Opinion ID: 813175
Heading Depth: 1
Heading Rank: 5

Heading: administrative procedure act claims

Text: The APA provides that “[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.” 5 U.S.C. § 702. A PTO decision to issue a patent is an “agency action” under the APA. See Dickinson v. Zurko, 527 U.S. 150, 154 (1999). The APA sets forth several limitations on the grant of judicial review set out in § 702. Relevant here, the APA applies “except to the extent that - 13 PREGIS CORP v. KAPPOS (1) statutes preclude judicial review . . . .” 5 U.S.C. § 701(a)(1) (emphasis added). Additionally, the APA authorizes judicial review of final agency actions only if “there is no other adequate remedy in a court.” 5 U.S.C. § 704. The question here is whether a competitor, who has been sued as an infringer, is entitled under the APA to judicial review of the PTO’s decision to grant the patents in suit. Pregis asserts a right to challenge two distinct aspects of a PTO “decision to issue” a patent: 1) the PTO’s stated reasons for allowing the claims during examination under 35 U.S.C. § 131, and 2) the issuance of the patent itself. Pregis argues the need to permit competitors to challenge the PTO’s stated reasons for allowance is illustrated by the prosecution history of the Perkins ’397 patent. The PTO allowed the claims of Perkins ’397 based on arguments made by Free-Flow’s patent attorney to distinguish a prior art reference. During the litigation of this case, Free-Flow conceded that its attorney’s arguments during prosecution were based on a misunderstanding of the prior art and were incorrect. Thus, at trial, Free-Flow argued Perkins ’397 was patentable over the prior art on a different basis. Pregis argues it should be permitted to bring an APA claim challenging the PTO’s reasons for allowance in addition to an invalidity defense—which is subject to a corresponding presumption of validity—in litigation against the patentee. Pointing to § 702 of the APA, Pregis asserts it was “adversely affected or aggrieved” by the PTO’s action because the Free-Flow Patents “purported to impose a direct regulation and restriction on Pregis’ business by excluding Pregis from making use of subject matter that was in the public domain . . . , and by exposing Pregis to claims for alleged infringement by its direct competitor, [Free-Flow].” Cross-Appellant Br. 55. PREGIS CORP v. KAPPOS 14 The district court dismissed Pregis’ APA claims and held that the Patent Act’s comprehensive scheme precludes putative third party infringers from seeking judicial review of PTO decisions to issue patents. J.A. 3775– 76. The district court based its holding on Syntex (U.S.A.) Inc. v. United States Patent & Trademark Office, 882 F.2d 1570 (Fed. Cir. 1989), in which this court affirmed dismissal of a suit against the PTO by a third party reexamination requester. Indeed, this court has twice previously stated that a potential infringer cannot sue the PTO under the APA to attack the validity of an issued patent. In Syntex, we framed the jurisdictional issue as whether the patent statute impliedly grants a third party requester a right to review of the PTO’s final decision in reexamination. Id. at 1572. This court determined in Syntex that the Patent Act’s “clear, comprehensive statutory scheme” indicates that Congress intended to limit appeals from reexamination to the mechanisms specifically provided for by statute. Id. at 1573. The creation of a right in a third party to challenge a result favorable to a patent owner after ex parte prosecution cannot be inferred. Id. at 1575. We explicitly pointed out that “a potential infringer may not sue the PTO seeking retraction of a patent issued to another by reason of its improper allowance by the PTO.” Id. at 1576. In Animal Legal Defense Fund v. Quigg, 932 F.2d 920 (Fed. Cir. 1991) (“ALDF”), this court held that plaintiffs, various individual farmers and organizations whose goal is the protection of animals, lacked standing to sue under the APA to enjoin the PTO from issuing patents on multicellular living organisms because the plaintiffs failed to show injury traceable to the PTO’s actions, and because plaintiffs were outside the zone of interests addressed by the Patent Act. This court held that the zone of interests 15 PREGIS CORP v. KAPPOS of the patent laws does not extend to “any member of the public who perceives they will be harmed by an issued patent.” Id. at 938. In so holding, we specifically declined to “open[] the door to collateral attack on the validity of issued patents” by permitting competitors to sue the PTO to challenge a patent’s validity. Id. As we held, “[t]he structure of the Patent Act indicates that Congress intended only the remedies provided therein to ensure that the statutory objectives would be realized.” Id. Both Syntex and ALDF addressed challenges to PTO determinations in a factual context different from that of this case, but the reasoning expressed by the court in those cases applies here. We affirm the district court’s dismissal of Pregis’ APA claims and hold that a third party cannot sue the PTO under the APA to challenge a PTO decision to issue a patent. The comprehensive legislative scheme of the Patent Act “preclude[s] judicial review” of the reasoning of PTO decisions to issue patents after examination under 35 U.S.C. § 131, and competitors have an “adequate remedy in a court” for the issuance of invalid patents. 5 U.S.C. §§ 701(a)(1), 704.
To determine whether a particular statute precludes judicial review, we look to its express language, the structure of the statutory scheme, its legislative history and purpose, and the nature of the administrative action involved. Block v. Cmty. Nutrition Inst., 467 U.S. 340, 345 (1984). There is a “strong presumption” that Congress did not intend to prohibit all judicial review of a type of agency action. Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 672 (1986); Dunlop v. Bachowski, 421 U.S. 560, 567 (1975). A statute need not explicitly state that judicial review is unavailable for preclusion to be found. See Bowen, 476 PREGIS CORP v. KAPPOS 16 U.S. at 671 (“To preclude judicial review under [the APA] a statute, if not specific in withholding such review, must upon its face give clear and convincing evidence of an intent to withhold it.”) (quoting H.R. Rep. No. 1980, 79th Cong., 2d Sess. 41 (1946)). For example, “when a statute provides a detailed mechanism for judicial consideration of particular issues at the behest of particular persons, judicial review of those issues at the behest of other persons may be found to be impliedly precluded.” Block, 467 U.S. at 349. As such, judicial review may be precluded when Congressional intent to do so is “fairly discernible in the statutory scheme.” Id. at 351 (quoting Assoc. of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 157 (1970)). The Patent Act expressly provides an intricate scheme for administrative and judicial review of PTO patentability determinations that evinces a clear Congressional intent to preclude actions under the APA seeking review of the PTO’s reasons for deciding to issue a patent. First, the Patent Act establishes specific procedures allowing a patent applicant to appeal PTO rejections of patent claims. 35 U.S.C. §§ 134, 141, 145. Second, the statute permits third parties to challenge issued patents through carefully-circumscribed reexamination proceedings. 35 U.S.C. §§ 301–307, 311–318 (2006).1 Third, putative 1 Congress extensively revised this scheme with the passage of new post-grant review and inter partes review procedures as part of the Leahy-Smith America Invents Act (“AIA”). Leahy-Smith America Invents Act, Pub. L. No. 112-29, sec. 6, 125 Stat. 284 (2011) (to be codified at Chapters 30-32 of Title 35). Because at all times relevant to this appeal the provisions of the AIA governing post-grant review had not yet taken effect, this opinion discusses the Patent Act as it existed prior to the AIA. Nevertheless, the fact that Congress has prescribed detailed new procedures for administrative and judicial 17 PREGIS CORP v. KAPPOS infringers with a sufficiently immediate controversy may challenge the validity of issued patents through a declaratory judgment action, or can raise invalidity as a defense to an infringement suit. 28 U.S.C. § 2201(a); 35 U.S.C. § 282; MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). The Patent Act thus presents several mechanisms by which third parties may challenge the PTO’s decision to issue a patent, unlike cases in which preclusion of a suit under the APA would leave an agency action entirely free from judicial review. Cf. Bowen, 476 U.S. at 678 (holding “it is implausible to think [Congress] intended that there be no forum to adjudicate statutory and constitutional challenges to regulations promulgated by the Secretary” for the method by which Medicare Part B payments are calculated) (emphasis original). Having considered and addressed the need for review of PTO patentability determinations, Congress enacted specific procedures allowing third parties to attack the validity of issued claims. It is apparent that Congress decided not to provide for third parties to obtain review of the reasons for allowance of claims. The carefully balanced framework of the Patent Act specifies a well-defined process for how, when, where, and by whom PTO patentability determinations may be challenged. Only a patent applicant may challenge an examiner’s decision to reject claims in original examination under 35 U.S.C. § 131. The applicant must first bring an administrative appeal to the Board of Patent Appeals and Interferences (the “Board”). 35 U.S.C. § 134(a). The applicant may then appeal the Board’s review of issued patents reinforces the conclusion that Congress intended to preclude other avenues of judicial review. PREGIS CORP v. KAPPOS 18 decision in this court under 35 U.S.C. § 141, or may file suit against the PTO in the United States District Court for the District of Columbia under 35 U.S.C. § 145.2 A third party, by contrast, cannot challenge an examiner’s decision after original examination, but only may obtain judicial review of PTO decisions confirming patentability by first participating in inter partes reexamination.3 35 U.S.C. §§ 134(c), 141. The Patent Act thus reflects Congressional intent as to which parties should be permitted to challenge the examiner’s patentability determination made during original examination. That the Patent Act dictates the courts in which a disappointed applicant may appeal a patentability determination also shows Congress intended to preclude challenges to such PTO actions under the APA. Every district court of the United States has jurisdiction over an APA claim, while the patent applicant is restricted to review in a single district court or to a direct appeal to the Federal Circuit. 35 U.S.C. §§ 141, 145. Moreover, Congress has protected the interests of competitors and the public through the mechanisms explicitly provided to them in the Patent Act to challenge the validity of issued patents. Preclusion of APA suits challenging the PTO’s reasons for issuing a patent therefore does not “threaten realization of the fundamental objectives of the statute” to promote innovation by incentivizing inventors without unduly limiting competition. Block, 467 U.S. at 352. 2 We note that under the current version of § 145, actions are to be brought in the Eastern District of Virginia, but Congress has retained a statutory scheme that dictates the court in which such actions must be brought. 3 Similarly, under the AIA, a third party may resort to either post-grant review or inter partes review after issuance. See AIA secs. 7(b), (c). 19 PREGIS CORP v. KAPPOS We conclude that a Congressional intent to preclude judicial review of the PTO’s reasons for issuing patents is “fairly discernible” from the statutory scheme of the Patent Act. Block, 467 U.S. at 351. Allowing competitors to collaterally attack issued patents through suits under the APA would destroy the Patent Act’s careful framework for judicial review at the behest of particular persons through particular procedures.
The APA authorizes judicial review only where the agency action is “made reviewable by statute” or where there is a “final agency action for which there is no other adequate remedy in a court.” 5 U.S.C. § 704. As we have held, the PTO’s decision to issue a patent during original examination is not “made reviewable by statute.” Thus, the review Pregis seeks under the APA is barred by § 704 unless “there is no other adequate remedy” available in court. The Patent Act provides three different adequate remedies in court for competitors harmed by the PTO’s erroneous issuance of a patent. The Patent Act allows any third party to request an inter partes reexamination by raising a substantial new question of patentability. 35 U.S.C. §§ 301, 311. A participant in inter partes reexamination may obtain judicial review of a PTO decision to allow claims after reexamination by appealing to the Board and then, if necessary, to this court. 35 U.S.C. § 315(b). Additionally, a putative infringer can raise invalidity as a defense to a patent suit or can proactively bring a declaratory judgment action against the patent owner to have the patent declared invalid. 35 U.S.C. § 282. Each of these avenues provides review, in an Article III court, of the validity of patents issued by the PTO. PREGIS CORP v. KAPPOS 20 In litigation against the patentee, the putative infringer can attack the patent on a wide variety of substantive grounds (e.g., failure to comply with the conditions for patentability set forth in Part II of Title 35, or with the written description, enablement, definiteness and other requirements of § 112). 35 U.S.C. § 282(b). These are generally the same criteria on which the PTO reviews patentability, and thus present the same issues that would be raised in a direct challenge to the PTO’s reasons for issuing the patent. If successful, the relief granted—invalidation of patent claims—fully relieves the harm caused by the PTO having erroneously issued the patent. Pregis argues that because not all PTO mistakes are recognized as defenses under § 282, a declaratory judgment action or the defenses in an infringement suit are not an adequate judicial remedy. See Aristocrat Techs. Australia Pty Ltd. v. Int’l Game Tech., 543 F.3d 657, 66263 (Fed. Cir. 2008) (improper revival of abandoned application is not a cognizable defense to infringement claim). Yet, the specific list of defenses available under § 282 reflects the deliberate judgment of Congress that not every error during prosecution should provide a defense to a claim of patent infringement. Similarly, Pregis argues that the presumption of validity of an issued patent, which can be overcome only by “clear and convincing evidence,” renders patent litigation an inadequate alternative to review under the APA. Pregis asserts that a civil action under 5 U.S.C. § 702 would not give such weight to the PTO decision being challenged. 5 U.S.C. § 706. Regardless, a suit under the APA would impermissibly alter the burden of proof, set by Congress and confirmed by the Supreme Court, for invalidating a patent. See 35 U.S.C. § 282; Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2246 (2011) (holding 21 PREGIS CORP v. KAPPOS Congress chose the “clear and convincing” standard of proof by stating in § 282 that a patent is “presumed valid”). Furthermore, a judicial remedy is adequate for purposes of 5 U.S.C. § 704 even if it does not “provide relief identical to relief under the APA, so long as it offers relief of the ‘same genre.’” Garcia v. Vilsack, 563 F.3d 519, 523 (D.C. Cir. 2009). A private lawsuit against a third party, such as litigation of patent validity in an action against the patentee, need not be “as effective as an APA lawsuit against the regulating agency.” Id. at 525. The alternate remedy in court need only be “adequate” for it to supplant a suit under the APA. Id.; 5 U.S.C. § 704. In sum, the fact that the defenses available under 35 U.S.C. § 282, or in a challenge to a patent through inter partes reexamination, are not identical to an APA suit does not render the carefully-considered judicial remedies provided by the Patent Act “inadequate.”4