Ethicon Endo-Surgery, Inc. v. Covidien Lp
2016 U.S. App. LEXIS 11296
Fed. Cir.2016Background
- Appeal concerns denial of Ethicon’s petition for rehearing en banc following a panel decision affirming PTAB practice in IPR2013-00209.
- Judge Newman dissented from the denial of rehearing en banc, arguing the PTO improperly assigned the Director’s statutory institution function to PTAB panels.
- Under the America Invents Act (AIA), Congress distinguished two phases: (1) Director’s threshold institution decision (35 U.S.C. § 314) and (2) PTAB merits trial and final decision (35 U.S.C. § 6(b), §§ 316, 318).
- The PTO implemented 37 C.F.R. § 42.4(a), under which the same PTAB judges that decide institution commonly preside over the merits trial.
- Newman contends this consolidation violates the statutory allocation of authority, risks prejudgment, and undermines confidence in post-grant proceedings; she cites PTAB statistics showing low reversal rates after institution.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PTO rule 37 C.F.R. § 42.4(a) improperly assigns the Director’s institution function to PTAB panels | PTO cannot subdelegate the Director’s statutorily assigned institution decision; statute requires Director make the threshold determination | PTO asserts rulemaking and delegation authority permit assigning institution decision to PTAB panels | Newman (dissent): Rule conflicts with statutory text and intent; PTO lacks discretion to contravene the statute (calls for en banc review) |
| Whether consolidation of institution and merits judges creates prejudgment and undermines fairness | Consolidation taints proceedings and prejudges merits; undermines public confidence | PTO/majority argue director’s delegation and procedural rules are permissible | Newman: Consolidation risks prejudgment; statistics suggest low rates of reversal after institution supporting concern |
| Whether agency rulemaking may override explicit statutory allocations | Agency rulemaking cannot contravene clear statutory language or legislative intent | PTO claims rulemaking/delegation is within its authority to implement procedures | Newman: When statute is explicit, agency has no discretion to override Congress’ allocation |
| Whether courts should give deference to PTO interpretation of its statute here | Agency interpretations get deference generally | Where interpretation contradicts clear congressional intent, no deference owed | Newman: No deference where agency rule conflicts with statute; calls for judicial enforcement of statutory text |
Key Cases Cited
- Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976) (agency rulemaking must carry out— not make—law; cannot override statute)
- James v. Campbell, 104 U.S. 356 (1881) (patent rights are property rights not granted as a favor; due process protections apply)
- Muwwakkil v. Office of Pers. Mgmt., 18 F.3d 921 (Fed. Cir. 1994) (agency interpretations contrary to congressional intent receive no deference)