Challenging the PTO for Issuing Patents

by Dennis Crouch

Pregis Corp. v. Kappos and Free Flow Packaging (Fed. Cir. 2013)

Pregis was feeling the pinch of its competitor Free-Flow's air-packaging patents and so, in 2009, Pregis sued Free-Flow for declaratory judgment of invalidity and non-infringement. In the same lawsuit, Pregis also sued the USPTO in order to prevent the agency from issuing two of Free-Flow's pending applications. When those two patents issued, Pregis amended its complaint to allege that the PTO's action in issuing the patents was "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." Under the Administrative Procedures Act (APA), Pregis argued, such an action should be nullified by the court.

The district court rejected those claims against the USPTO as lacking subject matter jurisdiction and that decision was affirmed by the Federal Circuit in December 2012. – holding that "a potential infringer cannot sue the USPTO under the APA to attack the validity of an issued patent." In February, Pregis filed its petition for rehearing en banc and focuses its argument on the Supreme Court's recent decision in Sackett v. EPA, 132 S. Ct. 1367 (2012) that held that the statute's silence as to judicial review and some allowance for limited judicial review were insufficient "to overcome the APA's presumption of reviewability for all final agency action." Pregis writes in its petition for rehearing:

The Supreme Court has repeatedly rejected "implied" preclusion arguments similar to what the PTO asserted and the panel accepted here. See generally Stephen G. Breyer et al., Administrative Law and Regulatory Policy 777 (6th ed. 2006) ("Implicit preclusion is rare."). The case for "implied" preclusion of judicial review is especially weak in context of the Patent Act, since that statute's text expressly precludes judicial review of certain patent-related administrative agency actions. See 35 U.S.C. § 282 ("A due diligence determination under section 156(d)(2) is not subject to judicial review."). Section 282 demonstrates that Congress well knows how to provide for preclusion of judicial review of patent-related administrative agency actions, and did not include any such provision in the Patent Act for PTO grant decisions.

The Sackett decision demonstrates the strength of the presumption in favor of judicial review. . . . [In that case t]he Court specifically rejected the government's argument that, by affording regulated parties a right to challenge the validity of a compliance order in a subsequent enforcement action, the Clean Water Act impliedly precluded judicial review of the agency's decision to issue such an order. The Court reasoned, "the APA provides for judicial review of all final agency actions, not just those that impose a self-executing sanction." The parallel between Sackett and the present case is clear: like the agency action at issue in Sackett, the issuance of a patent imposes legal obligations and exposes regulated persons to enforcement actions (i.e., infringement actions) for non-compliance. In both cases, judicial consideration of the legality of the initial agency action in a later enforcement action does not provide a good reason to foreclose judicial review of the initial action.

The Sackett decision also rejected the government's argument that express grants of judicial review elsewhere in the Clean Water Act provided a solid basis for overcoming the presumption of judicial review. Rather, as the Sackett Court unanimously instructed, "if the express provision of judicial review in one section of a long and complicated statute were alone enough to overcome the APA's presumption of reviewability for all final agency action, it would not be much of a presumption at all."

The Federal Circuit's reaction to this latest move will be interesting. 

18 thoughts on “Challenging the PTO for Issuing Patents

  1. MM: “I think that certain people are confused about the extent of governmental power and authority thanks to a barrage of misinformation coming mainly from Republicans”

    Is Pregis one of those people?

    Try to stick to the topic. We have all been bored to tears by your ad nauseum expression of your political views.

    Your legal analysis, when you actually do it, is much better.

  2. I’m not convinced. Suing for DJ of invalidity has somewhat difficult requirements to get standing, even after MedImmune. And post-grant review or ex parte/inter partes reexamination aren’t a remedy in court. There’s a decent case to be made that there’s no adequate remedy. However, the case is not likely to be reheard en banc, so it’ll have to go before the Supreme Court. I’m not convinced they’ll take this case.

  3. Pregis is out on the pleadings under Rule 12(b)(6). The key statute of the APA is § 704

    5 U.S.C. § 704

    Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review.

  4. I think that people in general are beginning to question more and more the extent of governmental power and authority

    “Keep the government out of my medicare.”

    I think that certain people are confused about the extent of governmental power and authority thanks to a barrage of misinformation coming mainly from Republicans who spread that misinformation on behalf of their extremely powerful, extremely rich and non-elected constituents who wish to remove any checks on their ability to seize more power and money. The above quotation is a classic example of the result. How did that work out for those people, politically?

    I do agree that the USPTO is a well-worn tool for abuse by greedy, wealthy people. Nothing particularly new there. It’s primarily for that reason that the t–bagger types were instructed to lash out against other government “entitlement” programs. You know, like the kind of government agencies that make life better for poor people, provide them with decent drinking water and food, etc.

  5. ‘sued the USPTO in order to prevent the agency from issuing two of Free-Flow’s pending applications’

  6. I think the dificulty is they require the indegent inventor to let the cat out of the bag with the fileing requirement to show the value of the patent then dont protect it against the competition by requiring a statutory offer like say 15% minimum to genuine concievers or uspto disallows startup on complaint of immediate novelty check filers to determine novelty and stop of production startup without depositing 25% of profits for litigation processes where filers are indegent and unable to startup themselves. Ive solved the problem myself by my new customer bidding plan based on eventual profits on sliding scale but the existing companies are in posession of stolen conceptions so they want to continue that disgrace and especially not pay but for new startups its a bonus to not have the competetion for the products although finding uninvolved money is dificult and new tightned lending regulations are also retarding full economic recovery potential

  7. It’s about time somebody brought this challenge.

    Honestly, I can’t believe it’s taken so long to address many of these issues that I see as fundamental.

    Why now, then? I think that people in general are beginning to question more and more the extent of governmental power and authority, right from the chief executive on down to the local clerk. Executive agencies such as the PTO, that evoke the taint of a sort of executive sovereignty, are obvious targets.

    I’m hoping that Pregis will prevail, but considering what is at stake, I’m not holding my breath.

  8. Here is a uspto function that needs change drastically to improve and retain indegent inventor dismal odds of monitizing their intellectual properties. There attitude is put it out the door if its technically perfect and deny if its the original conception but lacking perfection and now with the Kapos regime give the IP away to the thieves in 3 years if your financially unable to due dilligence. The result of this is the original conciever wont be offered anything for the patent because they know his financial circumstances and his inability to afford even a troll to intimidate an offer from them. Twenty years is the time period the conciever should have to attempt due diligence otherwise the funders and R+D teams wont form up behind him meaning uspto shutdown from no marketable conceptions and no human advancement,jobs, revenues and exports

  9. Implied perclusion huh ide be argueing fraud and theft of intellectual property. They need to start taking responsibity for the damages there doing to the economy just on my 35 billion doller portfolio theyve haulted all the marketable invention conception from being created from 2004 through 2013 now around 1600 patents capable of 200+ jobs each

  10. No. Free Flow already has the patent (I believe the latest of the patents was issued by the PTO in 2009). Pregis is challenging the PTO’s action in physically issuing the patent to Free Flow.

  11. Quite true. But couldn’t one say that delaying the issuance of the patent would adversely affect Free-Flow?

  12. 5 USC 702: any party can sue under the APA if they are adversely affected by the agency’s final action.

    Pregis filed a DJ action, so they are presumably under apprehension of suit for infringing the patent and therefore ‘adversely affected’ by the PTO’s grant of the patent.

  13. Maybe they’re afraid the patentee will just sue them without starting licensing talks (since they’re already in litigation) in a different venue, and this would be the only way to guarantee that the case would be heard in the same venue as the other suit?

    My question is on standing – does Pregis even have standing to sue under the APA if Free-Flow isn’t asserting the new patents against them yet? Seems like they could get standing by filing for inter partes review first (and having an adverse result), which also would have made more sense in the first place.

  14. I don’t even understand why the infringer would want to involve the US government as a defendant in what appears to be an attack on validity? Could it have something to do with the burdern of proof imposed by the presumption of validity? If that is the problem, why not just invoke an interpartes review?

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