Ssbg v. Kappos

• Decision Date: 18 December 2009
• Docket Number: No. 1:09cv935.,1:09cv935.
• Citation: 675 F.Supp.2d 629
• Parties: SIGRAM SCHINDLER BETEILIGUNGSGESELLSCHAFT MBH, Plaintiff, v. David J. KAPPOS in his official capacity as Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

675 F.Supp.2d 629

SIGRAM SCHINDLER BETEILIGUNGSGESELLSCHAFT MBH, Plaintiff, v. David J. KAPPOS in his official capacity as Undersecretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office, et al., Defendants.

No. 1:09cv935.

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

December 18, 2009.

Tommy Port Beaudreau, Fried Frank Harris Shriver & Jacobson LLP, Washington, DC, for Plaintiff.

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

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

In this declaratory judgment action, plaintiff ("SSBG"), a patent owner in the midst of an ex parte reexamination appeal to the Board of Patent Appeals and Interferences ("BPAI"), challenges a Patent and Trademark Office ("PTO") regulation—37 C.F.R. § 1.303—as being "in excess of [its] statutory jurisdiction, authority, or limitations, or short of statutory right."¹ According to plaintiff, although 35 U.S.C. §§ 141 and 306 allow a patent owner aggrieved by an adverse BPAI reexamination decision the option of appealing to the Court of Appeals for the Federal Circuit or filing a civil action for review in the District Court for the District of Columbia, the challenged regulation impermissibly limits a patent owner to a Federal Circuit appeal. Defendants disagree, arguing that plaintiff, if aggrieved by a BPAI reexamination decision, may appeal only to the Federal Circuit. Defendants also makes the threshold jurisdictional argument that this declaratory judgment action is not ripe—and may never ripen—and hence must be dismissed.

I.

A.

A brief summary of the pertinent statutory and regulatory framework governing patent issuances and reexaminations is helpful to the disposition of this case. An inventor who files a patent application with the PTO is deemed a patent applicant. Following an examination of the alleged new invention pursuant to the statutory procedural rules and substantive principles governing patentability of inventions,² the PTO Director issues either (i) a patent or (ii) a notice of rejection "stating the reasons for such rejection, or objection or requirement, together with such information and references as may be useful in judging of the propriety of continuing the prosecution of his application."³ 35 U.S.C. § 131 (2006) (patent issuance); id. § 132(a) (application denial). A patent applicant who receives a notice of rejection may persist in his claim for a patent—even where no amendment is made to the application—in which event the PTO will undertake further review of the rejected application and again issue a patent or notice of rejection. See id. § 132(a).

Issued patents may also be subject to reexaminations, either ex parte or inter partes.⁴ Both ex parte and inter partes reexaminations may be initiated by a "third-party requester," statutorily defined as "a person requesting ex parte reexamination under section 302 or inter partes reexamination under section 311 who is not the patent owner." Id. § 100(e). On this request, and on a finding by the PTO Director of a "substantial new question of patentability," the PTO undertakes a reexamination of the patent in the same manner that it conducts an initial patent application examination. See id. §§ 303(a), 305, 314(a).

Patent applicants, patent owners involved in a reexamination, and third-party requesters are authorized, under certain statutory provisions, to appeal a primary examiner's final decision of patentability to the BPAI. See id. §§ 134, 306, 316. The process of seeking court review of BPAI ex parte reexamination decisions has long been governed by 35 U.S.C. §§ 141 to 145 and 306. Prior to 1999, patent applicants, patent owners involved in ex parte reexamination proceedings,⁵ and parties to an interference were permitted to seek court review of BPAI determinations by either: (i) filing an appeal in the Federal Circuit, where review is made solely on the administrative record; or (ii) filing a civil action in the D.C. District Court, where discovery is permitted and a patentability determination is made by the district court de novo.⁶ See 35 U.S.C. §§ 141-146, 306 (1996). Importantly, the two avenues of court review were mutually exclusive: Filing an appeal with the Federal Circuit waived a party's right to pursue a civil action in the D.C. District Court, and filing a civil action in the D.C. District Court waived a party's right to appeal to the Federal Circuit. See id. §§ 141, 145. In addition, patent applicants and patent owners involved in ex parte reexamination proceedings were afforded only sixty days in which to seek court review in either the Federal Circuit or the D.C. District Court. See id. §§ 142, 145.

Prior to 1999, §§ 141 to 145 referenced only patent applicants.⁷ Nonetheless, patent owners involved in ex parte reexamination proceedings were authorized to seek court review of BPAI decisions under § 306, which stated that "[a] patent owner involved in a reexamination proceeding under this chapter [governing ex parte reexamination] may appeal under the provisions of section 134 of this title [to the BPAI], and may seek court review under the provisions of sections 141 to 145 of this title." Id. § 306. Thus, § 306's cross-reference to §§ 141 to 145 effectively applied the court review provisions governing patent applicants to patent owners involved in ex parte patent reexaminations. Of course, the right to appeal a BPAI reexamination decision accrued only in the event the BPAI rendered a decision "adverse to the patentability of any original or proposed amended or new claim of the patent." Id. § 306; see also id. §§ 141, 145 (allowing appeal only where "an applicant is dissatisfied with the decision in an appeal to the [BPAI]").

In 1999, Congress enacted the American Inventors Protection Act of 1999 ("AIPA"), which: (i) amended the process of appealing PTO primary examiner⁸ determinations to the BPAI; (ii) amended the provisions governing court review of BPAI decisions; and (iii) created the inter partes reexamination procedure.⁹ With respect to appeals to the BPAI, § 134 was amended to read, in its current incarnation, as follows:

(a) Patent Applicant.—An applicant for a patent, any of whose claims has been twice rejected, may appeal from the decision of the primary examiner to the [BPAI], having once paid the fee for such appeal.

(b) Patent Owner.—A patent owner in any reexamination proceeding may appeal from the final rejection of any claim by the primary examiner to the [BPAI], having once paid the fee for such appeal.

(c) Third-Party.—A third-party requester in an inter partes proceeding may appeal to the [BPAI] from the final decision of the primary examiner favorable to the patentability of any original or proposed amended or new claim of a patent, having once paid the fee for such appeal.

35 U.S.C. § 134(a)-(c) (2006) (emphasis added). The AIPA also added the following to § 141 regarding Federal Circuit review of BPAI decisions:

A patent owner in any reexamination proceeding dissatisfied with the final decision in an appeal to the [BPAI] under section 134 may appeal the decision only to the United States Court of Appeals for the Federal Circuit."

AIPA § 4605 (codified as amended at 35 U.S.C. § 141 (2006)) (emphasis added). These AIPA amendments became effective on November 29, 1999. See id. § 4608.¹⁰

Notably, the AIPA left § 306 unchanged, and accordingly still provided that a patent owner involved in an ex parte reexamination, after appealing to the BPAI and receiving an adverse determination, may "seek court review under the provisions of sections 141 to 145 of this title." 35 U.S.C. § 306. As noted supra, prior to the AIPA's enactment, § 306 allowed patent owners to appeal to the Federal Circuit or file a civil action in the D.C. District Court pursuant to §§ 141 to 145, despite the fact that these provisions on their face applied only to patent applicants. Accordingly, the fact that § 306 continues to cross-reference §§ 141 to 145 following the AIPA's enactment appears to be in tension with the AIPA amendment to § 141: Although § 145 authorizes a patent applicant—and thus a patent owner under the plain terms of § 306—to file a civil action in the D.C. District Court, § 141 was specifically amended to allow patent owners dissatisfied with a BPAI decision to "appeal the decision only to the United States Court of Appeals for the Federal Circuit." Id. § 141 (emphasis added). Despite this tension, the statutory provisions continue to make clear that a patent owner's right to seek court review of a BPAI decision accrues only after the BPAI renders a "decision adverse to the patentability of any original or proposed amended or new claim of the patent." Id. § 306; see also id. §§ 141-145.

Interpreting these statutory amendments in 2000, the PTO promulgated a regulation stating: (i) that patent owners involved in ex parte reexamination proceedings filed before November 29, 1999 were permitted to appeal an adverse BPAI decision to the Federal Circuit or, alternatively, to file a civil action in the D.C. District Court challenging that decision; and (ii) that patent owners involved in ex parte reexamination proceedings initiated on or after November 29, 1999 were not authorized to file civil actions in the D.C. District Court pursuant to § 145.¹¹ As the PTO explained in the Federal Register, "[t]his date distinction is necessitated by the conforming amendments to 35 U.S.C. § 141."¹² Whether this challenged regulation, codified at 37 C.F.R. § 1.303, contradicts § 306 is the merits issue presented here.

B.¹³

On October 11, 2005, the PTO issued U.S. Patent No. 6,954,453 B1 ("the '453 patent") to SSBG. On August 30, 2007, Cisco Systems, Inc. ("Cisco"), a third-party requester under 35 U.S.C. § 302, filed a request for ex parte reexamination of the '453 patent on the ground that there existed a "substantial new...