courts deferred to the Office when reviewing its new regulatory scheme governing post-grant proceedings. With this deference, the courts upheld a couple of regulations: the Supreme Court upheld the “broadest reasonable construction” of claim terms in Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. 261, 276-83 (2016), and the Federal Circuit upheld partial institution over multiple challenges. Neither rule remains, though, so Loper Bright does not immediately call into question any previously upheld regulation.

For the second half of the PTAB’s existence, with the end of Chevron in sight, the courts began to retreat from deference to agencies. The cracks began to show by 2017, when a fractured Federal Circuit struck down the Board’s rule giving patent owners the burden to prove the patentability of amended claims in Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017) (en banc). A majority of the en banc court decided the issue without deferring to the Office. Then, in SAS Institute, Inc. v. Iancu, 584 U.S. 357 (2018), the Supreme Court flipped the Federal Circuit’s prior decision upholding the rule allowing partial institution. The Supreme Court held that no deference was owed because the statute was unambiguous. The Court was invited to overrule Chevron then, but left the question “for another day.”

Since then, the Federal Circuit has carefully avoided Chevron deference. The court has held that neither non-precedential nor precedential Board decisions are entitled to any deference, strictly limiting Chevron to the realm of regulations—and only those that do more than parrot the statute. Where parties have argued for Chevron deference, the Federal Circuit has resolved the challenges without it, often by determining that the statute is unambiguous. In short, Loper Bright should not dramatically change the Court’s approach to resolving new challenges, because that shift came years ago.

Pending regulations may be slightly more vulnerable to attack

The Patent Office has recently been actively proposing new regulations governing the PTAB. The Office’s proposed regulations will govern discretionary denial of institution, disclosure of settlement agreements, and procedures for director review of panel decisions. The former will remain largely shielded from attack by the statutory provisions barring judicial review of institution decisions. Although the lack of Chevron deference makes any regulations marginally more vulnerable to attack, it should come as no surprise to the Office that Chevron deference would be unavailable. Loper Bright is therefore unlikely to change the Office’s course.

Expect greater turmoil at other agencies

The Federal Circuit was not alone in recently backing away from Chevron, but the PTAB is unusual in that its governing regulations are new enough not to be backed by older cases giving Chevron deference.  Greater upheaval may come, for example, to older regulatory schemes governing the ITC and FDA regulatory exclusivity.