Thursday, March 26, 2015

CAFC in Exela v. Lee: PTO revival rulings are not subject to third party collateral challenge; Judge Newman: we must try harder

The CAFC in Exela addressed third party challenges to PTO revival rulings.


The issue addressed:

This appeal presents the question of whether a third party has the right to challenge, by way of the Administrative Procedure Act (APA), a ruling of the Patent and Trademark Office reviving a patent application that had become abandoned by failure to meet a filing schedule established by the Patent Cooperation Treaty and its implementing statute. The challengers are Exela Pharma Sciences, LLC; Exela Pharmsci, Inc.; and Exela Holdings, Inc. (collectively “Exela”).

Exela petitioned the PTO to “reconsider and withdraw” its revival of the national stage
application and to cancel the issued patent. The patent is United States Patent No. 6,992,218 (“the ’218 patent”), assigned to SCR Pharmatop. The PTO declined to consider Exela’s petition, stating that no law or regulation authorizes non-party challenge to a PTO ruling to accept a tardy filing. Exela then brought suit under the APA in the United States District Court for the Eastern District of Virginia, arguing that the PTO’s action was ultra vires and that Exela’s petition should have been considered and favorably decided. The PTO moved to dismiss Exela’s complaint on several grounds.

The district court initially held that Exela was entitled to challenge the PTO’s decision under the APA, but on reconsideration and in view of new Fourth Circuit precedent, the district court dismissed Exela’s complaint for failing to meet the statute of limitations for claims filed against the United States, including APA claims.1 We affirm the dismissal, on the ground that PTO revival rulings are not subject to third party collateral challenge, thereby precluding review regardless of whether Exela’s claims were time-barred


The nub of the debate:

The PTO responds that there is no authority for third parties to collaterally challenge the correctness of PTO revival rulings. Thus the PTO contends that the merits should be decided in its favor, even if dismissal is not appropriate on limitations grounds.

Exela argues that although such third party action is not explicitly authorized by statute or regulation, it is available under the APA. Exela cites the Court’s statement in Block v. Community Nutrition Institute that “where substantial doubt about the congressional intent exists, the general presumption favoring judicial review of administrative action is controlling.” 467 U.S. 340, 350–51 (1984).


The issue here is whether a third party may collaterally challenge and obtain judicial review of a PTO revival ruling concerning an unrelated patent application. The Patent Act’s “intricate scheme for administrative and judicial review of PTO patentability determinations,” and “the Patent Act’s careful framework for judicial review at the behest of particular persons through particular procedures” demonstrate that third party challenge of PTO revival rulings under the APA is not legislatively intended. Pregis Corp. v. Kappos, 700 F.3d 1348, 1357 (Fed. Cir. 2012) (“[A] third party cannot sue the PTO under the APA to challenge a PTO decision to issue a patent.”). We conclude that PTO revival actions are not subject to third party challenge under the APA. On this ground, the dismissal of the Exela complaint is affirmed

There is a separate issue in the concurring opinions.

Judge Newman wrote

I write separately to address the concerns raised in Judge Dyk’s concurring opinion, in which he criticizes the court’s ruling in Aristocrat Technologies Australia Pty Ltd. v. International Game Technology, 543 F.3d 657 (Fed. Cir. 2008). With all respect to my colleague, I do not share the view that Aristocrat was wrongly decided.


With all respect, my colleague errs in stating that such major substantive issues, each of which is a traditional defense, “cannot be so easily distinguished” from an excuse for a missed filing date. Conc. Op. at 5. If judges cannot easily distinguish the significance of antitrust violation from a missed date, we must try harder.


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