IP Law Daily Inventor’s challenges against USPTO were time-barred or based on mistaken statutory interpretation
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Monday, September 24, 2018

Inventor’s challenges against USPTO were time-barred or based on mistaken statutory interpretation

By Brian Craig, J.D.

In a challenge brought by an inventor with approximately 400 pending patent applications alleging that the USPTO acted unlawfully in denying his petition for rulemaking, the U.S. Court of Appeals for the Federal Circuit held that while the federal district court in Nevada improperly dismissed the case for lack of subject matter jurisdiction, the challenges are either time-barred or based on mistaken statutory interpretation. The court found that most challenges to the 2014 amendment to Manual of Patent Examining Procedure were time-barred because the amendment was not substantive and did not restart the statute of limitations period (Hyatt v. USPTO, September 24, 2018, Hughes, T.).

Gilbert Hyatt is the named inventor on more than 70 issued patents and approximately 400 pending patent applications, all of which were filed before June 8, 1995. Due to numerous amendments, those pending applications contained approximately 115,000 total claims as of August 2015. In June 2016, the applicant filed suit challenging the denial of his petition for rulemaking in Nevada district court under the Administrative Procedure Act (APA). The complaint alleges that the USPTO’s adoption of Manual of Patent Examining Procedure (MPEP) § 1207.04 was arbitrary and capricious, and in excess of statutory authority. The district court granted summary judgment and dismissed all of the claims, determining that it lacked subject matter jurisdiction. The applicant appealed to the Federal Circuit.

Subject matter jurisdiction. The Federal Circuit first analyzed whether the federal district court in Nevada properly dismissed the action based on subject matter jurisdiction. Although Congress has granted the Federal Circuit and the Eastern Virginia district court exclusive jurisdiction to review final Board application decisions, this grant does not apply to APA challenges to the USPTO’s denial of petition for ruling. Accordingly, the federal district court in Nevada improperly granted summary judgment based on lack of subject matter jurisdiction.

Claim preclusion. The Federal Circuit then analyzed whether the applicant’s prior unreasonable delay barred his claims under claim preclusion. The parties disputed whether the prior case involved the same set of transactional facts. Here, the two sets of claims relate to different sets of facts. The applicant’s unreasonable delay claims arose from the USPTO’s reopening of prosecution for 80 of his applications in 2013. In contrast, his present claims arose from the USPTO’s denial of his petition for rulemaking in December 2015. This petitioning process is completely independent of the USPTO’s application examination process. In addition, the two sets of claims could not have been conveniently tried together. Thus, the Federal Circuit determined that claim preclusion does not bar the applicant's claims.

Time-barred claims. The Federal Circuit then analyzed whether the challenges to the denial of the petition for rulemaking are time barred. The court found that the argument contending that the USPTO promulgated MPEP § 1207.04 without providing public notice and an opportunity to comment is time barred. The court also held that the USPTO’s 2014 amendments to MPEP § 1207.04 did not restart the statute of limitations because the amendment did not substantively alter the rule. A procedural challenge to an agency rulemaking under the APA accrues at the time of final agency action. For substantive challenges, the right of action accrues either when the agency makes its initial decision or at the time of an adverse application of the decision against the plaintiff, whichever comes later. While most of the arguments are time-barred, the court concluded that the argument alleging MPEP § 1207.04 violates 35 U.S.C. § 6(b)(1) is timely.

Mistaken statutory interpretation. Because the other claims are time-barred, the Federal Circuit only considered the merits of the claim that the USPTO unlawfully denied his petition for rulemaking because MPEP § 1207.04 violates 35 U.S.C. § 6(b)(1) which requires the Board to "review adverse decisions of examiners upon applications for patents pursuant to section 134(a)." In analyzing the plain meaning, the Federal Circuit held that the mandatory language indicates that the Board does not have discretion over whether to review an examiner’s rejection of an application. The USPTO’s rules allow applicants to seek review of examiners’ final rejections before a higher authority with the Board. Nothing suggested that the USPTO cannot impose conditions on the Board’s ability to reach the merits of an appeal or delay the appeal. Allowing examiners to reopen prosecution does not deprive applicants of their right to appeal final examiner rejections because reopening prosecution cannot circumvent the Board’s review. Once the examiner adds a new ground of rejection, the applicant may immediately appeal it along with the old grounds. Here, there was no evidence in the record that, in the wake of that decision, USPTO examiners have repeatedly reopened prosecution of the applications for the purpose of further delaying Board review. Therefore, the court held that the claims are barred based on the plain meaning of the statute.

This case is No. 2017-1722.

Attorneys: Andrew M. Grossman (Baker & Hostetler LLP) for Gilbert P. Hyatt and American Association for Equitable Treatment, Inc. Molly R. Silfen for the USPTO.

Companies: American Association for Equitable Treatment, Inc.

MainStory: TopStory Patent FedCirNews

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