No Substance: Hyatt’s Challenge of MPEP 1207.04 (reopening prosecution rather than hearing appeal)

by Dennis Crouch

Hyatt v. USPTO (Fed. Cir. 2018) (Judges HUGHES, Reyna, and Wallach)

This billionaire gets no respect!  Gilbert Hyatt is the named invenetor on 70+ US patents and has 400+ pending patent applications “all of which were filed prior to June 8, 1995.” That date is critical because those “pre-GATT” applications will remain in force for 17-years from their issue date (if they ever issue).  These applications claim priority back to the early 1970s. For the past 10 years, Hyatt has been trying to get his cases heard by the PTAB – but has been repeatedly foiled by PTO delays and unilateral reopening of prosecution.  Here, the Federal Circuit sided with the PTO in Hyatt’s generalized challenge to this practice — finding portions of his his petition time-barred and that the substance of his challenge lacked merit.

The Big Deal for this case for the rest of us: If the PTO has spelled out an improper practice within the MPEP, an APA challenge on procedure or policy must be filed within six years of MPEP publication, if at all.  Also, the Court says its fine for the USPTO to reopen prosecution rather than hearing the appeal. 

The USPTO has been quite frustrated with Mr. Hyatt.  It turns out though that the frustration – lets call it that – is mutual.  Under Dir. Kappos, the PTO formed a special HYATT Unit that basically did nothing — refusing to examine his applications or hear pending PTAB appeals.  In Hyatt v. USPTO, 797 F.3d 1374 (Fed. Cir. 2015), the Federal Circuit sided with the PTO on the special “requirements” the PTO had placed on HYATT applications that forced him to limit each patent family to 600 claims (absent a showing that more claims were necessary) and to identify the earliest priority date for each claim (with evidence).  The PTO then re-opened prosecution (rather than hearing the appeals he had filed).  And, the E.D.Va. district court sided with the PTO that re-opening prosecution was appropriate. Hyatt v. USPTO, 146 F. Supp. 3d 771 (E.D. Va. 2015).

This case arose from a “petition for rulemaking” filed by Mr. Hyatt under 5 U.S.C. 553(e). That provision specifically provides that “(e) Each agency shall give an interested person the right to petition for the issuance, amendment, or repeal of a rule.” Hyatt’s petition here was a request to promulgate a rule cancelling MPEP § 1207.04 (Reopening of Prosecution After Appeal). In relation to Hyatt’s case, the manual provides that an examiner can “reopen prosecution” with a new ground of rejection rather than continue an appeal:

The examiner may, with approval from the supervisory patent examiner, reopen prosecution to enter a new ground of rejection in response to appellant’s brief.

The USPTO Denied Hyatt’s petition and he sued in Nevada District Court — arguing that the PTO procedures are “arbitrary and capricious, in excess of statutory authority, and without observance of procedure required by the law.”  Rather than deciding the case, however, the district court dismissed for lack of jurisdiction — and noted that they were “likely precluded” by prior lawsuits brought by Hyatt.

On appeal, the Federal Circuit first rejected the district court analysis — holding that “the district court has subject mater jurisdiction” over Mr. Hyatt’s APA claim.*  Although E.D. Va. has exclusive jurisdiction to hear civil actions under 35 U.S.C. 145 that ask for review of PTAB decisions, that exclusive jurisdiction “does not displace the district court’s jurisdiction over APA challenges to the PTO’s denial of a petition for rulemaking.”

Claim Preclusion The Federal Circuit also rejected the PTO’s claim that Hyatt is precluded bringing his APA claim under general principles of claim preclusion — Holding that his prior lawsuit against the agency related to a different set of facts than the present lawsuit.  This setup is pretty interesting. In a 2013 lawsuit, Hyatt challenged the USPTO’s refusal to hear appeals in 80 of his cases. He lost that lawsuit (and did not appeal).  In the present lawsuit, he is seemingly looking for a similar outcome by challenging the PTO procedure, but is not actually asking for any relief regarding those 80 cases.  The Federal Circuit distinguishes these situations:

The PTO’s argument that the two sets of claims arise from the same set of transactional facts relies on a misunderstanding of Mr. Hyatt’s claims. The PTO frames Mr. Hyatt’s suit as a collateral attack on the agency’s reopening prosecution for the 80 applications at issue in his unreasonable delay case. But Mr. Hyatt’s present suit does not seek any relief related to those 80 applications. His claims challenge the PTO’s denial of his petition for rulemaking and his complaint only seeks forward-looking relief such as “[a] declaration that MPEP § 1207.04 is unlawful,” “[a] declaration that the PTO . . . unlawfully denied the Director Petition,” and “[a]n order enjoining the PTO . . . from enforcing MPEP § 1207.04.” The requested relief makes clear that Mr. Hyatt is not collaterally attacking the PTO’s prior prosecution reopenings.

In a footnote, the court remarks that its no-preculsion decision would be different if the case requested any specific action regarding appeals of those 80 pending cases:

Because Mr. Hyatt undoubtedly could have challenged the validity of MPEP § 1207.04 in his unreasonable delay suit, claim preclusion would bar him from doing so in any future case arising from the PTO’s reopening of prosecution for the 80 applications at issue in his prior case.

. . . . .

Time Barred by MPEP Implementation: The winner for the PTO is its third argument — that Mr. Hyatt’s claims are time-barred. The APA does not have a specific statute of limitations, but  28 U.S.C. § 2401(a) provides a general six year statute of limitations for cases against the US Government: “every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues.”

The question here is when did Mr. Hyatt’s “right of action first accrue.” In the appeal, the Federal Circuit ruled that Hyatt could have raised a challenge as early as 2005 when the MPEP provision was adopted. Although it was amended in 2014, that amendment did not “substantively alter” the provision.  The oddity of this case though is that the MPEP is not a “rule” adopted through ordinary notice-and-comment. Still, the Federal Circuit held that the 10 year delay killed the deal.

Note here that the Federal Circuit ruled that some of the challenge are seen as “procedural . . . under the APA”: e.g., that adopting the MPEP provisions without notice-and-comment.  Some of the challenges were also “policy challenges”: e.g., that the MPEP provision conflicts with an already promulgated rule.  “This challenge is not ‘substantive’ because an agency can violate its own regulations while remaining within its statutory and constitutional authority.”  According to the court, the statute of limitations of these procedural and policy-based challenges started to run as soon as the MPEP was published.

On the other hand, Hyatt’s argument that the MPEP violates 35 U.S.C. § 6(b)(1) is a substantive APA challenge since it argues that agency rule/practice violates a statute or constitutional duty.  Here 6(b)(1) states that the PTAB has the “duty. . . . on written appeal of an applicant, review adverse decisions of examiners upon applications for patents pursuant to section 134(a).”  Here, the court ruled that the statute of limitations for such a substantive challenge only begins ticking once the rule is adversely applied to the challenger.  “The PTO denied Mr. Hyatt’s petition for rulemaking in 2015, which qualifies as an adverse application of MPEP § 1207.04 against him.”  As such, that statute of limitations has not run.

The court then looked particularly at Section 6(b)(1) — and concluded that “the text
does not require the PTAB to reach the merits of every appeal that is filed. . . . ”  Here, the court noted that the PTO is able to impose conditions on the process such as time limits for filing, and content restrictions.  This condition (that the examiner not reopen prosecution” is simply just “another condition that must be satisfied before an
appeal reaches the Board.”

Mr. Hyatt expresses concern that examiners could use repeated prosecution reopenings to prevent the PTAB from ever reviewing application rejections. But the prospect that prosecution reopenings after the filing of an appeal brief might be used abusively cannot override the plain meaning of § 6(b)(1). . . . There is no evidence in the record that, in the wake of that decision, PTO examiners have repeatedly reopened prosecution of Mr. Hyatt’s  applications for the purpose of further delaying PTAB review.

On remand, the district court needs to withdraw its original dismissal for lack-of-jurisdiction and re-enter judgment in favor of the PTO on the substance.

[Note – Lots more, but I have to run to teach my class…]

19 thoughts on “No Substance: Hyatt’s Challenge of MPEP 1207.04 (reopening prosecution rather than hearing appeal)

  1. 6

    “The question here is when did Mr. Hyatt’s “right of action first accrue.” In the appeal, the Federal Circuit ruled that Hyatt could have raised a challenge as early as 2005 when the MPEP provision was adopted. Although it was amended in 2014, that amendment did not “substantively alter” the provision. The oddity of this case though is that the MPEP is not a “rule” adopted through ordinary notice-and-comment. Still, the Federal Circuit held that the 10 year delay killed the deal.”

    That seems like ret arded reasoning. His right of action would only start once he was affected by the “rule”/”MPEP modification”, i.e. when he got rejected and was headed to the board. Though I guess that could have been like 15 years ago now idk.

  2. 5

    That will fix him for another decade. Maybe quantum computing will finally obsolete Hyatt’s invention so they can let him out of SAWS quarantine and issue his patents.

    1. 5.1

      I read one of his patent applications and the claims.

      Frankly, I think it would be fairly easy to reject them under 103.

      1. 5.1.1

        I read one of his patent applications and the claims.

        Frankly, I think it would be fairly easy to reject them under 103.

        One would think that this statement alone ought to make it clear Hyatt’s side of the story isn’t the whole story, hmm? I mean, do you think the office is paying attorneys to go to court rather than simply doing easy 103s and letting the PTAB affirm?

        1. 5.1.1.1

          do you think the office is paying attorneys to go to court rather than simply doing easy 103s and letting the PTAB affirm?

          Actually Random, that leans towards Hyatt. Why not make 103’s and proceed?

          1. 5.1.1.1.1

            Actually Random, that leans towards Hyatt. Why not make 103’s and proceed?

            As always, I confine my statements to the public record here. Do you have any citations that anything but regular order was followed with respect to Hyatt prior to the request in 2013?

            You might want to read pretty much everything on the issue and realize that the only thing being discussed is that the office is generating uncommon OUTCOMES. (Which is as it has to be, as statements as to how things were prosecuted are private) It’s certainly not common to wait 41 months for pending examiner’s answer, but then again it’s certainly not common to file a 1300 page brief. And for what amounts to an easy 103 too! What is everyone talking about?? The common outcome of claims that are subject to an “easy 103” rejection on a micro level is that the 103 rejection is made, they may be minorly amended, a final will issue, the case may or may not go to appeal, the appeal is briefed, and the PTAB will uphold the examiner. On a macro level, they’re quickly and easily disposed of: Either the 103 sticks and the applicant realizes they won’t get a patent or it doesn’t stick and there’s an allowance. It sounds like (and I don’t want to put words in Night’s mouth here) that despite an easy 103 being available, that common path is not unwinding. It seems unlikely that the office would let an easy 103 sit around for 20 years while money is spent on litigation over the issue, doesn’t it? Plus that’s a pretty stunning level of corruption being suggested – $.7 to $2.1 million per year (more if you add in benefits) that would have continued over a series of different directors and acting directors ultimately being overseen by both parties in the white house being spent for the sole purpose of screwing over a disfavored person?

            Let’s ignore Hyatt and you consider how you would act. Let’s assume you have a patent application. Let’s assume you feel your patent is being treated unfairly in a procedural manner, do you a) file a suit showing how your prosecution history is similar to other prosecution histories that have not been treated in such a fashion, i.e. mount an easy as-applied challenge or b) mount a facial attack on the entire concept of reopening? Which is more likely to succeed? Which case is more embarassing for the office, making them less likely to appeal? And if an appeal is made, which situation is more likely to be taken up by the supreme court?

            So, let me ask you – does the fact that Night sees easy 103 really lean toward Hyatt? Do you think the office is paying 14 people to allegedly ignore their jobs just to stick it to one person that they allegedly hate, and that he is sitting there as his litigious self and not arguing an issue that you all think is clearly appalling? I mean, I suppose it’s possible that the office is pure evil, but they’re sure winning a lot in court if so. Alternatively, you could look at the fact that you lack all the angles to view this particular picture.

            I know it’s not your usual side, but try looking at it on the side of the office for a second. Go take any of the facts you’re aware of and think are ridiculous and then ask yourself if there exists a prosecution history which would render all these acts which are being upheld as more reasonable than they may appear. I actually do believe in your imaginative powers here, and think you’ll be good at this exercise. Then ask yourself if its more likely that those facts occurred, or that a cadre of corrupt examiners has the go-ahead from a series of unrelated directors to simply screw a guy, while he sits there filing suit on other issues, and while the courts that oversee these issues just twiddle their thumbs as they uphold the office again and again.

            1. 5.1.1.1.1.1

              However you want to “confine” your statements, my question remains.

              And tellingly, remains unanswered.

              1. 5.1.1.1.1.1.1

                And tellingly, remains unanswered.

                Which is unsurprising, as the patent is not published so it would be illegal to answer it

                1. Hmmm, no. Certainly in context and at the level of the discussion here, an answer could well be given. This is not like the explicit details are being asked.

                2. Asking about if a 103 was made on a family of cases calls for the status of claims in a nonpublished application, which is secret. Asking for a reason as to why a 103 was or was not made calls for the procedure within a particular nonpublished application, which is secret, and moreover calls for the prosecution history as context, which is secret. As I’ve said, there are things to glean from the public record of the court cases that have been going on for a few years, but it can’t be supplemented by a discussion of procedure within a particular unpublished application, which is why I’ve been clear to say I’ve confined my discussion to the public record.

                3. Thanks Random — that was helpful.

                  However…

                  The fact that you proceed to try to make a case on a known less than full record says one of two things:

                  That part of the record not used does not change the case you attempt to make (which makes the substance of my questions not only viable but directly on point),

                  or

                  You are perfectly willing to misconstrue//misdirect the discussion by engaging in a known partial argument with substantive elements missing.

                  The latter is not only improvident, but also reinforces a SAWS-like notion that the Office IS “out to get” the Plaintiff. If indeed, the latter were to be the case, prudence would dictate that you advance NO partial arguments whatsoever, “constraint” being effectively a “half-truth.”

                4. That part of the record not used does not change the case you attempt to make (which makes the substance of my questions not only viable but directly on point),

                  As I said, I obviously can’t make any assertions on any private record, so this is not a valid option.

                  or You are perfectly willing to misconstrue//misdirect the discussion by engaging in a known partial argument with substantive elements missing.

                  So any discussion I have is inherently misleading? Talk about a darned if you do darned if you don’t argument. I mean, if your view is that Hyatt’s position is the only one that can be heard/considered, I suppose there’s little point in continuing any conversation.

                  The narrative originally put forward by Hyatt has been rendered unlikely by the mere passage of time, and has been rendered further unlikely by Hyatt’s postdating actions, including this case here. If your viewpoint is that even though the charge is no longer credible, someone arguing in favor of the office can only put forward a defense that includes subject matter that cannot legally be conveyed in order to disprove an unfair assumption that the office acts improperly as a null hypothesis, then there is no defense which will satisfy you. Charging someone with a bad act, putting forward no credible evidence in support of that charge, then asking them to disprove the charge and preventing them from asserting just such evidence as would be necessary to refute the charge is not plausibly just. I can’t disabuse you of any notion you will have, I can only point out how those notions are not reasonable and conflict with known public facts.

                5. Try again – the fact that you attempt to make a case at all screams volumes.

                  Maybe you need to recognize legal logic…

                  Talk about a darned if you do darned if you don’t argument.

                  It’s LESS the argument, and MORE the situation that YOU have placed yourself into. THAT is something that you would do well to recognize.

                  And this has NOTHING to do with any actions by Hyatt. This is ALL you.

  3. 4

    Some of the language in this post is a little off. For example: Under Dir. Kappos, the PTO formed a special HYATT Unit that basically did nothing — refusing to examine his applications or hear pending PTAB appeals.

    Citation needed.

    Can someone point to where in any case that:

    1) A court concludes that the office delayed examination of hyatt’s claims
    2) The court concludes the delay was unreasonable; and similarly,
    3) The court concludes that Hyatt was not the cause of the delay

    I am aware of no such case. In fact, the only statement of delay is an argument made by Hyatt in 2014. In what I can only assume (as I don’t know his mind) is an entirely unrelated issue, the office required Hyatt in late 2013 to restrict and prosecute his claims to a reasonable number of claims. That requirement was upheld by a court. The case explicitly didn’t consider the PTO’s delay (and, might I add, consequently had no reason to discuss if Hyatt had caused delay) because the issue was moot as the office was examining pursuant to the restriction. Had that requirement not been upheld, then I suppose Hyatt wouldn’t have had to comply with the restriction.

    Also interesting – it so happens that in each of the cases that Hyatt has filed since the requirement, if he were to win the case he wouldn’t have to comply with the requirement. For example, had he won the previous “The PTO can’t withdraw from appeals” case, his 80 cases would have to be appealed on the 115,000 claims they had rather than the amounts the office wanted.

    Some notable public facts:

    The record is that Hyatt filed 400 applications prior to ’95. The record is that examination of those patents went on for 15+ years. Notably absent from the record is what Hyatt did or did not do during those 15+ years. For example, between 2002 and 2005, public records show that his claims increased some 20x (see 146 F. Supp. 3d 771, 777).

    For example, Hyatt complains that the office would sometimes suspend prosecution, but the record is also pretty clear that during that time, Hyatt was suing the office on issues relevant to the case (most of which the office won, btw), which one would think makes the suspension reasonable (See 146 F. Supp. 3d 771, 778-779).

    Hyatt also complained that the office would take a long time (in one example 41 months) to respond to an appeal brief. But, in a casually thrown-away footnote (one would think this fact deserves better) – the record indicates that it was Hyatt’s style to file hundred or even thousand page briefs (see Footnote 21, referencing a 1319 page brief).

    Notably, in the 2015 case, the court premises its holding on the PTO putting forward a plan of action for how to deal with the Hyatt applications that includes responding to appeals within six months. At the time that case came down – Nov 2015 – only 2 of the 80 cases were finally rejected following the 2013 requirement. Less than seven months later – in June, 2016 – Hyatt files a Nevada case, arguing that the Office can’t withdraw from appeals.

    So how did he know the office was withdrawing from appeals? He didn’t, of course, as the cases hadn’t gone final, let alone get appealed, let alone have the appeal responded to, yet. He was complaining about withdrawing from appeals *pursuant to the claims changing due to the restriction requirement.* The instant case is his attempting to get a second bite at the apple by getting the entire appeal section thrown out. So he couldn’t get the requirement ruled invalid, he couldn’t make the office continue examining without enforcing the requirement, he couldn’t get a court to say that the withdrawing from appeal following the requirement was improper, he couldn’t get the PTO to rewrite the MPEP to have prevented the withdrawing, and he couldn’t get a court to force the PTO to rewrite the MPEP to prevent the withdrawing. That’s a lot of work to avoid having to comply with the requirement.

    In short (and again, this is all public record) prior to 2013 there was no complaint of delay. Then in 2013 the office performs an act which a court has determined to be valid, which has the effect of forcing Hyatt to prosecute his application with a reasonable number of claims or explain why he needs more and cut through the vagueries of the effective filing date. In response to his requirement, Hyatt takes 5 separate actions to attack the office’s requirement, sometimes framing the issue as the office “delaying” examination of his invention, none of which result in a holding that the office had delayed, was delaying, was being unreasonable, or was overstepping its powers.

    Here’s some unexplained things from the public record: Why is it that the number of claims increased 20x, up to a total of 115k claims? Why is it there was no case complaining of the multiple suspensions that happened in the mid 2000s as he was filing suits? Why are all of the specifications so large, and why do they cross reference each other? Why are thousand page briefs filed in appeals?

  4. 3

    … talk about an inventor willing to fight the good fight for what is right …

  5. 2

    The PTO has not handled this well.

    1. 2.1

      Contrast with this decision written by the CAFC – there is meticulous handling of details and issues (no doubt, spurred at least in part by knowledge that one of the parties WILL persevere as long as possible).

  6. 1

    If Hyatt gives me $20 million dollars I guarantee him that he will have his patent in ten years.

    On the other hand, if someone gives me just $5 million dollars I will gladly ensure that Gil Hyatt is remembered by every patent attorney for the next one hundred years as the irredeemable schm uck that he is.

    Dude needs to get a life.

    1. 1.1

      For another $10 million I can get Gil his cr @ppy patent in three years, maybe two.

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