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.
Ide beg to differ in many different ways at least in my situation. The excludeed inventor particularly the true conciever should have the right to intervene especially under the facts of how the system works or doesent work. The invention funding and development are supposed to form up behind the true conciever to maintain efficient development and ensure financial reward for the brilliant conception without the invention would not exist. However the brutal history of corruption intimidation and murder concerning inventors is the basis for inventor security in legislation and the physical operation of the uspto to eliminate profting by pirates something the congress has intentionally ignored in the aia. And they wont return to these critical issues either because that bucks organized crime. This is why we need to throwout incumbants in the next election and only be willing to vote for those pledging correction to the corruption
Michael, it looks like we are on the same page here.
It should be recognized that Lemleys theory is also the theoy of the high federals or hith royals before presidents became popular. The lone wiseman of suprior inventative capaity to lead the democracy to full human advncement capabilities. This capacity and vision is now destroyed by asa and corruption
Lemley is correct is his theory of the lone inventor although his grasp of the magnitude of the situation is uncomprehendable at least presently. Yes only 4 great inventors of significance since the invention of fire and metal 1804-5. Now congress has intentionally obstructed justice by denying invention cluster arguments in new legislaton
Exactly Ned, a good description of a Lemley article.
Right Ned The congress has intentionally betrayed the trust of the American people and voted for there own financial intrests and reelection campaigns and the 1%s intrests not the 99%s resulting in continued economic depression for 25 years +. China is stealing inventions from me as well as U.S. big business espionagers. Yes definately a failed system now and before aia with no intention of correction on there part. There are penelties but when will enforcement occur there appears to be no recgnition of the problem.
Michael, if you suggest that Congress has in fact authorized and provided incentives for others to steal inventions (perhaps from China?) and file them without any real defense of invalidity…………
I must confess, Michael, that is exactly what they did. They were warned, repeatedly warned, that this was exactly what was going to happen. Not everyone in the world is ethical. If you build a patent system on the assumption that people are ethical with no penalties or remedies for when they are not, you are soon going to have a failed system.
I dont think so depending on the circumstances.Lack of inventor security and the survivability of counterfiling need to be considered and indegence and the 40 method of theft from inventors all make bleek odds of sucessful moniterizeing. Also the thuggy legislature wont reinstall integrity in tne new ais just more carefully laid fraud methods against the inventor even legalizing murdering the inventor to steal his patent.
Ive got some filed in recent years that are going into abndondment because of lack of customers and the money monopoly and they all owe me money and wont pay its so big its holding up economic recovery the way ive recoverd the economy the last five recessions and I ended the great depression in 1954
Thanks big guy I hop he likes contingent cases. If I can get some attorneys to agree on the merits of the cases then I can likley find lawsuit investors. The pirates of course used every dirty trick in the book to obtain the conceptions and silence the oposition so fraud is a big issue
Remember the new aia is likley designed to bury the past injustices through obstruction of justice new provisions so cases need to be argued accordingly.
OK, Mr. Wrongway, if the statute provides a statute of limitations on derivation actions, eliminates 102(f), and refuses to permit any third party to raise invalidity based on incorrect inventorship… well, of court eBay must be wrong. That makes perfect sense.
PURist, what do you mean, must police? Not at all. If you never file for a patent yourself, but have PUR against the pirate’s patent, you are not harmed in the slightest. In fact, the pirate is helping you because he imposes costs on your competition in the form of royalties that you do not pay.
Now, you might get pissed off just a bit because the pirate disclosed your trade secrets. But that is a different lawsuit. Perhaps you might even get a court in equity to say the pirate holds the patent in trust for you and might even order the pirate to assign the patent to you. But my read of the AIA, is that the patent remains valid despite incorrect inventorship, which means that you receive the assignment of a valid patent even though you, the true inventor, are not the named inventor on the patent.
Mr. New, OK. A pirate has a patent granted on an application filed in 2014. The true inventor never filed. You are an accused infringer. The grounds for invalidity are set forth in 282.
Under the new AIA 102(f) has been repealed.
Cite the statutory grounds that you would rely on in your summary judgment motion that the patent is invalid based on incorrect inventorship.
We await, in fact the whole country awaits, you wisdom and knowledge.
This case may still be relevant to day, but it may also be obviated by the 1952 Patent Act and the Administrative Procedures Act that respectively alter the way that we think about challenging patent rights and challenging agency determinations.
“void for want of authority”
I repeat:
“void for want of authority”
indeed. SCOTUS addressed this long ago:
In Mullan v. U. S., a suit to vacate a patent which had been granted for certain coal lands, the court held that the mistake was one of law, but that, nevertheless, it having been committed, and the patent given for lands which the land officers were not authorized to patent, the patent could be annulled by the court. And Mr. Chief Justice Waite said: ‘It is no doubt true that the actual character of the lands was as well known at the department of the interior as it was anywhere else, and that the secretary approved the lists, not because he was mistaken about the facts, but because he was of opinion that coal lands were not mineral lands, within the meaning of the act of 1853, and that they were open to selection by the state; but this does not alter the case. The list was certified without authority of law, and therefore by a mistake against which relief in equity may be afforded. As was said in U. S. v. Stone, 2 Wall. 525, 535: ‘The patent is but evidence of a grant, and the officer who issues it acts ministerially, and not judicially. If he issues a patent for land reserved from sale by law, such patent is void for want of authority. But one officer of the land office is not competent to cancel or annul the act of his predecessor. That is a judicial act, and requires the judgment of a court.”
They are addressing land patents, of course, but the legal issue is the same. See,164 U.S. 190
17 S.Ct. 45
41 L.Ed. 399
WISCONSIN CENT. R. CO.
v.
UNITED STATES.
MichaelR, I recommend Edward P. Heller III. He has appellate experience, including with cases involving piracy: link to law.justia.com
I think he can help you and your three grandfathers.
“That would frustrate the statutory scheme big time and should be categorically disallowed.”
Yes, because one little section in patent law designed to treat the rare interference (now called derivation) MUST trump basic law of standing…
eBay too MUST be wrong…
Patent Law uber alles
[eyeroll]
What if the pirate steals an invention from someone who has no desire to join the patent game, but meets all the requirements of establishing a PUR?
What if the documentation of the established PUR clearly and convincingly also established the very fact that the pirate is a pirate (i.e., that he derived from the PUR holder, and thus lied to the Office?
Remember, that a PUR holder will hold his water in secret (and may intermingle Trade Secrets) until the information is needed in defense of a charge of infringement, so it is highly unlikely that the PUR holder would even be bothering to check if anyone is trying to obtain a patent, much less that a pirate is trying to obtain a patent.
The way I read your read of the law, you have created a “must police and file” requirement that is untenable and fully unrealistic.
This is wrong on so many levels I scarcely know where to begin.
Take the pirated invention as a second example.
The new AIA specifies that the true inventor must file his own application, and must engage in a derivation proceeding within one year of publication or patenting of an interfering claim.
What if dissatisfied inventors or third parties could raise inventorship as a grounds for invalidity through the APA, outside of the one year period, and without even filing an application? That would frustrate the statutory scheme big time and should be categorically disallowed.
I don’t see just how the defendant is harmed unless he knew of the PCT and relied on the failure to file a national stage application in a timely fashion to his detriment.
Assume the patentee did not pay the issue fee, but still the PTO issued the patent. It stands there, patented, but no issue fee has ever been paid. Is the patent invalid? No. Can it be challenged under the APA by an infringer? I would find that more than ridiculous.
The harm has to be something other than the patent issued. The person harmed should have to show that it relied on some public information about the status of the application to its detriment, and that it has a right to rely on that status.
Ive been trying to get the top 10000 patents canceled and reissued for 5 years now back to 1953 all the valuable ones are in the wrong name. Is there an attorney in the house
You’re responding to 6, the PTO’s most gleefully triumphant invincibly ignorant examiner.
You are correct that the cause of action arises under the APA. However, the arising under jurisdiction of the federal circuit does not simply look to the cause of action. Rather, the federal circuit also claims jurisdiction if the well pleaded complaint necessarily requires interpretation of a substantial question of patent law.
Kappos is fighting this lawsuit.
It might be super easier to simply go to K man and ask him nicely to do what you’re wanting him to do.
Why should the Federal Circuit have appellate jurisdiction? This cause of action “arises under” the APA, not the patent statutes.
Who has standing?
Thanks DF. Good points. I don’t think that the court needs to worry about a flood of similar lawsuits, but there are certainly a number of non-trivial issues that could be corrected with this sort of action.
Regarding standing – in this case, the court found that the infringement lawsuit against Exela was sufficient to create standing. The court did not, however, suggest that it is necessary.
They should have a provision to retract patents that infringe based on a filers complait to the uspto epecialy indegent filers with insuficient resource to fight court battles. Theyve got to level the playing field of small businesses they cant even get off the ground like mine the most important one in the world goingd nowhere and the worlds economy with it.
Dennis, thanks for posting this, and three points. First, I’d long suspected that after Aristocrat, the PTO believes that in many circumstances it can do what it wants and is beyond review; its arguments in this case confirm that suspicion.
Second, in both the district court decision in Aristocrat, as well as in another district court decision, New York University v Autodesk (SDNY, July 13, 2007), the judges found that the PTO was in violation of the APA in reviving applications under the facts of the respective cases. Which seems to bode well for the plaintiff here.
Third, I can contact you offline about at least one case I’m familiar with where, despite existing mechanisms and the new ones under the AIA for challenging patents, a patent was obtained fraudulently and the only way to challenge will be to get sued by the patentee and then raise fraud as a defense. If the Excela case proceeds and the CAFC doesn’t yank the district court’s jurisdiction to review under the APA, that would provide another avenue to challenge the patent – although apparently only after getting sued for infringement.
James Dabney of KSR fame has lectured about using, and has successfully sued under, the APA to invalidate allowed patents.
GO ED GO!!!!
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