OVERVIEW OF PREGIS CORP v. KAPPOS:
In this case Free-Flow and Pregis are competitors in the air-filled packing cushion industry. Essentially, these companies make the air packaging fillers you find in boxes when receiving packages. During the 1990’s, air-packaging became more prevalent over the peanut packaging or using crumpled paper.
Free-flow holds 3 patents relating to air-filled packaging that claim priority to applications filed in late 1999 and 2000. Free-Flow claimed their innovations were improvements over machines that were already on the market allowing ease of creating a more reliable seal to produce uniformly-inflated air cushions.
Initially, Pregis filed a suit in the District Court for the Eastern District of Virginia seeking declaratory judgment of non-infringement and invalidity of Free-Flow’s patents, and also took the extra and unusual step of suing the United Stated Patent and Trademark Office. At both the district court and court of appeals level Free-Flow’s patents were held to be obvious in view what was already known in the public domain, and this blog post is geared towards Pregis action of suing the USPTO. For those who are interested, the case may be found here: http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1492.pdf
Pregis sought judgment to hold unlawful and set aside the actions of the Patent Office in allowing Free-Flow’s patents, alleging that the issuance of the patented by the PTO was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law. Specifically, Pregis claimed that 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 status is entitled to judicial review thereof.” 5 USC 702.
The district court dismissed Pregis APA claims against the USPTO for lack of subject matter jurisdiction stating that “the Patent Act and its own scheme clearly expressed Congress’ intent to preclude putative third part infringers from seeking judicial review” under the APA of PTO decisions on patents.
The court of appeals affirmed the district court’s ruling stating that the question to determine 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. The court of appeals reasoned that the patent act precludes review under the APA because the Patent Act expressly provides an intricate scheme for administrative and judicial review of PTO patentability
Determinations that evidence a clear Congressional intent to preclude actions under the APA seeking review of the PTO’s reasons for deciding to issue a patent for at least the following:
– The Patent Act establishes specific procedures allowing a patent applicant to appeal PTO rejections of patent claims. 35 U.S.C. §§ 134, 141, 145.
– The Patent Act establishes specific procedures allowing a patent applicant to appeal PTO rejections of patent claims. 35 U.S.C. §§ 134, 141, 145.
– Putative 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).
As such, the court of appeals held that 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.
Furthermore, the court of appeals when on to state that the APA authorizes judicial review only where an agency action is no other adequate remedy in court. The court of appeals listed the following three avenues that are available to competitors harmed by the PTO’s erroneous issuance of a patent:
1) An inter partes reexamination by raising a substantial new question of patentability. 35 U.S.C. §§ 301, 311.
2) 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).
3) 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.
AUSTIN PATENT ATTORNEY’S TAKEAWAYS:
1) Do not try to sue the USPTO. I am surprised that Pregis attorney’s tried to take the route to sue the USPTO, and I would be interested to see if Pregis’ clients would pay the legal fees associated with this extra action. Although there may be valid claims and issues caused by the USPTO issuing invalid patents, patents on their face only create a legal remedy as well as shift the burden of proof in patent cases. There was no way that the USPTO would allow this type of action to be upheld because of the amount of litigation that they could eventually face (every patent suit).
2) This case lays out a nice framework of what can be done if you have been sued. I believe the court was nice enough to layout this framework because Pregis’ attorneys should have known this. But if you are a law student, new patent attorney, client looking for what the procedure are for a defendant in a patent suit, this case lays out a good framework with the above 1-3 steps.