Droplets, Inc. v. Andrei Iancu, Director, United States Patent and Trademark Office

This petition presents a square conflict over the Chenery doctrine in a context of exceptional legal and practical importance. Under Chenery, an agency’s decision must stand or fall on its own terms, leaving reviewing courts to “judge the propriety of [agency] action solely by the grounds invoked by the agency.” SEC v. Chenery, 332 U.S. 194, 196 (1947); accord Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 50 (1983). In the proceedings below, the Patent Trial and Appeal Board invalidated the claims of petitioner’s patent. The sole dispositive issue before the Board was the proper construction of the patented claims, yet the Board’s disposition of that issue consisted of a single, unsupportable sentence. In the Federal Circuit, the government accordingly defended the Board’s decision on new legal grounds not articulated by the Board itself. Although that tactic is precluded by Chenery and the prevailing law in multiple courts of appeals, it is permitted by entrenched precedent in the Federal Circuit, which, once again, has departed from the baseline legal norms applied in other courts. The questions presented are:

1. Whether “an agency’s action must be upheld, if at all, on the basis articulated by the agency itself” (State Farm, 463 U.S. at 50), or whether a court can substitute its own views for the agency’s whenever the issue is “legal in nature” (In re Comiskey, 554 F.3d 967, 975 & n.5 (Fed. Cir. 2009)).

2. Whether inter partes reexamination under the Patent Act violates Article III and the Seventh Amendment by allowing Article I judges to adjudicate the validity of an issued patent. (I)