Exela Pharma Sciences, LLC et al v. Kappos et al, 12-cv-0469 (E.D. Va. 2013). Download Exela v Kappos Dkt 55- Opinion dismissing case
I previously wrote about Exela's lawsuit against the USPTO in an essay titled Suing the USPTO to Cancel Improperly Issued Patents. The patent at issue in this case is Cadence Pharma's U.S. Patent No. 6,992,218 that covers an injectable form of acetaminophen. During prosecution the patentee failed to timely file a US national-stage application before the 30-month PCT deadline. However, the USPTO allowed the patentee to subsequently revive the case and file the national-stage application based on a pleading that the delay was "unintentionally." Exela argues that the Patent Act only permits revival in this situation when the application was unavoidable abandoned – a much more difficult standard to meet. Unfortunately for Exela, improper revival is not a cognizable defense in patent litigation. See Aristocrat Gaming v. IGT and 35 U.S.C. §282. So, when Cadence sued Exela for infringement, Exela filed this collateral action against the PTO – asking the agency to cancel the improperly issued patent.
In his original decision in the case, Judge Grady sided with Exela against the PTO's motion to dismiss – finding that the Administrative Procedures Act (APA) contemplates that parties wronged by an agency action have a cause of action to right those wrongs and that this type of lawsuit is currently the only way that an adversely affected party can take action on this issue (because it is excluded as a defense). The USPTO had argued that some of its decisions should simply not be challengeable. The court entirely rejected that untenable position. "The Court finds no support for the PTO's apparent proposition that certain agency actions should remain entirely unchecked." The district court also held that the case was not time-barred because Exela's standing only recently became ripe.
In a new decision, the district court has flipped its stance and dismissed the case as barred by the six-year statute of limitations defined by 28 U.S.C. § 2401(a) ("Except as [otherwise provided], every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues."). The basic rule applied by the court here is that the statute-of-limitations was triggered when the USPTO created its offensive rule, regardless of whether this particular plaintiff (Exela) would have had standing at that point. In 2000, the PTO finalized Rule 37 C.F.R. 1.137(b) to provide for revival of applications based on an applicant's unintentional abandonment of a PCT application. Case dismissed. Exela will almost certainly appeal with the argument that its right of action did not accrue. It will be interesting to see whether the Federal Circuit applies its own law or the law of the Fourth Circuit to this case – especially since the district court couched its decision as being required by the recent Fourth Circuit decision in Hire Order Ltd. V. Marianos, 698 F.3d 168 (4th Cir. 2012).
Challenging USPTO Rules: An important take-away from this decision is reminder of the six-year deadline for challenging USPTO rules.