The Director of the U.S. Patent and Trademark Office (USPTO) may issue a certificate of correction "[w]henever a mistake of a clerical or typographical nature, or of minor character, which was not the fault of the Patent and Trademark Office, appears in a patent and a showing has been made that such mistake occurred in good faith . . . if the correction does not involve such changes in the patent as would constitute new matter or would require re-examination." 35 U.S.C. § 255. In Japanese Foundation for Cancer Research v. Lee, 773 F.3d 1300 (Fed. Cir. 2014), the Federal Circuit reversed a district court's order directing the USPTO to withdraw a properly filed terminal disclaimer, and held that a paralegal's mistaken belief that the patentee sought to disclaim the patent was not a "clerical error" that the USPTO was statutorily empowered to correct. The court held that the USPTO did not act arbitrarily, act capriciously, or abuse its discretion in declining to use any inherent authority to withdraw terminal disclaimer.
In Japanese Foundation, the attorney of record filed a terminal disclaimer for the claims of U.S. Patent No. 6,194,187 ("the '187 patent"). Two months later, the attorney of record filed a petition to withdraw the statutory disclaimer asking the USPTO to withhold publication of the terminal disclaimer in the Official Gazette, or in the alternative to grant relief under 37 C.F.R. §§ 1.182 and 1.183, "to invoke the discretion of the director and suspend the rules." In this later petition, the Foundation (patentee) included signed declarations from a number of people associated with one of the licensees of the '187 patent and the Foundation's Japanese patent counsel. Id. at 1303. The declarations outlined the series of events that preceded the filing of the patent disclaimer. One of the licensees of the '187 patent asserted that it only intended to obtain guidance from U.S. counsel as to whether the patent could be disclaimed prior to its expiration. Id. The inquiry was posed to U.S. counsel by a patent paralegal working for Japanese counsel to the licensee. The instruction e-mail read as follows:
Our clients would like to abandon the captioned patent positively and invalidate this patent before the case lapses by non-payment of the next maintenance fees, which will be due on August 27, 2012.
Would you please let us have the necessary forms and/or information for the procedure of positive abandonment, preferably by March 15, 2011.
We would appreciate your immediate reply by return facsimile.
Id. (citation omitted) Two days after sending these instructions to U.S. counsel, Japan suffered an earthquake and tsunami that disrupted business in Japan for months. Id. Because of the disaster, the Japanese paralegal did not forward a copy of her email to the licensee. Id. In October 2011, the U.S. attorney of record filed the terminal disclaimer and reported to the Japanese law firm in November 2011. Id. Upon learning of the filing of the disclaimer, the Foundation immediately instructed the Japanese law firm to urgently ask the U.S. attorney of record to restore the patent. Id. The U.S. attorney, in turn, filed the petition to withdraw the terminal disclaimer. Id.
The USPTO rejected the Foundation's contention that it had inherent authority to withdraw the disclaimer, and the Foundation filed suit in district court to challenge the agency's decision under the Administrative Procedure Act. Id. at 1304. Specifically, the Foundation alleged that the licensee did not have the authority to disclaim the patent and that the Foundation did not instruct nor authorize any action leading to the disclaimer. Id. The licensee in turn argued that it had asked the Japanese law firm to inquire as to the possibility of disclaiming the patent term, but it did not provide instructions to disclaim the patent. See id. at 1303-04. The district court granted the Foundation's summary judgment motion and ordered the USPTO to withdraw the disclaimer "absent a finding that the Foundation actually authorized its filing." Id. at 1304. (quoting Japanese Found. for Cancer Research v. Rea, No. 13-412, 2013 WL 3894156, at *10 (E.D. Va. July 26, 2013)).
The Federal Circuit reversed. First, the court addressed the Foundation's argument that the USPTO has the power to withdraw an erroneously filed terminal disclaimer under 35 U.S.C. § 255 based on the court's earlier decision in Carnegie Mellon University v. Schwartz, 105 F.3d 863 (3d Cir. 1997), and that refusing to do so is an abuse of discretion. Japanese Found., 773 F.3dat 1305. In Carnegie Mellon, the attorney of record mistakenly entered the serial number and filing date of an issued patent, rather than the application for which he had intended to file a disclaimer, and filed it with the USPTO. Id. (citing Carnegie Mellon, 105 F.3d at 865). The USPTO subsequently granted a petition to withdraw the disclaimer and issued a certificate of correction, indicating that all references to the disclaimer in the notice of disclaimer attached to the patent and published in the Official Gazette should be deleted. Id. (citing Carnegie Mellon, 105 F.3d at 865). The court distinguished the case by asserting that, under the USPTO's policy, relief is available in situations where a terminal disclaimer was filed in the wrong target patent or application. In such instances, the relief accorded by the USPTO nullifies the terminal disclaimer on the wrongly identified patent, while then enforcing the terminal disclaimer on the intended patent or application. Id. at 1306. Here, the court explained, the Foundation had not identified an error in the patent number or application that was apparent on its face, which would entail redirecting the disclaimer to the correct target. Id. The Foundation instead argued that the filing of the disclaimer was itself the "clerical or typographical error" that may be corrected under § 255 because the error here was made by a patent paralegal, a clerical employee performing clerical work. Id. The court rejected this argument because clerical or typographical errors are generally understood as those simple mistakes that appear on the face of the document, instead of mistakes about whether to file the document itself. See id. Moreover, the court explained, even if the "clerical error" definition somehow applied to the Japanese paralegal, the terminal disclaimer was actually filed by the Foundation's attorney of record. Id. at 1306-07. Indeed, the court emphasized, the terminal disclaimers must be signed by "the patentee, or an attorney or agent of record." Id. at 1307 (quoting 37 C.F.R. § 1.321(a)(1)). Therefore, even if the Foundation's reading of "clerical error" was correct, it would be impossible for a subordinate who lacks the duty of exercising judgment to file a valid terminal disclaimer on his own. Id. The court found no error in the USPTO's interpretation of its lack of authority to withdraw the terminal disclaimer pursuant to § 255.
The court also rejected the Foundation's argument that the USPTO could have withdrawn the disclaimer because it had not yet been "recorded" when the Foundation filed its first petition to withdraw. Id. First, the court clarified that the correct statement of the law is that a disclaimer is "recorded" when it is properly submitted and received by the USPTO, based on the court's interpretation of 35 U.S.C. § 253 and 37 C.F.R. § 1.321. Id. And while the court recognized that, under 37 C.F.R. §§ 1.182 and 1.183, the USPTO has "inherent authority" to reconsider its decisions, it also agreed with the USPTO's position that in this case, the disclaimer was properly filed and there was no basis for the USPTO to review and change its decision. See id. at 1307-08.
The court also agreed with the USPTO's additional reasons for refusing to withdraw the disclaimer. Id. at 1308. First, once the disclaimer was filed, the public may have relied on it, and second, the USPTO is not the proper forum for resolving the issue of whether the disclaimer was filed per the intentions of the patentee on the basis of its position that "miscommunications between attorneys and clients do not excuse the actions of the representative." Id. at 1309 (citation omitted). Accordingly, the USPTO did not act arbitrarily, capriciously, or abuse its discretion in declining to use any inherent authority that it might have in withdrawing the terminal disclaimer on the '187 patent that the Foundation's attorney of record duly filed in accordance with the USPTO's regulations.
Finally, the court addressed the district court's suggestion that the USPTO was the sole source of relief for the Foundation with regard to its lost property rights by noting that "in circumstances where a client may be deprived of a claim based on its attorney's conduct, and the facts indicate that the 'attorney's conduct falls substantially below what is reasonable under the circumstances, the client's remedy is against the attorney in a suit for malpractice.'" Id. at 1309 n.6 (quoting Link v. Wabash R.R. Co., 370 U.S. 626, 634, n.10 (1962)).
Japanese Foundation can be used as a case that highlights the importance of clear communication between clients and U.S. practitioners, particularly when conducting business through a foreign agent. It is generally good practice to confirm in writing receipt of the instructions and to request clarification where appropriate. The case also reminds practitioners to clearly document who has the right or authority to provide direction during prosecution in scenarios of joint ownership of a patent or patent application, or where multiple parties have an ownership interest over the application. Ideally, such clarification is sought at the outset of the process or as soon as ownership and responsibility for prosecution changes.
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.
