Invention Submission Corp. v. Dudas

• Decision Date: 24 June 2005
• Docket Number: No. 04-2295.,04-2295.
• Citation: 413 F.3d 411
• Parties: INVENTION SUBMISSION CORPORATION, a Pennsylvania corporation, Plaintiff-Appellant, v. Jonathan W. DUDAS, Under Secretary of Commerce for Intellectual Property and Director, United States Patent and Trademark Office, U.S. Department of Commerce, in his official capacity, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 411

413 F.3d 411

INVENTION SUBMISSION CORPORATION, a Pennsylvania corporation, Plaintiff-Appellant, v. Jonathan W. DUDAS, Under Secretary of Commerce for Intellectual Property and Director, United States Patent and Trademark Office, U.S. Department of Commerce, in his official capacity, Defendant-Appellee.

No. 04-2295.

United States Court of Appeals, Fourth Circuit.

Argued May 24, 2005.

Decided June 24, 2005.

ARGUED:

Edward B. Friedman, Pittsburgh, Pennsylvania, for Appellant. Rachel

Celia Ballow, Assistant United States Attorney, Office of the United States Attorney, Alexandria, Virginia, for Appellee.

ON BRIEF: J.

Stephen Purcupile, Friedman & Friedman, Pittsburgh, Pennsylvania; Richard C. Sullivan, Reed Smith, L.L.P., Falls Church, Virginia, for Appellant. Paul J. McNulty, United States Attorney, Alexandria, Virginia, for Appellee.

Before WILKINS, Chief Judge, and NIEMEYER and SHEDD, Circuit Judges.

Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Chief Judge Wilkins and Judge Shedd joined.

OPINION

NIEMEYER, Circuit Judge.

In our earlier review of the district court's final order dismissing this case under Federal Rule of Civil Procedure 12(b)(6), we held:

Because the conduct of the [Patent and Trademark Office] that is the subject of this action did not constitute "final agency action" as used under the [Administrative Procedure Act], the district court did not have subject matter jurisdiction to evaluate the complaint under Rule 12(b)(6) and should have dismissed this case under Rule 12(b)(1). We therefore vacate its order of October 30, 2002, as well as the supporting opinion, and remand with instructions to dismiss this case under Federal Rule of Civil Procedure 12(b)(1).

Invention Submission Corp. v. Rogan, 357 F.3d 452, 460 (4th Cir.2004). By order dated May 5, 2004, the district court did vacate its earlier dismissal order and dismissed this case under Federal Rule of Civil Procedure 12(b)(1).

Invention Submission Corporation filed a motion to vacate the district court's May 5, 2004 order and to grant Invention Submission leave to file an amended complaint for the purpose of avoiding the jurisdictional issue. The district court denied this motion and reaffirmed its earlier dismissal order. Invention Submission now challenges the district court's order denying its motion to vacate and for leave to amend.

Because the district court was bound by the mandate of this court to dismiss this case for lack of subject matter jurisdiction, we affirm.

I

In January 2002, the Patent and Trademark Office ("PTO") launched a media campaign to counter invention promotion scams. The print advertisements featured an inventor named Edward Lewis, along with text that identified him by name and read, "I spent $13,000 and three years `spinning my wheels' with a company that promised my idea would make lots of money. They were right. It made lots of money ... for them. I haven't seen a penny." The advertisement ended with a general statement about avoiding "invention promotion scams" and contact information for the PTO.

A journalist for a cable television network, who saw the PTO's advertisements, interviewed Lewis and published a story revealing that Lewis was referring in the advertisements to his relationship with Invention Submission, a business engaged in assisting inventors with obtaining patents. The article revealed that Lewis had filed a complaint with the PTO in August 2001 that was "being processed." The article also revealed that Invention Submission was one of several companies investigated by the FTC in the 1990s "for misrepresentation in patent marketing schemes." The article concluded with Invention Submission's response that it did nothing wrong and that its representations and commercials misled neither Lewis nor anyone else.

After the article appeared, Invention Submission commenced this action under the Administrative Procedure Act ("APA"), 5 U.S.C. § 704, against the PTO, alleging that the PTO's advertising campaign was aimed at Invention Submission to penalize it and ultimately to put it out of business. Invention Submission claimed that the campaign was an illegal final agency action that was arbitrary and capricious and exceeded any statutory authority conferred on the PTO.

The PTO filed a motion to dismiss Invention Submission's complaint under Federal Rule of Civil Procedure 12(b)(1), contending that the PTO advertising campaign was not a "final agency action" and therefore that the district court lacked subject matter jurisdiction to review its actions. The district court granted the motion to dismiss but based its decision on Rule 12(b)(6), finding that "it is clear as a matter of law that no relief could be granted under any set of facts that could be proved consistent with the allegations." The court observed that "[t]he PTO's publications in this case were merely generic advertisements of agency programs not specifically naming the plaintiff. Any harm to the plaintiff was, at most, indirect." Finally, the court found that the agency's conduct was not a "final agency action" and that Invention Submission had not alleged any specific harm caused by the PTO's actions.

On Invention Submission's first appeal, we agreed with the district court that the PTO's alleged conduct did not constitute final agency action and therefore was not reviewable under the APA. We observed:

The text of the advertising material can only be construed to be an effort by the PTO to inform inventors of the perils and potential scams that they might encounter during the patent process. Such advertising did not create "legal consequences" for Invention Submission or any other member of the public cognizable as final agency action, and the campaign itself did not determine any right or obligation of any party.

Invention Submission, 357 F.3d at 460 (emphasis added). In response to Invention Submission's contention that in conducting the advertising campaign, the PTO harbored an intent to put Invention Submission out of business and that therefore the advertising campaign was agency action adversely affecting Invention Submission, we stated:

Such underlying intent of agency officials, however, does not convert the PTO's legal advertising material warning generally of invention promotion scams — the purpose for which Congress enacted the Inventors' Rights Act — into a PTO sanction imposed on Invention Submission that would be reviewable in court, especially when the material itself does not reference an intent to penalize any particular company.

Id. Focusing particularly on the effect of the advertising campaign on Invention Submission, we observed:

If the PTO's advertising made business more difficult for Invention Submission by raising the public's awareness, the decisions of members of the public are attributable to independent responses and choices of third parties and cannot be imputed to the PTO for purposes of determining whether its conduct was a final agency action.

Id. (internal quotation marks and citation omitted). We summarized our holding as follows:

In short, the PTO's advertising campaign warning the public about invention promotion scams was consistent with the PTO's commission granted by the Inventors' Rights Act of 1999, and in the circumstances of this case, the decision to pursue such a campaign, as well as its content, did not create a final agency action that is reviewable in court.

Id. (emphasis added). Accordingly, we concluded that the district court did not have subject matter jurisdiction over the case and remanded it "with instructions to dismiss this case under Federal Rule of Civil Procedure 12(b)(1)." Id.

During the course of its prior appellate briefing, Invention Submission argued that the district court's jurisdiction over its complaint could have rested on general equity jurisdiction under the holding of American School of Magnetic Healing v. McAnnulty, 187 U.S. 94, 23 S.Ct. 33, 47 L.Ed. 90 (1902), an argument that it raised for the first time on appeal. In response, we stated, "we do not address whether the `McAnnulty Doctrine,' which Invention Submission raises for the first time on appeal, provides a basis for judicial review of unlawful agency action." Invention Submission, 357 F.3d at 457 n. *.

After the case was remanded to the district court and the district court had dismissed the case under Rule 12(b)(1), Invention Submission filed a motion to vacate the dismissal order and for leave to amend its complaint to allege jurisdiction under the McAnnulty doctrine. The district court, relying on the scope of our...