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The Administrative Procedure Act's "substantial evidence" standard governing court review of agency fact-finding requires a court to ask whether a reasonable mind might accept a particular evidentiary record as adequate to support a conclusion. The "clearly erroneous" standard governing appellate court review of findings of fact made by a district court judge is described in terms of whether a reviewing judge has a definite and firm conviction that an error has been committed. The former is somewhat less strict than the latter.
Under an Administrative Procedure Act (APA) provision (5 USCS 706), a reviewing court is generally required to set aside a federal agency's factual findings (1) if they are found to be arbitrary, capricious, or an abuse of discretion; or (2) in certain circumstances involving review on the record of an agency hearing, if the findings are found to be unsupported by substantial evidence. However, there is a provision in 5 USCS 559 that the APA does not limit or repeal additional requirements "recognized by law," which has been interpreted to mean so recognized at the time of the APA's original enactment in 1946. A patent examiner of the Patent and Trademark Office (PTO), in denying an application for a patent on a method of increasing computer security, concluded that the applicants' method was obvious in light of the prior art. A PTO review board, the Board of Patent Appeals and Interferences, upheld the examiner's decision. Under 35 USCS 141, the applicants sought direct review in the United States Court of Appeals for the Federal Circuit (CAFC). A panel of the CAFC, in reversing, expressed the view that (1) the question as to what the prior art taught was one of fact, and (2) the PTO's finding on this matter was clearly erroneous. On rehearing en banc, the CAFC (1) noted that since its genesis in 1982, the court had been using a standard, which was more searching than the standards in 706, of reviewing PTO fact-finding for clear error; (2) expressed the view that 559 permitted--and the doctrine of stare decisis warranted--the court's continued application of the clear-error standard of review, as this standard was an additional requirement that was recognized prior to 1947; and (3) reversed the Board's decision for the reasons set out in the panel opinion.
Is the Court of Appeals for Federal Circuit required to use framework of Administrative Procedure Act provision (5 USCS 706), rather than "clear error" standard of review, when reviewing fact-finding by Patent and Trademark Office?
The Court reversed the Federal Circuit's decision, finding that the correct standard of review was that set forth in the Administrative Procedure Act (APA), 5 U.S.C.S. § 706. The "clearly erroneous" standard had not been grandfathered by the APA, 5 U.S.C.S. § 559, because the Court of Customs and Patent Appeals, the predecessor court to the Federal Circuit, did not recognize the stricter "clearly erroneous" standard when the APA was adopted. Petitioner did not successfully present policy reasons that would justify an exception to the rule.