Hyatt v. U.S. Patent & Trademark Office

• Decision Date: 24 September 2018
• Docket Number: 2017-1722
• Citation: 904 F.3d 1361
• Parties: Gilbert P. HYATT, American Association for Equitable Treatment, Inc., Plaintiffs-Appellants v. UNITED STATES PATENT AND TRADEMARK OFFICE, Andrei Iancu, in his Official Capacity as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendants-Appellees
• Court: U.S. Court of Appeals — Federal Circuit

904 F.3d 1361

Gilbert P. HYATT, American Association for Equitable Treatment, Inc., Plaintiffs-Appellants

v.UNITED STATES PATENT AND TRADEMARK OFFICE, Andrei Iancu, in his Official Capacity as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, Defendants-Appellees

2017-1722

United States Court of Appeals, Federal Circuit.

Decided: September 24, 2018

Andrew M. Grossman, Baker & Hostetler LLP, Washington, DC, argued for plaintiffs-appellants. Also represented by Mark W. DeLaquil.

Molly R. Silfen, Office of the Solicitor, United States Patent and Trademark Office, Alexandria, VA, argued for defendants-appellees. Also represented by Thomas W. Krause, Robert J. McManus.

Before Reyna, Wallach, and Hughes, Circuit Judges.

Hughes, Circuit Judge.

Gilbert Hyatt sued the United States Patent and Trademark Office alleging that the PTO acted unlawfully in denying his petition for rulemaking. Mr. Hyatt now appeals from the district court’s grant of the PTO’s motion for summary judgment and dismissal of his claims for lack of subject matter jurisdiction. We reverse the district court’s dismissal for lack of subject matter jurisdiction. Because Mr. Hyatt’s claims are either time-barred or reliant on mistaken statutory interpretation, however, we affirm on alternate grounds the district court’s grant of summary judgment.

I

Mr. Hyatt is the named inventor on more than 70 issued patents and approximately 400 pending patent applications, all of which were filed before June 8, 1995. Due to Mr. Hyatt’s numerous amendments, those pending applications contained approximately 115,000 total claims as of August 2015. Each of these applications incorporates by reference, and claims priority from, numerous previously-filed applications dating back to the early 1970s. In October 2012, the PTO dedicated twelve full-time patent examiners to the sole task of examining Mr. Hyatt’s applications. By 2015, that number had increased to fourteen.

The PTO’s examination of these patents has proven slow going. Beginning in the mid-2000s, the PTO started issuing final rejections for some applications, prompting Mr. Hyatt to appeal the rejections to the Patent Trial and Appeal Board (PTAB). Upon an applicant’s filing of an appeal brief before the Board, the patent examiner may file an examiner’s answer setting forth the grounds on which the patent was rejected or adding a new ground of rejection. 37 C.F.R. § 41.39(a). But there is no statutory or regulatory deadline for filing an answer. In Mr. Hyatt’s case, the examiners never filed answers to his briefs, which prevented the PTAB from acquiring jurisdiction over his appeals. See 37 C.F.R. § 41.35(a).

In 2013, the PTO issued a series of formal office actions, called "Requirements," intended to accelerate examination of Mr. Hyatt’s claims. These Requirements instructed Mr. Hyatt to limit the number of claims from each patent family to 600 absent a showing that more claims were necessary, identify the earliest possible priority date and supporting disclosure for each selected claim, and present a copy of the selected claims to the PTO. Although Mr. Hyatt challenged the PTO’s authority to issue these Requirements, we held that the special circumstances of Mr. Hyatt’s applications justified the unique disclosure requirements. Hyatt v. U.S. Patent & Trademark Office , 797 F.3d 1374, 1385 (Fed. Cir. 2015). Following issuance of the Requirements, the PTO reopened prosecution of 80 applications that its examiners had previously rejected.

In February 2014, Mr. Hyatt responded to the reopening of his 80 applications with a suit in the U.S. District Court for the District of Nevada alleging the PTO unreasonably delayed examination of his applications by reopening prosecution rather than letting the PTAB hear his appeals. See Hyatt v. U.S. Patent & Trademark Office , No. 2:14-CV-00311-LDG, 2014 WL 4829538, at *1 (D. Nev. Sept. 30, 2014). The Nevada district court determined that it lacked jurisdiction over Mr. Hyatt’s claims and transferred his case to the U.S. District Court for the Eastern District of Virginia. Id. In November 2015, the Eastern Virginia district court granted summary judgment for the PTO. Hyatt v. U.S. Patent & TrademarkOffice , 146 F. Supp. 3d 771, 787 (E.D. Va. 2015). Mr. Hyatt did not appeal the court’s decision.

While his unreasonable delay case was pending before the Nevada district court, Mr. Hyatt filed a petition for rulemaking with the PTO pursuant to 5 U.S.C. § 553(e). His petition requested that the PTO either promulgate a rule repealing Manual of Patent Examining Procedure ( MPEP) § 1207.04 or declare that MPEP provision unenforceable. Section 1207.04 describes an examiner’s ability to, "with approval from the supervisory patent examiner, reopen prosecution to enter a new ground of rejection in response to appellant’s brief." This section provides an alternative to MPEP § 1207.03, which allows examiners to include new grounds of rejection in their answers to an applicant’s appeal brief. To avoid abandonment of an application following a reopening of prosecution, the applicant must file a reply to the office action reopening prosecution or initiate a new appeal to the PTAB by filing a new notice of appeal. MPEP § 1207.04.

Mr. Hyatt’s petition raised three arguments in support of repealing MPEP § 1207.04. He argued that MPEP § 1207.04 (1) conflicts with 35 U.S.C. § 6(b)(1) ’s creation of a right for applicants to appeal rejections; (2) conflicts with 37 C.F.R. § 41.39 ’s implicit disallowance of prosecution reopening after an applicant’s filing of an appeal brief; and (3) was improperly adopted without notice-and-comment rulemaking. In September 2014, the PTO denied Mr. Hyatt’s petition. He subsequently requested reconsideration of that denial, which the PTO denied in December 2015.

In June 2016, Mr. Hyatt filed this suit challenging the denial of his petition for rulemaking in Nevada district court under the Administrative Procedure Act. See 5 U.S.C. §§ 701 – 706. Mr. Hyatt’s complaint primarily alleges, for the same reasons raised in his petition for rulemaking, that the PTO’s adoption of MPEP § 1207.04 was arbitrary and capricious, in excess of statutory authority, and without observance of procedure required by law. Accordingly, he alleges that the PTO’s denial of his request to rescind MPEP § 1207.04 was similarly arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law.

The district court granted summary judgment to the PTO and dismissed all of Mr. Hyatt’s claims, determining that it lacked subject matter jurisdiction over them. In choosing to dismiss the case rather than transfer it to a court with the requisite jurisdiction, the district court reasoned that Mr. Hyatt’s challenges to MPEP § 1207.04 were "likely precluded" because he could have raised the same arguments in his prior unreasonable delay suit. J.A. 4. Mr. Hyatt now appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II

We review a district court’s grant of summary judgment according to the law of the regional circuit. Teva Pharm. Indus. Ltd. v. AstraZeneca Pharm. LP , 661 F.3d 1378, 1381 (Fed. Cir. 2011) (quoting Lexion Med., LLC v. Northgate Techs., Inc. , 641 F.3d 1352, 1358 (Fed. Cir. 2011) ). The Ninth Circuit reviews such grants de novo. Universal Health Servs., Inc. v. Thompson , 363 F.3d 1013, 1019 (9th Cir. 2004). Following the Ninth Circuit, "[w]e must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Id. (quoting EEOC v. Luce, Forward, Hamilton & Scripps , 345 F.3d 742, 746 (9th Cir. 2003) ).

"The district court’s conclusion that it lacks subject matter jurisdiction is subject to de novo review." Ip v. United States , 205 F.3d 1168, 1170 (9th Cir. 2000) (quoting Central Green Co. v. United States , 177 F.3d 834, 835 (9th Cir. 1999) ). When an issue of claim preclusion is "particular to patent law," we analyze it under our own law. Acumed LLC v. Stryker Corp. , 525 F.3d 1319, 1323 (Fed. Cir. 2008) (quoting Hallco Mfg. Co. v. Foster , 256 F.3d 1290, 1294 (Fed. Cir. 2001) ). We review de novo whether claim preclusion bars a plaintiff’s claim. Faust v. United States , 101 F.3d 675, 677 (Fed. Cir. 1996). Whether a claim is barred by a statute of limitations is also a legal question subject to de novo review. Newby v. Enron Corp. , 542 F.3d 463, 468 (Fed. Cir. 2008). An agency’s denial of a petition for rulemaking is reviewed for whether it is arbitrary and capricious. Preminger v. Sec’y of Veterans Affairs , 632 F.3d 1345, 1353 (Fed. Cir. 2011).

A

As an initial matter, the district court had subject matter jurisdiction over Mr. Hyatt’s challenge to the PTO’s denial of his petition for rulemaking. Under 28 U.S.C. § 1331, district courts have "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." The APA is a federal statute that provides a cause of action for persons "suffering legal wrong because of agency action." 5 U.S.C. § 702. Subject to some exceptions inapplicable in this case, APA challenges to federal agency actions usually fall within the district courts’ § 1331 jurisdiction. See Califano v. Sanders , 430 U.S. 99, 105–07, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977). In addition, if a plaintiff’s APA challenge raises a substantial question of patent law, district courts have jurisdiction under 28 U.S.C. § 1338(a). Helfgott & Karas, P.C. v. Dickinson , 209 F.3d 1328, 1334 (Fed. Cir. 2000). Here, Mr. Hyatt challenges the validity of a PTO rule, in part on the basis that it conflicts with statutes and regulations governing the patent application process. We have held that "the question of whether the [PTO] has violated the APA in applying ... its own regulations ... raises a substantial question...