IP Law Daily, PATENT—E.D. Va.: Inventor not entitled to injunction due to USPTO’s examination delay, (Nov 16, 2015)

By Peter Reap, J.D., LL.M.

There was no appropriate remedy for past unreasonable delay by the USPTO in examining plaintiff Gilbert Hyatt’s 80 patent applications, if any occurred, that would be consistent with the strict requirements for judicial relief under the Administrative Procedure Act (APA) Section 706.1, the federal district court in Alexandria, Virginia, has decided (Hyatt v. U.S. Patent and Trademark Office, November 12, 2015, Ellis, T.). The conclusion that the current administrative record does not support a remedy obviated the need to determine whether any past unreasonable agency delay occurred, when, and who is responsible. Nor was Hyatt entitled to any declaratory relief against the USPTO. Accordingly, Hyatt’s motion for summary judgment was denied, and the USPTO's motion for summary judgment was granted.

Background. Hyatt alleges that the USPTO has unreasonably delayed final agency action on 80 of plaintiff's approximately 400 pending patent applications. All 80 of the patent applications in issue have been pending before the USPTO since at least 1995, yet no patent has issued, nor have any applications been finally rejected. Moreover, all 80 patent applications in issue include specifications of unprecedented length (well in excess of 100 pages) and assert claims in unprecedented numbers (at one point, approximately 115,000 total). The parties point accusatory fingers at one another as the cause of the delay in the prosecution of the 80 patent applications in issue. Hyatt says that at various points the USPTO has deliberately declined to allow prosecution of the applications and has taken other steps to halt the process. The USPTO responds that responsibility for the delay in the process can be laid at plaintiff's feet, as the length of the applications, the number of claims asserted, and the interrelatedness of the claims are the causes and, in effect, constitute for plaintiff a self-inflicted wound.

Over the course of the 20 or more years the patent applications in issue have been pending, the administrative record reflects that each of the applications has spent some time in examination before a patent examiner, some time on appeal in the PTO's administrative appeal process, and some time in a period of suspension. In fact, each of the 80 patent applications in issue spent between six and thirteen years in examination before an examiner, and each of the 80 applications received an adverse action entitling plaintiff to an appeal before the USPTO Appeal Board. Although plaintiff appealed these adverse actions to the USPTO Appeal Board, plaintiff's appeal briefs went unanswered, thereby stalling the prosecution process as the Appeal Board could not acquire jurisdiction without an examiner's answer. That is, the examiners whose decisions at the examination stage were appealed to the Appeal Board declined to file briefs of their own defending their decisions. As a result, there were extended periods of inaction for the 80 patent applications in issue, even despite plaintiff’s attempts to prompt the examiners to file answers.

Beginning in the mid-2000s, the USPTO, without specific explanation, began to issue "suspensions" in each of the various applications. The administrative record reflects that each of the 80 patent applications in issue was subject to between five and eighteen suspensions, generally for the maximum six-month period allowed. According to the USPTO, the suspensions were in response to the pendency of multiple proceedings before the Appeal Board and the plaintiff’s filing of multiple civil lawsuits against the USPTO. Specifically, the USPTO now contends that the collective outcome of these proceedings would have directly affected the examination of the plaintiff's pending patent applications. Although the plaintiff disputes the USPTO's argument as a post hoc justification, there is no dispute that in October 2012, approximately six months after the plaintiff prevailed in the last of his civil actions against the USPTO, the USPTO dedicated twelve full-time patent examiners to the sole task of examining plaintiff's patent applications.

In August 2013, almost a year after commencement of the USPTO's renewed efforts to examine plaintiff's patent applications, the USPTO began issuing a series of Requirements for Information ("Requirements") applicable to the plaintiff's patent applications, including for each of the 80 patent applications in issue. The Requirements recite the "confluence of multiple factors" that made examination of plaintiff's applications, in the USPTO's view, "unmanageable." The Requirements go on to explain that maintaining a clear mental picture of the thousands of independent claims drawn to a common specification is "not feasible" and that "attempting to hold in mind the delineations created by the 45,000 independent and 115,000 total claims across all 399 applications in the extended family is simply impossible." Moreover, in the PTO's view these problems made examination "inefficient" and "impractical." To remove these barriers to effective examination, the Requirements instructed the plaintiff to: (1) select a number of claims from each "family" (i.e., group of related claims), not to exceed 600 claims absent a showing that more claims are necessary; (2) identify the earliest possible priority date and supporting disclosure for each selected claim; and (3) present a copy of the selected claims to the USPTO. The Requirements also reopened examination for most of the 80 patent applications in issue, placing the applications back before a patent examiner. The plaintiff has complied with the Requirements under protest.

In the wake of the issuance of the Requirements, the USPTO has now rejected all of the plaintiff's claims in most of the 80 patent applications in issue, often on grounds different from the grounds on which the USPTO relied in rejecting the claims before the Requirements issued. Currently, there are fourteen full-time patent examiners dedicated to examining plaintiff's patent applications (up from the twelve initially dedicated to the task in 2012). As of September 3, 2015, the USPTO has taken non-final office action on 59 of the 80 patent applications in issue; plaintiff has responded to 39 of these actions; the USPTO has replied to 16 of these responses; and final office action has resulted on 2 of these applications. The USPTO further represents that, as of October 16, 2015, there were 22 applications that plaintiff could appeal to the Appeal Board immediately. In addition, there are 40 other applications that plaintiff could have appealed to the Appeal Board, but plaintiff instead elected to continue prosecution before an examiner.

The plaintiff seeks (1) a declaration that the USPTO has unreasonably delayed final agency action on the 80 patent applications in issue and (2) injunctive relief compelling agency action. Specifically, plaintiff requests an order (i) prohibiting the USPTO from suspending action in any of the 80 patent applications in issue and (ii) barring the USPTO from raising new grounds for rejection of the 80 patent applications once plaintiff files an appeal brief relating to a patent application before the USPTO Appeal Board or, alternatively, (iii) barring the USPTO from reopening prosecution on the USPTO's own initiative once plaintiff files such an appeal brief.

The Administrative Procedure Act. Section 70g(1) of the APA allows a court to compel agency action that has been delayed without adequate reason or justification. To determine whether delay is justified—and, by extension, reasonable—courts routinely employ a multi-factor standard rather than a firm rule. See Telecommunications Research & Action Ctr. V. FCC, 750 F.2d 70 (D.C. Cir. 1984 (TRAC). Specifically, the D.C. Circuit in TRAC concluded that the time an agency takes to make a decision should be governed by a "rule of reason." The content of a rule of reason can sometimes be supplied by a congressional indication of the speed at which the agency should act.

Although the parties focused their summary judgment arguments in large part on the TRAC factors, the proper focus for the Section 706(1) analysis in this case is not whether unreasonable delay occurred, when unreasonable delay occurred, who or what caused the unreasonable delay, or why; rather, the proper focus for the analysis is the current patent application examination landscape, the court determined. The facts of this case presented a unique and seemingly unprecedented situation, namely significant past delay during an iterative, back-and-forth process but current and ongoing progress. Moreover, the TRAC factors did not necessarily fit comfortably with the facts here; TRAC reviewed agency action in which there was no back-and-forth between the petitioners for review and the agency, making it clear that all delay was taxable to the agency. Accordingly, on the facts of this case it made the most sense to begin not by looking at the past and assigning fault for delay but by looking at the present and asking whether there is anything a court should lawfully and discretionarily compel, the court explained.

What the law requires of the USPTO with respect to patent applications is clear and straightforward: When a patent application is submitted, "[t]he Director [of the USPTO] shall cause an examination to be made of the application and the alleged new invention; and if on such examination it appears that the applicant is entitled to a patent under the law, the Director shall issue a patent therefore." 35 U.S.C. Section 131. In other words, there are two actions that Section 131 requires of the USPTO: (i) causing an examination to be made of the patent application and (ii) issuing a patent if the applicant is legally entitled to one. There is no suggestion in this case that the plaintiff is legally entitled to a patent. Rather, the plaintiff complained about the delay in moving his patent applications through the prosecution process.

Sharp focus on the language of Section 131—which requires the USPTO to "cause an examination to be made"—is critically important to the analysis. The administrative record showed that the USPTO has placed all 80 of the plaintiff's patent applications in issue in front of an examiner for examination. Thus, the USPTO has already done what it is statutorily required to do, namely to cause an examination of the applications, according to the court. Simply put, at this stage of the administrative proceedings there was no agency action to compel because the administrative record clearly showed that the USPTO is now doing all that it is required to do.

Moreover, it was important to note that the USPTO is under no legal obligation to cause an expeditious—or even an efficient—examination of a patent application. In the course of arguing that past USPTO delay has been unreasonable, plaintiff suggested that in Congress's judgment a patent application should generally not spend more than three years under examination. In support of this argument, plaintiff noted that the current patent statute grants a one-day extension of the patent term for every day beyond three years that an application spends in examination, subject to certain limitations. Of course, that statute is not a deadline, nor is it an admonition to the USPTO, nor even an express statement of some aspirational goal; rather, it is a means by which to avoid prejudice to inventors as a result of slow-moving prosecutions. That Congress avoided setting a deadline, giving an admonition, or stating an aspiration made perfect sense in light of the special nature of USPTO action, the court reasoned.

Declaratory Judgment Act. The plaintiff argued that a declaration of unreasonable delay by the USPTO would supplement an injunction under Section 706(1) by preventing the USPTO "from evading the effects of a Court order by citing prosecution laches to prevent a patent from issuing in the first place." As relevant here, the doctrine of prosecution laches allows the USPTO to reject patent applications based on unreasonable and unexplained delay in prosecution, even though the patent applicant complied with pertinent statutes and rules.

No doubt, the plaintiff has reasonable grounds on which to harbor "uncertainty" or "insecurity" about the prospect of prosecution laches. Indeed, the USPTO has issued prosecution laches "warnings" in 20 of the 80 patent applications in issue. But a general declaration would afford no relief from this uncertainty or insecurity, as the USPTO could still invoke the doctrine of prosecution laches on the basis of plaintiffs own delays, the court observed. Thus, a general declaration that the USPTO has engaged in unreasonable delay would not necessarily eliminate the specter of prosecution laches. And, for related reasons, a declaration would serve no "useful purpose in clarifying and settling the legal relations" of the parties. This was so because delay by the USPTO is not dispositive to whether the USPTO could apply prosecution laches generally, and hence would do nothing to clarify whether the USPTO could apply prosecution laches to the plaintiff's patent applications specifically. Not only would a declaration fail to fulfill the principal goals of the Act, there were sound prudential reasons to prefer targeted review of the application of prosecution laches to a given patent application if and when such application occurs, in the court’s view.

Accordingly, it was appropriate to decline the exercise of declaratory judgment jurisdiction is this case.

The case is No. 1:14-cv-01300-TSE-TCB.

Attorneys: John T. Steffen (Hutchison & Steffen, LLC) for Gilbert P. Hyatt. Lauren A. Wetzler, U.S. Attorney’s Office, for U.S. Patent and Trademark Office.

Companies: U.S. Patent and Trademark Office

Cases: Patent VirginiaNews