Burandt v. Dudas

• Decision Date: 12 July 2007
• Docket Number: No. 1:06 CV 1141.,1:06 CV 1141.
• Citation: 496 F.Supp.2d 643
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Corliss O. BURANDT, Plaintiff, v. Jon W. DUDAS, Director of the United States Patent & Trademark Office Defendant.

496 F.Supp.2d 643

Corliss O. BURANDT, Plaintiff, v. Jon W. DUDAS, Director of the United States Patent & Trademark Office Defendant.

No. 1:06 CV 1141.

United States District Court, E.D. Virginia, Alexandria Division.

July 12, 2007.

David Michael Young, Goodwin Procter LLP, Washington, DC, for Plaintiff.

Dennis Carl Barghaan, Jr., United States Attorney's Office, Alexandria, VA, for Defendant.

MEMORANDUM OPINION

HILTON, District Judge.

This matter comes before the Court on cross motions for summary judgment. Plaintiff Corliss Burandt filed a Complaint in this Court on October 10, 2006, seeking judicial review under the Administrative Procedures Act ("APA"), 5 U.S.C. §§ 701 et seq. (2000), challenging a decision made by Defendant Jon W. Dudas, Director of the United States Patent and Trademark Office (USPTO) and Undersecretary of the Department of Commerce for Intellectual Property, denying Plaintiffs petitions to reinstate United States Patent No. 4,961,406 (the '406 patent). In the Complaint, Plaintiff claims that he adequately showed that the delay in payment of the patent maintenance fee was "unavoidable" under 35 U.S.C. § 41(c)(1) (2000), and thus, Plaintiff is entitled to reinstatement of the '406 patent. In the Complaint, Plaintiff also petitions this Court for a writ of mandamus to compel Defendant to reinstate the '406 patent, alleging that Defendant's refusal to reinstate the '406 patent was arbitrary, capricious, and an abuse of discretion. Both Plaintiff and Defendant now move this Court for summary judgment.

Plaintiff Corliss Burandt is a United States citizen and resident of Minnetonka, Minnesota. Plaintiff claims that he is the sole inventor of the '406 patent as well as the current assignee, and the legal and equitable title holder of the '406 patent, a "Method and Device for Optimizing the Air-Fuel Mixture Burn Rate of Internal Combustion Engines During Low Speed, Light and Heavy Load Operating Conditions," issued on October 9, 1990, from U.S. Patent Application No. 07/1778,467, filed on April 7, 1988.

Defendant Jon W. Dudas is the Director of the USPTO and Undersecretary of the Department of Commerce for Intellectual Property. The USPTO is a federal agency within the United States Department of Commerce, located in Alexandria, Virginia in the judicial district of the Eastern District of Virginia, Alexandria Division. This Court has jurisdiction over the subject matter pursuant to the APA, 5 U.S.C. §§ 701 et seq. and federal question jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1361 (2000).

In September 1980, Plaintiff designed engines for Investment Rarities Incorporated (IRI), a Minnesota company. On August 4, 1981, Plaintiff voluntarily entered into an assignment agreement with IRI which provided that IRI would fund Plaintiff's research and development of engine designs and, in return, any and all patent applications and patents developed using IRI's funds would become the property of IRI. As compensation, Plaintiff would receive twenty-eight percent of the net profits derived from such patents. The agreement further provided that Plaintiff could repurchase the patents from IRI if certain prerequisites were met, including IRI's notice that it would no longer fund Plaintiff's research and that any funded project was not substantially completed. Pursuant to the agreement, Plaintiff developed and assigned to IRI the '406 patent.

At that time, the maximum term allowable for the '406 patent was seventeen years from the date of issuance, To prevent the '406 patent from expiring prematurely, IRI, the legal title holder, was required to pay maintenance fees to the USPTO at three-and-a-half, seven-and-a-half, and eleven-and-a-half years from the date of issuance. The '406 patent issued on October 9, 1990. IRI's first maintenance fee was due on April 9, 1994, but could be paid up to six months late with a surcharge. See 35 U.S.C. § 41(b). IRI did not pay or attempt to pay the three-and-a-half year maintenance fee and, as such, the '406 patent expired on October 9, 1994.

According to Plaintiff, he first learned that the '406 patent expired seven years later, in December 2001, when Plaintiff read an article regarding the introduction of a variable valve engine by Honda. Plaintiff claims that at this time, he contacted the USPTO to confirm that all was in order with his patents. Plaintiff concedes and the administrative record confirms that Plaintiff made no attempt to contact the USPTO or IRI at any time during the ten years between the issuance of the '406 patent and December 2001, let alone at any time prior to the date on which the initial or second maintenance fees were due, even to inquire as to whether IRI had paid the maintenance fees associated with the patent.

Plaintiff maintains that after discovering that the '406 patent had expired, Plaintiff sought and regained legal title to the patent from IRI on May 21, 2002. On October 9, 2005, more than eleven years after the deadline for paying the initial three-and-a-half-year maintenance fee, more than nine years after the period for reinstating the patent under the less strict "unintentional delay" standard,¹ and more than three years after Plaintiff regained title, Plaintiff attempted to pay the requisite maintenance fees and reinstate the '406 patent under the more stringent "unavoidable delay" standard.

In total, Plaintiff filed four petitions, making the same arguments for reinstatement of the '406 patent in each petition. In his petitions, Plaintiff did not present any evidence that IRI had taken any steps to pay maintenance fees in the '406 patent nor did Plaintiff explain the reasons behind IRI's failure to pay the fees or that any delay on IRI's part was "unavoidable." Instead, Plaintiff argued that he should not be bound by the acts of the prior assignee, IRI, because Plaintiff maintained equitable title in the '406 patent. In support of this argument, Plaintiff produced letters demonstrating that he and his attorney had contacted IRI between 1988 and 1990 in an attempt to exercise Plaintiff's repurchase option under the assignment agreement. Plaintiff asserted that he was unable to pursue court action to regain title of the '406 patent over the next twelve years because of lack of funding. In short, Plaintiff asked the USPTO to ignore the actions of the legal title owner, IRI, and to instead focus solely on his actions as the alleged equitable title owner in determining whether to reinstate the '406 patent.

Building on this premise, Plaintiff next argued that any delay on his part, as the alleged equitable title holder, was "unavoidable" based on his financial status and mental illness. Plaintiff proffered financial records to show that he lacked sufficient financial capacity at the time that the maintenance fees in the '406 patent first came due, and for some period thereafter. Plaintiff also produced declarations from his psychiatrist to show that he suffered from an anxiety disorder which, in his psychiatrist's opinion, would allow Plaintiff to "provide effective assistance to counsel in proceeding before the USPTO only provided that counsel was patient and properly focused on the relevant inquiries." Finally, Plaintiff asserted that, beginning in December 2001, after Plaintiff learned the '406 patent expired, Plaintiff made several attempts with attorneys, congressional leaders, automobile manufacturers, and the press to get legal and financial assistance to reinstate the expired '406 patent.

The USPTO issued three decisions in this matter, the first two dismissing Plaintiff's petitions and the last denying his final petition. In its decisions, the USPTO explained that the evaluation of a petition to reinstate a patent under the "unavoidable delay" standard looks to three time frames: (1) the delay that originally resulted in the expiration, (2) the delay in filing the first petition to reinstate, and (3) the delay in filing a grantable petition to reinstate. Consistent with the Federal Circuit's decision in Ray v. Lehman, 55 F.3d 606 (Fed.Cir.1995), the USPTO interpreted 35 U.S.C. § 41(c) and its own regulation, 37 C.F.R. § 1.378(b)(3)(2006) as follows:

[A]n adequate showing that the delay in payment of the maintenance fee at issue was "unavoidable" within the meaning of 35 U.S.C. § 41(c) and 37 C.F.R. [§] 1.378(b)(3) requires a showing of the steps taken by the responsible party to ensure the timely payment of the [first] maintenance fee for this patent.

The USPTO's evaluation, therefore, focused on the activities of the responsible party in each of the relevant time periods.

With regard to the first time period, the USPTO found that, as the legal title holder, IRI was responsible for paying the three-and-a-half year maintenance fee for the '406 patent, but failed to do so. The USPTO reminded Plaintiff that, under 35 U.S.C. § 41(c), Plaintiff has the burden of establishing the cause of the "unavoidable delay," and then found that Plaintiff failed to present any evidence that steps were taken by or on behalf of IRI to ensure timely payment of the three-and-a-half year maintenance fee. The USPTO also cautioned Plaintiff that, in the absence of adequate evidence showing that IRI transferred its obligation to pay the requisite fees to Plaintiff at the time the first maintenance fee came due in 1994, Plaintiff must show that IRI had measures in place to make the fee payment but was "unavoidably" prevented from doing so. According to the USPTO, Plaintiff failed to make such a showing.

Turning to the last two periods of delay, the USPTO noted that Plaintiff waited four years after Plaintiff learned that the '406 patent expired to file his petition to reinstate. Although the USPTO expressed sympathy for Plaintiffs unfortunate financial and mental condition during this time period, the USPTO observed that, for mental illness to constitute "unavoidable delay" under § 1.378(b), the incapacitation must be "of such a...