JUST IN: Federal Circuit Denies Vacatur in USPTO Rules Case

By Gene Quinn
November 13, 2009

Federal Circuit Building, Washington, DC

Federal Circuit Building, Washington, DC

Earlier today the Chief Judge Paul Michel of the United States Court of Appeals for the Federal Circuit issued an Order declaring the pending appeal of Dr. Tafas and GlaxoSmithKline moot due to the fact that USPTO Director David Kappos has withdrawn the rules. The Federal Circuit per Judge Michel, however, denied the motion of the USPTO and GlaxoSmithKline to vacate the district court opinion authored by Judge Cacheris. Most will recall that a three-judge panel had voted 2 to 1 (over the strong dissent of Judge Rader) to overrule most of Judge Cacheris’ opinion. The entire Federal Circuit decided to hear the case en banc, which was mooted by Kappos’ withdrawal of the rules. In the Order to rehear the case en banc the Federal Circuit vacated the three judge panel decision, leaving the original decision of the district court as the standing judicial decision on the rules, at least pending rehearing en banc. What this means is that the scathing indictment contained in that opinion regarding how the USPTO went about instituting the claims and continuations rules remains, as does the precedent, albeit district court precedent, standing for the proposition that the USPTO acted without authority and the claims and continuations rules directly contradicted the relevant patent statutes enacted by Congress. This should open the door for Dr. Tafas to return to the district court to make his case that he is a prevailing party and should be entitled to his attorneys fees, which was one of the points raised by his attorneys in their motion objecting to vacatur.

Judge Michel’s, joined by the other Judges on the Federal Circuit with the exception of Judge Lourie, who did not take part in the consideration of the case, was quite short.  The highlights of the order follow below:

The parties’ joint motion for dismissal of the appeal is proper because the USPTO has rescinded the rules that formed the basis of this litigation. The appeal is therefore moot and dismissal of the appeal is not only appropriate, but required.

However, vacatur of the district court’s judgment is inappropriate under the circumstances. In U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18 (1994), the Supreme Court held that when a party procures the conditions that lead to a case becoming moot, that party should not be able to obtain an order vacating the lower court decision that was adverse to that party. Vacatur, held the Court, is appropriate if the mootness arises from external causes over which the parties have no control, or from the unilateral act of the prevailing party, but not when the mootness is due to a voluntary act by the losing party, such as a settlement. U.S. Bancorp Mortgage Co., 513 U.S. at 25.

The motion seeks to paint this case as falling into the former category, but it appears to us to fall squarely into the latter. This is not a case in which the regulations have been overridden by a statutory change; instead, it is a case in which the agency itself has voluntarily withdrawn the regulations and thus set the stage for a declaration of mootness. The motion’s statement that an intervening regulatory change is directly analogous to an intervening statutory change is not persuasive. The agency does not control Congress; but it does control the decision to rescind the regulations. Thus, it was the USPTO (the losing party in the district court action) that acted unilaterally to render the case moot, and vacatur is not appropriate.

The last section of Judge Michel’s Order should be music to the ears of Dr. Tafas.  While there is no discussion of Tafas’ argument that he should be entitled to at least make the case for awarding of his fees, it seems clear that the Federal Circuit thought about this and at the very least indirectly provided guidance, if not outright assistance, to Dr. Tafas and Judge Cacheris, who would ultimately rule on the awarding of any fees.  Specifically, Michel and the rest of the Federal Circuit (save Judge Lourie) announced in clear and direct terms that the USPTO is “the losing party in the district court action” and that the USPTO unilaterally rendered the case moot.  If the USPTO is the losing part that would seem to have to translate to Tafas being a prevailing party, and one who has prevailed as a result of litigation and not through any intervening statutory change or settlement.  So it would seem that Dr. Tafas has had the road cleared for him to at least make his case that he should be awarded attorneys fees.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. 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.

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Discuss this

There are currently 5 Comments comments.

  1. EG November 13, 2009 4:04 pm

    Gene,

    Justice finally prevailed here. But at what cost, including the wasted time, anguish and torment we in the patent bar (and our clients) went through tryng to cope with potential implementation of these rules. And a tip of my hat to Tafas and their counsel for seeing this through to the end, including not caving in on allowing Cacheris’ decision to be vacated.

  2. scrappy November 13, 2009 4:26 pm

    Great news!! Thank you Dr. Tafas (and Steve Moore et al.)

  3. Noise above Law November 13, 2009 5:31 pm

    While district court precedence is nice, stare decisis directly against the losing party is much more powerful.