USPTO Director Lee sued for declaring federal holiday, allowing IPR filing after statutory deadline

By Gene Quinn
August 17, 2016

USPTO Director Michelle Lee.

USPTO Director Michelle Lee.

On December 22, 2015, at approximately 7:00 pm, the United States Patent and Trademark Office (USPTO) experienced a catastrophic failure of electronic information systems due to a major power outage at the Office’s headquarters in Alexandria, Virginia. Power that comes into the USPTO main building feeds two power filtration systems that provide steady, filtered power to control against power surges. A malfunction in that power supply caused significant damage to both systems, which caused the failure of both the main and backup systems.

With all USPTO electronic systems down, USPTO Director Michelle Lee declared December 22-24, 2015, a federal holiday within the District of Columbia. The USPTO announcement, in pertinent part, read as follows:

In light of this emergency situation, the USPTO will consider each day from Tuesday, December 22, 2015, through Thursday, December 24, 2015, to be a “Federal holiday within the District of Columbia” under 35 U.S.C. § 21 and 37 C.F.R. §§ 1.6, 1.7, 1.9, 2.2(d), 2.195, and 2.196. Any action or fee due on these days will be considered as timely for the purposes of, e.g., 15 U.S.C. §§ 1051(b), 1058, 1059, 1062(b), 1063, 1064, and 1126(d), or 35 U.S.C. §§ 119, 120, 133, and 151, if the action is taken, or the fee paid, on the next succeeding business day on which the USPTO is open (37 C.F.R. §§ 1.7(a) and 2.196). A subsequent notice is anticipated to be issued as needed if the USPTO’s systems are not fully operational by Monday, December 28, 2015.

According to the Patent Office, Director Lee seems to have relied on some unspecified power under 35 U.S.C. 21(b), which says:

When the day, or the last day, for taking any action or paying any fee in the United States Patent and Trademark Office falls on Saturday, Sunday, or a Federal holiday within the District of Columbia, the action may be taken, or the fee paid, on the next succeeding secular or business day.

Of course, the Director of the USPTO does not have the authority to declare a federal holiday. Federal holidays are created only by Congress and signed into law by the President. Only 10 federal holidays have been created. See 5 U.S.C. 6103(a). Not even the President can declare a federal holiday, although by executive order the President can close an executive agency or give workers a half day, as is customarily done on Christmas Eve or if the day after Christmas falls on a Friday.

In retrospect, the proper thing for Director Lee to have done would have been to declare an emergency under the powers vested in her by 35 USC 21(a). Under §21(a) the Director of the USPTO can declare that a paper was filed on a day that it would have been filed but for a disruption in mail service or emergency. A catastrophic failure of transformers at the USPTO that brought down all electronic systems would seem to qualify as an emergency, particularly in 21st Century America where over 99% of all filings sent to the USPTO arrive via electronic filing. [1]

The net effect of Director Lee having declared an emergency, which she clearly has the power to do, is that any filing would have been treated the same as under the Saturday, Sunday or Federal holiday rule. I explained this all in an article on December 29, 2015, and urged the USPTO to clarify that Director Lee had not created a new federal holiday, but rather declared an emergency. The USPTO was made aware of the article, but no such clarifications were ever issued. The Patent Office was content with Director Lee declaring December 22-24, 2015 as federal holidays, which clearly she had no right to do.

It was only going to be a matter of time before Director Lee declaring a federal holiday without any statutory authority came back to haunt the USPTO. On August 12, 2016, Elm 3DS Innovations, LLC, sued Director Lee and the USPTO in the United States District Court for the Eastern District of Virginia arguing that they were aggrieved by Director Lee declaring a federal holiday without any authority to make such a declaration.

The problem created by Director Lee’s decision to declare a federal holiday relates to the tardy filing of an inter partes review (IPR).

Elm 3DS Innovations sued Micron Technology, Inc., Samsung Electronics Co., Ltd.; Samsung Semiconductor, Inc., and Sk Hynix Inc. (and various associated companies) in the U.S. District Court for the District of Delaware, alleging that they had infringed certain of Elm’s patents. The defendants were served with the complaint on December 24, 2014. Pursuant to 35 U.S.C. 315(b), this means any IPR had to be filed on or before Thursday, December 24, 2015, otherwise the petition would be time barred. The defendants filed their IPR petitions on Monday, December 28, 2015.

Elm 3DS Innovations argues in the complaint filed that the IPR petitions would be considered untimely but for Director Lee declaring December 22-24, 2015, federal holidays. Elm is, of course, correct.

Elm 3DS Innovations is asking the Eastern District of Virginia to declare that December 22-24, 2015, were not federal holidays and that Director Lee acted outside the scope of her statutory authority in declaring those days to be federal holidays. Furthermore, they are asking for a declaration that by accepting the IPR petition outside of the statutory deadline to file the petition Director Lee acted outside of her statutory powers. Elm is also looking for a declaration forbidding the USPTO from continuing to implement Director Lee’s declaration of December 22-24, 2015, as federal holidays.

Why Director Lee relied upon some unspecified power she clearly does not possess instead of a power she clearly does possess is a complete mystery. The law is enormously clear. Unless the Eastern District and ultimately the Federal Circuit decide to ignore the law, the outcome of this case is easy to predict. Director Lee will be found to have lacked the authority to declare a federal holiday and the IPR petitions filed on December 28, 2015 will be time barred.

_____________

[1] The USPTO Director does have the power pursuant to 35 U.S.C. 21(a) to declare emergencies. Both MPEP 511 and the 37 CFR 1.10 seem to be written with an eye toward the emergency being U.S. Postal Service related. The statute could easily be (and should be) interpreted to give the Director the authority to identify a different type of emergency, and should have been utilized in this situation if forgiveness of missed deadlines was the goal.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 21 Comments comments.

  1. Anon2 August 17, 2016 11:25 am

    Indulging in a little psychologizing, the belief that one could simply choose to “consider” certain days a “Federal Holiday”, perhaps reveals a little bit about one’s orientation along the spectrum of “Rule of Law” vs “Rule of Men”

  2. patent leather August 17, 2016 12:56 pm

    Wow, nine patents at stake and K&L Gates may be on the hook for the big M if their IPR petitions are thrown out. But all Michelle Lee has to do is go to her buddies at Congress and get a retroactive bill passed declaring those three days a Federal holiday. I’m guessing the USPTO is working on that right now, lest they face further embarrassment for their lack of basic knowledge about administrative law.

    I wonder if Lee can still declare an emergency under 35 USC 21(a).

  3. Gene Quinn August 17, 2016 1:06 pm

    patent leather-

    I doubt the PTO is working on getting a Special Act of Congress. When they were made aware of this problem back in December 2015 they laughed it off as crazy talk to suggest that what was done was not completely appropriate. They were warned and told it was only a matter of time before the issue came back to haunt them.

    -Gene

  4. Curious August 17, 2016 1:26 pm

    But all Michelle Lee has to do is go to her buddies at Congress and get a retroactive bill passed declaring those three days a Federal holiday.
    Not going to happen. Why would a REPUBLICAN-CONTROLLED Congress do something to help the Administration save face?

    The Patent Office was content with Director Lee declaring December 22-24, 2015 as federal holidays, which clearly she had no right to do.
    I remember the incident and the article. It would have been a trifle for Lee to do the right thing — but they didn’t. One wonders about the quality of legal advice being given internally at the USPTO. Then again, the USPTO’s actions have long evidenced the characteristics of a rogue agency when it comes to following the law.

    Unless the Eastern District and ultimately the Federal Circuit decide to ignore the law, the outcome of this case is easy to predict.
    It’ll probably make its way to the Federal Circuit — and if the Federal Circuit’s recent nature of accommodating the USPTO is any indication, I suspect that they’ll decide that the Lee’s failure to invoke the correct statute was “harmless error” (well, “harmless” error to the USPTO). As you indicate, Lee did have the power to do what she did, she just didn’t invoke that power.

    Anyway, by the time this goes to the Federal Circuit, Lee will probably be back with Google (or a major law firm that gets Google work) with the upcoming change of the Administration. She’ll be reaping in millions for her work at the USPTO in preventing the issuance of (or invalidating) thousands of patents that threated her benefactors at Google et al., and she won’t care anymore.

    No wonder why people don’t trust the government …

  5. Gene Quinn August 17, 2016 2:24 pm

    Curious @4-

    I agree with virtually everything you wrote. One exception…

    Don’t bet any money on Lee returning to Google, unless of course you want to bet with me. I’d take that bet in a heartbeat! I don’t know where she will go, and I’m sure as a former PTO director she will make out very well. I just can’t see it happening with Google.

  6. Curious August 17, 2016 3:12 pm

    Don’t bet any money on Lee returning to Google, unless of course you want to bet with me. I’d take that bet in a heartbeat! I don’t know where she will go, and I’m sure as a former PTO director she will make out very well. I just can’t see it happening with Google.
    Its an option, and I wouldn’t discount it. Moreover, there are few companies that could pay her better. That being said, I did offer up an alternative. Do you have any thoughts as to where she might end up?

  7. Gene Quinn August 17, 2016 3:57 pm

    Curious-

    I really don’t know where she will end up, but it won’t be Google. That’s my prediction and I feel as confident about that as anything I’ve ever predicted.

    -Gene

  8. step back August 17, 2016 4:04 pm

    Ultra vires declaring of Federal Holidays?
    Ha.
    That’s the least of it.

    How about ultra vires following of laws legislated by SCOTUS as opposed to obeying the laws, 35 USC 101, 102 (entitled unless …) passed by the US Congress?

  9. KenF August 18, 2016 10:34 am

    metaphoric for the whole carnival down there just outside of old town….

  10. KenF August 18, 2016 11:34 am

    Or, to modify the expression, stupid sh*t rolls down hill…..

  11. Ron Katznelson August 18, 2016 10:50 pm

    What seems to be missing in these discussions here is that the missed deadline for one IPR filer (challenging a patent) is a drop in the bucket compared to the number of applicants (seeking to get a patent) who have actually missed a statutory six months deadline in responding to an Office action. Under 35 USC 133 all such applications are deemed abandoned “unless it be shown to the satisfaction of the Director that such delay was unavoidable.” No such showing had been timely made. Unlike other non-statutory deadlines, the fact that the PTO did not abandon such applications is irrelevant because the PTO has no statutory authority to keep them alive.

    According to PTO’s Paperwork Reduction Act statistics, there are about a million replies and submissions responsive to office actions per year, If we assume uniformity of flow, during the three-day bogus Federal Holiday, there would have been about 8,000 responses. It is not unreasonable to estimate that about 1/10 (800) of these had a statutory deadline that fell within this 3-day period.

    I would be concerned that hundreds of issued patents with this fact pattern are therefore particularly at risk. And for applications still pending, it is unclear whether a petition on unavoidable delay to the Director making the “showing” almost two years after the fact would be granted to immunize the applicant. I can easily see such petitions dismissed as “moot” citing the very Federal Holiday Declaration that is being challenged in court.

    Gene’s observation that “When [PTO staff] were made aware of this problem back in December 2015 they laughed it off” may not be an indication of particular incompetence. This response (not the electric power outage) may not have been a “bug” but a “feature” under which the possibility of downside mostly for hundreds of applicants with substantial opportunity for infringers may not have been of any particular concern to some in PTO management.

  12. Eric Berend August 19, 2016 4:35 am

    “A government of laws, and not of men.”
    John Adams (1735-1826)

    Such reminders are perhaps, more appropriate than ever, given that one would never know it form the recent machinations of corrupted politicians to undermine long time U.S. patent jurisprudence, selling yet another essential component of the nation’s economic system “down the river” (to Google; to ‘China, Inc.’; to Intel; to Facebook; etc.).

    Perhaps her ultimate boss, Pres. Obama can ride to the USPTO’s rescue with an Executive Order. Certainly, he does have the legal authority.

    After all, this is the same POTUS that actually included the pejorative “patent troll” moniker in a State of the Union address, just as the true ‘masters’ at Google/Alphabet wanted. Recently, when a friend expressed dismay at the apparent influence of the Rev. Al Sharpton on Pres. Obama, citing some 80+ visits to the White House in his time there so far, I pointed out that representatives of Google have been welcomed to visit by the same, over 400 times (at least once per week or more) in the same period.

    His eyes went wide with sudden understanding of the magnitude of the influence of illicit interests of infringers at the very highest levels of U.S. government, and he ceased to complain about Sharpton.

    Out of sight, out of mind. The “little people” have little idea when it comes to topics requiring even a mere bit of intricacy to understand; as with patents and patent laws. All they seemingly know, is what simplistic jingoism is placed into their small minds to feel ‘with it’, such as the absurd “patent troll” (thanks, Intel, Inc. – for nothing…but evil betrayal of what protected your own rise, just as with Google, Inc. now calling itself “Alphabet”)

  13. Anon August 19, 2016 5:40 am

    Eric,

    While I can identify your feelings regarding the capture of the executive and legislative branches (with no small help from the likes of Citizens United-like “voices” of juristic persons), I am unclear about what exactly you would like the President to do with any type of actions based on the general idea of his ‘legal authority.”

    What exactly do you want done with an executive order?

    Ron,

    Your observation is once again illuminating and at our Office, we only had a very few number of actions that fell into that time period, and we elected to either include notice of payment for time extensions or where that was not enough, went “old fashioned” and used the snail mail certification route.

  14. Anon August 19, 2016 5:42 am

    Eric,

    I forgot to include a small note of irony that you quote John Adams, then appear to turn around and want some “special law” effect of the singular person of the President to be put into action over the existing rule of law.

  15. patent leather August 19, 2016 10:34 am

    Ron, I am scratching my head why any practitioner would file a response during the “holiday” online when they could just as easily have used an old fashioned certificate of mail like my firm did (the USPTO fax line was overloaded). While Michelle Lee is clueless, the first thing me and my colleagues thought about was how questionable this was, and the patent blogs immediately covered this as well.

    If the USPTO loses the Elm case, I think a petition for revival will work for those poor souls who filed electronically during the “holiday.” Of course such a petition now would be rejected by the USPTO because the application is not really abandoned. However, on event of the USPTO losing Elm (which is likely), those applications would become abandoned and a revival petition would be appropriate. There would be no delay in filing because I think the delay has to be from when one could file a grantable petition.

    Perhaps one could file a “petition for conditional revival” under 37 CFR 1.182, “question not specifically provided for”, and ask for a conditional revival if it turns out in the future that the application is abandoned. I don’t know.

    Of course, if such a patent has already issued, I’m not sure there is much recourse. I would suggest to anyone who filed an electronic response during the “holiday” to not let the application issue until the Elm case is decided. Unfortunately, anyone subject to a statutory bar who e-filed their application during the holiday is probably SOL.

  16. patent leather August 19, 2016 10:40 am

    Typo in my prior post #15, first line, I meant “why any practitioner wouldn’t file a response during the “holiday” on paper but instead wait until EFS was back up.”

  17. Randall S. Svihla August 19, 2016 7:30 pm

    Does anyone remember Tuesday, September 11, 2001, and this notice that the USPTO subsequently issued:

    The United States Patent and Trademark Office, as of approximately 10:30 a.m., September 11, 2001, has been closed for official business as a result of an order by the Office of Personnel Management. In the emergency situation of this day, the Patent and Trademark Office will consider September 11 a “federal holiday within the District of Columbia” under 35 U.S.C. § 21(b). Although normally the Patent and Trademark Office does not consider days on which the agency is closed for only part of the day as a federal holiday, it is making an exception for the unusual circumstances of this date. As a result of the closing of public transportation and particular circumstances in the immediate vicinity of the Office, parties are discouraged from coming to the Patent and Trademark Office in order to make filings on September 11.

    Any action or fee due on September 11, 2001, will be considered as timely for the purposes of, e.g., 35 U.S.C §§ 119, 120, 133 and 151, if the action is taken, or the fee paid, on the next succeeding business day on which the Patent and Trademark Office is open. 37 C.F.R. § 1.6(a)(2) provides that correspondence deposited as Express Mail in accordance with 37 C.F.R. § 1.10 will be considered filed on the date of its deposit.

  18. Randall S. Svihla August 19, 2016 7:36 pm

    patent leather, there are many practitioners who have never filed a paper by mail or hand delivery, and many offices are not set up to do that. Also, there were many complaints during the outage by practitioners abroad who could not use the certificate of mailing procedure since it only applies to U.S. mail.

  19. patent leather August 20, 2016 12:04 am

    Randall, thanks for the memory. Yes, I do remember that notice. I’m not sure but I think that Notice came out at the end of the day on 9/11, meaning those attorneys still working that day would have filed what they had to file anyway (there was of course no EFS back then). The big difference with last year’s Notice was I think it also considered the day after the Notice was issued a holiday. Meaning lots of people must have taken advantage of this “free extension.”

    But yes, it is fascinating that Godici also got the powers wrong as well. Perhaps Lee reviewed the 9/11 notice which is why she did the same thing?

  20. Gene Quinn August 20, 2016 12:38 pm

    Randall, patent leather-

    The other big difference between 9/11 and the catastrophic power failure was that Washington, DC was under attack and it was not at that moment known whether there would be a second wave (or waves) of attack. Roads were being closed and the notice specifically mentions that this was being done at least in part to discourage people from coming to the USPTO to deliver filings by hand given the government wanted everyone off the roads. So it is very interesting to compare the two instances, but they are quite different.

    Still, I would agree that the emergency postal powers of 21(a) would have almost certainly been the appropriate section to use. Without even asking whether postal interruption and emergency requires the “emergency” to be of a “postal” nature, didn’t the entire federal government shut down on 9/11? Didn’t that also include the Post Office?

    -Gene

    -Gene

  21. Gene Quinn August 23, 2016 9:52 am

    Everyone-

    If you haven’t seen Courtenay Brinckerhoff’s take on this take a look at:

    https://www.pharmapatentsblog.com/2016/08/18/uspto-sued-over-december-2015-holidays/

    Courtenay explains that when the PTAB filing systems experienced problems in December 2014 the USPTO did NOT extend statutory deadlines, but instead came up with a work around.

    -Gene