Star Fruits S.N.C. v. U.S.

• Decision Date: 03 January 2005
• Docket Number: No. 04-1160.,04-1160.
• Parties: STAR FRUITS S.N.C. and Institute of Experimental Botany, Plaintiffs-Appellants, v. UNITED STATES and Department of Commerce, Defendants-Appellees, and Patent and Trademark Office and Jon Dudas, Director, Patent and Trademark Office and Under Secretary of Commerce for Intellectual Property, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

393 F.3d 1277

STAR FRUITS S.N.C. and Institute of Experimental Botany, Plaintiffs-Appellants, v. UNITED STATES and Department of Commerce, Defendants-Appellees, and Patent and Trademark Office and Jon Dudas, Director, Patent and Trademark Office and Under Secretary of Commerce for Intellectual Property, Defendants-Appellees.

No. 04-1160.

United States Court of Appeals, Federal Circuit.

January 3, 2005.

COPYRIGHT MATERIAL OMITTED

Patrick H. Ballew, Stratton Ballew PLLC, of Yakima, Washington, argued for plaintiffs-appellants.

Stephen Walsh, Associate Solicitor, United States Patent and Trademark Office, argued for defendants-appellees. With him on the brief were John M. Whealan, Solicitor, and Linda Moncys Isacson, Associate Solicitor.

Before NEWMAN, CLEVENGER and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge CLEVENGER, Dissenting opinion filed by Circuit Judge NEWMAN.

CLEVENGER, Circuit Judge.

Star Fruits S.N.C. and Institute of Experimental Botany ("Star Fruits") appeal the decision of the United States District Court for the Eastern District of Virginia denying Star Fruits's motion for summary judgment and granting summary judgment in favor of the United States. Star Fruits S.N.C. v. United States, 280 F.Supp.2d 512 (E.D.Va.2003). Because the United States Patent and Trademark Office ("the Office") did not act unlawfully when it deemed Star Fruits's patent application abandoned for failing to respond to a Requirement For Information under 37 C.F.R. § 1.105, we affirm the judgment of the district court.

I

The facts of this case are straightforward. Star Fruits filed U.S. Patent Application No. 09/557,043, directed to a variety of peach tree. A subsequent Office Action included a "Requirement For Information Under 37 C.F.R. 1.105." Specifically, the Office sought "any information available regarding the sale or other public distribution of the claimed plant variety anywhere in the world" and "copies of the application, published proposed denomination and published Breeder's Right grant." The Office further informed Star Fruits that to the extent Star Fruits did not have or could not readily obtain the required information, a statement to that effect would "be accepted as a complete response to the requirement for that item."

Star Fruits declined to provide the required information on the grounds that it was "not material to patentability of the new variety." The Response accompanying Star Fruits's refusal to provide the required information did not state that Star Fruits did not have or could not readily obtain the information. Instead, the Response made clear that Star Fruits anticipated a rejection of its application under 35 U.S.C. § 102 if it complied with the Office's requirement, that it viewed the prospective rejection based on the requested information as contrary to law, and that it refused to provide the information because it sought to prevent the Office from making the rejection.

The Office viewed Star Fruits's refusal to provide the required information as a "deliberate omission, not a bona fide attempt at a complete response," and issued a Notice of Abandonment. Pursuant to 37 C.F.R. § 1.181, Star Fruits petitioned the Director to require the Examiner to accept Star Fruits's Response as complete. The Director denied the petition, stating:

The threshold for requiring information from applicants under 37 CFR 1.105 is that the information required is reasonably necessary to treat a matter in an application. The matter may or may not be related to patentability. The matter here is a matter of patentability and the information required is necessary for the examiner to make a reasoned judgment under 35 U.S.C. 102(b) of patentability. Applicant's arguments have not shown, in rebuttal, that the information requested to be provided is unnecessary or unreasonable. In contrast, the examiner has shown by appropriate arguments that the information requested is necessary under ex parte Thomson, 24 USPQ2d, 1618.

(J.A. at 98.) The Director reset the time period for Star Fruits to respond to the Requirement For Information to three months. Star Fruits requested reconsideration. The request was granted, the request for relief from the Requirement For Information was again denied, and the application was deemed abandoned.

Star Fruits brought suit in the district court. It claimed that the Office abused its discretion when it denied Star Fruits's petition challenging the Requirement For Information because, as a matter of law according to Star Fruits, the information the Office sought could not be used to reject Star Fruits's application. The district court disagreed, concluding that "such information as may be reasonably necessary to properly examine or treat the matter," 37 C.F.R. § 1.105(a)(1), includes information that may not be directly used to reject an assertion of patentability. Star Fruits, 280 F.Supp.2d at 515-16. It further held that a section 1.181 petition is "the exclusive administrative check on the discretion of individual patent examiners before a determination has been made on the merits of an application," and when the Director concluded that the requirement was proper, "Star Fruits had no choice but to comply." Id. at 516. Accordingly, the district court held that by refusing to provide the required information, Star Fruits abandoned its application. Id. at 517.

II

Star Fruits appeals. Because this claim, brought pursuant to the Administrative Procedure Act ("APA"), see 5 U.S.C. §§ 702-706 (2000), involves the Director's duties "[i]n the course of examining or treating a matter in [an application] ... in a patent, or in a reexamination proceeding," 37 C.F.R. § 1.105(a)(1), it raises a substantial question under the patent laws, and, accordingly, we have jurisdiction under 28 U.S.C. § 1338(a) and 28 U.S.C. § 1295(a)(1) (2000). See Helfgott & Karas, P.C. v. Dickenson, 209 F.3d 1328, 1333-35 (Fed.Cir.2000).

We review the district court's grant of summary judgment without deference, reapplying the same standard as the district court. See Conroy v. Reebok Int'l, Ltd., 14 F.3d 1570, 1575 (Fed.Cir.1994). Under the APA, courts "hold unlawful and set aside agency action ... found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2); Arnold P'ship v. Dudas, 362 F.3d 1338, 1340 (Fed.Cir.2004). An abuse of discretion occurs where the decision is based on an erroneous interpretation of the law, on factual findings that are not supported by substantial evidence, or represents an unreasonable judgment in weighing relevant factors. 362 F.3d at 1340.

III

Star Fruits's contention on appeal is that the Director abused his discretion when he required compliance with the Requirement For Information because it was based on an erroneous interpretation of law. In particular, Star Fruits contends that the language, "such information as may be reasonably necessary to properly examine or treat the matter," from section 1.105 may not include "any information available regarding the sale or other public distribution of the claimed plant variety anywhere in the world" and "copies of the application, published proposed denomination and published Breeder's Right grant." This is so, according to Star Fruits, because the duty of candor embodied in 37 C.F.R. § 1.56, which requires applicants to disclose information material to patentability, controls section 1.105 requirements. The effect of this, again according to Star Fruits, is that an applicant need not comply with any section 1.105 requirement that seeks information that is not material to patentability. Here, Star Fruits extends this logic by equating the concept of "material to patentability" with information that directly supports a rejection. Moreover, Star Fruits asserts that the applicant, not the examiner, decides what information is material to patentability under section 1.56. Thus, in Star Fruits's view, the Office cannot require information unless the product of the requirement will result in a rejection and were the Office to require any other information, section 1.56 affords Star Fruits the power to refuse the requirement. We respond first, in detail, to Star Fruits's arguments.

A

i

Under 37 C.F.R. § 1.105 the Office can require information that does not directly support a rejection. An agency's interpretation of its own regulations is entitled to substantial deference and will be accepted unless it is plainly erroneous or inconsistent with the regulation. See Eli Lilly & Co. v. Bd. of Regents of the Univ. of Wa., 334 F.3d 1264, 1266 (Fed.Cir.2003). Here, the Office considered information concerning any sale or public distribution of the claimed invention and any information concerning Breeder's Rights applications or grants as within the authorized scope of a Requirement For Information under section 1.105.

This interpretation is not plainly erroneous or inconsistent with the regulation. Congress has delegated to the Office the rulemaking power to "establish regulations, not inconsistent with law, which — (A) shall govern the conduct of proceedings in the Office." 35 U.S.C. § 2(b)(2) (2000) (formerly at 35 U.S.C. § 6(a) (1988), see Merck & Co. v. Kessler, 80 F.3d 1543, 1549-50 (Fed.Cir.1996)); Stevens v. Tamai, 366 F.3d 1325, 1333 (Fed.Cir.2004). Section 1.105 stems from an initiative entitled Changes to Implement the Patent Business Goals. Through notice and comment rulemaking the Office made explicit the inherent authority of Office employees to require information from an applicant. The goal is to "encourage" employees to use that power to "perform the best quality examination possible." 65 Fed.Reg. 54,604, at 54,633 (September 8, 2000) (to be codified at 37 C.F.R. pts. 1, 3, 5, 10); see also 64 Fed.Reg. 53,772 (proposed October 4, 1999); 63 Fed.Reg. 53,498 (proposed October 5, 1998). The final rule permits that "the examiner or other Office...