United States: PTO Revival Rulings Are Not Subject To Third-Party Collateral Challenge

In Exela Pharma Sciences, LLC v. Lee, No. 13-1206 (Fed. Cir. Mar. 26, 2015), the Federal Circuit affirmed a dismissal of a challenge under the APA on the ground that PTO revivals are not subject to third-party collateral challenge, thereby precluding review regardless of whether the claims were time-barred.

Patentee SCR Pharmatop ("SCR") filed its initial patent application in France and, in conformity with the PCT, filed an international patent application identifying as a designated state the United States, among others.  SCR did not timely file the required materials for the U.S. application within the thirty-month statutory deadline, and, consequently, the PTO deemed the application abandoned.  SCR filed a petition to revive the application, stating that the delay was "unintentional."  Slip op. at 4.  The PTO granted the petition, and U.S. Patent No. 6,992,218 ("the '218 patent") issued.

SCR and its exclusive licensee sued Exela Pharma Sciences, LLC, Exela Pharmsci, Inc., and Exela Holdings, Inc. (collectively "Exela").  Exela subsequently petitioned the PTO for infringement of the '218 patent under the Hatch-Waxman Act.  Exela then filed the subject petition in the PTO, under the APA and 37 C.F.R. §§ 1.181, 1.182, and 1.183, challenging the PTO's revival of the patent application.  The PTO declined to consider Exela's petition, finding that no statute or regulation authorizes a third-party challenge to the PTO's revival of a patent application.  Following the PTO's rejection of its petition, Exela filed the present action in the district court under the APA, requesting that the district court compel the PTO to vacate the revival decision.  In response, the PTO moved to dismiss the action under Fed. R. Civ. P. 12(b)(1) and (6) on several grounds, including that Exela lacked standing to challenge the PTO's revival ruling, that Exela's APA action was time-barred, and that a PTO revival is not subject to judicial review at the request of a third-party challenger.  The district court dismissed Exela's action because its facial challenge to 37 C.F.R. § 1.137 was time-barred by the six-year statute of limitations.

The Patent Act's 'intricate scheme for administrative and judicial review of PTO patentability determinations,' and 'the Patent Act's careful framework for judicial review at the behest of particular persons through particular procedures' demonstrate that third party challenge of PTO revival rulings under the APA is not legislatively intended."  Slip op. at 8 (quoting Pregis Corp. v. Kappos, 700 F.3d 1348, 1357 (Fed. Cir. 2012)).

On appeal, the Federal Circuit first phrased the issue before it as "whether a third party may collaterally challenge and obtain judicial review of a PTO revival ruling concerning an unrelated patent application."  Slip op. at 8.  The Court held that "[t]he Patent Act's 'intricate scheme for administrative and judicial review of PTO patentability determinations,' and 'the Patent Act's careful framework for judicial review at the behest of particular persons through particular procedures' demonstrate that third party challenge of PTO revival rulings under the APA is not legislatively intended."  Id. (quoting Pregis Corp. v. Kappos, 700 F.3d 1348, 1357 (Fed. Cir. 2012)).

Judge Newman wrote separately to address the concern raised in Judge Dyk's concurring opinion, criticizing the Court's ruling in Aristocrat Technologies Australia Pty Ltd. v. International Game Technology, 543 F.3d 657 (Fed. Cir. 2008).  Judge Newman explained that in Aristocrat, the Federal Circuit held that "the PTO's revival of an application 'is neither a fact or act made a defense by title 35 nor a ground specified in part II of title 35 as a condition for patentability.'"  Newman Concurrence at 2 (quoting Aristocrat, 543 F.3d at 663).  Judge Newman opined that "[t]he Patent Act is explicit as to the grounds for challenges to issued patents; these grounds do not include challenge to PTO discretionary actions in revival of deemed-abandoned applications."  Id.  Judge Newman further stated that "Judge Dyk correctly points out that there are areas in which 'a non-listed defense has been recognized by courts,' citing cases in which antitrust violation, patent misuse, and shop right have been recognized as defenses to patent infringement."  Id. at 3-4 (quoting Dyk Concurrence at 4).  Taking issue with Judge Dyk's statement that "such major substantive issues . . . 'cannot be so easily distinguished,'" Judge Newman stated, "If judges cannot easily distinguish the significance of antitrust violation from a missed date, we must try harder."  Id. at 4 (quoting Dyk Concurrence at 5).

Judge Dyk wrote separately to explain why the Court's decision in Aristocrat was "problematic."  Dyk Concurrence at 2.  Judge Dyk stated that four aspects of the Aristocrat opinion warrant its reconsideration.  First, Judge Dyk explained that Aristocrat did not discuss the presumption of judicial review of agency action.  Second, Judge Dyk stated that the present case did not involve minor procedural error in the PTO's process.  Third, Judge Dyk explained that in Morganroth v. Quigg
885 F.2d 843, 846 (Fed. Cir. 1989), the Court held that review of the PTO's refusal to revive a patent application was available under the APA, but Aristocrat does not cite to Morganroth.  Finally, Judge Dyk stated that Aristocrat failed to recognize that Quantum Corp. v. Rodime, PLC, 65 F.3d 1577, 1584 (Fed. Cir. 1995)—holding that a patentee who improperly enlarged the scope of its claims during reexamination, violating 35 U.S.C. § 305, was subject to a defense of invalidity—"was hardly the only example of situations in which a non-listed defense has been recognized by courts. . . .  These other cases cannot be so easily distinguished from the situation in Aristocrat itself."  Dyk Concurrence at 4-5.

Judges: Newman (concurring), Dyk (concurring) (per curiam)

[Appealed from E.D. Va., Judge O'Grady]

This article previously appeared in Last Month at the Federal Circuit, April, 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Copyright © 2015 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP | All rights reserved

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