IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA CENTRAL DIVISION

TARGET TRAINING INTERNATIONAL, LTD., Plaintiff, v. TERESA STANEK REA, ACTING DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Defendant.

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Civil Action No. 3:13-cv-3057

COMPLAINT

Plaintiff Target Training International, LTD ("TTI") for its Complaint against Teresa Stanek Rea, the Acting Director of the United States Patent and Trademark Office ("PTO"), alleges and states as follows: NATURE OF THE ACTION 1. This is an action by the assignee and owner of United States Patent No. 7,249,372

("the '372 patent") TTI seeking review of the Director's final determination and denial of its 37 C.F.R. 1.181 Petition seeking reconsideration of the PTO's decision to enter an inter partes reexamination filing date of September 14, 2013 for a Reexamination filed against the '372 patent. 2. This action arises under the Patent Act, 35 U.S.C. 1, et seq., and under the

Administrative Procedure Act ("APA"), 5 U.S.C. 701 06. This action further arises under the Rules of Practice in Patent Cases, 37 C.F.R. 1.1 et seq., specifically sections 1.248, 1.181, 1.183, 1.915, and 1.919. 1

PARTIES 3. Plaintiff TTI is an industry leading organization in the field of data-driven

research of human behavior and motivators in the realms of hiring and development. TTI is incorporated in the State of Iowa with a registered agent in the Northern District of Iowa, and with its headquarters and principle place of business in Scottsdale, Arizona. 4. Defendant Teresa Stanek Rea serves as Acting Under Secretary of Commerce for

Intellectual Property and Acting Director of the PTO. The Director is the head of the PTO and is responsible for superintending and performing all duties required by law with respect to the granting and issuing of patents, and is named in her official capacity. JURISDICTION AND VENUE 5. This Court has jurisdiction pursuant to the Administrative Procedure Act, 5

U.S.C. 701 06, and 28 U.S.C. 1338(a) and 1361. 6. Venue is proper in this Jurisdictional District under 5 U.S.C. 702 06, and 28

U.S.C. 1391(e). 7. TTI is registered with the Iowa Secretary of State and has a registered agent in

Clear Lake, Iowa, in Cerro Gordo County. 8. Cerro Gordo County is in the Central Division of the Northern District of Iowa

which makes all filings in this case appropriate in the Sioux City office. BACKGROUND The '372 Patent

9.

The '372 patent issued to Plaintiff TTI, as assignee of Bonnstetter et al. on July

24, 2007 and attached as Exhibit 1 is a true and correct copy of the '372 patent.

10. 2001. 11.

The '372 patent issued from a patent application that was filed on January 12,

The '372 patent is entitled, "Network Based Document Distribution Method" and

is directed at a method of distributing and collecting documents over a network and doing business over the Internet. 12. TTI is the assignee and sole owner of the '372 patent. '372 Patent Litigation 13. The '372 patent is the subject of two related and parallel disputes in the United

States District Court for the Southern District of Texas. 14. On September 17, 2010, TTI filed a complaint against Extended Disc North

America, Inc. ("EDNA") for direct and contributory infringement of the '372 patent Case No. 4:10-cv-03350 ("TTI (I)"). 15. On April 4, 2011, Extended DISC International, Inc., a Finnish Corporation,

("EDI") filed a first Ex Parte Request for Reexamination. 16. On May 4, 2011, EDNA, the U.S. franchisee of EDI and defendant in the first

Texas case, filed the first Motion to Stay Litigation Pending Reexamination of the '372 patent in TTI (I). 17. On May 19, 2011, the Court denied EDNA's Motion to Stay Pending

Reexamination in TTI (I). 18. On June 7 2011, and in response to defenses asserted by EDNA, TTI filed a

sealed Motion for Leave to Amend the Complaint in TTI (I) to add as a defendant, Extended DISC International, Inc. ("EDI") the Finland based company.

19.

On June 21, 2011, the Court denied the Motion to Amend the Complaint to add

EDI of Finland as a defendant in TTI (I). 20. On July 7, 2011, TTI filed a separate and second complaint against EDI of

Finland for direct and contributory infringement of the '372 patent Case No. 4:11-cv-02531 ("TTI (II)"). 21. On January 24, 2012, EDI of Finland filed a Motion to Stay the second Litigation

Pending Reexamination of the '372 patent in TTI (II). 22. On March 26, 2012, the Court granted the Motion to Stay the second Litigation

Pending Reexamination in TTI (II), and the case was stayed pending reexamination. 23. On July 23, 2012, about one week before trial was scheduled to begin in TTI (I),

the case against the U.S. franchisee, TTI filed a Motion for Continuance of Trial Date Due to Serious Illness of Lead Counsel. 24. On July 25, 2012, the Court denied the Motion for Continuance of the first case

and, instead, entered an Order Staying this Litigation Pending Reexamination of the '372 patent in TTI (I). 25. As of the filing of this complaint, both TTI (I) against EDNA and TTI (II) against

EDI remain stayed pending reexamination. '372 Ex Parte Reexamination 26. On April 4, 2011, EDI of Finland initiated and filed an Ex Parte reexamination

proceeding of the '372 patent with the USPTO pursuant to 35 U.S.C. 301, et al. Serial No. 90/011,434 ("Ex Parte Proceedings"). 27. On March 1, 2012, after extensive prosecution of the patented claims, the USPTO

issued a Final Rejection. The ultimate status of the claims of the '372 patent is as follows:

claims 1 15, 23, 25, 33, 38, 47, 49 51, 55, and 56 are pending and rejected; claims 18 22, 24, 26, 27, 29, 30 37, 41 48, 60, 70, and 72 76 are pending and allowed; claims 53, 54, and 58 68 have been cancelled. All original claims are currently rejected 28. On October 1, 2012, TTI filed an Appeal of the examiner's Final Rejection before

the USPTO Board of Patent Appeals and Interferences. 29. In the Appeal, TTI argued that the Examiner's lack of novelty rejections were

erroneous as such a rejection requires strict identity and the cited references, as compared to the claim language of the '372 patent, did not satisfy the strict identity test for lack of novelty. 30. On September 30, 2013, the Board Affirmed the Examiner's decision and upheld

the lack of novelty rejection. The decision of the Board is attached as Exhibit 2. It is non-final with respect to the 372 patent and will be appealed to the Court of Appeals for the Federal Circuit within the statutory deadline of sixty (60) days. '372 Inter Partes Reexamination 31. Allegedly on September 14, 2012, EDNA filed a Request for Inter Partes

Reexamination of the '372 patent pursuant to 35 U.S.C. 311, 312 Reexamination Control No. 95/002,307. This law expired on September 15, 2012. 32. The September 14, 2012 Request included a separate paper entitled "Certificate of

Service" stating service of the Request by first class mail on September 14, 2012. 33. On September 15, 2012, the PTO Electronic Filing System acknowledged the

electronic filing of a paper entitled "Second Certificate of Service" stating service of "a second copy of the Request . . ." by "United States Postal Service, Tracking Number 9434610200992489031677, Shipment ID MMNH7MU1FGDGN" on September 14, 2010.

34.

On September 16, 2012, the USPTO Electronic Filing System acknowledged the

electronic filing of a paper entitled "Corrected Certificate of Service" stating service of "copies of the Request . . ." were by first class mail on September 14, 2012 "in six packages, each package identified as 1 of 6, 2 of 6, 3 of 6, 4 of 6, 5 of 6, and 6 of 6." 35. The USPTO assigned the Inter Partes Request a filing date of September 16,

2012, one day after the statute authorizing Inter Partes Reexamination expired. 36. The USPTO unilaterally, without notice, and without explanation adjusted the

records regarding the Inter Partes request to reflect a filing date of September 14, 2012, the last day of the existing Inter Partes Reexamination statute. 37. On November 14, 2012, counsel for TTI filed an Opposition to the change of

reexamination filing date and included a petition to reinstate the originally assigned September 16, 2012 filing date pursuant to the Director's powers under 37 C.F.R. 1.181, 1.182, or 1.183. 38. In the November 14, 2012 Opposition, TTI argued that the originally assigned

September 16, 2012 filing date is proper because the Certificate of Service accurately reflects an earliest possible filing date of September 15, 2012 and the United States Postal records related to the tracking number have an earliest date of September 16, 2012. 39. TTI argued that the unilateral change of a filing date by the Legal Instruments

Examiner is improper to the extent the filing date does not accurately reflect the date that all statutorily required documents were properly filed with the USPTO. 40. On November 28, 2012, EDNA filed a Response to TTI's Opposition and argued

that the September 14, 2012 filing date was proper and that they filed before the statute expired.

41.

In support of the Response, EDNA argued that service was effective on the patent

owner and that EDNA satisfied the requirements of 37 C.F.R. 1.915 (Content of Request for Inter Partes Reexamination) as of September 14, 2012. 42. EDNA argued that the original filing with the USPTO on September 14, 2012

contained a reference to service being exacted by "Parcel Post." 43. EDNA argued that, upon further review, it appeared as though service by "Parcel

Post" would not satisfy the requirements for service under 37 C.F.R. 1.8, 1.248, and 1.915. 44. According to the Response, counsel for EDNA discovered this error late on

September 14, 2012 the same day as the original filing and a Second Certificate of Service was filed indicating that initial service was via "Parcel Post" and included the tracking number associated with the shipment. 45. According to counsel, EDNA then prepared a second copy of the Request, but

"due to the lateness of the hour" the United States Postal Service Facilities were not open by the time the second copy was prepared. 46. According to counsel, EDNA divided the second copy into six (6) large envelopes

and included a Third Certificate of Service with each envelope in the second copy of the Request. A copy of the "Corrected Certificate of Service" reflecting the "Third Certificate of Service" and the deposit of the six (6) envelopes was filed with the USPTO on September 16, 2012. 47. On December 7, 2012, an Order was entered by the USPTO granting EDNA's

request for Inter Partes Reexamination. 48. On December 12, 2012, TTI filed a Reply to EDNA's November 28, 2012

Response and highlighted that, pursuant to provisions of the Leahy-Smith America Invents Act

("AIA") and 37 C.F.R. 1.93(b), Inter Partes Reexamination no longer exists as a matter of law on or after September 16, 2012. 49. TTI argued that the September 16, 2012 date, as initially entered by the USPTO,

was the proper date as the record indicates that proper service and filing was not complete and effective until such date. 50. TTI again argued that the USPTO's unilateral, without notice changing of the

filing date to September 14, 2012 was inconsistent with the record and the rules and was, therefore, improper. As such, TTI requested that the Director reinstate the proper date of September 16, 2012 or, to the extent the September 14, 2012 date was maintained, for the USPTO to make written record of the reasons for the unilateral and without notice change in date, as made in an inter partes proceeding. 51. On June 5, 2013, the Director of the Central Examination Unit issued a non-final

Decision on the Petitions under 37 C.F.R. 1.181, denying and dismissing both the original Opposition/Petition and the Reply/Petition. [See Initial Decision of the Director attached as Exhibit 3.] 52. The Director noted that 37 C.F.R. 1.248 indicates that the date of mailing will

be regarded as the date of service and that proof of service of such a date of mailing can be met by providing a statement signed by the agent or attorney indicating the manner of service, but invited further review. 53. The Director noted that 37 C.F.R. 1.8 indicates that correspondence is

considered timely when deposited with the USPS with sufficient postage as first class mail and the correspondence includes a certificate for each piece of correspondence stating the date of deposit or transmission.

54.

The Director concluded that the "Corrected Certificate of Service" was sufficient

to meet the requirements of 37 C.F.R. 1.915(b)(6) in establishing that the mailing date and effective date of service was September 14, 2012 and, as such, denied the Opposition/Petition to change the filing date to September 16, 2012. 55. On June 25, 2013, TTI filed a Request for Reconsideration of the Director's denial

and decision dated June 5, 2013. [See Request for Reconsideration attached as Exhibit 4.] 56. In the Request for Reconsideration [Exhibit 4], TTI argued that 37 C.F.R. 1.915

explicitly requires that a request for reexamination "must" include the certificate of service and that such certificate of service is not effective unless it contains reference to a valid form of service. 57. TTI further argued that there is no authority in the Rules that a Request for

Reexamination can be filed piece-meal and that, because the effective Certificate of Service was not filed until September 16, 2012, that the Request for Reexamination was not complete until that date, which is after the statute expired. 58. TTI pointed out that EDNA had admitted that a Certificate of Service reflecting a

valid form of service was not filed until September 16, 2012, but EDNA then argued that the date the first class mail was sent, September 14, 2012, should be controlling. 59. TTI argued that, the date the shipment was deposited with the USPS is irrelevant

in determining the date a valid Certificate of Service was filed with the USPTO and the proper filing date under 37 C.F.R. 1.919. 60. TTI requested that the examiner reconsider the June 25, 2013 decision in light of

these arguments and reinstate an effective filing date of September 16, 2013, which is too late for USPTO jurisdiction.

61.

On September 6, 2013, the Director of the Central Examination Unit dismissed

the Request for Reconsideration, [Exhibit 4] and maintained the reassigned filing date of September 14, 2013. [Final Denial of Director attached as Exhibit 5.] 62. The Director agreed with TTI that 37 C.F.R. 1.915 requires a third party

requestor to include a certificate of service with the request and that 37 C.F.R. 1.919 requires that all parts of the request must be received by the Office to afford a filing date. 63. The Director cited the powers under 37 C.F.R. 1.183 which include the ability

of the Director to suspend or waive ". . . in an extraordinary situation, when justice requires, any requirement of the regulations in this part which is not a requirement of the statutes." No party had asked the Director to suspend the USPTO rules. 64. The Director improperly decided that the requirements for certificate of service

were not included in 35 U.S.C. 311 and were therefore controlled by the regulations, not statute. 65. The Director decided that, despite the failure to file a proper Certificate of Service

until September 16, 2012, the record indicated that the patent owner was served twice on September 14, 2012, albeit not in accord with the literal language of the rules. 66. The Director decided that such evidence deemed that justice required the use of

the powers under 37 C.F.R. 1.183 and, sua sponte, affording the Request for Reexamination a filing date of September 14, 2012. 67. The decision of the Director is a final decision of the USPTO on these issues, and

is not appealable to the Patent Trial and Appeal Board.

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CAUSE OF ACTION JUDICIAL REVIEW OF FINAL AGENCY ACTIONDENIAL OF SECTION 1.181 RECONSIDERATION PETITION 68. 69. The allegations of paragraphs 1 67 are incorporated herein as fully set forth. Under the Administrative Procedure Act, "[a]gency action made reviewable by

statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review." 5 U.S.C. 704. Further, "[a] person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof." 5 U.S.C. 702. 70. This action seeks judicial review of the Final PTO Decision denying TTI's 37

C.F.R. 1.181 Reconsideration Petition seeking to have the Director reinstate the original filing date of September 16, 2012. 71. 35 U.S.C. 311 allows for "a person who is not the owner of a patent may file

with the Office a petition to institute an inter partes review of the patent. The Director shall establish, by regulation, fees to be paid by the person requesting the review, in such amounts as the Director determines to be reasonable, considering the aggregate costs of the review." 72. 35 U.S.C. 312 sets forth the requirements of a petition filed under 311 and

reads: "(a) petition filed under section 311 may be considered only if . . . (4) the petition provides such other information as the Director may require by regulation . . ." 73. 37 C.F.R. 1.915 sets forth the required content of a request for inter partes

reexamination and indicates, "(b) A request for inter partes reexamination must include the following parts: . . . (6) A certification by the third party requester that a copy of the request has been served in its entirety on the patent owner at the address provided for in 1.33(c). The name

11

and address of the party served must be indicated. If service was not possible, a duplicate copy of the request must be supplied to the Office." 74. 37 C.F.R. 1.8 sets forth the requirements for service: "(a) . . . (1)

Correspondence will be considered as being timely filed if: . . . (i) . . . (A) Addressed as set out in 1.1(a) and deposited with the U.S. Postal Service with sufficient postage as first class mail; . . . (ii) The correspondence includes a certificate for each piece of correspondence stating the date of deposit or transmission. The person signing the certificate should have reasonable basis to expect that the correspondence would be mailed or transmitted on or before the date indicated." 75. 37 C.F.R. 1.248 further requires: "(a) Service of papers must be on the attorney

or agent of the party if there be such or on the party if there is no attorney or agent, and may be made in any of the following ways: . . . (4) Transmission by first class mail. When service is by mail the date of mailing will be regarded as the date of service . . ." 76. 37 C.F.R. 1.919 reads, "(a) The filing date of a request for inter partes

reexamination is the date on which the request satisfies all the requirements for the request set forth in 1.915." 77. 37 C.F.R. 1.183 reads, "[i]n an extraordinary situation, when justice requires,

any requirement of the regulations in this part which is not a requirement of the statutes may be suspended or waived by the Director or the Director's designee, sua sponte, or on petition of the interested party, subject to such other requirements as may be imposed. Any petition under this section must be accompanied by the petition fee set forth in 1.17(f)." 78. The Director's decision to change the date without notice was contrary to a Such an

Constitutional right of notice and due process, and was therefore unlawful. unconstitutional decision should be set aside under the APA, 5 U.S.C. 706(2)(B).

12

79.

The Director's decision to change the date without notice violates the Due Process

clause of the Fifth Amendment as the Director permitted the change in date without giving reasonable notice or a reasonable time to respond. Unilaterally granting the change in filing date without warning is unlawful and unconstitutional. 80. The Director's decision to invoke 37 C.F.R. 1.183 was arbitrary, capricious, an

abuse of discretion, and otherwise not in accordance with law because it unlawfully waives a requirement of the statutes, and should be set aside under the APA, 5 U.S.C. 706(2)(A). 81. While the Director argues that the decision to waive the regulations is not

inconsistent with 35 U.S.C. 311, the Director's decision to change the date is inconsistent with 35 U.S.C. 312 which explicitly requires that an inter partes reexamination request may only be considered if all of the required components are filed. 82. Included in 35 U.S.C. 312 is the requirement that the reexamination may only

be considered if all the information required by the Director is filed. This serves a gatekeeping function and the language and requirements of the statute must be complied with before the Director may even consider the reexamination petition. This is not a regulation to be waived by the Director. All such required information was not properly filed as of September 14, 2012. 83. The Director admitted that the regulations require that all parts of the request must

be received in order to afford a filing date, including a valid Certificate of Service. 84. The Director set forth that the ultimate determination to deny the Request for

Reconsideration required invoking the power of 37 C.F.R. 1.183, and declared that EDNA's failure to properly execute service and properly file a certificate of service was an extraordinary situation in which justice required the regulations regarding these requirements be suspended and waived.

13

85.

Such a decision was inconsistent with 37 C.F.R. 1.183 which only allows the

Director to waive or suspend regulations and makes clear the Director's powers do not extend to requirements of the statutes. 86. 35 U.S.C. 312 is a statute, not a regulation, and the Director's decision to

consider the Request filed and submitted for review on September 14, 2012 is inconsistent with this statute. The Director does not have the power to waive or suspend the statute and, therefore, the Director's decision was arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law. 87. Even if the requirements for service were founded in the regulations, which they

are not, the Director's decision to invoke 37 C.F.R. 1.183 was arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law because such a statute is reserved for extraordinary situations in which justice requires the Director to suspend or waive a regulation. The failure of a party to comply with simple, but crucial notice and filing requirements is not such a situation, and the decision should be set aside under the APA, 5 U.S.C. 706(2)(A). 88. EDNA waited until September 14, 2012, the sunset day of the statute, to attempt

to file their request for inter partes reexamination. 89. The statute allowing for inter partes reexamination under 35 U.S.C. 311 expired

on September 15, 2012. The AIA replaced inter partes reexamination with a wholly different procedure described as inter partes review. Accordingly, no inter partes reexamination

proceeding is allowed on or after September 15, 2012. 90. EDNA took the risk of waiting until the last moment to file their Request for Inter Their decision to wait, and subsequent failure to comply with the

Partes Reexamination.

14

requirements of the statute and the regulations afforded EDNA a filing date of September 16, 2012. 91. The natural and ordinary consequence of non-compliance with a statute or

regulation is a missed date and the award of a filing date consistent with the date on which full compliance is achieved, a date too late to be effective. 92. Justice is not served in a situation wherein EDNA's non-compliance with the

statute and regulations results in EDNA receiving an undeserved filing date and ignores all fairness to the patentee. Litigation in the underlying cases has been stayed pending the result of the ex parte reexamination proceedings. Those proceedings are on the threshold of completion. EDNA waited until the last minute to attempt to invoke these proceedings and justice requires that they comply with the appropriate statutes and regulations in order to be afforded a filing date of September 14, 2012. They did not. 93. The USPTO's decision to unilaterally change the date to September 14, 2012, and

the Director's decision to invoke 37 C.F.R. 1.183 to uphold the filing date as changed is inconsistent with the requirements of justice and fairness, and is arbitrary, capricious, an abuse of discretion. 94. TTI seeks reversal of the Final Decision of the Director and USPTO and an Order

of this Court directing reinstatement of the original filing date, September 16, 2012. 95. TTI also seeks costs and attorney's fees associated with this action to the extent

allowed by the law.

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CAUSE OF ACTION JUDICIAL REVIEW OF FINAL AGENCY ACTIONSTAY OF AGENCY PROCEEDINGS/DECISION PENDING REVIEW BY THIS COURT 96. Pursuant to 5 U.S.C. 705, this Court is authorized as follows: "On such

conditions as may be required and to the extent necessary to prevent irreparable injury, the reviewing court, including the court to which a case may be taken on appeal from or on application for certiorari or other writ to a reviewing court, may issue all necessary and appropriate process to postpone the effective date of an agency action or to preserve status or rights pending conclusion of the review proceedings." 97. An Order from this Court staying the inter partes reexamination proceedings in

the PTO is necessary to prevent irreparable injury to TTI and the '372 patent. 98. Any preliminary ruling by the PTO adverse to the patent owner would create an

unnecessary and improper cloud on the validity of the patent right, even if the agency lacks jurisdiction on the basis of the statute having expired prior to the filing of the inter partes reexamination. Further, the patentee should not have to be burdened with the expense of

responding in the PTO until the jurisdictional issue is resolved. 99. TTI requests this Court enter an Order staying the inter partes reexamination

proceedings, Reexamination Control No. 95/002,307, until such time as this Court completes its review.

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PRAYER FOR RELIEF WHEREFORE, TTI prays for the entry of a judgment from this Court: (a) Staying the inter partes reexamination proceedings of the '372 patent in the

USPTO pending this judicial review; (b) Reversing the Director's decision denying TTI's 37 C.F.R. 1.181 reconsideration

petition; (c) Directing the Director and the USPTO to reinstate the original filing date of

September 16, 2012; (d) Ordering the Director to dismiss the inter partes reexamination as having been

filed after the statute authorizing such expired; (e) Awarding costs of this litigation and attorney's fees to the fullest extent allowed

by law; and (f) just. Dated: October 21, 2013 Respectfully submitted, Awarding TTI such other and further relief as this Court may deem to be right and

/s/ Edmund J. Sease Edmund J. Sease R. Scott Johnson Cory A McAnelly McKEE, VOORHEES & SEASE, P.L.C. 801 Grand Avenue, Suite 3200 Des Moines, IA 50309-2721 Phone: 515-288-3667 Fax: 515-288-1338 Email: ed.sease@ipmvs.com Email: scott.johnson@ipmvs.com Email: cory.mcanelly@ipmvs.com Email: mvslit@ipmvs.com ATTORNEYS FOR PLAINTIFF 17