849 F.2d 1422 (Fed. Cir. 1988), 88-1202, Ethicon, Inc. v. Quigg

Docket Nº:Appeal No. 88-1202.
Citation:849 F.2d 1422
Party Name:7 U.S.P.Q.2d 1152 ETHICON, INC., Plaintiff-Appellant, v. Donald J. QUIGG, Commissioner of Patents & Trademarks and the United States Patent & Trademark Office, Defendants-Appellees.
Case Date:June 15, 1988
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit

Page 1422

849 F.2d 1422 (Fed. Cir. 1988)

7 U.S.P.Q.2d 1152

ETHICON, INC., Plaintiff-Appellant,

v.

Donald J. QUIGG, Commissioner of Patents & Trademarks and

the United States Patent & Trademark Office,

Defendants-Appellees.

Appeal No. 88-1202.

United States Court of Appeals, Federal Circuit

June 15, 1988

Page 1423

David E. Schmit, of Frost & Jacobs, Cincinnati, Ohio, argued, for plaintiff-appellant. With him on the brief, was Ronald J. Snyder.

John C. Martin, Associate Sol., Arlington, Va., argued, for defendants-appellees. With him on the brief, was Fred E. McKelvey, Sol.

Before RICH, NIES, and MAYER, Circuit Judges.

OPINION

MAYER, Circuit Judge.

Ethicon, Inc. appeals from a grant of summary judgment by the United States District Court for the Eastern District of Virginia, 5 USPQ2d 1138 (1987), holding that the Commissioner of Patents and Trademarks has the authority to stay a patent reexamination proceeding pending the outcome of a case in another district court involving allegations that the same patent is invalid. We reverse.

Background

U.S. Patent No. 3,499,591 ('591), covering a particular construction for a surgical stapler, was issued to David T. Green in 1970, and he assigned it to the United States Surgical Corporation (USSC). In January of 1981, USSC filed suit in the United States District Court for the District of

Page 1424

Connecticut against three parties unrelated to our case, alleging infringement of four patents, including the '591 patent. The defendants there argue the '591 patent is invalid. The parties in our case do not agree on which claims of the '591 patent are before the Connecticut court, but this does not affect our disposition. The trial in Connecticut was completed in September 1987 and a decision is pending.

In April 1986, USSC sued Ethicon in the United States District Court for the Southern District of Ohio alleging that Ethicon has infringed the '591 patent and a design patent. Ethicon denies infringement and claims the '591 patent is invalid. Again, the parties do not agree which claims are at issue in Ohio but, as with the Connecticut case, it does not matter.

Pursuant to 35 U.S.C. Secs. 301-307, on March 12, 1987, Ethicon filed a request with the Patent and Trademark Office (PTO) to reexamine the validity of claims 1-5, 8, 9, and 20 of the '591 patent in view of prior art patents and publications not previously considered by the PTO. The following day, Ethicon asked the Ohio court to stay that litigation pending resolution of the reexamination. The district court denied the request but said, "If and when the Patent Office moves relating to the validity of any of the patents in dispute, at that time this matter can be re-examined."

The PTO granted Ethicon's reexamination request on May 21, 1987, stating, "A substantial new question of patentability affecting Claims 1-5, 8, 9, and 20 of United States Patent Number 3,499,591 to Green is raised...." As a result, on June 3, Ethicon moved the Ohio court to reconsider its decision denying a stay, which was denied as "premature" because "no final determination" of the reexamination had been made.

In August, USSC filed its statement on the PTO's decision to initiate a reexamination in accordance with 35 U.S.C. Sec. 304, and Ethicon filed a reply. Thereafter, under the Manual of Patent Examining Procedure (MPEP) Sec. 2261, the examiner assigned to the reexamination was required to complete a first office action within one month. According to MPEP Sec. 2260, it is "intended" that the examiner's first office action on the merits "be the primary action to establish the issues which exist between the examiner and the patent owner insofar as the patent is concerned."

In early September 1987, USSC filed with the PTO a "Petition to Stay Reexamination Proceeding Pursuant to 37 C.F.R. Sec. 1.565 and MPEP Sec. 2286" of the '591 patent "in deference to an ongoing trial being conducted" in Connecticut. Later in the month, USSC advised the PTO that the Connecticut trial had been completed. According to Ethicon, not all the prior art references involved in the reexamination are before the court in Connecticut, but this is irrelevant to our view of this case.

On October 2, the PTO denied USSC's stay petition because it was untimely under 37 C.F.R. Sec. 1.540. But it nevertheless stayed the reexamination pending the decision of the Connecticut court, relying on MPEP Sec. 2286 which provides in pertinent part:

If reexamination is ordered the reexamination will continue until the [Patent and Trademark] Office becomes aware that a trial on the merits has begun at which time the reexamination proceeding normally will be stayed, sua sponte by the examining group director unless a proper petition to stay has been filed which is not rendered moot by the sua sponte stay.

This procedure is based on 37 C.F.R. Sec. 1.565(b) which states, "If a patent in the process of reexamination is or becomes involved in litigation ..., the Commissioner shall determine whether or not to stay the reexamination...."

Ethicon then filed this suit to enjoin the Commissioner from delaying the reexamination and for a declaratory judgment that the stay of the reexamination proceedings was "unlawful and contrary to the reexamination statute, particularly 35 U.S.C. Sec. 305." The district court denied a temporary restraining order and preliminary injunction, and, on cross-motions for summary judgment, granted summary judgment

Page 1425

for the Commissioner. The court reasoned that "37 C.F.R. Sec. 1.565(b) and MPEP Sec. 2286 are reasonably related to the statute because they promote the statutory purpose of achieving expeditious and efficient (i.e., non-duplication) resolution of patent validity issues." 5 USPQ2d at 1142. On appeal, Ethicon renews its argument that the Commissioner has no authority to stay reexamination pending the outcome of district court litigation.

Discussion

Consistent with its legislative function, Congress "may leave it to administrative officials to establish rules within the prescribed limits of the statute." Patlex Corp. v. Mossinghoff, 758 F.2d 594, 605, 225 USPQ 243, 251 (Fed.Cir.1985) (citing United States v. Grimaud, 220 U.S. 506, 517, 31 S.Ct. 480, 483, 55 L.Ed. 563 (1911)), modified on other grounds, 771 F.2d 480, 226 USPQ 985 (Fed.Cir.1985). In the patent field, Congress has done precisely that by providing that the Commissioner "may, subject to the approval of the Secretary of Commerce, establish regulations, not inconsistent with law, for the conduct of proceedings in the Patent and Trademark Office." 35 U.S.C. Sec. 6(a). In this type of situation, "the validity of a regulation promulgated thereunder will be sustained so long as it is 'reasonably related to the purposes of the enabling legislation.' " Mourning v. Family Publications Service, Inc., 411 U.S. 356, 369, 93 S.Ct. 1652, 1661, 36 L.Ed.2d 318 (1973) (quoting Thorpe v. Housing Authority of Durham, 393 U.S. 268, 280, 89 S.Ct. 518, 525, 21 L.Ed.2d 474 (1969)); see Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694 (1984); Patlex, 758 U.S. at 606, 225 USPQ at 252. The ultimate question here is whether the Commissioner's exercise of authority to stay a reexamination purportedly pursuant to section 6(a) 1 conflicts with the laws governing reexaminations specifically. If it does, it cannot stand.

The PTO conducts its proceedings in accordance with regulations set out in Title 37 of the Code of Federal Regulations, and the MPEP. The MPEP states that it is a reference work on patent practices and procedures and does not have the force of law, but it "has been held to describe procedures on which the public can rely." Patlex, 758 U.S. at 606, 225 USPQ at 252 (citing In re Kaghan, 387 F.2d 398, 401, 55 C.C.P.A. 844, 156 USPQ 130, 132 (1967)). Of course, an agency's interpretation of a statute it administers is entitled to deference, Chevron U.S.A., 467 U.S. at 844, 104 S.Ct. at 2782, but "the courts are the final authorities on issues of statutory construction. They must reject administrative constructions of the statute, whether reached by adjudication or by rulemaking, that are inconsistent with the statutory mandate or that frustrate the policy that Congress sought to implement." FEC v. Democratic Senatorial Campaign Committee, 454 U.S. 27, 32, 102 S.Ct. 38, 42, 70 L.Ed.2d 23 (1981).

"As always, the 'starting point in every case involving construction of a statute is the language itself.' " United States v. Hohri, --- U.S. ----, 107 S.Ct. 2246, 2250, 96 L.Ed.2d 51 (1987) (quoting Kelly v. Robinson, 479 U.S. 36, 107 S.Ct. 353, 358, 93 L.Ed.2d 216 (1986)). Section 302 provides that "[a]ny person at any time may file a request for reexamination by the [Patent and Trademark] Office of any claim of a patent...." (Emphasis added.) "Within three months following the filing of a request for reexamination under the provisions of section 302 of this title, the Commissioner will determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request...." 35 U.S.C. Sec. 303(a). If the Commissioner determines that there is a substantial new question of patentability, the patent will be reexamined. 35 U.S.C. Sec. 304. Section 305 then provides: "All reexamination proceedings under this section, including any appeal to the Board of Patent Appeals and Interferences, will be conducted with special dispatch

Page 1426

ithin the Office." (Emphasis added.) Read together the statutes say: Any person at any time may request reexamination and all reexamination procedures will be conducted with special dispatch. The issue for us is whether "special dispatch" contemplates that a reexamination be suspended pending the outcome of a district court case involving allegations of invalidity of the same patent. We...

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