Hitachi Metals, Ltd. v. Quigg, Civ. A. No. 89-1340 SSH.

• Citation: 776 F. Supp. 3
• Decision Date: 18 October 1991
• Docket Number: Civ. A. No. 89-1340 SSH.
• Court: United States District Courts. United States District Court (Columbia)
• Parties: HITACHI METALS, LTD., Plaintiff, v. Donald J. QUIGG, Commissioner of Patents and Trademarks, Defendant, Allied-Signal, Inc., Intervenor.

776 F. Supp. 3

HITACHI METALS, LTD., Plaintiff, v. Donald J. QUIGG, Commissioner of Patents and Trademarks, Defendant, Allied-Signal, Inc., Intervenor.

Civ. A. No. 89-1340 SSH.

United States District Court, District of Columbia.

October 18, 1991.

COPYRIGHT MATERIAL OMITTED

Thomas J. MacPeak, Washington, D.C., for Hitachi Metals, Ltd.

Fred E. McKelvey, Patent & Trademark Office, Office of the Sol., Arlington, Va., for Quigg.

William K. West, Washington, D.C., for Allied-Signal, Inc.

OPINION

STANLEY S. HARRIS, District Judge.

This matter is before the Court on motions to dismiss by defendant Donald J. Quigg, Commissioner of Patents and Trademarks (the Commissioner), and by intervenor Allied-Signal, Inc. (Allied), and on a motion for summary judgment by plaintiff, Hitachi Metals, Ltd. (Hitachi). The Court dismisses Hitachi's complaint with respect to both the defendant and the intervenor in this action, because the Court lacks subject matter jurisdiction to consider plaintiff's challenge to the grant of a reissue patent to Allied, and because plaintiff lacks standing to bring this action.¹

Background

Plaintiff is a Japanese corporation that manufactures and sells amorphous metals in the United States. Intervenor, an American corporation, competes with Hitachi in this market and owns a reissue patent, U.S. Patent No. 32,925, for amorphous metals. Hitachi alleges that the defendant Commissioner reissued Allied's patent for amorphous metals in a manner which violated the regulations set forth at 37 C.F.R. § 1.56, exceeded the Commissioner's authority under the Patent Statute, 35 U.S.C. § 251, and involved both unlawful agency action and agency action unlawfully withheld under the Administrative Procedure Act (APA), 5 U.S.C. § 706(1), (2)(A), (C). Hitachi also maintains that the Commissioner's notice purporting to waive the requirements set forth in 37 C.F.R. § 1.56 is an invalid rule, issued and applied in violation of the APA, specifically, 5 U.S.C. §§ 553, 706(1), (2)(A), (C), and (D).

The Patent and Trademark Office (PTO) first issued the patent in question, U.S. Patent 3,856,513 ('513 Patent), to Hou-Sou Chen, et al., in December of 1974.² Claiming that Hitachi and others were infringing on this patent, Allied initiated a proceeding before the United States International Trade Commission (ITC), seeking to have amorphous metals manufactured by Hitachi and others excluded from the United States market. In July 1984, the ITC determined that Allied's '513 Patent was unenforceable, because Allied's "gross negligence" had caused it to make material misrepresentations to the PTO. Allied's subsequent appeal of the ITC decision was never considered on its merits, because the United States Court of Appeals for the Federal Circuit found that the appeal had not been filed until after the expiration of the statutory period. Thus unable to appeal the ITC's decision, Allied filed a reissue application for Patent '513 with the PTO on October 23, 1986.

On February 9, 1987, Hitachi filed a protest in response to Allied's reissue application. Hitachi's protest, filed pursuant to 37 C.F.R. § 1.56(h), sought rejection of Allied's reissue claims on multiple grounds, including Allied's alleged violation of the duty of disclosure through gross negligence, which, if established by clear and convincing evidence, mandated rejection under 37 C.F.R. § 1.56(d). With Allied's reissue application still pending, the Commissioner published a notice in the Official Gazette of the Patent and Trademark Office on October 11, 1988 (October 1988 Notice), stating that "the Office will no longer investigate original or reissue applications under 37 C.F.R. § 1.56 and to the extent 37 C.F.R. § 1.56 now requires the Office to do so, it is hereby waived." The notice also stated that "examination of lack of deceptive intent in reissue applications will continue but without any investigation of inequitable conduct issues. Applicant's statement of lack of deceptive intent will normally be accepted as dispositive except in special circumstances such as an admission or judicial determination of fraud or inequitable conduct."

Plaintiff filed a second protest to Allied's reissue application on April 25, 1989, asserting once again that PTO rules required rejection of the application and that the October 1988 Notice was irrelevant, because it had not been validly adopted pursuant to the Administrative Procedure Act, 5 U.S.C. § 553. On May 9, 1989, the PTO issued a decision on plaintiff's protest, stating that prosecution of Allied's reissue application would not be reopened, that the evidence in the record was not "sufficient to conclude that reissue is not proper," and that based on the October 1988 Notice, the PTO no longer investigated "fraud" issues.

After learning of the PTO's decision regarding its second protest, plaintiff filed the complaint which initiated this civil action. In Count One, Hitachi contends that the Commissioner's failure to follow 37 C.F.R. § 1.56 constituted an agency action unlawfully withheld under 5 U.S.C. § 706(1), and arbitrary and capricious action under 5 U.S.C. § 706(2)(A). In Count Two, plaintiff asserts that the Commissioner's October 1988 Notice waiving the requirements of 37 C.F.R. § 1.56 constituted unlawful agency action under 5 U.S.C. §§ 706(2)(A), (C), and (D), because it was an invalid attempt at substantive rule making in violation of the APA rule making requirements set forth in 5 U.S.C. § 553. Alternatively, in Count Three, plaintiff argues that even if the October 1988 Notice was validly enacted, it was unlawfully applied pursuant to 5 U.S.C. §§ 706(1) and 706(2)(A). Finally, in Count Four, plaintiff claims that the Commissioner's reissue of Allied's patent was not authorized by the Patent Statute, 35 U.S.C. § 251, and therefore constituted unlawful agency action under 5 U.S.C. §§ 706(2)(A) and (C).³ In support of this claim, Hitachi alleges that the law required the Commissioner to assign a collateral estoppel effect to the ITC's findings of inequitable conduct and to reject Allied's reissue application based on those findings.

Plaintiff requests relief in the form of: (1) a declaratory judgment holding the PTO's October 1988 Notice null and void, (2) an injunction prohibiting both enforcement of the October 1988 Notice and retroactive enforcement of any valid codification of the notice, (3) an injunction prohibiting the Commissioner from reissuing the '513 Patent until final determination of this action, (4) a writ of mandamus directing the Commissioner "to give proper consideration" to Allied's alleged breach of its duty of disclosure, (5) an injunction requiring the Commissioner to give collateral estoppel effect to the ITC's factual findings regarding Allied's conduct, (6) an injunction prohibiting the Commissioner from reissuing the '513 Patent if it was issued based on material representations made through gross negligence, (7) an order retaining jurisdiction of this action pending the Commissioner's final decision on Allied's reissue application, and (8) any further relief to which plaintiff is entitled.⁴

On May 19, 1989, the PTO reissued the '513 Patent, Reissue Patent No. 32,925, to intervenor Allied. The Commissioner subsequently filed a motion to dismiss Hitachi's action, and plaintiff responded with a motion for summary judgment. After receiving the Court's authorization to intervene, Allied filed its own motion to dismiss plaintiff's action. Following Allied's intervention, Hitachi modified its request for relief by asking that the Court issue an order directing Allied to surrender its reissue patent. Plaintiff also reiterated its request that the Court retain jurisdiction of this action, and its request that the Court issue injunctions requiring the Commissioner to abide by 37 C.F.R. § 1.56 and by the determinations of the ITC when reconsidering Allied's reissue application.

Discussion

I. Subject Matter Jurisdiction.

Plaintiff asserts that 28 U.S.C. § 1331 provides this Court with jurisdiction to review the PTO's decision to reissue Allied's patent under the APA, 5 U.S.C. § 701, et seq. The Court disagrees. The Court lacks subject matter jurisdiction over Hitachi's claims, because the comprehensive scheme Congress established to govern patent grants reveals Congress's intent to preclude judicial review of PTO examination decisions at the behest of third parties protesting the issue or reissue of a patent. "The general presumption favoring judicial review of administrative action may be overcome by inferences of intent drawn from the statutory scheme as a whole." Block v. Community Nutrition Inst., 467 U.S. 340, 349, 104 S.Ct. 2450, 2456, 81 L.Ed.2d 270 (1984); see also Morris v. Gressette, 432 U.S. 491, 97 S.Ct. 2411, 53 L.Ed.2d 506 (1977) (Voting Rights Act of 1965 precludes judicial review of the Attorney General's decision not to object to a change in voting procedures); Switchmen's Union v. National Mediation Bd., 320 U.S. 297, 64 S.Ct. 95, 88 L.Ed. 61 (1943) (Railway Labor Act precludes judicial review of National Mediation Board decisions to certify representatives for collective bargaining); cf. Clarke v. Securities Indus. Ass'n, 479 U.S. 388, 402-403, 107 S.Ct. 750, 758-759, 93 L.Ed.2d 757 (1987) (although the National Bank Act did not expressly provide for judicial review at the behest of trade associations representing competitors of commercial banks, Congress intended to authorize these associations to seek judicial review of rulings by the Comptroller of the Currency).⁵ The Commissioner has demonstrated that such inferences of congressional intent to preclude judicial review are "fairly discernible in the statutory scheme" governing patent grants. Association of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 157, 90 S.Ct. 827, 832, 25 L.Ed.2d 184 (1970). Through this showing of "contrary legislative intent," the Commissioner has satisfied the standard of "clear and...