Federal Circuit Supports USPTO’s Refusal to Withdraw Terminal Disclaimer

by Dennis Crouch

Japanese Foundation for Cancer Research v. Michelle Lee (Fed. Cir. 2014)

[Note – Read Prof Hricik’s discussion here]

The Japanese Foundation holds several patents relating to treatment of malignancies with a drug causing cell apoptosis.  See U.S. Patent No. 6,194,187.  The ‘187 patent issued in 2001.  In October 2011, Japanese Foundation’s attorney filed a disclaimer of the remaining term of the ‘187 patent. Then, two months later, the Foundation petitioned the USPTO to withdraw the disclaimer.  However, the USPTO refused to withdraw the disclaimer — indicating that neither statute nor the rules of practice provide a mechanism for withdrawal or amendment of a fully processed terminal disclaimer.

According to the explanation from the Foundation, a paralegal at the Japanese Firm mistakenly sent a request to Foley & Lardner to abandon the patent rather than an inquiry regarding disclaimer.  In particular, the USPTO argues that it should be able to fully rely upon statements by a patentee’s legal representative.

After failing to convince the USPTO to reconsider, the Foundation filed a civil action in the E.D. Va. Federal Court.  The district court sided with the patentee and held that the PTO must withdraw the disclaimer “absent a finding that the Foundation actually authorized its filing.”

On appeal, the Federal Circuit has reversed – siding with the USPTO and finding that the USPTO had not acted arbitrarily and capriciously nor had it abused its discretion by refusing to withdraw the terminal disclaimer.

Under the Administrative Procedures Act (APA), an agency’s action will be set aside if it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).  This standard is normally met only if the [agency] decision was not based on the relevant factors or it fails toexamine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.” However, unlike actions of many federal agencies, USPTO statutory interpretations are ordinarily given no deference and USPTO decisions based upon an erroneous interpretations of the law will also be overturned.

An oddity of the case here is, although the Foundation did not file for a certificate of correction under 35 U.S.C. 255, it argued on appeal that the USPTO has inherent authority to withdrawing the disclaimer that is housed in Section 255.

In the appeal, however, the Federal Circuit found no basis for issuing a certificate of correction because the mistake in filing the disclaimer was not “of a clerical or typographical nature, or of minor character.”

19 thoughts on “Federal Circuit Supports USPTO’s Refusal to Withdraw Terminal Disclaimer

  1. 7

    Unfortunately, this seems to be a miscommunication where there was too little communication. The US associate should have written back explaining that the patent would lapse in due course, and that no action is necessary.

    I know that in some foreign countries you have to be proactive about this stuff, but not the US. For example, some countries you have to request extensions of time BEFORE the deadline expires (for office actions). The US is very generous about these things.

    I had that exact situation once. The client sent instructions on the 3 month date asking that we take a one-month extension of time, and that his instructions would follow the next week. I responded that no such action was necessary at this time, but that we would request the extension when we filed the response. Problem solved.

    1. 7.1

      The letter from the Japanese law firm instructed Foley to actively abandon the case before it expired, so the Japanese were clearly aware of the option to do nothing. Japanese clients usually do not like being second-guessed.

      There are also good reasons to actively abandon a patent: a tax break, to settle a law suit, or to avoid possible double patenting rejections.

      So, there were good reasons to think that the request was legitimate, and good reasons not to ask for further confirmation.

      1. 7.1.1

        Respectfully Anon, reticence over offending the client does not and cannot trump diligent service to the client.

        That being said, you do offer some solid points for consideration on the topic.

        Thanks.

        1. 7.1.1.1

          If the request was, on its face, not unreasonable, then there is no need to ask the client for confirmation.

          1. 7.1.1.1.1

            That’s nice but not on point.

            Not sure why you opted for the double negative, so let’s restate your post plainly:

            If the request was reasonable on its face…

            Now read post 1.1.

            How often would the reticence we are discussing even come up in facially reasonable interactions?

      2. 7.1.2

        Anon: I think express abandonment of an issued patent is so unusual that it warrants confirmation that the originating JP firm is not confused or relying on how things are done in Japan.

        Dennis: Your title is a bit off. The issue is patent disclaimer, not terminal disclaimer. I went into the article wondering what the big dispute over a terminal disclaimer could be.

  2. 6

    On this fact pattern, the actions of Foley are not understandable. The way I read the instructions from Japan, they were for a request for forms and advice, not for action by Foley.

    Did he provide the forms?

    Did he provide the advice?

    Was he subsequently told to file the disclaimer?

    Acting as he did based solely on a request for forms is truly not understandable. Someone is not telling the whole truth.

    1. 6.1

      Someone is not telling the whole truth.

      If the instructions were read differently by Foley, then there isn’t a whole lot more to be said (at least not by Foley) that is relevant to this case.

  3. 5

    If I could speculate at what happened here, it appears that in October 2011, half a year after the Japanese paralegal’s letter, an attorney or a paralegal or someone in docketing or maybe even the attorney’s assistant at F0ley stumbled upon the Japanese paralegal’s letter and, in a moment of panic and confusion, decided that a deadline had been dropped. That set into motion the events that led to the unfortunate filing and (apparently) irreversible disclaiming of the patent.

    We all know that stranger things have happened. Mistakes are made. Some are small, some are big.

    1. 5.1

      MM, could be. I’m not so sure. Disclaiming a patent is highly unusual and normally one would confirm the instruction.

  4. 3

    The practice tip here is that when you are preparing to file a paper with major consequences to the patent owner or applicant, always make every effort to get a clear written confirmation that the patent owner or applicant understands the consequences before that paper goes out the door. That’s the easy tip to remember.

    For clients (and their counsel and paralegals), the tip is to remember that the attorney or agent you are instructing is just person working on many projects with critical deadlines. In addition, the letter you sent will often be processed by a docketing specialist with a key role in ensuring that everything is carried out on schedule. If there is a risk of something critical being misunderstood, be as clear as possible about what you are asking for, even if it means stating things twice (e.g., once in a positive sense stating what you want, and a second time in a negative sense stating what you don’t want, e.g., “do not file anything until we provide further instructions”).

    And when you are asked for this kind of confirmation by your attorney, please don’t mess around. Provide the information and give it quickly and clearly (“Yes I understand the consequences in your email, attached below and dated [insert date here]”) or, if you can’t provide the information until some later date, make that perfectly clear as well.

  5. 2

    anon: it is indeed odd that an express abandonment would occur in the given fact pattern. The more likely path would have been a simple non-payment of annuity when due.

    Agreed, in light of the request sent by the Japanese law firm’s paralegal to Foley:

    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.

    That was two days before the major Japanese earthquake so it’s easy to understand how the Japanese paralegal disappeared from the picture (especially since there was no imminent need for any filing to occur).

    Nothing happened until later in October when the attorney at Foley, for whatever reason, decided to file “a statutory disclaimer pursuant to 37 C.F.R. § 1.321(a) with the PTO, disclaiming ‘the entire term of all claims in U.S. Patent 6,194,187′ “.

    If I could speculate at what happened here, in October 2011 the attorney or a paralegal or someone in docketing or maybe even the attorney’s secretary at Foley stumbled upon the Japanese paralegal’s letter and, in a moment of panic and confusion, decided that the ball had been dropped. That set into motion the fateful events that led to the unfortunate and (apparently) irreversible extinguishing of the patent.

    We all know that stranger things have happened. Mistakes are made. Some are small, some are big.

  6. 1

    It’s interesting that there’s a second story in as many days about an attorney at Foley filing something from their client blindly despite its dubious nature. How many patents get expressly abandoned during their term? Doesn’t that raise any red flags?

    I’m not saying that anyone at Foley is liable here. In fact, maybe stuff like this happens at all sorts of law firms, and I’m just not in a position to see it. I’m just saying it’s… interesting.

    1. 1.1

      It is indeed odd that an express abandonment would occur in the given fact pattern.

      The more likely path would have been a simple non-payment of annuity when due.

      1. 1.1.1

        anon: it is indeed odd that an express abandonment would occur in the given fact pattern. The more likely path would have been a simple non-payment of annuity when due.

        Agreed, in light of the request sent by the Japanese law firm’s paralegal to Foley:

        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.

        That was two days before the major Japanese earthquake so it’s easy to understand how the Japanese paralegal disappeared from the picture (especially since there was no imminent need for any filing to occur).

        Nothing happened until later in October when the attorney at Foley, for whatever reason, decided to file “a statutory disclaimer pursuant to 37 C.F.R. 1.321(a) with the PTO, disclaiming ‘the entire term of all claims in U.S. Patent 6,194,187′ “.

          1. 1.1.1.1.1

            Ned, I tried to come up with some kind of explanation (not an excuse, just as a hypothesis) in comment 4.

            For whatever reason, the filter snagged me on the term “f a te ful”. Pain in the you know what.

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