Legality of the Matal Appointment: Acting As PTO Director

The following is a guest post by David Boundy – a Cambridge Massachusetts attorney with a specialty at the intersection of patent and administrative law. In 2007-09, David led the teams that quashed the Continuations, 5/25 Claims, IDS, Markush, and appeal rules under the Paperwork Reduction Act.

On other mailing lists, members of the patent bar have expressed concern that the appointment of Joe Matal may be illegal, because it does not follow the succession plain laid out in the Commerce Department Organization order 10-14.04. Some have wondered whether the appointment is illegal, in defiance of law. Would actions taken by Mr. Matal be ultra vires? Would patents signed by Mr. Matal be validly issued?

The DOO is not a statute. It’s not even a regulation. The Administrative Procedure Act, 5 U.S.C. § 553, sets out the “pigeonholes” for classifying rules and their effect. Of those pigeonholes, the DOO is a “statement of policy,” and thus only “hortatory,” not binding against the agency or the public.

Guidance is binding on an agency’s employees when that guidance promises procedural rights in favor of the public (but guidance is not binding against the public, unless it meets all the requirements of Chevron to be an “interpretation of statute or regulation”). Here, I have trouble seeing a procedural right operating in favor of the public that’s violated by appointment of one qualified individual over another, and thus there’s no binding effect for the DOO guidance.

In the guidance alone, I don’t see anything having force of law that could be breached, I don’t see who would have standing to challenge the DoC/PTO’s self-waiver, and I don’t see what remedy a court could order. (The DOO guidance may be a paraphrase or interpretation of a statute governing agency succession—that would be a different matter. I don’t know of such a statute.)

Very likely the law controlling validity of patents signed by Mr. Matal is expressed in Aristocrat Technologies Australia Pty, Ltd. v. International Game Technology, 543 F.3d 657, 663, 88 USPQ2d 1458, 1463 (Fed. Cir. 2008)—once a patent issues, nonstatutory procedural lapses (other than inequitable conduct) merge into the grant, and are not bases for challenging validity.

To be sure, there are procedural issues swirling around the PTO. The PTO’s self-grant of a federal holiday is a statutory issue, and even after an unpublished district court decision in Elm 3DS Innovations LLC v Lee, that’s still an open issue clouding validity of patents. The PTO’s misunderstanding of the legal stature of guidance creates hundreds of millions of dollars of waste, fraud, abuse, and unwarranted burden for the public. The PTO’s neglect of its obligations, and self-granted waivers, under the Paperwork Reduction Act, allow these millions to be hidden from OMB’s oversight authority. Those problems are compounded by the PTO’s failure (indeed, outright refusal stated in Petition Decisions) to implement a 2007 directive from the Executive Office of the President that clarifies the role of guidance, and the legal obligation of agencies to enforce guidance against its own employees and not against the public.

But the skirting of guidance leading to Mr. Matal’s appointment isn’t one of those legal problems. I hope the Patent Bar will join me in welcoming a lawyer into the PTO senior management. Mr. Matal is a lawyer with recent stand-up court experience. I hope that he will translate his experience into infusing the PTO with an appreciation for the importance of procedure, and respect for rule of law, to fair and accurate decisionmaking.