by Dennis Crouch
Although issued patents can be challenged in court, they come with a presumption of validity that can only be overcome with clear and convincing evidence. i4i. Section 282 of the Patent Act also limits the defenses available to avoid charges of infringement. On Patently-O, we have had some recent discussion on whether Section 101 patentable subject matter questions qualify as defenses. In the groundbreaking case of Aristocrat Gaming v. IGT, the Federal Circuit held that improper revival of an abandoned patent application was not a proper defense under Section 282. Thus, in that case, the accused infringer was unable to challenge the asserted patent even though the USPTO had seemingly made a legal error in issuing the patent.
In 2011, Cadence Pharma sued Exela Pharma in Northfor infringing its patents relating to injectable acetaminophen (OFIRMEV). Exela believes that one of the patents in question should never have issued because it was abandoned and then improperly revived. See U.S. Patent No. 6,992,218. As in the Aristocrat case, the patentee here failed to timely file a US national-stage application before the abandonment date of its PCT application. The USPTO allowed the patentee to subsequently file the national-stage application based on a pleading that it had been unintentionally abandoned. Exela argues here that the Patent Act only permits revival in this situation when the application was unavoidable abandoned – a much more difficult standard.
Exela Pharma Sciences, LLC et al v. Kappos et al, 12-cv-0469 (E.D. Va. 2012).
Seeing no defense available in the infringement action, Exela filed its own lawsuit against the USPTO to force the agency to rescind the revival decision. The lawsuit was filed under the Administrative Procedures Act (APA). As a general matter, there is a presumption that the APA provides a federal cause of action to individuals adversely affected by a federal agency action. Here, the court found no statute barring the lawsuit and noted 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).
In his first written decision in the case, District Court Judge Liam O’Grady has rejected the USPTO’s motion to dismiss — holding that: (1) the case is not time-barred because it did not become ripe until the 2011 lawsuit; (2) Exela has standing to sue the USPTO because the allegedly improper patent grant is “a substantial factor” that motivated the harm Exela is feeling now; and (3) the APA presumption of judicial reviewability of the USPTO’s action has not been overcome.
The USPTO had argued that some of its decisions should simply not be challengeable. The court entirely rejected that position. “The Court finds no support for the PTO’s apparent proposition that certain agency actions should remain entirely unchecked.”
In the end, the court rejected the USPTO’s motion to dismiss. Because the district court case is ongoing, the USPTO has no right to immediately appeal. However, the executive agency may seek a writ of mandamus from the Court of Appeals for the Federal Circuit — asking that court to end this case at an early stage. In the Myriad case, the district court held that the plaintiffs could sue the USPTO for improperly issuing the gene patents. (Myriad and the University of Utah were also sued). However, those claims were based on an allegation of constitutional violations rather than merely capricious actions as here. The district court subsequently dismissed the claims against the USPTO (without prejudice) based upon the doctrine of constitutional avoidance.
The US already has a fairly complex system for challenging patents. Accused infringers can challenge validity and enforceability under Section 282 in both federal courts and the International Trade Commission (USITC). Third parties can request reexamination at the USPTO. Soon, third parties will also be able to participate in post-grant review trials at the USPTO. Although the new post grant review system will have a substantially expanded scope as compared with reexamination practice, it will not offer the opportunity to challenge improperly revived patents.
Noted attorney Ed Polk is leading Exela’s litigation team. The USPTO’s position is being represented by AUSA Stephen Obermeier.