IP agencies will not escape pull of SCOTUS ruling on ‘important’ Chevron doctrine

The US Supreme Court (SCOTUS) heard oral arguments on Wednesday in a case related to fishing that, despite an absence of IP, lawyers believe is one of the most important of 2024.

The details of the cases—brought by fishing companies—are largely irrelevant to the broader debate they are sparking, and are certainly irrelevant to the world of IP. But they are vehicles to review Chevron, a key US doctrine.

For context, Loper Bright Enterprises v Raimondo and Relentless v Department of Commerce are both challenging a rule issued by the National Marine Fisheries Service, which ultimately requires the herring industry to bear the costs of federal observers on fishing boats.

Now, here’s the crux—almost 40 years ago, the outcome of Chevron v Natural Resources Defense Council (1984) gave rise to the Chevron  doctrine. The Supreme Court then ruled that courts should defer to a federal agency’s reasonable interpretation of an ambiguous statute.

This includes the US Patent and Trademark Office (USPTO) and the Patent Trial and Appeal Board (PTAB) among the thousands of other federal agencies in the US.

So, going back to the plight of the fishing vessels, both the US Court of Appeals for the District of Columbia Circuit and the US Court of Appeals for the 1st Circuit upheld Chevron, finding it to be a reasonable interpretation of federal law.

This led the fishing groups to challenge the doctrine by asking the Supreme Court to overrule it, bringing us to this critical point in US legislative history.

The end of Chevron?

But the big debate is whether Chevron’s days are numbered. The majority of the nine justices that heard the three-and-a-half hours of oral arguments on January 17 appeared to indicate so.

Indeed, over the past few years, conservative voices—including members of the Supreme Court—have called into question whether Chevron is appropriate under the Constitution, and whether the court should be deferring to federal agencies on matters of statutory interpretation.

Justices Gorsuch, Alito and Kavanaugh appeared to embody this view most strongly on Wednesday.

Does doctrine provide stability?

Justice Gorsuch, for example, believes that Chevron leads to instability, since administrative agencies change leadership frequently, with subsequent interpretations of statute leading to multiple volte-faces.

Chad Landmon, partner and chair of the Intellectual Property and Food and Drug Administration (FDA) Practice Groups at Axinn, noted that it was interesting hearing the justices' perspectives on whether Chevron provides stability or not.

This, he said, is the “big” debate.

“The argument from the conservative side of the court is that it doesn't provide stability, because each presidential administration can come in and change the direction in big ways of whatever agency,” he told WIPR.

Using a broadband case as an example, the justices went through it administration by administration, he explained. “George W Bush's administration had one position. That was flipped by the Obama administration, which was then flipped by the Trump administration, and now the Biden administration is considering going back.”

On the subject of political flip-flopping, Donald Trump’s presidential campaign will “certainly cause more of a stir depending on the outcome,” added Landmon.

Those for Chevron

The court’s three liberal justices—Kagan, Sotomayor and Jackson—argued for keeping the doctrine. Justice Elena Kagan emphasised the role of federal agencies, whose scientific and technical expertise are better suited than courts to resolve ambiguities in a federal statute.

US Solicitor General Elizabeth Prelogar, arguing on behalf of the Department of Commerce, also urged the court not to overrule the doctrine, deeming the petitioners’ proof of the requisite exceptional circumstances to be lacking.

“Important decisions could be upended and open to challenge,” she said. “That profound disruption is unwarranted. Congress has legislated for decades with Chevron as the background rule.”

Writing on the political website Slate, Mark Joseph Stern appears to chime with this view.

“Here’s the bottom line: without Chevron deference, it’ll be open season on each and every regulation, with under-informed courts playing pretend scientist, economist, and policymaker all at once,” he wrote.

“Securities fraud, banking secrecy, mercury pollution, asylum applications, healthcare funding, plus all manner of civil rights laws: They are ultra-vulnerable to judicial attack in Chevron’s absence.”

He added that this is why the medical establishment has lined up in support of Chevron, explaining that its demise would mark a “tremendous disruption” for patients and providers—“just rinse and repeat for every other area of law to see the convulsive disruptions on the horizon,” commented Stern.

Role of the judiciary

Axinn’s Landmon is generally not a fan of the Chevron doctrine.

“I think the proper role of the judiciary is to evaluate what the statute says, and to decide whether the agency's actions are consistent with the statute,” he said.

Chevron, he added, puts more power, or more of an onus on Congress, to legislate more, and not to rely on the agencies to legislate.

“Ten-plus years ago, if you sued a federal agency, you had a very hard time trying to win in court, because courts were really deferential under Chevron.

“But over the last five, six, seven years, definitely pushed by the Supreme Court, courts are less deferential to federal agencies and do a much more thorough job of looking at the statute and trying to evaluate whether it's really ambiguous or not,” he said.

He believes that’s a good thing.

“Our system was set up so that Congress makes the laws and they should be the ones doing it. I am cognisant that, given our political environment, it's really hard to get Congress to take action and to move in the right direction.

“But I generally think our judiciary, our judges, are very, very good. Are there exceptions to that? Yes, but I think generally, our judges are very good, and are faithful to the law.”

Applying the brakes

Landmon noted that, whether Chevron is scrapped or not, the result of the court’s ruling will likely result in more challenges to FDA decisions, which would directly impact his clients, as well as regulated businesses of many kinds.

“No matter what, Chevron is definitely going to be more limited, certainly more than it was being interpreted ten years ago, and there's going to be less deference,” he explained.

He believes that generally, that'll lead to more litigation against the agencies and to companies exercising their rights to make sure the agencies are complying with what Congress said.

“It'll be interesting to see how the agencies handle that. Hopefully what that means is that the agencies will be more careful to stay faithful and consistent with the statute. But it will be hard to see how this plays out over the coming couple of decades.”

Whatever the outcome, this is certainly one case to watch in 2024.

“It's definitely, to me, one of the most important cases before the Supreme Court this year, that will have pretty broad-ranging implications.”