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April 23, 2014

Third-Party Competitor Cannot Sue U.S. Patent and Trademark Office (PTO) Over Issued Patents

Addressing the issue of whether an alleged infringer can sue the U.S. Patent and Trademark Office (PTO) to prevent issuance of a competitor’s patents, the U.S. Court of Appeals for the Federal Circuit affirmed a lower court’s bench ruling that it lacked subject matter jurisdiction over such a claim, concluding that the Patent Act’s comprehensive legislative scheme provides competitors with an adequate remedy in a court for the issuance of invalid patents and, thus, precludes such lawsuits.  Pregis Corp. v. Kappos, Case Nos. 10-1492, 10-1532 (Fed. Cir., Dec. 6, 2012) (Reyna, J.).

Free-Flow Packaging International, Inc. owned patents relating to air-filled packaging technology used to fill space in shipping boxes carrying lightweight items that do not take up all the available space in a box.  Pregis Corporation, Free-Flow’s direct competitor, filed suit in district court seeking a declaratory judgment of non-infringement and invalidity of the Free-Flow patents.  Pregis also took the unusual step of suing the PTO under the Administrative Procedures Act (APA) to prevent the issuance of two pending patent applications.

The district court dismissed Pregis’ APA claims for lack of subject matter jurisdiction.  In a bench ruling, the district court held that the Patent Act shows Congress’ intent to preclude putative third-party infringers from seeking judicial review under the APA of PTO decisions to issue patents.  After a jury trial, the jury found the entire asserted claims invalid, not infringed or both.  Free-Flow moved for judgment as a matter of law as to infringement and validity of the patents, and the court denied its motions.  Free-Flow appealed the denial of its post-trial motions on validity and infringement, and Pregis appealed the dismissal of its APA claims.

Regarding obviousness, Free-Flow did not dispute that the prior art cited at trial, with some modifications, taught every element of the asserted patent claims.  Instead, Free-Flow argued that there was no evidence of a reason to combine the prior art references in the manner required to arrive at the asserted claims of the Free-Flow patents.  Free-Flow also argued that the prior art references taught away from such combination.

Relying on the testimony of Pregis’ technical expert, who presented detailed claim charts and testimony detailing the disclosure of the prior art and explaining how a person of ordinary skill in the art would have knowledge regarding certain modifications of the prior art disclosure, the Federal Circuit found that there was substantial evidence to support the factual underpinnings of the jury verdict of invalidity for obviousness.  The Court also found that the prior art references did not teach away from the asserted claims, affirming the lower court’s denial of Free-Flow’s post-trial motions in this regard.  The Federal Circuit stated that a prior art reference’s preferred embodiment does not constitute teaching away from other reasonable uses of the disclosure.

The Federal Circuit also affirmed the lower court’s ruling that dismissed Pregis’ APA claims.  The Court relied on the part of the APA that states the APA applies except to the extent that another statute precludes judicial review and that the APA authorizes judicial review of final agency actions only if there is no other adequate remedy in a court.  The Federal Circuit stated that the comprehensive legislative scheme of the Patent Act precludes judicial review of the reasoning of PTO decision to issue patents after examination and that competitors have an adequate remedy in a court for the issuance of invalid patents.  The Federal Circuit concluded that a third party cannot sue the PTO under the APA to challenge a PTO decision to issue a patent.

© 2014 McDermott Will & Emery

About the Author

Associate

 

Charles J. Hawkins is an associate in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, D.C. office.  Chuck focuses his practice on the litigation of intellectual property disputes.  He has been involved in litigation dealing with utility patent, design patent, trademark, trade secret and trade dress infringement and has handled matters at all stages of litigation, investigations involving allegations of unfair importation at the United States International Trade Commission (ITC) and including appeals to the United...

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