May 06, 2013

Advantages of challenging USPTO decisions in the EDVA

Stites & Harbison, May 6, 2013

by Stites & Harbison, PLLC

The America Invents Act, enacted Sept. 16, 2011. makes the U.S. District Court for the Eastern District of Virginia (“EDVA”) a primary trial court for challenging decisions of the U.S. Patent and Trademark Patent Office. Under the AIA, the following will all now be litigated in the EDVA:

  1. adverse decisions of the USPTO on patentability under 35 U.S.C. § 145,
  2. adverse decisions of the USPTO in derivation proceedings under 35 U.S.C. § 146,
  3. decisions of the USPTO on patent term adjustments under 35 U.S.C. § 154(b)(4), and
  4. adverse trademark decisions of the USPTO under 15 U.S.C. § 1071(b).

For three reasons, the advantages of the EDVA cannot be overstated. First, the EDVA, colloquially referred to as the “rocket docket,” has the shortest average time (12.1 months) among all federal district courts from filing to disposition for civil cases. Second, the judges in the EDVA are well versed in patent and trademark law. Third, as explained below, in the EDVA, the parties can introduce a wider range of evidence than is possible in the Court of Appeals for the Federal Circuit.

Challenging Adverse Decisions of the PTO on Patentability (35 U.S.C. § 145)

A patent applicant who appeals a USPTO examiner’s denial to the Patent Trial and Appeal Board1 under 35 U.S.C. § 134(a) and is “dissatisfied with the decision” of the board may either appeal to the Federal Circuit under 35 U.S.C. § 141 or bring a civil action against the director of the USPTO in the EDVA under 35 U.S.C. § 145. Specifically, Section 145 provides that:

An applicant dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a) may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director in the United States District Court for the Eastern District of Virginia … . The court may adjudge that such applicant is entitled to receive a patent for his invention, as specified in any of his claims involved in the decision of the Board of Patent Appeals and Interferences, as the facts in the case may appear and such adjudication shall authorize the Director to issue such patent in compliance with the requirements of law.

The Federal Circuit's review in a § 141 appeal is expressly limited to the record before the board. See 35 U.S.C. §141(d) (“the Board’s decision shall govern the further proceedings in the case”). A civil action under §145, however, is not so limited.

The scope of evidence that a district court could consider under a § 145 proceeding was enlarged on April 18, 2012, when the United States Supreme Court issued a unanimous decision in Kappos v. Hyatt, 132 S. Ct. 1690 (2012). In that decision, the Supreme Court affirmed the Federal Circuit’s en banc decision that evidence not submitted to the USPTO during patent prosecution is admissible in a civil action brought under 35 U.S.C. § 145, subject only to the limitations imposed by the Federal Rules of Evidence and the Federal Rules of Civil Procedure. See Hyatt, 132 S.Ct. at 1701-02. The court confirmed that the district court does not merely defer to the board’s decision but must make a de novo finding of patentability when “new evidence is presented on a disputed question of fact.” Id. at 1702. In doing so, the Supreme Court rejected Kappos’ suggestion that §145 proceedings “should be governed by the deferential principles of agency review.” Id. at 1697.

The Supreme Court’s decision in Hyatt effectively rejects what had become standing practice by the courts to limit new evidence in § 145 actions to that which could not have been reasonably provided to the USPTO during prosecution of the patent application. Accordingly, expert testimony, demonstrations, or fact witness testimony, which would have previously been excluded, are now not only admissible, but, as noted above, require the district court to make a de novo finding. Id. at 1700.

Recently, Judge Anthony Trenga offered a glimpse into how judges in the EDVA view §145 actions. In BTG Int’l Ltd. v. Kappos, 2012 U.S. Dist. LEXIS 173334, Civ. Act. No. 1:12-cv-00682 (E.D. Va. Dec. 6, 2012) the USPTO argued that 37 C.F.R. § 41.37(c)(1)(iv) (2012) (“Rule 41.37”) — which provides that whenever a patent applicant fails to present to the board any argument specifically directed to the patentability of any specific patent claim or any separate group of claims, the board may, in its discretion, determine the patentability of all claims based solely on a representative claim — restricted the issue of patentability in a subsequent § 145 civil action to the patentability of the “representative claim” considered by the board. Id. at *14-15.2

Judge Trenga held that Rule 41.37 does not restrict the broad scope of a § 145 action. Id. at *15. He observed that while Rule 41.37 authorizes an administrative consolidation of all claims into a single “representative claim” in an appellate proceeding before the board, the § 145 action was not part of that concluded administrative proceeding. Id.

The subsequent civil action was not an appeal, but rather a separate, independent action, and thus Rule 41.37 could not restrict the patent claims or evidence considered by the district court. Id. Judge Trenga rejected the USPTO’s contention that BTG could not offer evidence on “new issues or arguments not made before the Board.” Id. at *19. Calling “new arguments” nothing more than facts not considered by the board, Judge Trenga held that Hyatt entitled BTG “to present all admissible evidence under the rules of evidence as to all claims, whether or not that evidence was first presented to the Board.” Id. at *20.3

Challenging An Adverse Decision of the USPTO in Derivation Proceedings (35 U.S.C. § 146)

The AIA now provides a new proceeding meant to address situations where a named inventor derived the invention from another, known as a derivation proceeding. See 35 U.S.C. § 135. Unless both of the adverse parties elect to proceed to the CAFC, a remedy can be sought by the dissatisfied party against any party in interest by a civil action in a United States district court. If there are adverse parties residing in a plurality of districts not embraced within the same state, or an adverse party residing in a foreign country, then the EDVA shall have exclusive jurisdiction over such a civil action.4

Challenging a USPTO Decision on Patent Term Adjustment (35 U.S.C. § 154(b)(4))

A challenge to a decision on PTA must be made by a civil action, the exclusive jurisdiction for which is the EDVA. There are two types of PTAs, namely one that guarantees prompt USPTO responses (so called “Type A”) and another that guarantees no more than three years of patent application pendency (so called “Type B”). There is currently a split within the EDVA as to the correct way to calculate Type B PTA.5

Challenging an Adverse Trademark Decision of the USPTO Trademark Trial and Appeal Board (15 U.S.C. § 1071(b)

In an ex parte case, the sole party challenging the TTAB decision may appeal to the Federal Circuit or file a civil action against the USPTO in any United States district court. However, if the TTAB proceeding was an inter partes case and all adverse parties do not agree to proceed to the Federal Circuit, then a dissatisfied party can bring a civil action against a party at interest in a United States district court. If there are adverse parties residing in a plurality of districts not within the same state or an adverse party residing in a foreign country, then the EDVA shall have exclusive jurisdiction over such civil action.

1Known prior to AIA as the Board of Patent Appeals and Interferences

2As District Judge Leonie Brinkema recently joked: “We are all becoming patent examiners.”

3However, as Disney Enterprises recently discovered, discovery in Section 145 litigation is not a free-for-all. On Feb. 11, 2013, Judge Brinkema granted the USPTO’s motion in limine to exclude the supplemental opinion of Disney Enterprise’s expert witness. Disney Enters. Inc. v. Kappos, 2013 U.S. Dist. LEXIS 17977 (E.D. Va. Feb. 11, 2013). Not surprisingly — at least to those who regularly practice in the Eastern District of Virginia — Judge Brinkema held that although the supplemental report and additional documents were produced during the discovery period, they were not timely because they were produced after the deadlines for expert disclosures set by the parties’ discovery schedule. Id. at *14.

4The AIA now provides three new “trial” proceedings before the USPTO, namely inter partes review, post grant review, and the transitional program for covered business method patents. However, unlike appeals of derivation proceedings, the exclusive venue for appeals of these trial procedures is the Federal Circuit. See 35 U.S.C. § 141.

5Judges Brinkema and Ellis have written two opinions that differ on the calculation of a patent term adjustment for the time that a request for continuing examination was under consideration, regardless of when the RCE was filed. Compare Exelixis Inc. v. Kappos, No. 1:12-cv-574, 2013 U.S. Dist. LEXIS 11173 (E.D. Va. Jan. 28, 2013) (Brinkema, J.) with Exelixis Inc. v. Kappos, No. 1:12-cv-96, 2012 U.S. Dist. LEXIS 157762 (E.D. Va. Nov. 1, 2012) (Ellis, J.).

The opinions expressed are those of the author and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.