IP Law Daily Holder of cancelled patent not entitled to refund of USPTO fees
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Monday, August 24, 2020

Holder of cancelled patent not entitled to refund of USPTO fees

By Sheri A. Wattles-Miller, J.D.

The fees collected by the USPTO were not in excess of statutory authority and, thus, were not a taking or an illegal exaction.

A company whose patent claims were cancelled in an inter partes review failed to state a plausible claim that the cancellation of its patent claims caused a taking or an illegal exaction, the U.S. Court of Appeals for the Federal Circuit ruled, upholding the federal claims court's dismissal of the case. Cancellation of a patent in an inter partes review does not create a compensable claim against the United States. The company asserted no constitutional provision, statute, or regulation that required refunding the issuance and maintenance fee payments made to the USPTO. Furthermore, the fees collected by the USPTO were collected pursuant to statutory authority and were not a taking or an illegal exaction. Thus, the company was not entitled to a refund of the fees collected by the USPTO (Christy, Inc. v. U.S., August 24, 2020, Hughes, T.).

Background. The company applied for a patent on its "ambient air back flushed filter vacuum" in 2003, and the patent issued in 2006. All issuance and maintenance fees were timely paid through January 2018. In 2014, the company sued two competitors for patent infringement, and one of those competitors petitioned for inter partes review of the patent. In its review, the Patent Trial and Appeal Board found claims 1-18 of the patent unpatentable.

In response to the cancellation of its first 18 claims of the patent, the company filed suit in federal claims court. The court dismissed the case for failure to state a plausible claim. On appeal, the company argued that the lower court erred in three ways: (1) by finding that the company failed to state a compensable takings claim based on the cancellation of claims 1–18 of the patent; (2) by finding that the court lacked subject matter jurisdiction over the company’s illegal exaction claim; and (3) by finding that the company failed to state a plausible illegal exaction claim.

Golden v. United States. Shortly after oral argument in this case, the court issued an opinion in the case of Golden v. United States, 955 F.3d 981 (Fed. Cir. 2020), which resolved two of the three issues raised by the company on appeal in this case. First, Golden rejected the government’s argument that the federal claims court lacked jurisdiction over a takings claim arising from the cancellation of patent claims in an inter partes review. As a result, the court correctly held that it had subject matter jurisdiction over the company’s takings claim.

Second, Golden also confirmed that the company failed to state a plausible claim for a taking based on the cancellation of the patent. Golden specifically held that cancellation of patent claims in an inter partes review could not be a taking under the Fifth Amendment of the U.S. Constitution. Thus, the federal claims court correctly held that the cancellation of the company’s patent claims in the inter partes review was not a Fifth Amendment taking.

Failure to state a plausible claim. An illegal exaction occurs when money is "improperly paid, exacted, or taken from the claimant in contravention of the Constitution, a statute, or a regulation." Given that the Golden case already established that the Board did not violate the company’s Fifth Amendment rights by canceling its patent claims, the company was unable to assert that the USPTO violated any constitutional provision, statute, or regulation by failing to refund the company’s issuance and maintenance fee payments for the patent.

Instead, the company claimed that the cancellation of the patent amounted to an admission that the USPTO erred in issuing the patent claims. Allowing the government to keep the fees charged for its error was "unjust," the company argued, because the error was the cause of the company paying the issuance and maintenance fees. The company’s argument failed, the court stated, because the law requires payment of the fees without regard to any post-issuance proceedings. As the company did not show how the USPTO’s actions violated the Constitution, a statute, or a regulation, the company could not state a claim for an illegal exaction. The USPTO did not collect fees in excess of its statutory authority, and, therefore, did not illegally exact those fees. Thus, its refusal to refund the fees after the claims in the patent were canceled followed the requirements of the law.

This case is No. 19-1738.

Attorneys: James F. McDonough, III (Heninger Garrison Davis, LLC) for Christy, Inc. Scott R. McIntosh, U.S. Department of Justice, for the United States.

Companies: Christy, Inc.

MainStory: TopStory Patent FedCirNews GCNNews

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