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By Dennis Crouch

A pan-European patent court is a big deal. Once in operation, the Unified Patent Court will allow owners of European patents to use a single court action to enforce a patent across Europe.  The UPC Preparatory Committee continues to solidify practical elements of court operation – most recently, the committee set a fee schedule: 11,000 Euros fixed fee plus an additional value-based fee. For actions with a claimant-set-value of >50 million Euros, the additional value-based fee would be 325,000 Euros.  Small enterprises will receive a 40% reduction in fees and fees for all parties will be partially reimbursed if the case settles before final verdict.

In addition to court fees, the Committee also set a schedule for a successful party’s ‘recoverable costs’ from the unsuccessful party.  The general rule for the UPC is that the unsuccessful party bears the reasonable, proportionate, and equitable costs of the successful party. The Preparatory Committee has set ceilings for these costs that also depend upon the ‘value of the proceeding.’  For lower-value cases, the fee cap will be around 10% of the case value.  For actions with a claimant-set-value of >50 million Euros, the fee is capped at 2 million Euros.

Within the next few months, the Preparatory Committee will wrap-up its activities and we will then await ratification by the member nations.  The UPC Agreement was signed by 25 EU Member States.  However, it must be ratified by at least 13 states, including France, Germany and the United Kingdom – That process is likely to be concluded this summer as well.  If that schedule goes forward then the UPC may be open-for-business for the start of 2017.

by Dennis Crouch

In re Queens University (Fed. Cir. 2016)

In an interesting and important mandamus ruling, the Federal Circuit has ordered the district court to withdraw its order compelling discovery of communications with non-attorney patent agents.  The decision here recognizes “patent agent privilege”

[W]e find that the unique roles of patent agents, the congressional recognition of their authority to act, the Supreme Court’s characterization of their activities as the practice of law, and the current realities of patent litigation counsel in favor of recognizing an independent patent-agent privilege.

The court, however, includes the important limitation that the privilege only extends to the extent that communications fall within the patent agent’s scope-of practice as “authorized by Congress.”  On this point, the appellate panel quotes 37 C.F.R. § 11.5(b)(1):

Practice before the Office in patent matters includes, but is not limited to, preparing and prosecuting any patent application, consulting with or giving advice to a client in contemplation of filing a patent application or other document with the Office, drafting the specification or claims of a patent application; drafting an amendment or reply to a communication from the Office that may require written argument to establish the patentability of a claimed invention; drafting a reply to a communication from the Office regarding a patent application; and drafting a communication for a public use, interference, reexamination proceeding, petition, appeal to or any other proceeding before the Patent Trial and Appeal Board, or other proceeding.

On remand, the parties in the dispute will likely now fight over whether the agent-in-question’s activities fell within these limits on practice.

Going forward, this case also offers an important next step in the continued rise of stature of patent agents both within law firms and corporate structures.

This is an important case and I’m betting that David Hricik will write further on the topic. 

The data released from the USPTO in its annual report shades the truth somewhat, but includes a number of important signals.  The chart above shows the average first-action pendency (filing date to first office action mailing) for patent applications — showing a significant decline from 2011 with the USPTO’s continued aggressive targets for FY2016 & 2017. An important note here is that the ‘first action’ pendency treates RCE and continuation refilings as ‘new.’  Those re-filed applications typically have a much shorter delay before the first action and, as such, the reported pendency is several months lower than you would expect for a newly filed application.  In addition, the report apparently includes design and plant applications (that also have a lower first action pendency than utility applications).  All that said, the year-over-year decline is impressive and the trend appears set to continue.

Guest Post By Connor Curran*

 Palomer v. McDonald, 27 Vet. App. 245 (2015) and Palomer v. McDonald, ____ F.3d ____ (Fed. Cir. 2016)

The content here at Patently-O tends to focus on intellectual property law; however, occasionally contributors wish to divert attention to other realms (for a brief period only, of course).  In the interest of full disclosure, this blogpost is one of those occasions.

Most readers should know that the Court of Appeals for the Federal Circuit (“CAFC”) hears patent appeals, but some readers may be surprised when told that the CAFC also hears, inter alia, appeals from the Court of Appeals for Veterans Claims (“CAVC”).[1]

Palomer v. McDonald, 27 Vet. App. 245 (2015) is a case that was recently decided by the CAVC, which held 2-1 in favor of the Secretary of Veterans Affairs (“VA”).[2]   Mr. Palomer appealed that decision to the CAFC, and the oral argument is scheduled for March 7, 2016.  Professor Angela Drake – who runs the Veterans’ Appeals Clinic at the University of Missouri School of Law – will tell Mr. Palomer’s story at oral argument, but I wish to tell you his story today.  Before that story can be fully understood though, we must first revisit some of our nation’s history.

On December 7th, 1941, the Japanese Navy initiated the Battle of Pearl Harbor – a battle that resulted in the deaths of 2,403 U.S. soldiers, the injury of another thousand-plus soldiers, and the sinking of 4 out of the 8 battleships operated by the U.S. at the time.[3]  December 7th, 1941 was, in fact, a date which would live “in infamy,” as President Roosevelt prophetically proclaimed to Congress the very next day.  But if December 7th is infamous because it marks the date that Japan broke the international rules of engagement, then the next day, December 8th, 1941, is infamous as well because it marks the date that Filipino soldiers put their lives on the line in reliance on a promise that, for many, remains unfulfilled to this day.

On December 8th, 1941, only hours after bombing Pearl Harbor, the Japanese commenced an invasion of the Philippines, then a U.S. territory.  The Japanese met resistance from active infantry[4] and from guerilla soldiers; and from 1942-1945, among those guerillas was one Emilio Palomer, who served in the Walter Cushing Guerrillas.

In 1941, but prior to December 8th, President Roosevelt promised Philippine soldiers U.S. citizenship and full veteran’s benefits should they serve in the United States Army Forces Far East (“USAFFE”).  This promise was wildly successful as a recruiting mechanism, although it would later become known as Roosevelt’s forgotten promise to Filipino soldiers, going unfulfilled for over half a century.

After WWII was over, Congress passed the Rescission Act of 1946, defining service by Filipino soldiers serving the USAFFE prior to 1946 as “not . . . active . . . for the purposes of . . . conferring rights, privileges, or benefits upon any person.”[5]  It was not until 2009 – over 60 years later – that Filipino soldiers, pursuant to the creation of the Filipino Veterans Equity Compensation Fund (“FVECF”), were allowed to lay claim to the benefits they had been promised and had earned.[6]  But, at least for Mr. Palomer, Congress remembering Roosevelt’s broken promise in 2009 is not the same as keeping that promise – equating the two will depend upon the willingness of the CAFC to use its equitable powers to see to it that justice prevails.

Here’s how Mr. Palomer ended up before the CAFC.  Mr. Palomer filed a claim to receive benefits under the FVECF between 2009 and 2010, and submitted as proof of his service the following: his certificate of service from the Walter Cushing Guerillas, his Pledge Form, his Oath of Office, and a Confirmation of Officers and Enlisted Men Record.  The Manila Regional Office (“RO”) denied his claim in 2010, relying solely upon the finding of the National Records Personnel Center (“NPRC”) concluding that he did not establish that his service in the Walter Cushing Guerillas was in the service of the United States Armed Forces.

Mr. Palomer appealed to the Board of Veterans Appeals (“BVA”), who affirmed in 2013.  Then, in Tagupa v. McDonald, 27 Vet. App. 95, 98 (2014), the CAVC held that an RO has to check with both the NPRC and the Department of the Army in verifying active service, thus an RO cannot rely on the conclusion of only one of those entities in denying a claim for lack of proof of active service in the United States Armed Forces.  Accordingly, Mr. Palomer filed a Motion for Reconsideration, but it was sent 13 days late,[7] and ultimately denied.  Mr. Palomer then filed a timely Notice of Appeal with the CAVC.

Before the CAVC, the VA moved to dismiss due to the Motion for Reconsideration being 13 days late.  Mr. Palomer argued that equitable tolling should apply because, inter alia, he lives in the Phillipines and experiences a mail delay of 2-3 weeks; thus, he received his denial notice at least 13 days late which should make up for the fact that he filed his Motion for Reconsideration 13 days late.  Additionally, Mr. Palomer is over 90 years of age and in deteriorating health when it comes to his eyesight and hearing; as such, he relies upon the translation of written communications via a third party.

The CAVC acknowledged that equitable tolling could apply, but found that Mr. Palomer’s circumstances did not allow for it.  Specifically, they found that Mr. Palomer failed to show that an “extraordinary circumstance” was present, even though veterans who live in the United States do not ordinarily experience mail delays of 2-3 weeks and even though Mr. Palomer is an elderly WWII veteran who does not speak English and who cannot read without the aid of a translator.  On top of that, the CAVC noted that:

[a]lthough the inefficiencies in the delivery of mail between the United States and the Philippines may be a circumstance beyond Mr. Palomer’s control, he fails to assert, let alone demonstrate, that he had an inadequate amount of time to consider his options and timely mail his request for reconsideration.[8]

This language is notable for two reasons.  First, the CAVC admits that the mail delay is beyond Mr. Palomer’s control, which matters because the CAVC has held previously that a “common factor in all decisions adopting extraordinary circumstances as a basis for equitable tolling is the requirement that the extraordinary circumstance be beyond the claimant’s control.”[9]  Second, the CAVC seems to reason that, even if an extraordinary circumstance was present, Mr. Palomer still lost because he could have overcome the extraordinary circumstance with diligence after the mailing delay.

Now that Mr. Palomer is before the CAFC, he asserts, inter alia, that the CAVC erred as to a matter of law in that the CAVC applied an improper standard of diligence.  As Mr. Palomer contends, the CAVC, instead of requiring only that Mr. Palomer show that he was diligent during the period seeking to be tolled – the 2-3 week mailing delay – required that he show that he was diligent throughout the entire 120 day time limit.  And indeed, the CAFC has held that the former approach, known as the “stop-clock” approach, is the correct standard of diligence.[11]  So it seems as though the CAVC did err but, of course, we will have to wait and see whether the CAFC agrees.

For now, all there is to do is hope that the CAFC chooses justice over deference, because after 60 years of broken promises, it would certainly be unjust and inequitable for Mr. Palomer’s claim to the compensation he earned to be dismissed on a non-jurisdictional technicality of a filing being 13 days late – especially considering his extraordinary circumstances such as his age, deteriorating health, dependence upon a third party for translation of written communications, and the 14 day mailing delay that he experienced but that no veteran living in the United States would have encountered.

After all, it was because of where Mr. Palomer lived – in the Philippines during the Japanese invasion – that the promise of benefits compensation was first made to him; therefore, it should not be because of where he lives that said promise is allowed to continue to remain the very worst kind of promise, broken and unfulfilled.

= = = = = = = = = = =

Documents:

• CAVC Court Order
• PalomerApp.Br.-corrected
• PalomerBriefForRespondentAppellee
• Palomer.App.Reply.Br

= = = = = = = = = = =

* Connor Curran is a 3L and member of the Veterans Clinic at the University of Missouri School of Law.

[1] The CAVC is an Article I tribunal created by Congress in 1988 to provide judicial review of the Board of Veterans’ Appeals (“BVA”), which is part of the Department of Veterans Affairs (“VA”).

[2] Judge Greenberg dissented against Chief Judge Kasold and Judge Shoelen.

[3] See http://www.nps.gov/nr/twhp/wwwlps/lessons/18arizona/18charts1.htm.

[4] Five months prior to the Japanese invasion of the Philippines, on July 26, 1941, President Roosevelt, suspicious of imminent war with Japan, created the United States Army Forces Far East (“USAFFE”) and issued a Presidential Order calling the Philippine Commonwealth Army into the service of the Armed Forces of the United States.  See 6 Fed. Reg. 3825.

[5] See 38 U.S.C. § 107.

[6] See American Recovery and Reinvestment Act § 1002.

[7] 38 U.S.C. § 7266(a) allows a person adversely affected by a decision of the BVA 120 days to file a notice of appeal with the CAVC.

[8] Palomer v. McDonald, 27 Vet. App. 245, 252 (2015).

[9] McCreary v. Nicholson, 19 Vet.App 324, 331 (2005).

[10] Mr. Palomer also contends that the CAVC erred in that it failed to find the mailing delay to be an extraordinary circumstance in contradiction of its precedent and that the CAVC erred in that it failed to find his deteriorating health to be an extraordinary circumstance in contradiction of its precedent.

[11] See Checo v. Shinseki, 748 F.3d 1373, 1378 (Fed. Cir. 2014).

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JBLU v. CIT (Fed. Cir. 2016)

Although not a patent case, the JBLU decision has important commercial implications.  JBLU is an American company that sells jeans under the C’est Toi Jeans USA brand. Of course, despite the “USA” name in the brand, the jeans are not manufactured in the US, but rather in China. That fact (‘made in china’) was noted on the inside label of the jeans. (See specimen above).

Customs officials looked at the jeans and determined that they failed the country-of-origin labeling requirement of 19 U.S.C. § 1304(a) (“[E]very article of foreign origin … imported into the United States shall be marked in a conspicuous place … in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article.”).  Applying its regulatory authority US Customs created a set of regulations that indicate the use of “USA” or “America” on imports is likely to create confusion and so the country-of-origin must be made even more conspicuous (placed near the “USA” symbol and in equivalent size).  However, the regulations are somewhat relaxed when USA is part of the trademark name.  The Court of International Trade sided with customs officials – that JBLU must meet the more stringent standard (and had failed to meet that standard). On appeal, the Federal Circuit reversed.

The key issue here involved interpretation of the “trademark” term as used in the customs statute.  The CIT interpreted the word to be limited only to marks that are registered U.S. trademarks or else those subject to a registration application in the USPTO. (giving deference to the Customs interpretation of the term).  On appeal, though, the Federal Circuit reversed that determination and instead applied the broader definition found in the Lanham Act of  “any word, name, symbol, or device or any combination thereof adopted and used by a manufacturer or merchant to identify his goods and distinguish them from those manufactured or sold by others.” 15 U.S.C. § 1127.  In making this determination, the Federal Circuit chose to give no deference to Customs interpretation of its own regulations because the term “trademark” as used in the regulation “unambiguously includes federally registered and common law trademarks.”

If a regulation is clear on its face, no deference is given to the promulgating agency’s interpretation, and we interpret the regulation in accordance with its unambiguous meaning. Viraj Grp. v. United States, 476 F.3d 1349 (Fed. Cir. 2007). Doing otherwise would allow the agency, “under the guise of interpreting a regulation, to create de facto a new regulation.” Christensen v. Harris County, 529 U.S. 576 (2000). The fact that a term is not defined by a regulation does not make it ambiguous and entitled to deference. Executive Jet Aviation, Inc. v. United States, 125 F.3d 1463 (Fed. Cir. 1997).

On remand, the CIT will now become a trademark court to determine whether the C’est Toi Jeans USA counted as a trademark back in 2010 when the imports occurred.  (Following the import, the company did apply for TM registration on the brand).