CAFC Finds Administrative Procedures Act Claims Against USPTO Barred for Lack of Final Agency Action, Statute of Limitations

By Steve Brachmann
June 4, 2020

“Odyssey argued that the USPTO lost jurisdiction because the rehearing request was filed more than 63 days after the PTAB’s decision, outside of the time allowable for appeals under provisions of the Code of Federal Regulations, but the CAFC found that these provisions bind appeals from patent applicants, not agency actions.”

Federal CircuitOn May 22, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision in Odyssey Logistics and Technology Corporation v. Iancu in which the appellate court affirmed the Eastern District of Virginia’s dismissal of claims filed against the U.S. Patent and Trademark Office under the Administrative Procedures Act (APA). The Federal Circuit agreed with the lower court that Odyssey’s challenges to the USPTO’s rules and procedures governing ex parte appeals at the Patent Trial and Appeal Board (PTAB) should be dismissed for lack of subject matter jurisdiction or were barred by the six-year statute of limitations for actions against the U.S. governed by 28 U.S.C. § 2401.

Odyssey Challenges Agency Actions on Patent Applications and 2011 Ex Parte Rule Changes

Two of Odyssey’s APA claims stem from the USPTO’s prosecution of a pair of patent application filings. During the prosecution of one patent application, although the PTAB reversed an examiner’s rejection in April 2016, the Technology Center Director issued an examiner’s request for rehearing to challenge the PTAB’s ruling. Odyssey responded to the request by arguing the procedural propriety of allowing the rehearing request, ultimately appealing the request for rehearing to Eastern Virginia before the USPTO issued a decision on the merits of the rehearing arguments.

Odyssey also appealed the USPTO’s dismissal of a petition filed by Odyssey requesting that the examiner of a second patent application make certain evidence part of the record and provide additional explanations to Odyssey’s arguments appealing the final rejection of patent claims. Odyssey filed this petition at the same time that it filed an appeal of the examiner’s final rejections of patent claims, and the Technology Center Director mooted the petition after the examiner provided additional explanations while failing to include new evidence. Odyssey filed a new petition because it believed that the examiner’s answer to its appeal brief included new grounds of rejection, but the Technology Center Director again dismissed it.

Odyssey’s final APA claim stems from 2011 amendments to the USPTO’s amendments to the agency’s rules of practice for ex parte appeals. Odyssey challenged the legality of these amendments, although Eastern Virginia found that these claims were barred under the six-year statute of limitations in Section 2401. On appeal, Odyssey argued that the statute of limitations should start running on the effective date of the rules, as the Federal Circuit previously held in Preminger v. Secretary of Veterans Affairs (2008).

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Odyssey’s Agency Action Challenges Fail Finality Requirement of the APA

In addressing Odyssey’s appeal of the USPTO’s procedural actions relevant to its two patent applications, the Federal Circuit first sought to determine whether Odyssey’s challenge satisfied the APA’s finality requirement as codified in 5 U.S.C. § 704, which governs agency actions reviewable under the APA. Citing to the U.S. Supreme Court’s 2019 decision in Smith v. Berryhill, the Federal Circuit noted that an agency action is final if it both marks the consummation of the agency’s decision-making process, and it is a decision determining rights and obligations “or from which legal consequences will flow.”

Regarding Odyssey’s challenge to the examiner’s request for rehearing, the Federal Circuit found that the agency’s action were ordinary agency action under the Manual of Patent Examination Procedure (MPEP). While Odyssey has legal recourse to appeal a final decision on the merits of the rehearing request, the appellate court held that the rehearing request itself isn’t a consummation of the agency’s decision-making progress. Odyssey argued that the USPTO lost jurisdiction because the rehearing request was filed more than 63 days after the PTAB’s decision, outside of the time allowable for appeals under provisions of the Code of Federal Regulations, but the Federal Circuit found that these provisions bind appeals from patent applicants, not agency actions. Although USPTO delay could prejudice Odyssey, the Federal Circuit found that such issues could be raised on appeal in the event of an adverse decision.

While Odyssey conceded that its challenge based on its petition filed during the second patent application’s prosecution should have been dismissed, it argued that it should have been dismissed as moot under Federal Circuit precedent in In re Durance (2018) and not for lack of subject matter jurisdiction. While the Eastern District of Virginia’s decision didn’t address the issue of mootness, the Federal Circuit held that the district court wasn’t obligated to consider dismissing the challenge on the more uncertain ground of mootness. Instead, the appellate court found that Odyssey’s legal challenge also failed to be sustained under the APA for lack of finality in the USPTO’s agency action.

Without Adverse Rule Application, APA Statute Runs From Date of Publication

Finally, the Federal Circuit found that the Eastern Virginia court was correct to dismiss Odyssey’s challenge to the USPTO’s 2011 rule amendments under the Fourth Circuit’s 2012 decision in Hire Order Ltd. v. Marianos. In Hire Order, the Fourth Circuit held that the statute of limitations for APA challenges to rule changes begins running from the date that the rules were published. Odyssey’s suit included a facial challenge to the 2011 amendments and not an appeal of any adverse application of those rules to Odyssey’s patent applications. Therefore, the district court was correct to find that Section 2401’s statute of limitations began running on November 22, 2011, the date that the final rules were published in the Federal Register and more than six years prior to Odyssey’s complaint filed on January 23, 2018.

The Federal Circuit found that this conclusion was further compelled by its precedent in Hyatt v. U.S. Patent and Trademark Office (2018), a case which Odyssey had cited for the premise that the statute of limitations to a rules challenge can only run from the effective date of the rules because the right of action accrues from the first adverse application of those rules. However, the Federal Circuit found that Hyatt accorded with Hire Order in this case because Odyssey’s challenge didn’t seek relief for any adverse application of the rules to its own patent applications. Without challenge of a specific adverse application of those rules, the appellate court found that the statute of limitations begins running from the date of an agency’s initial decision under Hyatt. Further, the Federal Circuit found that Hyatt foreclosed Odyssey’s arguments under Preminger because Odyssey’s challenge to the rules wasn’t a procedural challenge and Hyatt relied on Preminger in finding that the relevant “final agency action” starting a statute of limitations in challenging a regulation is the promulgation of that regulation by the agency.

The Author

Steve Brachmann

Steve Brachmann is a freelance journalist located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He writes about technology and innovation. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients and is available for research projects and freelance work.

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