Panos v. Dir. of the U.S. Patent & Trademark Office

• Decision Date: 30 September 2015
• Docket Number: Civil Action No. 3:14cv698
• Court: U.S. District Court — Eastern District of Virginia
• Parties: JOHN DAVID PANOS, Plaintiff, v. DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Defendant.

JOHN DAVID PANOS, Plaintiff, v. DIRECTOR OF THE UNITED STATESPATENT AND TRADEMARK OFFICE, Defendant.

Civil Action No. 3:14cv698

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division

September 30, 2015

MEMORANDUM OPINION

This matter comes before the Court on the Motion to Dismiss filed by Defendant, the Director of the United States Patent and Trademark Office (the "Director"). (ECF No. 7.) Plaintiff John David Panos responded, pro se, and the Director replied. (ECF Nos. 10-11.) Accordingly, this matter is ripe for disposition. The Court dispenses with oral argument because the materials before the Court adequately present the facts and legal contentions, and argument would not aid the decisional process. For the following reasons, the Court will grant the Director's Motion to Dismiss.

I. Legal Background and Standards of Review

A. Patent Office Statutory and Regulatory Background

The United States Patent and Trademark Office ("USPTO") is responsible for "the granting and issuing of patents," 35 U.S.C. § 2(a)(1), subject to the statutory requirements for patent applications, the examination of applications, and patentability, see id. §§ 101-03, 111-18, 131-34. The USPTO examines patent applications based on the statutory requirement of patentability. See 35 U.S.C. § 131; 37 C.F.R. § 1.104. If the USPTO examiner determines that the invention as claimed is not patentable, he or she rejects the claims. 37 C.F.R. § 1.104(c); seealso Manual of Patent Examining Procedure ("MPEP") § 707 (9th. ed. Mar. 2014).¹ An applicant whose claims are twice rejected may appeal to the Patent Trial and Appeal Board (the "Board"). 35 U.S.C. § 134(a). A Board decision constitutes final agency action on patentability subject to judicial review either in this Court or in the Court of Appeals for the Federal Circuit. See 35 U.S.C. §§ 141(a), 145; 37 C.F.R. § 41.2 (defining "final").

To enable the USPTO to carry out its responsibilities, Congress conferred on the agency the authority to establish regulations that "govern the conduct of proceedings in the [USPTO]." 35 U.S.C. § 2(b)(2)(A); see also In re Bogese, 303 F.3d 1362, 1368 (Fed. Cir. 2002) ("The [USPTO] has inherent authority to govern procedure before the [USPTO], and that authority allows it to set reasonable deadlines and requirements for the prosecution of applications."). Pursuant to this authority, the USPTO has issued regulations governing examinations of patent applications, including appeals of adverse patentability determinations to the Board. See generally 37 C.F.R. pts. 1 & 41.

In delegating authority, Congress also expressly conferred on the USPTO the authority to establish certain fees.² Congress, however, authorized the USPTO to establish fees for all other patent-related processing, services, or materials to recover the estimated average costs to the USPTO of such processing, services, or materials. 35 U.S.C. § 41(d)(2)(A). The fees established by the USPTO include additional application processing fees and appeal fees. 37 C.F.R. §§ 1.17, 41.20. The application and appeal fees include an appeal forwarding fee torecover the cost of processing appeals. Id. § 41.20(b)(4); Setting and Adjusting Patent Fees, 78 Fed. Reg. 4,212, 4,230-31 (Jan. 18, 2013) (to be codified at 37 C.F.R. § 41.20) (explaining the appeal fee system including an appeal fee and a forwarding fee). Congress also authorized the USPTO to refund certain fees, including those for excess claims canceled before examination on the merits and any fee paid by mistake or in excess of the fee required if requested within two years from when the fee was paid. 35 U.S.C. §§ 41(a)(2)(C), 42(d); 37 C.F.R. § 1.26(a)-(b).

In addition to fees, Congress set certain statutory time limits for responding to any USPTO action, dictating that should an applicant fail to timely respond 'the application shall be regarded as abandoned." 35 U.S.C. § 133 (emphasis added); see 37 C.F.R. §§ 1.134-1.136. These time limits apply throughout the examination process, including during appeals to the Board. First, after filing a notice of appeal with the appeal fee, an appellant must file an appeal brief within two months. 37 C.F.R. §§ 41.31(a)(1), 41.37(a). Then, if the appeal results in an examiner's answer, the appeal forwarding fee must be paid within two months of the examiner's answer. Id. § 41.37(a); see id. §§ 41.39, 41.45(a). Failure to pay the forwarding fee results in dismissal of the appeal. Id. § 41.45(b). Upon dismissal, the proceedings terminate and applications with no allowed claims become abandoned. Id. § 1.197(a); MPEP § 1215.04.

The USPTO also has provided rules for reviving abandoned applications. An applicant can petition to revive an unintentionally abandoned application by filing, inter alia, the outstanding response to the USPTO action and a statement that the entire delay in filing the required response was unintentional. 37 C.F.R. § 1.137. Further, an applicant can petition to withdraw from abandonment an application deemed abandoned by the USPTO. Id. § 1.181; see MPEP § 711.03(c). A denial of a petition constitutes a final agency decision. See MPEP § 1002.02.

B. Rule 12(b)(1); Lack of Subject Matter Jurisdiction

In a motion to dismiss under Fed. R. Civ. P. 12(b)(1) challenging the Court's subject matter jurisdiction, the burden rests with the plaintiff, as the party asserting jurisdiction, to prove that federal jurisdiction is proper. See Int'l Longshoremen's Ass'n v. Va. Int'l Terminals, Inc., 914 F. Supp. 1335, 1338 (E.D. Va. 1996) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)). A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) can attack subject matter jurisdiction in two ways. First, a Rule 12(b)(1) motion may attack the complaint on its face, asserting that the complaint fails to state a claim upon which subject matter jurisdiction can lie. See Int'l Longshoremen's Ass'n, 914 F. Supp. at 1338; see also Adams, 697 F.2d at 1219. In such a challenge, a court assumes the truth of the facts alleged by plaintiff, thereby functionally affording the plaintiff the same procedural protection he or she would receive under Rule 12(b)(6) consideration. See Int'l Longshoremen's Ass'n, 914 F. Supp. at 1338; see also Adams, 697 F.2d at 1219.

A Rule 12(b)(1) motion may also, as here, challenge the existence of subject matter jurisdiction in fact, apart from the pleadings. See Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991); Int'l Longshoremen's Ass'n, 914 F. Supp. at 1338; see also Adams, 697 F.2d at 1219. In such a case, because a party challenges the court's "'very power to hear the case,'" the trial court is free to weigh evidence to determine the existence of jurisdiction. Int'l Longshoremen's Ass'n, 914 F. Supp. at 1338 (quoting Mortensen v. First Fed Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). No presumptive truthfulness attaches to the plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. See Int'l Longshoremen's Ass'n, 914 F. Supp. at 1338; see also Adams, 697 F.2d at 1219.

If the facts necessary to determine jurisdiction intertwine with the facts central to the merits of the dispute, a court should find that jurisdiction exists and resolve any factual dispute on the merits because the jurisdictional attack would then closely mirror a challenge of the merits. United States v. North Carolina, 180 F.3d 574, 580 (4th Cir. 1999); Adams, 697 F.2d at 1219. A court need not examine jurisdiction in that manner when a plaintiff asserts the claim solely for the purpose of obtaining jurisdiction, or when a plaintiff raises a wholly insubstantial and frivolous claim. Bell v. Hood, 327 U.S. 678, 682-83 (1946).

C. Rule 12(b)(6): Failure to State a Claim

"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)). In considering a motion to dismiss for failure to state a claim, a plaintiff's well-pleaded allegations are taken as true and the complaint is viewed in the light most favorable to the plaintiff. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993); see also Martin, 980 F.2d at 952. This principle applies only to factual allegations, however, and "a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

The Federal Rules of Civil Procedure "require[ ] only 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (omission in original) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).Plaintiffs cannot satisfy this standard with complaints containing only "labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Id. (citations omitted). Instead, a plaintiff must assert facts that rise above speculation and conceivability to those that "show" a claim that is "plausible on its face." Iqbal, 556 U.S. at 678-79 (citing Twombly, 550 U.S. at 570; Fed. R. Civ. P. 8(a)(2)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678 (citing Twombly, 550 U.S. at 556).

"If, on a motion under Rule 12(b)(6) ....