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Teles Ag, et al v. David J. Kappos

March 5, 2012

TELES AG, ET AL.,
PLAINTIFFS,
v.
DAVID J. KAPPOS, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY AND DIRECTOR, UNITED STATES PATENT AND TRADEMARK OFFICE,
DEFENDANT.



The opinion of the court was delivered by: Judge Beryl A. Howell

MEMORANDUM OPINION

This suit, arising out of the United States Patent and Trademark Office's (the "PTO") rejection of claims 34-36 and 38 of U.S. Patent No. 6,954,453 B1, presents a question of statutory construction that has not yet been addressed by this or other Circuits. The plaintiffs are patent owners, TELES AG and Sigram Schindler Beteiligungsgesellschaft mbH (collectively, "Teles"), who brought suit under section 306 of the Patent Act, 35 U.S.C. § 306, against David J. Kappos, Under Secretary of Commerce for Intellectual Property and Director of the PTO, in his official capacity, to contest an adverse decision of the PTO's Board of Patent Appeals and Interferences (the "BPAI"). The defendant has moved to dismiss the Complaint, arguing that this Court lacks subject matter jurisdiction, because, following amendments to the Patent Act in 1999, "patent owners" may appeal adverse ex parte reexamination decisions by the BPAI only to the United States Court of Appeals for the Federal Circuit and may not file a civil action in this Court.*fn1 For the reasons explained below, the defendant's Motion to Dismiss is granted and this case shall be transferred to the U.S. Court of Appeals for the Federal Circuit pursuant to 28 U.S.C. § 1631.*fn2

I.BACKGROUND

A. Statutory Framework

At issue in this case is the import of amendments made in 1999 to certain provisions of the Patent Act and how those amendments affect the right of a patent owner to seek judicial review following an ex parte reexamination proceeding. The plaintiffs claim the 1999 amendments are either irrelevant or merely "housekeeping" measures while the defendant claims these amendments were substantive and removed jurisdiction from this Court. Review of the statutory framework, including the chronology of amendments made to key provisions, helps to inform resolution of these divergent characterizations of the 1999 amendments.

In 1980, Congress created the reexamination system to allow patent owners or a third-party requester to confirm or challenge a patent. This newly created reexamination system "enabled the PTO to recover administrative jurisdiction over an issued patent in order to remedy any defects in the examination which that agency had initially conducted and which led to the grant of the patent," and served "an important public purpose . . . to revive United States industry's competitive vitality by restoring confidence in the validity of patents issued by the PTO." Patlex Corp. v. Mossinghoff, 758 F.2d 594, 601 (Fed. Cir. 1985). Among the anticipated benefits of the reexamination process were to "settle validity disputes more quickly and less expensively than the often protracted litigation involved in such cases;" "allow courts to refer patent validity questions to the expertise of the Patent Office;" and "reinforce investor confidence in the certainty of patent rights by affording the PTO a broader opportunity to review doubtful patents." Id. at 602 (citations and quotation marks omitted). According to a report from the House of Representatives that accompanied the 1980 legislation: "Reexamination will permit efficient resolution of questions about the validity of issued patents without recourse to expensive and lengthy infringement litigation." H. R. Rep. 96-1307(I), at 3-4 (1980), reprinted in 1980 U.S.C.C.A.N. 6460, 6463. In brief, "[t]he reexamination statute permits the patent owner or any other person to (1) cite to the Office patents or printed publications as prior art pertaining to the validity of an issued patent, and (2) request that the Office re-examine any claim of that patent on the basis of the cited prior art." H. R. Rep. No. 105-39, at 36 (1997).

The plaintiffs bring their claims under section 306 of the Patent Act, 35 U.S.C. § 306, the text of which remained the same from 1980, when the reexamination process was created, until recent amendments made in 2011.*fn3 Prior to the 2011 amendments, section 306 stated, in its entirety:

The patent owner involved in a reexamination proceeding under this chapter may appeal under the provisions of section 134 of this title, and may seek court review under the provisions of sections 141 to 145 of this title, with respect to any decision adverse to the patentability of any original or proposed amended or new claim of the patent.

35 U.S.C. § 306 (2006); see Compl. ¶ 14.

The reexamination system was perceived to have "only limited success." S. Rep. No.

105-42, at 57 (1997). Congress, therefore, responded with periodic amendments to make the reexamination process "a truly viable alternative for resolving questions of patent validity." S. Rep. No. 110-259, at 19 (2008). In 1999, Congress enacted the American Inventors Protection Act ("AIPA"), Pub. L. No. 106-113, 113 Stat. 1501 (1999), as part of the Intellectual Property and Communications Omnibus Reform Act of 1999, which resulted in amendments to the Patent Act and created an inter partes reexamination system to supplement the existing reexamination process.*fn4 While the 1999 amendments did not explicitly alter section 306, the 1999 amendments resulted in changes to sections 134, 141, and 145, parts of the Patent Act referenced in section 306.*fn5 These three sections, all part of the 1952 Patent Act, had not been revised in any way at the time of the creation of the reexamination system in 1980 and, until 1999, only specifically referenced "patent applicants," not "patent owners." The changes made to these three sections 134, 141 and 145 are discussed in detail below.

Provisions for administrative appeal of an initial examination of a patent application or a reexamination are provided for in 35 U.S.C. § 134, which was subject only to a minor change in 1984 before it was amended in 1999. Before the 1999 amendments, section 134 read in full: "An applicant for a patent, any of whose claims has been twice rejected, may appeal from the decision of the primary examiner to the Board of Patent Appeals and Interferences, having once paid the fee for such appeal." 35 U.S.C. § 134 (1994). That section was updated in the 1999 amendments to enumerate three separate categories of parties who may appeal to the BPAI and expressly referenced for the first time the reexamination process created in 1980 and the new inter partes proceedings created with the 1999 amendments. After the 1999 amendments, section 134 read in full:

(a) Patent applicant.--An applicant for a patent, any of whose claims has been twice rejected, may appeal from the decision of the primary examiner to the Board of Patent Appeals and Interferences, having once paid the fee for such appeal.

(b) Patent owner.--A patent owner in any reexamination proceeding may appeal from the final rejection of any claim by the primary examiner to the Board of Patent Appeals and Interferences, having once paid the fee for such appeal.

(c) Third-party.--A third-party requester in an inter partes proceeding may appeal to the Board of Patent Appeals and Interferences from the final decision of the primary examiner favorable to the patentability of any original or proposed amended or new claim of a patent, having once paid the fee for such appeal.

35 U.S.C. § 134 (2006) (emphasis in original).

The rights for either patent owners or patent applicants to appeal from an adverse BPAI

decision to the Court of Appeals for the Federal Circuit are enumerated in sections 141 to 144. Similarly to section 134, before the 1999 amendments, section 141 had been subject to only minor revisions since 1952 and did not specifically reference "patent owners." According to the relevant part of the version of section 141 in place prior to the 2011 amendments:

An applicant dissatisfied with the decision in an appeal to the Board of Patent Appeals and Interferences under section 134 of this title may appeal the decision to the United States Court of Appeals for the Federal Circuit. By filing such an appeal the applicant waives his or her right to proceed under section 145 of this title. A patent owner, or a third-party requester in an inter partes reexamination proceeding, who is in any reexamination proceeding dissatisfied with the final decision in an appeal to the Board of Patent Appeals and Interferences under section 134 may appeal the decision only to the United States Court of Appeals for the Federal Circuit.

35 U.S.C. § 141 (2006) (emphasis added).*fn6

As with sections 134 and 141, before the 1999 amendments, section 145 had only been

subject to minor revisions since 1952. Section 145 was also updated in the 1999 amendments but, by contrast to sections 134 and 141, no express reference to patent owners was added. Instead, section 145 was amended to confirm an express application to patent applicants. Specifically, the only change to section 145 made in 1999 was to limit the reference to § 134 to "§ 134(a)," the section pertaining exclusively to patent applicants. Section 145, in relevant part, provides that "[a]n applicant dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a) of this title 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 District of Columbia . . . ." 35 U.S.C. § 145 (2006) (emphasis added). Unlike an appeal to the Federal Circuit, plaintiffs bringing a "civil action" under 35 U.S.C. § 145 are not limited to the record made before the PTO but may undertake discovery and introduce new evidence. See Compl. ¶ 16.

As noted, in 1999, when sections 134 and 141 were changed to specifically reference patent owners, section 145 continued to reference only "patent applicants." A patent applicant thus has two ways of appealing an adverse decision of the BPAI on a patent application. The applicant may appeal directly to the United States Court of Appeals for the Federal Circuit. See 35 U.S.C. § 141 (2006) ("An applicant dissatisfied with the decision in an appeal to the [BPAI] under section 134 of this title may appeal the decision to the United States Court of Appeals for the Federal Circuit."). The patent applicant may also bring a civil action under 35 U.S.C. § 145 (2006) ("An applicant dissatisfied with the decision of the [BPAI] in an appeal under section 134(a) of this title 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 District of Columbia . . . .").

The defendant argues that, following the 1999 amendments, this Court has no jurisdiction over the claims of patent owners because the 1999 amendments changed section 145 to refer specifically to 35 U.S.C. § 134(a), which pertains only to patent applicants, not patent owners. Def.'s Mem. at 7. The defendant further argues that 35 U.S.C. § 306 allows a party to seek judicial review only to the extent that it is allowable under the provisions of section 134 and sections 141 to 145. Id. at 9. Thus, the defendant argues, section 306 cannot provide this Court jurisdiction to review a patent owner's ...


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