Excess of Jurisdiction vs. Agency Discretion

Earlier this week, the CAFC denied en banc rehearing in Google v. Unwired Planet.  While the denial was largely expected, Judge Hughes’ concurrence foreshadows the debate to come in WiFi One.

That debate, at least for Judge Hughes, is separating matters of agency discretion from questions of constitutionality and/or ultimate statutory authority.

As a reminder, WiFi One presents the following issue:

Should this court overrule Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) and hold that judicial review is available for a patent owner to challenge the PTO’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review?

In his concurrence Judge Hughes takes the position that the appeal bar of 314(d)/324(e) should control in all but an unconstitutional act or an unambiguous disregard of a statutory mandate.  And, that the Federal Circuit in Versata Development Group Inc. v. SAP America Inc. established a precedent of disagreeing with agency discretion under the auspices of a check on ultimate statutory authority.

Judge Hughes explained (here):

An exception [to the appeal bar] does not apply in instances where the court disagrees with the agency’s discretionary exercise of its explicit statutory authority. As I pointed out in Versata, if an agency can be said to be acting without statutory authority whenever this court disagrees with the board’s decision on any of the statutes related to institution, then the bar on judicial review is essentially eviscerated and is morphed into a bar on interlocutory review of the institution decision and nothing more.

Indeed, where Congress intended to convey final agency authority over a given decision, the statute must express that discretion; arguably this is the role of of 314(d)/324(e). See 5 U.S.C. § 701(a)(1) of the Administrative Procedure Act (APA)

Nevertheless, 5 U.S.C. § 706(2)(C) of the APA also provides that a reviewing court shall consider whether an agency acted in excess of statutory jurisdiction. So, the court must balance its policing role relative to statutory jurisdiction without over reaching to disturb otherwise lawful decisions left to agency discretion. In Versata, the threshold question presented (paraphrased) was: When does a patent qualify for CBM review, and is “financial product or service” language of Section 18(d)(1) of the America Invents Act (AIA) limiting in this regard?  This analysis would seem to be fair game as a question of the metes and bounds of ultimate agency jurisdiction, despite the appeal bar.

On the other hand, once a patent is deemed to qualify under the CBM statutory standard, Congress gave the agency an exception. This exception, “technological Invention,” gave the agency complete discretion to exclude otherwise qualifying CBM patents. AIA Sec. 18(d)(2). To the extent that the application of this exception is disputed to the CAFC, that aspect of CBM eligibility would seem to be barred as a matter left entirely to agency discretion. In my view the distinction in reviewability of these two sections speaks to the concern of Judge Hughes.  Therefore CBM reviewability in Versata may be more appropriately considered review of Sec. 18(d)(1) jurisdiction issues, but probably not 18(d)(2) discretionary issues.  (As I pointed out previously, the technological invention analysis creates a risk for petitioners seeking to preserve 101 challenges for the district court).

So where does this leave WiFi One?

35 U.S.C. § 315(b) does not present the same fundamental, definitional exercise as Versata’s Section 18(d)(1) jurisdictional dispute.  Yet, at least the PTAB rules appear to label 315(b) as a jurisdictional issue (37 C.F.R. § 42.3(b))  Previously the Achates decision found that 315(b) issues were sufficiently distinguishable from the fundamental jurisdiction questions of Versata— that is, 315(b) is party specific. This case-by-case analysis seemed less a fundamental jurisdictional issue, and more a matter best left to the discretion of the PTAB fact-finders.

Matters common to 315(b) disputes, such as privity and real-party-in-interest, are certainly not within the PTAB’s specialized expertise.  Congress probably didn’t intend for the 315(b) bar to preclude such matters (or even dream such would be a commonly debated issue). Nevertheless, it may be difficult for the Federal Circuit to reconcile Versata with a reversal of Achates without struggling with the discretion vs. jurisdictional dichotomy emphasized by Judge Hughes. The more likely outcome would seem to be a WiFi One holding that restricts the 314(d)/324(e) appeal bar to underlying patentability disputes as implied in portions of the High Court’s Cuozzo decision.