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Growing Pains in the Administrative State: The Patent Office’s Troubled Quest for Managerial Control
by Arti K. Rai

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In the last ten years of our "information age," the workload of the Patent and Trademark Office (PTO) has grown dramatically, increasing from 238,850 utility-patent applications in 1998 to over 460,000 in 2008. The flood of recent applications has thrust this previously obscure agency into the spotlight. The PTO faces an unenviable task. The volume of patent applications is obviously extremely large. At the same time, evaluating whether a patent should be granted is often a highly complex endeavor. Proper evaluation requires understanding not only the science in the area in which the patent is sought but also the manner in which the patent statute applies to the science. The patent statute itself sets out only a relatively skeletal set of standards regarding how patentability should be determined.

For all of these reasons, one might expect Congress to have established a highly muscular patent agency. This has not happened. Not only does the PTO lack substantive rulemaking authority, but the PTO's reviewing court, the Court of Appeals for the Federal Circuit, does not give any formal deference to legal decisions made by the agency in its statutorily authorized case-by-case adjudication.

Even in the face of all of these obstacles, the PTO has had some success in reforming substantive law in a manner that gives it more power in the decision-making process. The courts appear to have accepted, at least implicitly, the PTO's argument that these substantive reforms will help the agency manage its workload and improve the quality of the patents that it issues. In the 2005 case In re Fisher, the PTO succeeded in convincing the Federal Circuit of the validity of its heightened standard for evaluating the utility of patent applications. As a consequence, patentees cannot file applications until they have a "specific" and "substantial" use for their inventions. In 2006, the PTO worked with the Justice Department's Office of the Solicitor General to shape Supreme Court interest in and reform of the core patentability standard of nonobviousness. The result was the Supreme Court's 2007 decision in KSR International Co. v. Teleflex Inc., which has made it easier for the PTO to deny arguably "obvious" patents. In October 2008, the PTO was successful in leveraging the threat of Supreme Court intervention on the issue of patentable subject matter to secure from the Federal Circuit an en banc decision, In re Bilski, upholding the PTO policy of excluding from patentability processes that are not tied to a physical transformation or machine. Most recently, the PTO was able to rely on KSR and an earlier Supreme Court decision, Dickinson v. Zurko, which mandated significant deference to factual findings made by the PTO in the context of patent denials, to secure an April 2009 Federal Circuit victory with respect to the PTO's application of nonobviousness to DNA-sequence claims.

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