Japanese Found. for Cancer Research v. Lee: Federal Circuit Rules that PTO properly denied Certificate of Correction for Unauthorized Terminal Disclaimer

Category: Administrative Law  
 By: Roy Rabindranath, Contributor 
TitleJapanese 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.
Procedural History
The ‘187 patent was issued and assigned to the Foundation on February 27, 2001. On October 11, 2011, the Foundation’s attorney of record responsible for prosecution of the ‘187 patent filed a statutory disclaimer pursuant to 37 C.F.R. 1.132(a) with the PTO, disclaiming “the entire term of all claims in [the ‘187 Patent]” and requesting that the disclaimer be “duly recorded.” On December 13, 2011, the Foundation’s attorney of record filed a petition under 37 C.F.R. § 1.182 to withdraw the statutory disclaimer. The PTO issued a decision denying the Foundation’s petition on January 17, 2012. […] The PTO explained that the statutory mechanisms available to correct a patent “are not available to withdraw or otherwise nullify the effect of a recorded terminal disclaimer,” and that the PTO’s established policy was to deny any “request to withdraw or amend a recorded terminal disclaimer in an issued patent on the grounds that the rules of practice and 35 U.S.C. § 253 do not include a mechanism for withdrawal or amendment of such a terminal disclaimer.” […] On February 27, the Foundation filed a petition under 37 C.F.R. §§ 1.182 and 1.183 asking the PTO to withhold publication of the terminal disclaimer in the Official Gazette, and indicating that it would file a request for reconsideration, which it filed on March 16. (The Foundation asked in the alternative for relief under 37 C.F.R. §§ 1.182 and 1.183 “to invoke the discretion of the director and suspend the rules.”). In August, the Foundation’s attorney of record met with the PTO and, following that meeting, filed a supplemental petition addressing its argument concerning whether the PTO had the inherent authority to grant the relief the Foundation requested. The Foundation’s March petition described what the Foundation characterized as “newly revealed information” and “newly discoverable evidence.” This included signed declarations from a number of personnel associated with one of the ‘187 patent’s Japanese licensees, Kyowa Hakko Kirin, Inc. (“KHK”), and KHK’s Japanese patent counsel, Kyowa Law Group (“Kyowa Law”). According to the declarations and the Foundation’s petition, the following series of events preceded the Foundation’s attorney of record’s filing of the statutory disclaimer.
First, on March 8, 2011, KHK’s in-house counsel contacted a paralegal at Kyowa Law to inquire as to whether a patent may be abandoned or disclaimed before it lapsed because of non-payment of the next maintenance fee. The paralegal’s declaration states that she contacted her “boss” and together they “conducted research which indicated that a disclaimer could be filed under U.S. statutory and regulatory provisions.” Then, the next day, March 9, the paralegal declares that she sent a letter by fax to the Foundation’s attorney of record’s law firm, Foley & Lardner LLP (“Foley”), which reads, in relevant part, as follows […]

Dear Sirs:
Our clients would like to abandon the captioned patent positively and invalidate this patent before the case lapses by non-payment of the next maintenance fees, which will be due on August 27, 2012. Would you please let us have the necessary forms and/or information for the procedure of positive abandonment, preferably by March 15, 2011. We would appreciate your immediate reply by return facsimile.
[…] Then, on October 11, the Foundation’s attorney of record filed the terminal disclaimer at the PTO. The paralegal’s declaration goes on to state that she received a copy of the filed terminal disclaimer from the Foundation’s attorney of record on November 29, 2011, and then reported it to KHK. The next day, she was informed by KHK instructing Kyowa Law to “urgently ask Foley to restore the patent.” (The Foundation’s attorney of record subsequently filed the aforementioned December 2011 petition). The Foundation’s petition also included a declaration from the Executive Director of the Foundation stating inter alia, that the Foundation neither requested nor authorized the disclaimer. The petition also included a declaration from the individual “in charge of patents regarding biotechnology at KHK” stating that KHK did not have the authority to disclaim the patent, and that the declarant did not instruct nor authorize any action to the ‘187 patent disclaimer. The in-house patent counsel for KHK who originally communicated with the paralegal at Kyowa Law also provided a declaration, stating that the request was not for the disclaimer of the ‘187 patent but rather a question about “whether it was possible to actively disclaim a U.S. patent, rather than allow it to lapse by non-payment of maintenance fees.” […] On February 22, 2013, the PTO issued a final agency decision denying the Foundation’s petition. The foundation thereafter filed an action in district court appealing the PTO’s decision under the Administrative Procedure Act (“APA”), 5 U.S.C. § 551. The PTO subsequently agreed to withhold publication of the ‘187 patent’s disclaimer in the Official Gazette. In May, the PTO and the Foundation filed cross motions for summary judgment. The district court granted the Foundation’s motion and denied the PTO’s motion. It directed the PTO “to withdraw the disclaimer. Absent a finding that the Foundation actually authorized its filing.” The PTO appeals.
Japanese Found., at *2-6 (Text Added, Internal Citations Omitted).
Legal Reasoning (PROST, Dyk and Taranto):
Standard of ReviewUnder 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.
Certificate of CorrectionOn 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 AuthorityThe 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).
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.
Image Attribution Statement: unknown, “earthquake patent,” available as a public domain image, http://commons.wikimedia.org/wiki/File:Earthquake-patent.jpg (image edited) (last visited Jan. 20, 2015).
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