01/27/15

Title	Japanese Found. for Cancer Research v. Lee, No. 2013-1678, 2014-1014 (Fed. Circ. December 9, 2014).
Issue	[Whether the district court was correct in ruling that] the PTO acted arbitrarily and capriciously, and abused its discretion, when it refused to withdraw the terminal disclaimer on U.S. Patent No, 6, 194,187 (“187 patent”). Japanese Found., at *2 (Text Added).
Holding	[…] we find that the PTO did not act arbitrarily, act capriciously, or abuse its discretion in declining to use any inherent authority that it might have in withdrawing the terminal disclaimer on the ‘187 patent that the Foundation’s attorney of record duly filed in accordance with the PTO’s regulations. Id. at *17.

Legal Reasoning (PROST, Dyk and Taranto):
Background
Standard of Review	Under the APA, we set aside an agency’s action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Japanese Found., at *7.
Analysis
Certificate of Correction	On appeal, the Foundation argues that the PTO has the authority to issue a certificate of correction for the ‘187 patent to withdraw the terminal disclaimer under the statute that governs such certificates, 35 U.S.C. § 255. This statutory section provides that a certificate of correction may be issued “whenever a mistake of a clerical or typographical nature, or of minor character, which was not the fault of the Patent and Trademark Office, appears in a patent and a showing has been made that such mistake occurred in good faith [….] In support of its position that § 255 is available as a mechanism for withdrawing a mistakenly filed terminal disclaimer, the Foundation cites the disclaimer at issue in Carnegie Mellon Univ. v. Schwartz. […] The foundation argues that the facts of Carnegie Mellon indicate that a certificate of correction may be used to effect the withdrawal of a terminal disclaimer on an issued patent and, moreover, that its filing of the disclaimer on the ‘187 patent analogously represented a “clerical or typographical error” that occurred in “good faith” as required by § 255. As an initial matter, the PTO’s policy in fact does acknowledge the possibility of correcting a terminal disclaimer in the scenario that the Foundation argues was described in Carnegie Mellon. […] Indeed, the PTO’s decision on the Foundation’s petition noted this rule of practice, contrasting it with the Foundation’s request to simply withdraw a recorded disclaimer on an issued patent. Importantly, in the hypothetical scenarios described in [MPEP §1490], the patentee sought to file a terminal disclaimer but indicated the wrong target patent or application. The Carnegie Mellon disclaimer, for example, indicated the number of a patent that was related to the patent application that was the intended target. There, the relief accorded by the PTO only nullified the terminal disclaimer on the wrongly identified patent, while then enforcing the terminal disclaimer on the intended patent or application. Here, the Foundation has not identified an error in the patent number or application that is apparent on its face – like a transposed number or the number of a related patent – which would entail redirecting the disclaimer to the correct target. It instead claims that the filing of the disclaimer was itself the “clerical or typographical error” that may be corrected under § 255. […] An erroneous identification of a patent number, as in Carnegie Mellon, represents the outer edge of such an error, in which a patent application number was transposed with a related patent number. However, this definition of “clerical or typographical error” applies only to an error that appears on the face of the document, as opposed to the filing of the document itself. […] In sum, there is no basis for withdrawing the terminal disclaimer on the ‘187 patent by means of a certificate of correction under § 255. Japanese Found., at *8-12 (Text Added, Internal Citations Omitted).
Inherent Authority	The Foundation also argues, as the district court held, that the PTO has the inherent authority to withdraw a mistakenly filed terminal disclaimer and should have exercised its discretion to do so here. […] The first question, then, is the scope of the PTO’s authority, if any, to withdraw an effectively recorded disclaimer. We have held that “administrative agencies possess inherent authority to reconsider their decisions, subject to certain limitations, regardless of whether they possess explicit statutory authority to do so.” […] The PTO’s denial of the Foundation’s petition expressed its position that, as to terminal disclaimers recorded under § 253, there was no administrative determination for it to reconsider. According to the PTO, the “only determination” is whether the disclaimer satisfied the requirements of 37 CFR § 1.321(b), i.e., was signed by the application or any attorney or agent of record, stated the application’s ownership interest and what portion of the term was being disclaimed, and was accompanied by a fee. […] The district court, however, held that as the PTO receives disclaimer filings and is responsible for placing them in the public record, the PTO has the inherent authority to reconsider whether it should have filed an unauthorized terminal disclaimer. The district court also noted that during its hearing, the PTO “appeared to concede that it had inherent discretionary authority to withdraw a fraudulently filed disclaimer but not an unauthorized one.” However, it is also not our place to define what hypothetical circumstances might allow or require the PTO’s action, where those circumstances are not at issue here. The PTO has sufficiently stated its reasoning that, in this case, the existence of a mistake by an attorney other than the type falling under § 255 or a lack of actual authority from a client should not result in the withdrawal of the terminal disclaimer. The PTO need not articulate what other circumstances would warrant such withdrawal. […] In this case, the Foundation has alleged that its attorney of record filed the disclaimer because of miscommunications between the Foundation, KHK, Kyowa Law, and Foley. The PTO declined to delve into the record and evaluate the merits of the Foundation’s assertion. The PTO instead determined that it need not examine alleged miscommunications between the patentee and its attorney of record because of the principle that it holds the patentee “to be bound by the actions or inactions of his voluntarily-chosen representative.” The PTO, apart from clerical error under § 255, end its inquiry into attorney authorization once it determines that the attorney of record signed the disclaimer, as required by regulation. Id. at *12-16 (Text Added, Internal Citations Omitted).
Conclusion
	For the aforementioned reasons, we reverse the district court’s grant of the Foundation’s motion for summary judgment and denial of the PTO’s motion for summary judgment, and accordingly, we vacate the district court’s order that the PTO conduct additional proceedings and withdraw the terminal disclaimer on the ‘187 patent from the public record. Japanese Found., at *17.

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