USPTO Deputy Director’s Qualifications Backed; Lawsuit Could Return

By Steven Seidenberg for Intellectual Property Watch
It was a victory for the US Patent and Trademark Office (USPTO), but it may be short-lived.

On 7 December, a US federal court threw out a lawsuit that challenged Margaret Peterlin’s appointment as deputy director of the USPTO. Four inventors and patent attorneys had alleged that Peterlin did not possess “a professional background and experience in patent or trademark law” as required by a federal statute, 35 USC § 3(b).

USPTO Director Jon Dudas issued a statement supporting Peterlin. “I am pleased the US District Court dismissed this meritless lawsuit,” he said. “Margaret Peterlin is well qualified to serve in her capacity as Deputy Under Secretary, and we at the department continue to support her in fulfilling the duties of her office. USPTO had another record-breaking year in 2007 exceeding all goals in quality, production and e-government.”

The court, however, did not address the allegation that Peterlin was unqualified for her position. Judge James Robertson merely held that the courts were not empowered to hear any suits concerning violations of 35 USC § 3(b).

This decision by the Washington, DC federal district court may not be the last word on the subject. The plaintiffs in this case asked the court on 20 December to reconsider its ruling. If the plaintiffs continue litigating this case, they have a good shot at overturning the court’s ruling, according to experts in US law.

Judge Robertson ruled that 35 USC § 3(b) did not, by itself, authorise third parties to file lawsuits in order to enforce the statute’s provisions. Another federal law, the Administrative Procedure Act (APA), does authorise third parties to sue when federal agencies, such as the USPTO, act in violation of law. The plaintiffs argued that, under the APA, they could sue the USPTO for violating 35 USC § 3(b).

Judge Robertson noted, however, that the APA has an exception. A lawsuit may not challenge an agency’s acts if those acts are “committed to agency discretion by law.” Judge Robertson held that the exception applied in this case, “because 35 USC § 3(b) lacks standards that a court could meaningfully use in evaluating this type of high-level personnel decision.” The statute’s requirement of “a professional background and experience in patent or trademark law” is too “vague” for a court to apply, Judge Robertson wrote, so “the decision whom to appoint to Deputy Director must be considered ‘committed to agency discretion by law.’”

This interpretation of the APA is open to question, according to US legal experts. “It is an unprecedented expansion of the law,” said John Duffy, who teaches patent and administrative law at George Washington University Law School, in Washington, DC.

In the past, the US Supreme Court has construed exceptions to the APA quite narrowly. The high court has found an action was “committed to agency discretion” only when there were absolutely no legal standards to apply – such as when Congress gave a federal agency a lump sum of money with no strings attached. Because Congress failed to provide any rules for allocating the money, the allocation was a matter for agency discretion, the Supreme Court ruled in 1993.

The requirements of § 3(b) may be somewhat vague, Duffy asserts, but they are not like the matters that the Supreme Court has determined to be committed to agency discretion. “[T]his is much closer to what courts rule on every day of the week under the APA,” he said.

Other legal experts are uncertain. They say the requirements of § 3(b) might be too uncertain to apply. “Section 3(b) says you’re supposed to have some professional background in patent or trademark law, but it is unclear what that means,” said Arti Rai, who teaches patent and administrative law at Duke University Law School (US).

The requirements of § 3(b) are not merely an afterthought. Congress specifically amended US patent law in 1999 to require that the top two USPTO officials have professional experience in patent and trademark law.

Judge Robertson’s ruling, however, prevents third parties from enforcing the law, opponents assert. “The statute is [now] effectively meaningless,” says Gregory Aharonian, a patent analyst who is the lead plaintiff in the suit against Peterlin. “That puts us back in the position of where we were before Congress passed the law.”

The lack of patent experience at the top of the USPTO is hurting the agency’s operations, according to Aharonian. And he is not alone in this opinion. “Some very important constituencies are unhappy with the way things are being run at the [US] patent office,” said Rai.

For instance, many businesses and patent attorneys in the US are upset about regulations the USPTO recently promulgated that seek to limit the number of claims in patent applications as well as the number of continuations that applicants can file. (A continuation is a revised patent application, and it is usually filed in response to an examiner’s determination that some of the application’s claims are unpatentable.)

The claims and continuation rules are controversial, but the explanation of these rules by top patent office officials has increased the controversy and opposition to the rules, according to Rai. “The way [the new rules] were explained … began to frustrate people, because the explanations were somewhat obscure, and they were made by higher level officials who didn’t know the rules as well as they could have,” Rai said. She added, “Peterlin was seen as someone who, when she talked about the rules, didn’t know the details about the way the way the patent office operates.”

As a result of the strong opposition to the claims and continuations rules, several entities have filed lawsuits challenging the legality of the rules. A federal district court judge found the plaintiffs had a strong likelihood of winning the suits and issued a temporary injunction that prevented the rules from going into effect on 1 November. Early next year, the court is expected to hear arguments about whether to make the injunction permanent.

For the moment, Peterlin is secure in her job at the USPTO. The head of the agency has supported her. And even if Aharonian eventually wins his suit against her, he is unlikely to obtain a victory before January 2009 – when a new administration will come into office and will presumably appoint a new deputy director of the USPTO.

Still, Aharonian asserts his lawsuit is far from pointless. “Hopefully our case will create some more respect for the law [§ 3(b)] in the future,” he said. “That was our original goal in the first place, to send a message to Washington: Next time, get it right.”

Steven Seidenberg may be reached at info@ip-watch.ch.