Patlex Corp. v. Mossinghoff

• Citation: 771 F.2d 480,226 U.S.P.Q. 985
• Decision Date: 20 August 1985
• Docket Number: No. 84-699,84-699
• Parties: PATLEX CORPORATION, et al., Appellants, v. Gerald J. MOSSINGHOFF, et al., Appellees. Appeal
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 480

771 F.2d 480

226 U.S.P.Q. 985

PATLEX CORPORATION, et al., Appellants, v. Gerald J. MOSSINGHOFF, et al., Appellees.

Appeal No. 84-699.

United States Court of Appeals Federal Circuit.

Aug. 20, 1985.

Alan J. Davis, Wolf, Block, Schorr and Solis-Cohen, Philadelphia, Pa., argued for appellants. With him on the brief was Jeffrey S. Saltz.

John F. Pitrelli, Associate Solicitor, U.S. Patent & Trademark Office, Arlington, Va., argued for appellee. With him on the brief were Joseph F. Nakamura, Solicitor and John W. Dewhirst, Washington, D.C.

Edward M. Posner, Drinker, Biddle & Reath, Philadelphia, Pa., argued for appellee Control Laser. With him on the brief were Stewart Dalzell and Wilson M. Brown, III, Philadelphia, Pa.

Robert W. Duckworth, Duckworth, Allen, Dyer, & Pettis, P.A., of Orlando, Fla., of counsel.

Before MARKEY, Chief Judge, and FRIEDMAN and NEWMAN, Circuit Judges.

PAULINE NEWMAN, Circuit Judge.

ON PETITION FOR REHEARING

Appellants Patlex Corporation and Gordon Gould (herein referred to collectively as Gould) request rehearing of the court's decision of March 7, 1985. Patlex Corp. v. Mossinghoff, 758 F.2d 594, 225 USPQ 243 (Fed.Cir.1985). We deny the petition to the extent that it relates to our affirmance of the district court's decision that 35 U.S.C. Secs. 301-307, applied retroactively, do not violate the Fifth Amendment, or the Seventh Amendment, or Article III of the Constitution; that 35 U.S.C. Sec. 282 does not apply to reexamination; and that Manual of Patent Examining Procedure (MPEP) Sec. 2286 does not violate statutory and constitutional restraints.

We grant the petition to the extent that it relates to Gould's challenge to certain other rules and regulations, viz. 37 C.F.R. Secs. 1.26(c) and 1.530(a) and MPEP Secs. 2240 and 2244. The district court's judgment upholding these provisions, 585 F.Supp. 713, which we vacated on the premise that Gould lacked standing to challenge them, is reinstated. With respect to that judgment, we affirm in part and reverse in part.

I.

Reference is made to the court's opinion at 758 F.2d 596-98, 225 USPQ 244-46, for the history of this case. At that time we affirmed the district court's decision on Gould's challenge to the constitutional and statutory validity of certain laws and regulations governing reexamination, which Gould had standing to challenge since he had protectible rights which would be affected by our decision. Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 152-54, 90 S.Ct. 827, 829-30, 25 L.Ed.2d 184 (1970); Barlow v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970); see also L. Tribe, American Constitutional Law 80 & n. 4 (1978).

Those regulations and rules on which the court declined to rule relate to the threshold determination by the Patent and Trademark Office (PTO) of whether to grant a request for reexamination. The Commissioner of Patents and Trademarks had advised the court that Gould had conceded that a substantial new question of patentability existed with respect to U.S. Patents Nos. 4,053,845 and 4,161,436, the two Gould patents then undergoing reexamination. This concession was purportedly made to perfect Gould's right to conduct a facial challenge to the reexamination statute prior to exhaustion of the administrative process governing his patents undergoing reexamination. On this basis we held that Gould lacked standing to challenge the legitimacy of the provisions governing the threshold determination, because a decision on their validity or invalidity could have no effect on Gould's situation. Warth v. Seldin, 422 U.S. 490, 502, 95 S.Ct. 2197, 2207, 45 L.Ed.2d 343 (1975) ("Petitioners must allege and show that they personally have been injured"); Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962).

By this petition Gould asserts that he made no concession before either the district court or the Patent and Trademark Office as to the correctness of this threshold determination, for any purpose. The Commissioner now agrees with Gould on this point. We have reviewed the record, and conclude that Gould is correct concerning the absence of such concession and of the need for it. We hold, therefore, that Gould has standing to challenge the lawfulness and constitutionality of 37 C.F.R. Secs. 1.26(c) and 1.530(a) and MPEP Secs. 2240 and 2244.

II.

The PTO's initial determination whether to grant a request for reexamination is required by 35 U.S.C. Sec. 303, which provides in part:

Within three months following the filing of a request for reexamination ... the Commissioner will determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request....

Congress in performance of its legislative functions may leave it to administrative officials to establish rules within the prescribed limits of the statute. United States v. Grimaud, 220 U.S. 506, 517, 31 S.Ct. 480, 483, 55 L.Ed. 563 (1911). A statute that is valid on its face may nevertheless be administered in such a way that constitutional or statutory guarantees are violated. As summarized in L. Jaffee, Judicial Control of Administrative Action 321-22 (1965), the availability of judicial review is essential to the integrity of our system of government; it is "the necessary premise of legal validity". Judicial review of administrative action also serves to protect and preserve the separation of powers, a function clarified early in our nation's history. Marbury v. Madison, 5 U.S. (1 Cranch) 137, 176, 2 L.Ed. 60 (1803).

The challenged regulations and rules all relate to implementation of 35 U.S.C. Sec. 303 37 C.F.R. Sec. 1.530(a)

In accordance with this regulation, the patentee is barred from communicating with the PTO during the three-month statutory period during which the PTO is required to decide whether any substantial new question of patentability is raised by a reexamination request. Gould emphasizes that the PTO must rely solely on the representations of the person who requested reexamination, without opportunity for any explanation or correction by the patentee. The reexamination statute does not prohibit such participation, but 37 C.F.R. Sec. 1.530(a) does:

[N]o statement or other response by the patent owner shall be filed prior to the determinations [of whether a substantial new question of patentability is raised].... If a premature statement or other response is filed by the patent owner it will not be acknowledged or considered in making the determination.

Gould observes that although administrative decision-making may be easier when only one side of an issue is heard, this has never been viewed as justification for silencing the other side.

Gould asserts that the deprivation of the opportunity to be heard at this critical stage violates due process. He contends that due process requires that he should have had at least a minimum opportunity to contribute information to the PTO before its determination was made. This objection is particularly cogent in the context of the PTO's "rule of doubt", required by MPEP Secs. 2240 and 2244.

The Commissioner argues that Sec. 1.530(a) was adopted in the interest of efficiency, in view of the three-month deadline set by Congress in 35 U.S.C. Sec. 303. The PTO points out that the only purpose of this stage of the proceeding is to decide whether reexamination should go forward at all, not to decide how any new question of patentability ultimately will be answered. The Commissioner asserts that the PTO can not accommodate a "flurry of paper" at this stage.

Administrative convenience thus appears to be the sole basis for the rule. Although administrative convenience must be considered, "administrative convenience or even necessity cannot override the constitutional requirements of due process." Cella v. United States, 208 F.2d 783, 789 (7th Cir.1953), cert. denied, 347 U.S. 1016, 74 S.Ct. 864, 98 L.Ed. 1138 (1954); see also Ohio Bell Telephone Co. v. Public Utilities Commission of Ohio, 301 U.S. 292, 304, 57 S.Ct. 724, 730, 81 L.Ed. 1093 (1937).

As stated in Cafeteria & Restaurant Workers Union v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230 (1961), "consideration of what procedures due process may require under any given set of circumstances must begin with a determination of the precise nature of the government function involved as well as of the private interest that has been affected by governmental action". Gould argues that a patent examiner, in processing a hostile request for reexamination, may be unduly influenced by the uncontradicted assertions of the requester, which assertions might not withstand the illumination of even a brief response from the patentee. Gould argues that this threshold decision affects substantial property rights, and should not be made without full hearing, in compliance with the Fifth Amendment.

We consider only whether constitutional due process or the enabling statute requires patentee participation during the initial determination, not whether such participation would be useful or desirable.

A.

Study of the genesis of the reexamination statute leaves no doubt that the major purpose of the threshold determination whether or not to reexamine is to provide a safeguard to the patent holder. As described by then PTO Commissioner Diamond:

[The statute] carefully protects patent owners from reexamination proceedings brought for harassment or spite. The possibility of harassing patent holders is a classic criticism of some foreign reexamination systems and we made sure it would not happen here.

Industrial Innovation & Patent & Copyright Law Amendments: Hearings on H.R. 6933, 6934, 3806, & 214 Before the Subcomm. on Courts, Civil Liberties and the Administration of Justice of the House Comm. on the Judiciary, 96th Cong., 2d Sess. 594 (1980). That is the only purpose of the procedure established by 35 U.S.C. Sec. 303: "carefully" to protect...