Japanese Foundation for Cancer Research v. Lee (Prost-auth; Dyk; Taranto), mentions and partly arose out of the tsunami that devastated Japan a few years ago. The Japanese Foundation owned a patent. A Foundation employee asked a paralegal at a Japanese firm whether a patent could be abandoned or disclaimed before non-payment of maintenance fees. The paralegal then sent a fax to the Foundation’s attorney of record for the patent, Foley & Lardner, stating that the clients “would like to abandon” the patent before “before the case lapses by nonpayment of the next maintenance fees” which were due in a year and a half. The paralegal asked for any necessary forms.
Two days later the tsunami and earthquake hit. This caused the paralegal to lose track of the matter.
Meanwhile, six months after getting the fax, the attorney of record filed a statutory disclaimer. Two months later, he petitioned to withdraw it. The PTO rejected the petition because the attorney filed the disclaimer with a valid POA. The PTO rejected subsequent efforts to get the disclaimer withdrawn.
Then the Foundation filed suit in district court, which directed the PTO to withdraw the disclaimer unless the PTO found that the “Foundation actually authorized its filing.” The PTO appealed, and Chief Judge Prost wrote the panel opinion reversing the district court.
The opinion is significant for a couple reasons. One is that the panel held that 35 USC 255, governing certificates of correction, would not allow withdrawing a mistakenly filed statutory disclaimer. In doing so, it distinguished an earlier malpractice case where a disclaimer had been filed but in the wrong application, and correction was permitted, but the disclaimer was still effective as to the intended patent. The court said this was different, since here there was no “clerical or typographical error” in terms of 255: it reasoned that such an error “appears on the face of the document, as opposed to the filing of the document itself.” That sounds right.
Second, the district court had held that the PTO had inherent authority to withdraw a mistakenly filed terminal disclaimer. The district court had relied upon this power to order the PTO to withdraw it. The panel reversed, relying on the deference afforded to the PTO’s determination that the patentee was “bound by the actions or inactions of his voluntarily-chosen representative.” Once the PTO found the attorney of record signed the disclaimer, the inquiry ended as far as the PTO went. The panel then reasoned:
The Foundation suggests that it should not be bound to the consequences of its attorney of record’s actions, as it resulted in the loss of a valuable property right. It analogizes, as the district court did, to the principle that an attorney cannot settle a case or waive certain rights without the client’s authorization in the context of ordi- nary representation. The PTO has, however, clearly articulated in its regulations that, other than the patentee, only the attorney of record with power of attorney is authorized to file a terminal disclaimer on the patentee’s behalf. See 37 C.F.R. § 1.32. And here, the patentee provided specific authority to its attorney to file a disclaimer by filing a power of attorney to prosecute the underlying application and to transact all business in the PTO connected therewith. J.A. 199. Even if we disagreed with the PTO’s position as a matter of policy, we must not substitute our own judgment for that of the agency because “[unless] these vital differentiations between the functions of judicial and administrative tribunals are observed, courts will stray outside their province and read the laws of Congress through the distorting lenses of inapplicable legal doctrine.” FCC v. Pottsville Broad. Co., 309 U.S. 134, 144 (1940). We must defer to the agency’s interpretation of its own procedures and regulations, and this case does not indicate the kind of “extremely rare circumstances” that could “justify a court in overturning agency action because of a failure to employ procedures beyond those required by the statute.” Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519, 524, (1978). Here, the PTO determined that miscommunications between the Foundation and its attorney of record did not excuse the actions of the attorney, and we will not substitute our judgment for that of the agency.
Therefore, we find that the PTO did not act arbitrarily, act capriciously, or abuse its discretion in declining to use any inherent authority that it might have in with-drawing the terminal disclaimer on the ’187 patent that the Foundation’s attorney of record duly filed in accordance with the PTO’s regulations.
(Some citations omitted.)
Be careful out there.
Why did the JP patent owner want to expressly abandon rather than just let it lapse?
“Even if we disagreed with
the PTO’s position as a matter of policy, we must not
substitute our own judgment for that of the agency because
“[unless] these vital differentiations between the
functions of judicial and administrative tribunals are
observed, courts will stray outside their province and read
the laws of Congress through the distorting lenses of
inapplicable legal doctrine.” FCC v. Pottsville Broad. Co.,
309 U.S. 134, 144 (1940). We must defer to the agency’s
interpretation of its own procedures and regulations….”
Mark my words, this is going to be quoted in Versata. The government might even file a supplemental brief bringing the court’s attention to this case.
One clarification (which might give rise to other issues) — the opinion seems to indicate that the Japanese law firm was representing a licensee under the patent, not the Foundation, and so the reference to “our client” in the paralegal’s letter about the statutory disclaimer is somewhat ambiguous.
Agree – the fax is confusing in a couple respects.
The court said this was different, since here there was no “clerical or typographical error” in terms of 255: it reasoned that such an error “appears on the face of the document, as opposed to the filing of the document itself.” That sounds right.
The court didn’t mention it, but the alternative rule (allowing the “correction” in the present situation) would create a serious potential for abuse – “regret” could easily be described as “clerical error” in petitions to undo disclaimers.
Agreed, though that doesn’t seem to be the facts here… but, what’s that expression about hard facts and bad law?
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