Challenging the PTO for Issuing Patents

by Dennis Crouch

Pregis Corp. v. Kappos and Free Flow Packaging (Fed. Cir. 2013)

Pregis was feeling the pinch of its competitor Free-Flow’s air-packaging patents and so, in 2009, Pregis sued Free-Flow for declaratory judgment of invalidity and non-infringement. In the same lawsuit, Pregis also sued the USPTO in order to prevent the agency from issuing two of Free-Flow’s pending applications. When those two patents issued, Pregis amended its complaint to allege that the PTO’s action in issuing the patents was “arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.” Under the Administrative Procedures Act (APA), Pregis argued, such an action should be nullified by the court.

The district court rejected those claims against the USPTO as lacking subject matter jurisdiction and that decision was affirmed by the Federal Circuit in December 2012. – holding that “a potential infringer cannot sue the USPTO under the APA to attack the validity of an issued patent.” In February, Pregis filed its petition for rehearing en banc and focuses its argument on the Supreme Court’s recent decision in Sackett v. EPA, 132 S. Ct. 1367 (2012) that held that the statute’s silence as to judicial review and some allowance for limited judicial review were insufficient “to overcome the APA’s presumption of reviewability for all final agency action.” Pregis writes in its petition for rehearing:

The Supreme Court has repeatedly rejected “implied” preclusion arguments similar to what the PTO asserted and the panel accepted here. See generally Stephen G. Breyer et al., Administrative Law and Regulatory Policy 777 (6th ed. 2006) (“Implicit preclusion is rare.”). The case for “implied” preclusion of judicial review is especially weak in context of the Patent Act, since that statute’s text expressly precludes judicial review of certain patent-related administrative agency actions. See 35 U.S.C. § 282 (“A due diligence determination under section 156(d)(2) is not subject to judicial review.”). Section 282 demonstrates that Congress well knows how to provide for preclusion of judicial review of patent-related administrative agency actions, and did not include any such provision in the Patent Act for PTO grant decisions.

The Sackett decision demonstrates the strength of the presumption in favor of judicial review. . . . [In that case t]he Court specifically rejected the government’s argument that, by affording regulated parties a right to challenge the validity of a compliance order in a subsequent enforcement action, the Clean Water Act impliedly precluded judicial review of the agency’s decision to issue such an order. The Court reasoned, “the APA provides for judicial review of all final agency actions, not just those that impose a self-executing sanction.” The parallel between Sackett and the present case is clear: like the agency action at issue in Sackett, the issuance of a patent imposes legal obligations and exposes regulated persons to enforcement actions (i.e., infringement actions) for non-compliance. In both cases, judicial consideration of the legality of the initial agency action in a later enforcement action does not provide a good reason to foreclose judicial review of the initial action.

The Sackett decision also rejected the government’s argument that express grants of judicial review elsewhere in the Clean Water Act provided a solid basis for overcoming the presumption of judicial review. Rather, as the Sackett Court unanimously instructed, “if the express provision of judicial review in one section of a long and complicated statute were alone enough to overcome the APA’s presumption of reviewability for all final agency action, it would not be much of a presumption at all.”

The Federal Circuit’s reaction to this latest move will be interesting.


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