Dickinson v. Zurko

• Decision Date: 24 March 1999
• Docket Number: No. 98-377,98-377
• Citation: 144 L. Ed. 2d 143,527 U.S. 150,119 S. Ct. 1816
• Parties: Q. TODD DICKINSON, ACTING COMMISSIONER OF PATENTS AND TRADEMARKS, PETITIONER
• Court: U.S. Supreme Court

527 U.S. 150,

119 S. Ct. 1816,

144 L. Ed. 2d 143,

Q. TODD DICKINSON, ACTING COMMISSIONER OF PATENTS AND TRADEMARKS, PETITIONER v. MARY E. ZURKO ET AL.

No. 98-377

SUPREME COURT

OF THE UNITED STATES

March 24, 1999, Argued

June 10, 1999, Decided

Lawrence G. Wallace argued the cause for petitioner.

Ernest Gellhorn argued the cause for respondents.

BREYER, J., delivered the opinion of the Court, in which STEVENS, O'CONNOR, SCALIA, SOUTER, and THOMAS, JJ., joined. REHNQUIST, C. J., filed a dissenting opinion, in which KENNEDY and GINSBURG, JJ., joined.

OPINION

JUSTICE BREYER delivered the opinion of the Court.

[144 L. Ed. 2d LEdHR1A] LEdHN[1A][1A]The Administrative Procedure Act (APA) sets forth standards governing judicial review of findings of fact made by federal administrative agencies. 5 U.S.C. § 706. We must decide whether § 706 applies when the Federal Circuit reviews findings of fact made by the Patent and Trademark Office (PTO). We conclude that it does apply, and the Federal Circuit must use the framework set forth in that section.

I

Section 706, originally enacted in 1946, sets forth standards that govern the "Scope" of court "review" of, e.g., agency factfinding (what we shall call court/agency review). It says that a

"reviewing court shall --

. . . . .

"(2) hold unlawful and set aside agency . . . findings . . . found to be --

"(A) arbitrary, capricious, [or] an abuse of discretion, or . . .

. . . . .

"(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; . . .

. . . . .

"In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party . . . ."

[144 L. Ed. 2d LEdHR1B] LEdHN[1B][1B]Federal Rule of Civil Procedure 52(a) sets forth standards that govern appellate court review of findings of fact made by a district court judge (what we shall call court/court review). It says that the appellate court shall set aside those findings only if they are "clearly erroneous." Traditionally, this court/court standard of review has been considered somewhat stricter (i.e., allowing somewhat closer judicial review) than the APA's court/agency standards. 2 K. Davis & R. Pierce, Administrative Law Treatise § 11.2, p. 174 (3d ed. 1994) (hereinafter Davis & Peirce).

The Court of Appeals for the Federal Circuit believes that it should apply the "clearly erroneous" standard when it reviews findings of fact made by the PTO. In re Zurko, 142 F.3d 1447, 1459 (1998) (case below). The Commissioner of Patents, the PTO's head believes to the contrary that ordinary APA court/agency standards apply. See e.g., In re Kemps, 97 F.3d 1427, 1430-1431 (CA Fed. 1996); In re Napier, 55 F.3d 610, 614 (CA Fed. 1995); In re Brana, 51 F.3d 1560, 1568-1569 (CA Fed. 1995).

The case before us tests these two competing legal views. Respondents applied for a patent upon a method for increasing computer security. The PTO patent examiner concluded that respondents' method was obvious in light of prior art, and so it denied the application. See 35 U.S.C. § 103 (1994 ed., Supp. III). The PTO's review board (the Board of Patent Appeals and Interferences) upheld the examiner's decision. Respondents sought review in the Federal Circuit, where a panel treated the question of what the prior art teaches as one of fact, and agreed with respondents that the PTO's factual finding was "clearly erroneous." In re Zurko, 111 F.3d 887, 889, and n. 2 (1997).

The Federal Circuit, hoping definitively to resolve the review-standard controversy, then heard the matter en banc. After examining relevant precedents, the en banc court concluded that its use of the stricter court/court standard was legally proper. The Solicitor General, representing the Commissioner of Patents, sought certiorari. We granted the writ in order to decide whether the Federal Circuit's review of PTO factfinding must take place within the framework set forth in the APA.

II

[144 L. Ed. 2d LEdHR1C] LEdHN[1C][1C] [144 L. Ed. 2d LEdHR2] LEdHN[2][2]The parties agree that the PTO is an "agency" subject to the APA's constraints, that the PTO's finding at issue in this case is one of fact, and that the finding constitutes "agency action." See 5 U.S.C. § 701 (defining "agency" as an "authority of the Government of the United States"); § 706 (applying APA "Scope of review" provisions to "agency action"). Hence a reviewing court must apply the APA's court/agency review standards in the absence of an exception.

The Federal Circuit rests its claim for an exception upon § 559. That section says that the APA does "not limit or repeal additional requirements . . . recognized by law." In the Circuit's view: (1) at the time of the APA's adoption, in 1946, the Court of Customs and Patent Appeals (CCPA), a Federal Circuit predecessor, applied a court/court "clearly erroneous" standard; (2) that standard was stricter than ordinary court/agency review standards; and (3) that special tradition of strict review consequently amounted to an "additional requirement" that under § 559 trumps the requirements imposed by § 706.

Recognizing the importance of maintaining a uniform approach to judicial review of administrative action, see, e.g., Universal Camera Corp. v. NLRB, 340 U.S. 474, 489, 95 L. Ed. 456, 71 S. Ct. 456 (1951); 92 Cong. Rec. 5654 (1946) (statement of Rep. Walter), we have closely examined the Federal Circuit's claim for an exception to that uniformity. In doing so, we believe that respondents must show more than a possibility of a heightened standard, and indeed more than even a bare preponderance of evidence in their favor. Existence of the additional requirement must be clear. This is suggested both by the phrase "recognized by law" and by the congressional specification in the APA that "no subsequent legislation shall be held to supersede or modify the provisions of this Act except to the extent that such legislation shall do so expressly." 5 U.S.C. § 559. A statutory intent that legislative departure from the norm must be clear suggests a need for similar clarity in respect to grandfathered common-law variations. The APA was meant to bring uniformity to a field full of variation and diversity. It would frustrate that purpose to permit divergence on the basis of a requirement "recognized" only as ambiguous. In any event, we have examined the 89 cases which, according to respondents and supporting amici, embody the pre-APA standard of review. See App. to Brief for New York Intellectual Property Law Association as Amicus Curiae 1a-6a (collecting cases), and we conclude that those cases do not reflect a well-established stricter court/court standard of judicial review for PTO factfinding, which circumstance fatally undermines the Federal Circuit's conclusion.

[144 L. Ed. 2d LEdHR1D] LEdHN[1D][1D]The 89 pre-APA cases all involve CCPA review of a PTO administrative decision, which either denied a patent or awarded priority to one of several competing applicants. See 35 U.S.C. § 59a (1934 ed.) (granting CCPA review authority over PTO decisions); 35 U.S.C. § 141 (current grant of review authority to the Federal Circuit). The major consideration that favors the Federal Circuit's view consists of the fact that 23 of the cases use words such as "clear case of error" or "clearly wrong" to describe the CCPA's review standard, while the remainder use words such as "manifest error," which might be thought to mean the same thing. See App. to Brief for New York Intellectual Property Law Association as Amicus Curiae 1a-6a. When the CCPA decided many of these cases during the 1930's and early 1940's, legal authorities had begun with increasing regularity to use the term "clearly erroneous" to signal court/court review, Fed. Rule Civ. Proc. 52(a) (adopted in 1937), and the term "substantial evidence" to signal less strict court/agency review. Stern, Review of Findings of Administrators, Judges and Juries: A Comparative Analysis, 58 Harv. L. Rev. 70, 88 (1944) (describing congressional debates in which members argued for and against applying the "clearly erroneous" standard to agency review "precisely because it would give administrative findings less finality than they enjoyed under the 'substantial evidence' rule").

Yet the presence of these phrases is not conclusive. The relevant linguistic conventions were less firmly established before adoption of the APA than they are today. At that time courts sometimes used words such as "clearly erroneous" to describe less strict court/agency review standards. See, e.g., Polish National Alliance v. NLRB, 136 F.2d 175, 181 (CA7 1943); New York Trust Co. v. SEC, 131 F.2d 274, 275 (CA2 1942), cert. denied, 318 U.S. 786, 87 L. Ed. 1153, 63 S. Ct. 981 (1943); Hall v. Commissioner, 128 F.2d 180, 182 (CA7 1942); First National Bank of Memphis v. Commissioner, 125 F.2d 157 (CA6 1942) (per curiam); NLRB v. Algoma Plywood & Veneer Co., 121 F.2d 602, 606 (CA7 1941). Other times they used words such as "substantial evidence" to describe stricter court/court review (including appeals in patent infringement cases challenging district court factfinding). See, e.g., Cornell v. Chase Brass & Copper Co., 142 F.2d 157, 160 (CA2 1944); Dow Chemical Co. v. Halliburton Oil Well Cementing Co., 139 F.2d 473, 475 (CA6 1943), aff'd, 324 U.S. 320, 89 L. Ed. 973, 65 S. Ct. 647 (1945); Gordon Form Lathe Co. v. Ford Motor Co., 133 F.2d 487, 496-497 (CA6), aff'd, 320 U.S. 714, 88 L. Ed. 419, 64 S. Ct. 257 (1943); Electro Mfg. Co. v. Yellin, 132 F.2d 979, 981 (CA7 1943); Ajax Hand Brake Co. v. Superior Hand Brake Co., 132 F.2d 606, 609 (CA7 1943); Galion Iron Works & Mfg. Co. v. Beckwith Machinery Co., 105 F.2d 941, 942 (CA3 1939). Indeed, this Court itself on at least one occasion used the words "substantial evidence" to explain why it would not disturb a trial court's factual findings. Borden's Farm Products Co. v. Ten Eyck...