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Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 

---

United States Court of Appeals 

for the Federal Circuit ______________________ 

AUTOMATED MERCHANDISING SYSTEMS, INC., 

a Delaware Corporation,

Plaintiff-Appellant

v.

MICHELLE K. LEE, Director, U.S. Patent and 

Trademark Office, in her official capacity as the 

Under Secretary of Commerce for Intellectual 

Property and Director of the United States Patent 

and Trademark Office,

Defendant-Appellee

______________________ 

2014-1728

______________________ 

Appeal from the United States District Court for the 

Eastern District of Virginia in No. 1:13-cv-01289-AJTJFA, Judge Anthony J. Trenga.

______________________ 

Decided: April 10, 2015

______________________ 

JAMES DANIEL BERQUIST, Davidson Berquist Jackson 

& Gowdey, LLP, Arlington, VA, argued for plaintiffappellant. Also represented by DONALD LEE JACKSON. 

MEGAN BARBERO, Appellate Staff, Civil Division, 

United States Department of Justice, Washington, DC, 

argued for defendant-appellee. Also represented by MARK 

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2 AUTOMATED MERCHANDISING v. LEE

R. FREEMAN, JOYCE R. BRANDA; NATHAN K. KELLEY,

WILLIAM LAMARCA, LORE A. UNT, Office of the Solicitor, 

United States Patent and Trademark Office, Alexandria, 

VA; DANA J. BOENTE, DAVID MOSKOWITZ, Office of the 

United States Attorney for the Eastern District of Virginia, Alexandria, VA. 

______________________ 

Before PROST, Chief Judge, TARANTO, Circuit Judge,

and FOGEL, District Judge. *

TARANTO, Circuit Judge. 

Automated Merchandising Systems, Inc. (AMS) petitioned the United States Patent and Trademark Office to 

terminate four pending inter partes reexaminations of 

four AMS patents that had been the subject of a patentinfringement suit between AMS and Crane Co., the 

requester of the reexaminations. After AMS and Crane 

entered into a consent judgment, which dismissed the 

infringement suit and stated that the parties stipulated to 

the validity of the patents, AMS argued to the PTO that 

the reexaminations must stop because, under 35 U.S.C. § 

317(b) (2006), the consent judgment was a “final decision

. . . entered against a party in a civil action . . . that the 

party has not sustained its burden of proving the invalidity of any patent claim in suit.” The PTO denied AMS’s 

petition to terminate the reexaminations. 

When AMS challenged that decision in district court

under the Administrative Procedure Act (APA), 5 U.S.C. 

§§ 701–706, the court held that § 317(b) did not require 

termination of the reexaminations. Automated Merch. 

Sys., Inc. v. Rea, No. 1:13-CV-1289, 2014 WL 4628552, at 

* Honorable Jeremy Fogel, District Judge, United 

States District Court for the Northern District of California, sitting by designation.

 

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AUTOMATED MERCHANDISING v. LEE 3

*3–6 (E.D. Va. Aug. 6, 2014) (AMS). The court concluded 

that the consent judgment, though final, was not a decision that Crane failed to prove invalidity of the patents, 

as the judgment stated, regarding invalidity, only that the 

parties stipulated to validity. Id. We now affirm, though 

not on the district court’s ground of § 317(b)’s inapplicability. We conclude that AMS’s challenge to the PTO’s

refusal to terminate pending reexaminations cannot 

proceed because the refusal is not a “final agency action” 

under the APA, 5 U.S.C. § 704. 

BACKGROUND

AMS sued Crane in the Northern District of West 

Virginia for infringement of four patents, U.S. Patent 

Nos. 6,384,402, 6,794,634, 7,191,915, and 7,343,220. In 

early 2011, years into the litigation, Crane requested an 

inter partes reexamination of each patent under 35 U.S.C. 

§§ 311–318 (2006).1 Finding that Crane had raised substantial new questions of patentability as to all four 

patents, the PTO initiated four inter partes reexaminations. Id. §§ 312(a), 313. 

 While the reexaminations were underway, AMS and 

Crane settled their suit in the Northern District of West 

Virginia. Pursuant to the settlement, the court issued a 

consent judgment stating, in relevant part, that “[t]he 

parties stipulate that [the four patents] are valid,” that 

“[a]ll claims . . . are dismissed with prejudice,” and that 

“[t]his judgment is final.” J.A. 62. AMS then asked the 

1 The America Invents Act (AIA) repealed the provisions authorizing inter partes reexaminations. Pub. L. 

No. 112-29, § 6, 125 Stat. 284, 299–305 (2011). But the 

pre-AIA provisions apply here because Crane requested 

the inter partes reexaminations before the effective date 

of the AIA. Id. § 6(c)(3)(C), 125 Stat. at 305.

 

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4 AUTOMATED MERCHANDISING v. LEE

PTO, several times, to terminate the reexaminations 

under § 317(b), which read, in relevant part, as follows: 

Once a final decision has been entered against a 

party in a civil action arising in whole or in part 

under section 1338 of title 28, that the party has 

not sustained its burden of proving the invalidity 

of any patent claim in suit . . . , then neither that 

party nor its privies may thereafter request an inter partes reexamination of any such patent claim 

on the basis of issues which that party or its privies raised or could have raised in such civil action . . . , and an inter partes reexamination 

requested by that party or its privies on the basis 

of such issues may not thereafter be maintained 

by the Office . . . . 

The PTO refused to terminate the reexaminations. 

For example, with regard to the ’634 patent, it found no 

“decision” by the West Virginia court “that [Crane] ha[d] 

not sustained its burden of proving the invalidity of any 

patent claim.” J.A. 75. The PTO also stated that its 

refusal to terminate the proceedings was “a final agency 

action.” J.A. 81, 97. 

AMS filed suit in the Eastern District of Virginia, invoking the court’s jurisdiction under 28 U.S.C. §§ 1331, 

1338, 1346, and also relying for “jurisdiction” on the APA,

5 U.S.C. §§ 701–706, the Declaratory Judgment Act, 28 

U.S.C. § 2201, and the mandamus authority of 28 U.S.C. 

§ 1361. AMS argued that, in light of the consent judgment, § 317(b) required the PTO to terminate the reexaminations. The PTO did not dispute the district court’s 

authority to reach the merits of that challenge. 

The district court rejected AMS’s position on the 

merits. It held that § 317(b)’s prohibition on maintaining 

a reexamination does not apply unless there has been “an 

actual adjudication on the merits.” AMS, 2014 WL 

4628552, at *5. In AMS’s case, the district court deterCase: 14-1728 Document: 44-2 Page: 4 Filed: 04/10/2015
AUTOMATED MERCHANDISING v. LEE 5

mined, “[t]he Consent Judgment’s . . . language . . . cannot 

be reasonably understood as anything more than a willingness on the part of the court to dismiss the case based 

on the parties’ settlement without its adjudication of the 

merits.” Id. at *4. The district court thus denied AMS’s 

summary-judgment motion to terminate the reexaminations and granted summary judgment in favor of the PTO. 

Id. at *6. 

AMS has appealed to this court. We have jurisdiction 

pursuant to 28 U.S.C. § 1295(a)(1).

DISCUSSION

We review a grant of summary judgment de novo, applying the same standard as the district court. Burandt v. 

Dudas, 528 F.3d 1329, 1332 (Fed. Cir. 2008) (applying 

Fourth Circuit law). If review under the APA is authorized, we must “hold unlawful and set aside agency action, 

findings, and conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2). 

A 

Although the PTO did not raise the issue before the 

district court, it argues now that its refusal to terminate

the reexaminations was not a “final agency action” subject 

to judicial review under 5 U.S.C. § 704. Just as AMS 

treated the APA as a matter of “jurisdiction” in its complaint, the PTO here characterizes the APA’s finalagency-action requirement as “jurisdictional.” The sense 

of that term the PTO invokes is one that entitles a party 

to have an issue decided on appeal even when, like the 

PTO here regarding the § 704 issue, it failed to raise the 

issue in the district court. Appellee’s Brief at 14–22; see

Kontrick v. Ryan, 540 U.S. 443, 455 (2004). 

We need not decide whether the APA’s final-agencyaction requirement is jurisdictional in that sense. We 

assume, arguendo but with some basis, that it is not. See

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6 AUTOMATED MERCHANDISING v. LEE

Air Courier Conference of Am. v. Am. Postal Workers 

Union, 498 U.S. 517, 523 n.3 (1991) (“The judicial review 

provisions of the APA are not jurisdictional, Califano v. 

Sanders, 430 U.S. 99 (1977), so a defense based on exemption from the APA can be waived by the Government.”). 

Nevertheless, we may consider whether the APA requirement is met in this case. Under certain circumstances, we may consider issues not previously raised, 

and we find such circumstances present here. 

Considerations relevant to overlooking a failure to 

preserve an issue include whether 

(i) the issue involves a pure question of law and 

refusal to consider it would result in a miscarriage 

of justice; (ii) the proper resolution is beyond any 

doubt; (iii) the appellant had no opportunity to 

raise the objection at the district court level; (iv) 

the issue presents significant questions of general 

impact or of great public concern; or (v) the interest of substantial justice is at stake. 

L.E.A. Dynatech, Inc. v. Allina, 49 F.3d 1527, 1531 (Fed. 

Cir. 1995) (internal quotation marks and brackets omitted); see Singleton v. Wulff, 428 U.S. 106, 121 (1976) (“We 

announce no general rule. Certainly there are circumstances in which a federal appellate court is justified in 

resolving an issue not passed on below, as where the 

proper resolution is beyond any doubt . . . .”). 

Several criteria for discretionary disregard of forfeiture combine to justify consideration of the APA issue 

here. Proper resolution of the issue—which is a matter of 

law and which does not involve the merits of the § 317(b) 

challenge to the PTO’s decision—is beyond doubt, as 

explained infra in Part B. Moreover, whether a refusal to 

terminate ongoing PTO proceedings is immediately 

reviewable presents a significant question of continuing 

public concern, affecting a range of PTO proceedings in 

the regular operation of the agency. See Cemex, S.A. v. 

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AUTOMATED MERCHANDISING v. LEE 7

United States, 133 F.3d 897, 902 (Fed. Cir. 1998) (addressing pure issue of statutory construction not raised 

below—application of the Tariff Act—because the issue 

involved “ ‘significant questions of general impact’ ” ). And 

the issue has been fully briefed by the parties. See Interactive Gift Exp., Inc. v. Compuserve Inc., 256 F.3d 1323, 

1345 (Fed. Cir. 2001) (“ ‘A circuit court will disregard the 

rule [of waiver] in compelling circumstances[,] . . . 

[p]articularly . . . if the issue has been fully briefed, if the 

issue is a matter of law or the record is complete, if there 

will be no prejudice to any party, and if no purpose is 

served by remand . . . .’ ”) (quoting 19 James W. Moore et 

al., Moore’s Federal Practice § 205.05, at 205–58 (3d ed. 

1997)). 

For those reasons, we will consider whether the PTO’s 

refusal to terminate the reexaminations constituted a 

final agency action. 

B 

Under the APA, “[a]gency action made reviewable by 

statute and final agency action for which there is no other 

adequate remedy in a court are subject to judicial review. 

A preliminary, procedural, or intermediate agency action 

or ruling not directly reviewable is subject to review on 

the review of the final agency action.” 5 U.S.C. § 704. It 

is undisputed that no statute makes the challenged 

refusal to terminate the inter partes reexaminations 

immediately reviewable. Accordingly, the refusal is not 

reviewable unless it is a “final agency action for which 

there is no other adequate remedy in a court.”

Generally, two requirements must be met for an 

agency action to be final. “First, the action must mark 

the ‘consummation’ of the agency’s decisionmaking process—it must not be of a merely tentative or interlocutory 

nature. And second, the action must be one by which 

‘rights or obligations have been determined,’ or from 

which ‘legal consequences will flow.’” Bennett v. Spear, 

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520 U.S. 154, 177–78 (1997) (citations omitted); see also 

Franklin v. Massachusetts, 505 U.S. 788, 797 (1992) (“The 

core question is whether the agency has completed its 

decisionmaking process, and whether the result of that 

process is one that will directly affect the parties.”). The 

PTO’s refusal to terminate the inter partes reexaminations here does not qualify as a final agency action under 

those standards. 

The PTO’s refusal was anything but the “‘consummation’ of the [PTO’s] decisionmaking process”; it was, 

instead, “interlocutory” in nature. Bennett, 520 U.S. at 

178. An analogy is apt: the PTO’s refusal to stop the 

proceedings here was as interlocutory, as far from final, 

as the run-of-the-mill district-court denial of a motion to 

dismiss. See Van Cauwenberghe v. Biard, 486 U.S. 517, 

524 (1988) (noting strong general rule and narrowness of 

exceptions). An ultimate merits determination regarding 

the validity of any of the patent claims at issue has not 

yet been reached in any of the reexamination proceedings. 

The reexaminations could end with decisions in AMS’s 

favor, which would moot any controversy over how to 

interpret § 317(b). The PTO’s refusal to terminate simply 

permits each reexamination to reach such a final disposition—nothing more. See, e.g., Chemsol, LLC v. United 

States, 755 F.3d 1345, 1355 (Fed. Cir. 2014) (extending 

deadline for administrative action is not final agency 

action); Patlex Corp. v. Mossinghoff, 771 F.2d 480, 485 

(Fed. Cir. 1985) (“The determination that a substantial 

new question of patentability exists is a preliminary 

decision. It is not a final determination . . . .”), modifying

758 F.2d 594 (Fed. Cir. 1985); see also FTC v. Standard 

Oil Co., 449 U.S. 232, 239–43 (1980) (decision to initiate 

administrative proceedings is not final agency action); 

DRG Funding Corp. v. Sec’y of Hous. & Urban Dev., 76 

F.3d 1212, 1214 (D.C. Cir. 1996) (“[The final-agencyaction requirement] serves several functions. It allows 

the agency an opportunity to apply its expertise and 

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correct its mistakes, it avoids disrupting the agency’s 

processes, and it relieves the courts from having to engage 

in piecemeal review which is at the least inefficient and 

upon completion of the agency process might prove to 

have been unnecessary.”) (internal quotation marks and 

citation omitted). 

The PTO’s refusal to terminate the proceedings also is 

not an action “by which ‘rights or obligations have been 

determined,’ or from which ‘legal consequences will 

flow.’ ” Bennett, 520 U.S. at 178. AMS has lost no patent 

rights from the refusal to terminate the proceedings. Any 

loss of patent rights for the patents at issue will not occur 

until completion of the relevant reexamination. The only 

direct consequence that flows from the PTO’s refusal to 

stop the proceedings is that AMS must continue to participate in the reexaminations to preserve its interests. 

Alone, however, an agency’s imposition of the burden of 

participating in administrative proceedings is not enough 

to render that action final. Standard Oil, 449 U.S. at 242; 

see Van Cauwenberghe, 486 U.S. at 524 (similar point for 

finality rule applicable to district-court litigation).

If AMS receives an adverse ruling from the PTO in 

any of the reexaminations, AMS will at that time have an 

“adequate remedy in a court.” 5 U.S.C. § 704. Under the 

APA, the “intermediate” agency action of refusing to stop 

the reexaminations, not elsewhere declared to be unreviewable, “is subject to review on the review of the final 

agency action.” Id. The PTO has conceded that, under 35 

U.S.C. § 315(a)(1) (2006), “AMS can appeal any adverse 

[final determination of patentability]” to this court for 

“consider[ation of] whether the reexamination proceedings should have been terminated under § 317(b).” Appellee’s Brief at 20.

Accordingly, there is clearly no final agency action

here. And that conclusion is not altered by the fact that, 

in Cooper Techs. Co. v. Dudas, 536 F.3d 1330 (Fed. Cir. 

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2008), we affirmed, on the merits, a district court’s grant 

of summary judgment to the PTO regarding the agency’s 

refusal to terminate ongoing reexamination proceedings. 

Id. at 1332. Cooper did not discuss the APA’s finalagency-action requirement, so it is not precedential on the 

issue, even if the requirement is jurisdictional. See, e.g., 

Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 170 

(2004) (“Questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, 

are not to be considered as having been so decided as to 

constitute precedents.”) (internal quotation marks and 

citation omitted); Lewis v. Casey, 518 U.S. 343, 352 n.2 

(1996) (“[T]he existence of unaddressed jurisdictional 

defects has no precedential effect.”); United States v. Cnty. 

of Cook, Ill., 170 F.3d 1084, 1088 (Fed. Cir. 1999) (no

precedential effect of decisions on issues not squarely 

addressed); cf. Arbaugh v. Y&H Corp., 546 U.S. 500, 511 

(2006) (“ ‘drive-by jurisdictional rulings,’ ” in which legal 

rules are labeled “jurisdictional” through “unrefined

dispositions,” have no precedential effect). 

AMS therefore cannot proceed under the APA. And 

mandamus and the Declaratory Judgment Act, the other 

statutory avenues of relief that AMS invoked in its complaint, are also foreclosed.

Mandamus relief under 28 U.S.C. §§ 1361, 1651 is 

unavailable. AMS can present its § 317(b) argument on 

appeal from any final adverse PTO determination in the 

reexaminations and, if correct about § 317(b), can secure 

reversal of such a determination. Because AMS has an 

adequate remedy and its only present harm is the burden 

of participating in the proceedings at issue, it is not 

entitled to mandamus relief. See Mallard v. U.S. Dist. 

Court for the S. Dist. of Iowa, 490 U.S. 296, 309 (1989); 

Bankers Life & Cas. Co. v. Holland, 346 U.S. 379, 383 

(1953). 

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Relief under the Declaratory Judgment Act, 28 U.S.C. 

§ 2201, is also unavailable. AMS has not relied on that 

Act in its arguments to us, and for good reason. The Act 

provides a “discretionary” remedy that “courts traditionally have been reluctant to apply . . . to administrative

determinations” that are not final or otherwise ripe for 

review. Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967)

(courts should use discretion “to protect the agencies from 

judicial interference until an administrative decision has 

been formalized and its effects felt in a concrete way”), 

overruled on other grounds by Califano v. Sanders, 430 

U.S. 99, 105 (1977); see Lane v. U.S. Dep’t of Agric., 187 

F.3d 793, 795–96 (8th Cir. 1999) (declaratory-judgment 

action not ripe for lack of final agency action). “A declaratory judgment action should not be used to circumvent the 

usual progression of administrative determination and 

judicial review.” Agri-Trans Corp. v. Gladders Barge 

Line, Inc., 721 F.2d 1005, 1011 (5th Cir. 1983). A contrary conclusion here would impermissibly employ the general, discretionary declaratory-judgment remedy to 

override the specific requirements of the APA addressing 

review of agency action. See, e.g., Corley v. United States, 

556 U.S. 303, 316 (2009) (“[A] more specific statute will be 

given precedence over a more general one.”) (internal 

quotation marks and citation omitted). 

Because the PTO’s refusal to terminate the proceedings at issue was not a final agency action, the district 

court did not err in granting summary judgment in favor 

of the PTO. 

CONCLUSION

For the foregoing reasons, the judgment of the district 

court is affirmed.

AFFIRMED

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