SUPREME COURT NOMINEE WOULD LIKELY END CHEVRON DEFERENCE
After U.S. Court of Appeals for the 10th Circuit Judge Neil Gorsuch was recently nominated by President Donald Trump to be a United States Supreme Court judge, initial indications from Republicans suggested they will do whatever it takes to see him confirmed. Putting politics aside for other venues, I thought it would be interesting to review several intellectual property cases from the 10th Circuit with decisions authored by Gorsuch.
Though patent issues would not have gone to the 10th Circuit (i.e., they are all appealed to the U.S. Court of Appeals for the Federal Circuit), it’s worth pointing out that Judge Gorsuch has expressed skepticism of what is known as Chevron deference: a principle of administrative law that requires courts to defer to interpretations of statutes made by those government agencies charged with enforcing them, unless those interpretations are unreasonable.
Ending Chevron deference, as Judge Gorsuch would like to do, would have enormous consequences for all agencies—including the United States Patent and Trademark Office. This result, which is currently being contemplated by Congress, would also reopen previously settled patent rulings based on the USPTO’s interpretations of the America Invents Act.
El Encanto v. Hatch Chile
Last June 17, Judge Gorsuch authored the opinion in El Encanto, Inc. v. Hatch Chile Company. The dispute arose between these companies after Hatch Chile attempted to trademark the term HATCH for exclusive use relative to its chile pepper products. As Judge Gorsuch wrote: “The Hatch Valley may be to chiles what the Napa Valley is to grapes.” That is no doubt why El Encanto objected in filings before the Trademark Trial and Appeal Board.
During the TTAB proceeding, El Encanto asked Hatch Chile to disclose the provenance of the chiles it used. Hatch Chile responded that it did not know, and that El Encanto should ask its co-packers and suppliers. Armed with that suggestion, El Encanto issued subpoenas under Federal Rule of Civil Procedure 45, which authorizes discovery from non-parties. Hatch Chile objected in federal court, seeking a protective order and a motion to quash. Hatch Chile argued that such a Rule 45 subpoena could only be used in conjunction with a deposition, which was not requested. The district court agreed.
Judge Gorsuch observed that this case was rather unusual. In the typical discovery battle, the fight is over whether one party seeks too much discovery—but here, the fight was about whether enough discovery was requested to warrant the use of a Rule 45 subpoena. Gorsuch explained that no one wanted a deposition; all that was requested were documents that answered a rather straightforward question. Ultimately, he ruled “a party to a TTAB proceeding can obtain nonparty documents without wasting everyone’s time and money with a deposition no one really wants.”
Meshwerks v. Toyota Motor Sales
In Meshwerks, Inc. v. Toyota Motor Sales U.S.A., Inc., Judge Gorsuch authored an opinion on whether digital models are entitled to copyright protection. In this case, the facts showed that the models and their designs owed their origins to Toyota, and there was a deliberate choice not to include anything original of their own. As such, the 10th Circuit had little difficulty finding that the models in question were not original works of authorship entitled to copyright protection.
In approaching the answer to the question presented in Meshwerks, Gorsuch observed: “While there is little authority explaining how our received principles of copyright law apply to the relatively new digital medium before us, some lessons may be discerned from how the law coped in an earlier time with a previous revolution in technology: photography.” Gorsuch explained that photographs are copyrightable to the extent that they offer an original depiction of the subject, which can include a photographer’s choices regarding pose, lighting, shading, positioning and other elements of composition. Armed with these lessons, Gorsuch concluded, “Meshwerks’ models are not so much independent creations as (very good) copies of Toyota’s vehicles.”
Views on Vast Regulatory Powers
With respect to Chevron deference, last August 23 Judge Gorsuch wrote a concurring opinion in Gutierrez-Brizuela v. Lynch, which substantively relates to an order from the Board of Immigration Appeals. Gorsuch wrote that he thinks it is time to address the elephant in the room—namely, that Chevron deference is inconsistent with the Constitution because it deprives the judiciary of the power to review agency actions and interpretations. He explained:
“There’s an elephant in the room with us today. We have studiously attempted to work our way around it and even left it unremarked. But the fact is, Chevron and Brand X permit executive bureaucracies to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design. Maybe the time has come to face the behemoth.”
Gorsuch went on to write that the Founders thought “separation of powers to be a vital guard against governmental encroachment on the people’s liberties…”
Already, we have seen President Trump issue an executive order relating to the streamlining of the federal regulatory system, so the nomination of Gorsuch—who seems highly skeptical of the ever-increasing power of the federal regulatory system— should shock no one. Further, on January 11, the U.S. House of Representatives passed the Regulatory Accountability Act of 2017, which in part would modify the scope of judicial review for agency actions. If passed by the Senate and signed into law by President Trump, the act will authorize courts reviewing agency actions to decide all relevant questions of law de novo without giving deference to the agency’s interpretation. Passage of the Regulatory Accountability Act of 2017 would, in essence, do away with Chevron deference and thereby significantly open the door for the federal circuit to reconsider all of the patent office’s interpretations of the America Invents Act.
Although one’s view of Judge Gorsuch will no doubt be informed by many different aspects of his judicial philosophy, having a justice on the Supreme Court who is openly skeptical of vast federal regulatory powers insulated from any judicial review would seem to bode well for patent owners