Cooper v. Lee

• Decision Date: 18 February 2015
• Docket Number: Case No. 1:14–cv–00672–GBL–JFA.
• Citation: 86 F.Supp.3d 480
• Parties: J. Carl COOPER, et al., Plaintiff, v. Michelle K. LEE, Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

86 F.Supp.3d 480

J. Carl COOPER, et al., Plaintiff

v.Michelle K. LEE, Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office, Defendant.

Case No. 1:14–cv–00672–GBL–JFA.

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

Signed Feb. 18, 2015.

Kristin Anne Martin Zech, Amy Sanborn Owen, Nicholas Valdis Cumings, Brigliahundley PC, Tysons Corner, VA, for Plaintiff.

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

MEMORANDUM OPINION & ORDER

GERALD BRUCE LEE, District Judge.

THIS MATTER is before the Court on Plaintiffs J. Carl Cooper (“Cooper”) and eCharge Licensing, LLC's (“eCharge”) (collectively “Plaintiffs”) Motion for Summary Judgment (Doc. 3) and Defendant Michelle K. Lee's (“Defendant”) Motion for Summary Judgment (Doc. 14). This case arises from Plaintiffs' contention that the United States Patent and Trademark Office's (“PTO”) inter partes review proceedings, which occur before the Patent Trial and Appeal Board (“PTAB”), are unconstitutional as they deprive Plaintiffs of their right to have the matter adjudicated before an Article III tribunal. The issue before the Court is whether Plaintiffs' challenge of inter partes review is properly before the Court. The Court DENIES Plaintiffs' Motion for Summary Judgment (Doc. 3) and GRANTS Defendant's Motion for Summary Judgment (Doc. 14) because Plaintiffs have not exhausted administrative remedies before seeking judicial relief.

I. BACKGROUND

Cooper is an inventor and owner of numerous United States patents. eCharge is an entity that helps inventors license their intellectual property. (Doc. 4 at 2.) Cooper granted eCharge an exclusive license to a number of his patents, including the right to license and, if necessary, file suit against alleged infringers. (Id. )

On September 9, 2013, eCharge filed a Complaint in the United States District Court for the Northern District of Illinois against Square, Inc. (“Square”) for infringement of several Article 1–reviewed patents. (eCharge Licensing LLC v. Square, Inc., Case No. 1:13–cv–06445 (N.D.Ill.)). (Doc. 1 ¶ 23.) eCharge sought both monetary damages and a permanent injunction prohibiting future infringement of the patents, and demanded trial by jury. (Id. ¶ 23.) On November 18, 2013, Square filed a petition to institute an inter partes review of certain claims of the Article 1–reviewed patents under 35 U.S.C. § 311. (Id. ¶ 24.) On January 16, 2014, the United States District Court for the Northern District of Illinois entered a stay of proceedings pending the PTAB's decision in the inter partes review proceeding. (Id. ¶ 25.)

Although Plaintiffs had previously objected to the constitutionality of the inter partes review proceedings, on May 14, 2014, the PTO instituted an inter partes review of the Article 1–reviewed patents under 35 U.S.C. § 314. Plaintiffs are now before the Court contesting the constitutionality of inter partes review.

II. DISCUSSION

A. Standard of Review

Under Federal Rule of Civil Procedure 56, the Court must grant summary judgment if the moving party demonstrates that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).

In reviewing a motion for summary judgment, the Court views the facts in a light most favorable to the non-moving party. Boitnott v. Corning, Inc., 669 F.3d 172, 175 (4th Cir.2012) (citing Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). Once a motion for summary judgment is properly made and supported, the opposing party has the burden of showing that a genuine dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.2003) (citations omitted). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir.2008) (quoting Anderson, 477 U.S. at 247–48, 106 S.Ct. 2505).

A “material fact” is a fact that might affect the outcome of a party's case. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; JKC Holding Co. v. Wash. Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir.2001). Whether a fact is considered to be “material” is determined by the substantive law, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Hooven–Lewis v. Caldera, 249 F.3d 259, 265 (4th Cir.2001).

A “genuine” issue concerning a “material” fact arises when the evidence is sufficient to allow a reasonable jury to return a verdict in the nonmoving party's favor. Res. Bankshares Corp. v. St. Paul Mercury Ins. Co., 407 F.3d 631, 635 (4th Cir.2005) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). Rule 56(e) requires the nonmoving party to go beyond the pleadings and by its own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

B. Analysis

The Court DENIES Plaintiffs' Motion for Summary Judgment and GRANTS Defendant's Motion for Summary Judgment because Plaintiffs have not exhausted administrative remedies before seeking judicial relief. Furthermore, the Federal Circuit's decisions in Patlex v. Mossinghoff, 758 F.2d 594 (Fed.Cir.1985), and Joy Techs., Inc. v. Manbeck, 959 F.2d 226 (Fed.Cir.1992), suggest that Plaintiffs' challenge will ultimately fail. Before discussing the exhaustion doctrine, an overview of the statutory schemes for administrative review of the issuance of patents is appropriate. Administrative review of the issuance patents can be broken up into two time periods: pre-Leahy–Smith America Invents Act (“AIA”), Pub.L. No. 112–29, 125 Stat. 284, and post-AIA.

1. Pre–AIA Administrative Review

a. Patent Examination

An individual who seeks a patent on a particular invention must file an application with the PTO that contains a specification and an oath by the applicant declaring that they believe they are the original inventor of the invention at issue. See 35 U.S.C. §§ 111(a), 115. Next, a PTO patent examiner reviews the application and determines whether the application presents any patentable claims.Id. § 131. If “it appears that the applicant is entitled to a patent,” the PTO “shall issue a patent.” Id.

b. Patent Reexamination

i. “Ex Parte ” Reexamination

Before 1980, the only way a party could challenge the validity of an issued patent was through the courts—there was no administrative system within which patents could be challenged. See Patlex v. Mossinghoff, 758 F.2d 594, 601 (Fed.Cir.1985). Thus, the federal courts were inundated with patent challenges. In an effort to lower the amount of patent challenges filed in federal courts, in 1981 Congress created an administrative alternative to federal court litigation known as “ex parte reexamination.” Ex parte reexamination authorized a patent owner or third parties to request that the PTO reexamine “the substantive patentability” of an issued patent. 35 U.S.C. § 302. In the ex parte reexamination scheme, if the PTO accepted a third-party's request to reexamine an issued patent, only the patent owner and the PTO were party to the reexamination proceedings. See 35 U.S.C. §§ 304 –05 ; Syntex (USA), Inc. v. USPTO, 882 F.2d 1570, 1573 (Fed.Cir.1989) ( “The statute gives third-party requesters no further, specific right to participate in the reexamination proceeding. Indeed, the statute specifically prohibits further participation by third-party requesters during reexamination.”).

If the examiner conducting the reexamination proceedings concluded that the claims were not actually patentable, the examiner would issue a final office action rejecting those patent claims. 35 U.S.C. § 305. Once issued, only the patent owner could seek administrative appellate review of the rejection/cancellation of its former patent claims at the PTAB. 15 U.S.C. § 134. The decision of the PTAB could then be appealed to the Federal Circuit under 35 U.S.C. § 316(b).

ii. “Inter Partes ” Reexamination

In the years following the creation of ex parte reexamination proceedings, Congress found that individuals and entities were not utilizing the existing reexamination procedure because “a third party who requests reexamination cannot participate at all after initiating the proceedings.” H.R. Conf. Rpt. 106–464, at 133 (Nov. 9, 1999). Consequently, in 1999 Congress created the inter partes reexamination procedure, which authorized third-party requesters to participate in the reexamination proceedings. See 35 U.S.C. § 314. Just like in an ex parte reexamination, if the inter partes reexamination examiner determined that the relevant claims were not patentable, the examiner issued an office notice rejecting, and thus cancelling, those patents. Id. § 314(a). However, unlike ex parte reexaminations, in inter partes reexaminations both the patent owner and the third-party requester could seek review of the examiner's decision to the PTAB and the Federal Circuit. See §§ 315(a)-(b).

2. Post–AIA Administrative Review—Inter Partes Review and Post–Grant Review

By 2011, Congress recognized that despite the improvements that it had made to the procedure for the review of issued patents, the “[r]eexamination proceedings are [ ] often costly, taking several years to complete.” H.R. Rpt. 112–98, at 45 (2011), 2011 U.S.C.C.A.N. 67, 75. Consequently, through the AIA, Congress created two new types of administrative proceedings through which an individual or entity could obtain a PTO-review of an issued...