Academic journal article Iowa Law Review

Reasoned Decisionmaking vs. Rational Ignorance at the Patent Office

Academic journal article Iowa Law Review

Reasoned Decisionmaking vs. Rational Ignorance at the Patent Office

Article excerpt

I. Introduction

A polestar of modern administrative law is that the Administrative Procedure Act ("APA") imposes a comprehensive system of "reasoned decisionmaking" to regulate agency behavior.1 That interpretation of the APA has unanimous support on the supreme court and has been expressly invoked by Justices on both sides of the Court's ideological divide.2 It is also a long-standing principle. The exact phrase dates back more than a third of a century to the Supreme Court's momentous 1983 decision in Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co.,3 but the theoretical basis for the doctrine extends to some of the supreme court's earliest interpretations of the APA.4 Indeed, the precursors of the principle are evident not only in pre-APA administrative case law, but also in the very aspirations of modern administrative law.5

Despite the prominence of reasoned decisionmaking as a constraint on administrative action, the principle has been, until recently, largely absent from judicial decisions reviewing the work of the Patent Office.6 The Federal Circuit did not invoke the concept in even a single patent case until 2002 -two decades after the court's creation-and more than a decade would pass before the principle would make another appearance in an appellate patent decision. Indeed, the 2002 case that did require "reasoned decisionmaking" in the Patent Office-In re Lee7-likely did not become a watershed case because the opinion included unfortunate passages that appeared to bar the Patent Office from using "common sense" in evaluating patent applications.8 Subsequent Supreme Court precedent soon made clear that the Lee court was wrong in its hostility toward the agency's use of common sense.9 The controversy over Lee's "common sense" statements seemed to overshadow the far more supportable portions of the opinion recognizing that the Patent Office, just as any other administrative agency, must follow a course of "reasoned decisionmaking" that includes, among other things, a "thorough and searching" factual inquiry and "a full and reasoned explanation" justifying the agency's choice.10

While the constraint of "reasoned decisionmaking" was not being applied to the Patent Office in the late 20th and early 21st centuries, another theory of appropriate administrative behavior for the Patent Office gained prominence and influence. Mark Lemley's article Rational Ignorance at the Patent Office posited that "[b]ecause so few patents are ever asserted against a competitor, it is much cheaper for society to make detailed validity determinations in those few cases than to invest additional resources examining patents that will never be heard from again."11 "In short," he argued, "the PTO doesn't do a very detailed job of examining patents, but we probably don't want it to."12 It is instead better for the agency to remain "'rationally ignorant' of the objective validity of patents."13

The "rational ignorance" theory always suffered from at least three fundamental difficulties. A first and threshold problem is that the theory, if more than a truism, is hopelessly ill-defined. It is of course true that no governmental agency-and indeed, no individual-makes decisions with perfect information. Because information is costly, rational actors economize on its acquisition. They collect information up to the point where the marginal costs of gathering more information begin to outweigh the marginal benefits. They do not bother collecting information beyond that point because the collection of such additional information is not cost-justified. All of this is, however, a mere truism that follows from the assumptions of rational actors and costly information. In sum, all rational actors can be accurately said to be "rationally ignorant"-and also, for that matter, "rationally informed" -in all contexts.

If a theory of "rational ignorance" is to be more than just a truism, it must refer to some set of conditions that would cause rational actors to remain especially uninformed about facts. …

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