LawFlash

Chevron Overruled: Impact on IP Law in the Wake of US Supreme Court’s Decision

July 03, 2024

The US Supreme Court’s June 28, 2024 decision in Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce overruled the forty-year-old Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc. decision, one of the most-cited cases in US law. This development will have far-reaching impacts, and for intellectual property (IP) law specifically, it could significantly affect how the Court approaches US International Trade Commission (ITC) litigation.

The Chevron doctrine required courts to defer to “permissible” agency interpretations of the statutes those agencies administer, even when a reviewing court read the statute differently. On June 28, the Supreme Court held that reviewing courts need not defer to agency interpretation of law, even when the statute is ambiguous. The holding in the Loper Bright and Relentless decision could have wide-ranging impacts on US IP law.

Chevron’s Decades-Long Significance

Chevron established a framework for judicial deference to administrative agency interpretations of statutes. Under the long-standing doctrine, courts were required to determine if the US Congress had directly addressed the specific matter at hand; if it had, that interpretation had to be followed. If the statute was silent or ambiguous, courts would then defer to the agency’s interpretation, so long as it was a permissible construction of the statute.

This framework significantly shaped administrative law, emphasizing the deference owed to agencies in interpreting ambiguous statutes. In practice, the deference gave the executive branch significant influence over how to administer legislation and resulted in changes in interpretations between presidential administrations, even when the underlying statutory text and congressional intent remained unchanged.

The Supreme Court’s Decision

On June 28, the Supreme Court explicitly overruled Chevron in Loper Bright. An in-depth analysis of the decision can be found in our LawFlash that was published on June 30.

In short, the Court held that the federal judiciary must exercise independent judgment in interpreting statutes and when deciding whether an agency has acted within its statutory authority. While the Court left in place prior judicial rulings that relied on Chevron to enforce preexisting regulations or agency orders, the Court held that, going forward, Article III courts may not defer to an agency’s interpretation of the law.

Implications for IP Law in the United States

The reversal of Chevron deference will impact US IP law, and it is likely to have the most impact at the ITC. While the reversal will also affect how courts review interpretations of statutes made by IP administrative bodies like the US Patent and Trademark Office (USPTO) and the US Copyright Office, we expect a lesser impact for those agencies.

The ITC

The ITC hears IP cases pursuant to 19 USC § 1337, which authorizes the ITC to investigate alleged wrongdoing that involves importing an article into the United States that violates patent, trademark, copyright, trade secret, and other unfair competition laws. Drawing on this authority, the ITC has become a popular forum for IP cases given the speed of the cases[1] and the remedies that are difficult to receive in district court: injunctive relief and cease-and-desist orders.

The ITC’s authority has not gone unchallenged. For example, in Suprema v. ITC,[2] the US Court of Appeals for the Federal Circuit considered whether the ITC could ban the importation of articles that do not infringe as imported but would later infringe post-importation. The Federal Circuit concluded that the statutory language was ambiguous, and relying on Chevron, determined that the ITC’s broader interpretation of Section 337 to allow for jurisdiction of post-importation infringement was reasonable.[3]

On June 24, in anticipation of the Supreme Court’s Loper Bright and Relentless decision, Google petitioned the Federal Circuit for an en banc rehearing,[4] asking the Federal Circuit to reconsider “[w]hether the International Trade Commission’s authority under 19 USC § 1337(a)(1)(B)(i) is limited to articles that infringe a patent as imported, or instead extends to cases where infringement can occur only when additional features are added or additional steps are performed after importation.”[5] The Federal Circuit will have to consider this question and any future challenges to the ITC’s interpretation of its authority. This could lead to further limitations on what cases can be brought before and succeed at the ITC.

The USPTO

Unlike with the ITC, neither patent law in general nor practice before the USPTO is likely to be affected significantly by Chevron being overruled. As the Federal Circuit has held, the USPTO was never granted substantive rulemaking authority by Congress and, as a consequence, the agency’s interpretations of the substantive patent law have never received deference[6] and are reviewed de novo on appeal.[7]

In contrast, overruling Chevron may impact how the Federal Circuit treats the USPTO’s interpretations of procedural statutes. Previously, the USPTO has enjoyed deference to its interpretations where the Federal Circuit has found ambiguity in the procedural statute,[8] although the Federal Circuit frequently holds there is no statutory ambiguity.[9] The overruling of Chevron deference is not expected to impact the USPTO’s creation of procedural rules that Congress has authorized the USPTO to promulgate in areas where statutes are silent. We may, however, see an increase in challenges at the Federal Circuit on how the USPTO implements its procedural requirements, but we anticipate those challenges to be specific and narrow.

The US Copyright Office

We also do not anticipate that the overruling of Chevron will have a significant impact on copyright law and the Copyright Office because judicial review of Copyright regulations has not regularly applied Chevron deference.

Congress has expressly delegated authority to the Copyright Office to develop regulations regarding many facets of copyright law. This includes the music compulsory licensing rates set by the US Copyright Royalty Board, the formation and implementation of the Copyright Office’s Copyright Claims Board, and the registration of different types of copyrighted works. Every three years, the Copyright Office issues exemptions for Section 1201 of the Digital Millennium Copyright Act (DMCA), specifically to the prohibition on circumvention of technological measures that control access to copyrighted works. These exemptions cover issues including right to repair, unlocking cellphones, “jailbreaking,” and ripping DVDs for archival or educational purpose. These regulations, to the extent that they do not interpret statutes, are unlikely to be affected.

Though the Copyright Office falls within the Library of Congress, which is part of the legislative branch and thus not an agency within the meaning of the Administrative Procedure Act (APA) judicial review provision, the Copyright Act itself states that the actions of the Register of Copyrights are subject to APA review. In June 2024, the US Court of Appeals for the DC Circuit confirmed that “[i]rrespective of whether the Library is an ‘agency,’ . . . Congress has specified that copyright regulations . . . are subject to the APA.”[10] Further, the DC Circuit held that the Triennial DMCA rulemaking regarding the Section 1201 exemptions are subject to APA review.[11] Similarly, the actions of the Copyright Royalty Board are reviewed under the standards of the APA. Notably, these actions are typically reviewed under the APA’s “arbitrary and capricious” standard.[12]

Courts have applied Chevron deference to Copyright Office regulations where they interpret ambiguous statutes via formal rulemaking,[13] a relatively rare occurrence. Many Copyright Office decisions, however, do not involve formal rulemaking, and have not received Chevron deference.[14] For example, a court refused to apply Chevron to the Copyright Office Compendium’s construction of the meaning of “preexisting work” where no formal rulemaking occurred.[15] Another court determined that the Copyright Office’s “[i]ndividual decisions about the copyrightability of works are not like ‘rules carrying the force of law,’ which command Chevron deference.”[16]

In sum, the Court’s decision is anticipated to impact few regulations or decisions set by the Copyright Office.

Practical Takeaways

As a result of Loper Bright, litigants can expect an increase in challenges to agency decision-making based on statutory interpretations. As to IP cases, the decision is likely to have the biggest impact on ITC litigation.

How We Can Help

Our team of IP lawyers stand ready to assist companies with understanding the implications of the Court’s decision on their business and IP strategy.

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Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please reach out to any of the contacts below or any member of our Chevron Task Force.

Authors
Dion M. Bregman (Silicon Valley)
Julie S. Goldemberg (Philadelphia)
Meaghan H. Kent (Washington, DC / Miami)
Stephanie L. Roberts (Washington, DC)
Philadelphia
Wilmington

[1] Decisions from the ITC are typically rendered within 18 months of institution of an investigation.

[2] Suprema, Inc. v. ITC, 796 F. 3d 1338 (Fed. Cir. 2015).

[3] Id.

[4] Sonos, Inc. v. ITC, Case No. 22–1421 (June 24, 2024).

[5] Id.

[6] Merck & Co. Inc. v. Kessler, 80 F.3d 1543, 1549–50 (Fed. Cir. 1996).

[7] Id.

[8] E.g., Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1337 (Fed. Cir. 2008) (“Because the Patent Office is specifically charged with administering statutory provisions relating to the ‘conduct of proceedings in the Office’” 35 U.S.C. § 2(a)(2)(A), we give Chevron deference to its interpretations of those provisions.”); Ethicon Endo-Surgery, Inc. v. Covidien LP, 812 F.3d 1023, 1033 (Fed. Cir. 2016) (“The Director promulgated a regulation allowing the Board to institute inter partes review ‘on behalf of the Director.’ 37 C.F.R. § 42.4(a). This rule itself is entitled to Chevron deference.”).

[9] E.g., VirnetX Inc. v. Apple Inc., 931 F.3d 1363, 1377 (Fed. Cir. 2019) (“As discussed above, the statutory text and purpose leave no ambiguity . . . . Therefore, Chevron deference does not apply.”); Applications in Internet Time, LLC v. RPX Corp., 897 F.3d 1336, 1351 (Fed. Cir. 2018) (“We conclude that, with respect to the dispute in this case, § 315(b) is unambiguous: Congress intended that the term ‘real party in interest’ have its expansive common-law meaning.”).

[10] Medical Imaging & Technology Alliance and Advanced Medical Technology Assoc. v. Library of Congress and Carla Hayden, No. 23–5067 (D.C. Cir. June 7, 2024).

[11] Id. at 9–12, citing 17 U.S.C. §701(e) (“Except as provided by section 706(b) and the regulations issued thereunder [which relate to access to deposit records], all actions taken by the Register of Copyrights under this title are subject to the provisions of the [APA]”).

[12] SoundExchange, Inc. v. Librarian of Congress, 571 F.3d 1220, 1223 (D.C. Cir. 2009); Independent Producers v. Librarian of Congress, 792 F. 3d 132 (D.C. Cir. 2015); Johnson v. Copyright Royalty Bd., 969 F. 3d 363 (D.C. Cir. 2020); 17 U.S.C. §803(d)(3) (referencing 5 U.S.C. §706).

[13] Cablevision Sys. Dev. v. Motion Picture Ass'n, 836 F. 2d 599, 610 (D.C. Cir. 1988); Motion Picture Ass'n of America, Inc. v. Oman, 750 F. Supp. 3, 7-8 (D.D.C. 1990).

[14] Fox Television Stations, Inc. v. FILMON X LLC, 150 F. Supp. 3d 1, 25 (D.D.C. 2015).

[15] Olem Shoe Corp. v. Wash. Shoe Corp., 591 Fed. Appx. 873, 882 n. 10 (11th Cir. 2015).

[16] Varsity Brands, Inc. v. Star Athletica, LLC, 799 F. 3d 468, 479 (6th Cir. 2015) (rejecting Chevron deference for decisions of registerability).