142 F.3d 1447 (Fed. Cir. 1998), 96-1258, In re Zurko

Docket Nº:96-1258.
Citation:142 F.3d 1447
Party Name:46 U.S.P.Q.2d 1691 In re Mary E. ZURKO, Thomas A. Casey, Jr., Morrie Gasser, Judith S. Hall, Clifford E. Kahn, Andrew H. Mason, Paul D. Sawyer, Leslie R. Kendall, and Steven B. Lipner.
Case Date:May 04, 1998
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1447

142 F.3d 1447 (Fed. Cir. 1998)

46 U.S.P.Q.2d 1691

In re Mary E. ZURKO, Thomas A. Casey, Jr., Morrie Gasser,

Judith S. Hall, Clifford E. Kahn, Andrew H. Mason,

Paul D. Sawyer, Leslie R. Kendall, and

Steven B. Lipner.

No. 96-1258.

United States Court of Appeals, Federal Circuit

May 4, 1998

Page 1448

Nancy J. Linck, Solicitor, Arlington, VA, argued for the Commissioner of Patents and Trademarks. With her on the brief were Albin F. Drost, Deputy Solicitor, Karen A. Buchanan and Kenneth R. Corsello, Associate Solicitors.

Ernest Gellhorn, Washington, DC, argued for Mary E. Zurko, et al. With him on the brief was A. Sidney Johnston, Attorney, Corporate Law Department, Digital Equipment Corporation, Maynard, MA. Of counsel on the brief was Ronald C. Hudgens. Also of counsel on the brief were Janice M. Mueller, Assistant Law Professor, Suffolk University Law School, Boston, MA, John F. Sweeney, Israel Blum, Steven F. Meyer, and Michael O. Cummings, Morgan, & Finnegan, L.L.P., New York City.

Barry E. Bretschneider, Morrison & Foerster, LLP, Washington, DC, for amicus curiae Houston Intellectual Property Law Association.

Thomas G. Field, Jr., Professor of Law, Franklin Pierce Law Center, Concord, NH, for amicus curiae Thomas G. Field, Jr.

Scott F. Partridge, Baker & Botts, L.L.P., Houston, TX, for amicus curiae Biotechnology Industry Organization. With him on the brief was Roger L. Tate, Washington, DC.

Albert Robin, New York City, for amicus curiae International Trademark Association. With him on the brief was Leon J. Bechet.

Richard H. Stern, Ablondi, Foster, Sobin & Davidow, P.C., Washington, DC, for amicus curiae Seagate Technology, Inc. Of counsel on the brief was Edward P. Heller, III, Patent Counsel, Seagate Technology, Inc., Scotts Valley, CA.

Bruce T. Wieder, Chair, Amicus Committee, Patent, Trademark & Copyright Section, Bar Association of the District of Columbia, Washington, DC, for amicus curiae The Patent, Trademark & Copyright Section of the Bar Association of the District of Columbia. With him on the brief was Robert M. Schulman, Burns, Doane, Swecker & Mathis, L.L.P., Alexandria, VA, and Lisa E. Alexander, Morrison & Foerster, L.L.P., San Francisco, CA.

Bruce M. Wexler, Fitzpatrick, Cella, Harper & Scinto, of New York City, for amicus curiae New York Intellectual Property Law Association. With him on the brief was Edward V. Filardi, President, New York Intellectual Law Property Association. Of counsel on the brief was Charles P. Baker, Fitzpatrick, Cella, Harper & Scinto.

Rudolph P. Hofmann, Jr., Schwegman, Lundberg, Woessner, & Kluth, P.A., Minneapolis, MN for amicus curiae Federal Circuit Bar Association. With him on the brief were Ronald L. Smith, President-Elect, and George E. Hutchinson, Executive Director, Federal Circuit Bar Association, of Washington, DC.

Duke W. Yee, President, Dallas-Fort Worth Intellectual Property Law Association, Forth Worth, TX, for amicus curiae Dallas-Fort Worth Intellectual Property Law Association.

Gerald J. Mossinghoff, Oblon, Spivak, McClelland, Maier & Neustadt, Arlington, VA, for amicus curiae Pharmaceutical Research and Manufacturers of America. With him on the brief was Stephen G. Baxter. Of counsel on the brief was Matthew Van Hook, Deputy General Counsel, Pharmaceutical Research and Manufacturers of America, of Washington, DC.

Page 1449

Gary Griswold, President, American Intellectual Property Law Association, Arlington, VA, for amicus curiae American Intellectual Property Law Association. With him on the brief was R. Carl Moy, Faegre & Benson LLP, Minneapolis, MN.

Before MAYER, Chief Judge, [*] RICH and NEWMAN, Circuit Judges, ARCHER, Senior Circuit Judge, [**] MICHEL, PLAGER, LOURIE, CLEVENGER, RADER, SCHALL, BRYSON and GAJARSA, Circuit Judges.

MAYER, Chief Judge.

Mary E. Zurko et al. appealed from a decision of the Board of Patent Appeals and Interferences sustaining the rejection of United States Patent Application No. 07/479,666 under 35 U.S.C. § 103 (1994). Ex parte Zurko, No. 94-3967 (Bd. Pat. Apps. & Int. Aug. 4, 1995). On appeal, this court reversed, holding that the board's decision--that the method claimed for improving security in computer systems was obvious--was based on clearly erroneous findings of fact. In re Zurko, 111 F.3d 887, 42 USPQ2d 1476 (Fed.Cir.1997). Concluding that the outcome of this appeal turns on the standard of review used by this court to review board fact finding, we accepted the Commissioner's suggestion that we rehear the appeal in banc so that we could consider the following question: "Should this court review Patent and Trademark Office fact-findings under the Administrative Procedure Act standard of review instead of the presently applied 'clearly erroneous' standard?" 116 F.3d 874, 874 (Fed.Cir.1997). We believe section 559 of the Administrative Procedure Act permits, and stare decisis warrants, our continued application of the clearly erroneous standard in our review of these fact-findings.

I.

The Commissioner has campaigned aggressively for this court to review factual findings underlying the board's patentability determinations using the more deferential substantial evidence standard found in section 10(e) of the Administrative Procedure Act (APA) and codified in relevant part at 5 U.S.C. § 706 (1994), but we have not done so. See, e.g., In re Lueders, 111 F.3d 1569, 1574-78, 42 USPQ2d 1481, 1484-87 (Fed.Cir.1997); In re Mac Dermid, Inc., 111 F.3d 890, 890-91, 42 USPQ2d 1479, 1480 (Fed.Cir.1997); In re Kemps, 97 F.3d 1427, 1430-31 & nn. 5-6, 40 USPQ2d 1309, 1312-13 & nn. 5-6 (Fed.Cir.1996) (a precondition to addressing the standard of review issue is that its resolution be relevant to the determination of the case); In re Napier, 55 F.3d 610, 614, 34 USPQ2d 1782, 1785 (Fed.Cir.1995) (determining proper standard of review is unnecessary because board's fact finding could be affirmed under more stringent standard); In re Brana, 51 F.3d 1560, 1568-69, 34 USPQ2d 1436, 1443-44 (Fed.Cir.1995) (declining invitation to reconsider the standard of review because the decision does not turn on it). Specifically, the Commissioner argues that in appeals under 35 U.S.C. § 141, we should accept the factual findings underlying the board's patentability determinations as long as they are supported by probative evidence of a substantial nature (the substantial evidence standard found at 5 U.S.C. § 706(2)(E)), 1 or in the alternative 2 as long as they were made upon consideration of the proper factors (the arbitrary and capricious standard found at 5 U.S.C. § 706(2)(A)). Both standards require that we review board decisions on their own reasoning. Currently, we affirm decisions as long as we lack a definite and firm conviction that a mistake has been made. See, e.g., Kemps, 97 F.3d at 1430, 40 USPQ2d at 1312.

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This standard defines review for clear error and requires us to review board decisions on our reasoning. The substantial evidence, arbitrary and capricious, and clear error standards differ both in character and the amount of deference they contemplate. Thus, to choose among them, we must not only construe relevant sections of the APA and patent statutes, we must understand the historical context in which the standards developed and the current context in which they operate.

II.

Congress enacted the APA in part to stem the abuses of power by agencies seemingly unchecked by requirements for procedural rigor. For example, the original presidential committee investigating the need for congressional control over these agencies reported: "[Agencies] are in reality miniature independent governments.... They constitute a headless 'fourth branch' of the Government, a haphazard deposit of irresponsible agencies and uncoordinated powers.... Furthermore, the same men are obliged to serve both as prosecutors and as judges. This not only undermines judicial fairness; it weakens public confidence in that fairness." The Report of the President's Committee on Administrative Management 39-40 (1937). This same language was quoted by Senator McCarran, and by Representative Walters, during consideration of the final bills. See 92 Cong. Rec. 2149-50 & 2163-64 (1946), reprinted in Staff of Sen. Comm. on the Judiciary, 79th Congress, Administrative Procedure Act, Legislative History 1944-46 (1946) (APA Legislative History ). Congress was also concerned about the lack of uniformity and consistency in and among the administrative and adjudicative processes of these agencies. See generally APA Legislative History at 189 (report of Senate Judiciary Committee), 242-44 (report of House Judiciary Committee). Acting upon information gathered for almost ten years, Congress set out to "enunciate and emphasize[ ] the tripartite form of our democracy and bring[ ] into relief the ever essential declaration that this is a government of law rather than of men." Id. at iii (Sen. McCarran).

As incorporated into Title 5 of the United States Code, the APA requires agencies to provide information to the public (§ 552), to follow specified rulemaking procedures (§ 553), and to follow procedures for formal administrative adjudications (§ 554) and hearings (§ 556). The APA goes on to state: "This subchapter [and] chapter 7 ..., do not limit or repeal additional requirements imposed by statute or otherwise recognized by law. ... Subsequent statute may not be held to supersede or modify this subchapter [and] chapter 7 ..., except to the extent that it does so expressly." 5 U.S.C. § 559 (emphasis added). In chapter 7, the APA provides for judicial review of agency "action, findings, and conclusions":

To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law...

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