Currently pending before the U.S. Court of Appeals for the Federal Circuit is Facebook Inc. v. Windy City Innovations LLC, a cross-appeal of six separate inter partes reviews filed against four patents directed to internet chat room technology.1

Central to the appeal is the question of whether the Federal Circuit should provide deference under Chevron USA Inc. v. Natural Resources Defense Council Inc. to the Patent Trial and Appeal Board's precedential decisions. This question has been answered differently not only by the parties but by the amici curiae, which includes the U.S. Patent and Trademark Office.

The issues raised by the appeal present an opportunity for the Federal Circuit to provide some clarity on the appropriate level of deference to be afforded PTAB holdings and may even provide a chance for the U.S. Supreme Court to weigh in. Given that Justice Neil Gorsuch and Justice Brett Kavanaugh are two frequent critics of Chevron, the case has the potential to call the entire Chevron framework into question.

Facebook v. Windy City Innovations Litigation

In 2017, Windy City sued Facebook for patent infringement of four patents including a total of 830 claims. The district court did not require Windy City to narrow the number of asserted claims within the one-year statutory bar for filing IPRs, resulting in Facebook's having filed IPR petitions against some, but not all, of the asserted claims.

After the statutory deadline passed, Facebook filed additional IPR petitions along with motions to join them to the already pending petitions. The PTAB joined the late-filed petitions with the earlier ones, relying on the PTAB's Precedential Opinion Panel Proppant decision.2 In Proppant, the PTAB found that "Section 315(c) provides discretion to grant same party and issue joinder."3

Facebook successfully invalidated some but not all asserted claims during the IPR proceedings at the Dorothy Auth Danielle Tully Michael Sebba PTAB. In the current cross-appeals, the parties are disputing whether the PTAB's holding regarding whether joinder of the IPRs was proper in Proppant should be given Chevron deference by the judicial branch.

Competing Positions: To Defer or Not to Defer

The case was fully briefed and argued at the Federal Circuit before the USPTO weighed in. At the hearing, the panel expressed its view that POP decisions are unlikely to deserve Chevron deference.4 U.S. Circuit Judge S. Jay Plager took an especially strong view, imploring Facebook to focus on the rest of its case, explaining that POP decisions have no notice and comment procedure and fail to meet the requirements of the Administrative Procedure Act, and concluding that POP decisions should not be afforded Chevron deference.5

The panel further noted that it would be "grammatically incorrect" to read Section 315 as ambiguous, rendering a Chevron analysis unnecessary in any event.6 Following the completion of briefing and oral arguments, and in an effort to get a more fulsome view of the issues, the Federal Circuit invited the USPTO to file an amicus brief setting forth its view as to the appropriate level of deference that should be afforded to POP7 opinions.

The USPTO proffered that Chevron deference to its POP opinions is appropriate because Congress has provided the USPTO the authority not only to create its own rules, but also to adjudicate decisions and provide notice and comment pursuant to the America Invents Act.8

Further, the USPTO emphasized that where agency rules are being interpreted in precedential decisions, those decisions should also be afforded deference because "Courts have long afforded Chevron deference to interpretations rendered through adjudication even if the agency also possessed rulemaking authority but chose not to use it."9

The USPTO also pointed to examples in which Chevron deference has been extended to the precedential decisions of other administrative bodies even though those administrative bodies also possess authority to issue regulations, including the National Labor Relations Board, the Board of Immigration Appeals, the U.S. International Trade Commission, and the Department of Commerce.10 Thus, the USPTO argued, its ability to set out regulations which are afforded Chevron deference does not foreclose the possibility that its adjudicated decisions should likewise be afforded the same deference.

The USPTO was not alone in providing its opinion to the Federal Circuit, however, and a separate amicus brief, filed by a private attorney, argues that POP opinions deserve much lower deference. Specifically, David Boundy of Cambridge Technology Law LLC took the position that the USPTO deserves Chevron deference for rulemaking, but not for POP decisions. Boundy provided a number of reasons why the POP should not be provided Chevron deference, but, most notably, he explained that agency adjudicatory tribunals can only decide issues "in the context of deciding single cases."11

Boundy also differentiated policies of the ITC and Board of Immigration Appeals from those of the USPTO because, he argued, those tribunals have "consolidated rulemaking and adjudicatory authority."12 A third amicus curiae, Jeremy Doerre of Tillman Wright PLLC argued that adjudications issued on behalf of the director should be given Chevron deference, but those issued by the PTAB alone should not. "Congress in the AIA chose to grant rulemaking power to 'prescribe regulations establishing and governing inter partes review' to the Director, but chose to grant adjudicatory power to 'conduct each inter partes review' to the Board."13

Footnotes

1. Facebook, Inc. v. Windy City Innovations, LLC, No. 18-1400 (lead) (Fed. Cir.).

2. Proppant Exp. Invs., LLC v. Oren Techs., LLC, No. IPR2018-00914, Paper 38 (P.T.A.B. Mar. 13, 2019)

3. Id. at 21.

4. Oral Argument, Facebook, Inc. v. Windy City Innovations, LLC, No. 18-1400 (lead) (Fed. Cir. Aug. 7, 2019), http://www.cafc.uscourts.gov/node/25082 (2018-1400.mp3)

5. Id.

6. Id.

7. The POP comprises the Director, the Commissioner for Patents, and the Chief Judge of the PTAB and designates certain PTAB opinions to be precedential or informative.

8. Brief for the United States as Amicus Curiae at 5, Facebook, Inc. v. Windy City Innovations, LLC, No. 18-1400 (lead) (Fed. Cir. Sept. 17, 2019), ECF No. 76 ("USPTO Amicus") (citing United States v. Mead Corp., 533 U.S. 218, 226-27 (2001)).

9. USPTO Amicus at 10.

10. USPTO Amicus at 10 (citing 29 U.S.C. §156; Holly Farms Corp. v. NLRB, 517 U.S. 392, 398-99 (1996)); USPTO Amicus at 10-11 (citing INS v. Aguirre-Aguirre, 526 U.S. 415, 424-25 (1999); 8 U.S.C. §1103(g)(2)); USPTO Amicus at 11 (citing Suprema, Inc. v. ITC, 796 F.3d 1338, 1345-46 (Fed. Cir. 2015) (en banc); Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed. Cir. 2001)).

11. Brief of Amicus Curiae David E. Boundy, in Support of Neither Party at 5, Facebook, Inc. v. Windy City Innovations, LLC, No. 18-1400 (lead) (Fed. Cir. Sept. 17, 2019), ECF No. 79 ("Boundy Amicus") (citing NLRB v. Wyman-Gordon Co., 394 U.S. 759, 764-65, 768-69 (1969)).

12. Boundy Amicus at 5.

13. Brief of Amicus Curiae Jeremey C. Doerre in Support of Neither Party at 2, Facebook, Inc. v. Windy City Innovations, LLC, No. 18-1400 (lead) (Fed. Cir. Oct. 1, 2019), ECF No. 90 ("Doerre Amicus") (citing 35 U.S.C. §316(a)(4) and (c)).

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