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Dennis L. Schmirler Plaintiff, v. Hon. David J. Kappos, In his official capacity as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office Defendant. MEMORANDUM IN SUPPORT OF PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Case No. 10-cv-00144-LA
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TABLE OF CONTENTS
Table of Authorities Statement of Facts Legal Standards Argument I. Mr. Schmirler has the right to protect his personal property interest. A. B. C. D. II. III. Conclusion Mr. Schmirler is a tenant in common with the right to protect. Mr. Schmirler is the only known person that has legal rights to act in connection with the ‘374 Patent. Public policy favors protection and use of patent rights. Defendant’s logic is flawed. iii 1 10 11 11 12 14 15 16 19 21 23
The ‘374 Patent properly issued but the Office later erroneously withdrew it. The Office did not have authority to refund the issue fee.
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TABLE OF AUTHORITIES
Acs Consultant Co. v. Care
Blackledge v. Weir & Craig Mfg.
108 F. 71 (7th Cir. 1901)
No. 08C0803 (E.D. Wis. 2011)
10 13 20 10 10 12, 13, 16 16 13 11 19 13
Blacklight Power, Inc., v. Dickinson Camp v. Pitts
411 U.S. 138 (1973)
109 F. Supp. 2d 44 (D.D.C. 2000)
Citizens to Preserve Overton Park, Inc. v. Volpe Ethicon Inc. v. U.S. Surgical Corp. In re Patent No. 4,793,265 Kuenzi v. Leisten
401 U.S. 402 (1971) 135 F.3d 1456 (Fed. Cir. 1998) 1999 WL 34807445 (Comm’r Pat. 1999) 271 N.W. 18 (Wis. 1937) 463 U.S. 29 (1983)
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co. Sampson v. Dann Vose v. Singer
466 F. Supp. 965 (D.D.C. 1978) 4 Allen 226 (Mass. 1862) STATUTES 35 U.S.C. § 42(d) 35 U.S.C. § 100 35 U.S.C. §§ 116-118 35 U.S.C. § 151 35 U.S.C. § 253 35 U.S.C. § 261 35 U.S.C. § 262 8 Del. C. § 278 ADMINISTRATIVE RULES 37 C.F.R. § 1.26(a) 37 C.F.R. § 1.26(b)
21, 22 5, 11 15 7, 11, 19, 20, 21, 23 16 12 13 14
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ADMINISTRATIVE RULES (continued) 37 C.F.R. § 1.41(b) 37 C.F.R. § 1.42 37 C.F.R. § 1.110 37 C.F.R. § 1.175 37 C.F.R. § 1.251 37 C.F.R. § 1.313(b) 37 C.F.R. § 1.366(a) OTHER REFERENCES 11 18 12 12 12 10, 19, 20, 21 16
Oxford Dictionary of Phrase and Fable (2d ed. 2005) Manual of Patent Examining Procedure (MPEP) § 509
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Now comes Plaintiff Dennis L. Schmirler, through his attorneys, Garet K. Galster and Ryan Kromholz and Manion, S.C., and moves this Honorable Court, pursuant to Fed. R. Civ. P. 56(a) and Civil L.R. 56 and Civil L.R. 7, to grant summary judgment reinstating his patent, which was withdrawn from issuance by the Defendant arbitrarily, capriciously, without discretion or otherwise not in accordance with the law and the rules promulgated by Defendant.
Statement of Facts This case involves a loss of patent rights caused by action of the United States Patent and Trademark Office (“the Office”), which occurred after the issuance of a United States patent, U.S. patent number 6,214,374 (the ‘374 Patent). While the complained-of action occurred after the issuance of the ‘374 Patent, a short explanation of its history may provide a helpful backdrop. In the discussion that follows, this timeline of key patent prosecution dates will be constructed, with specific attention focused on events D-G:
The ‘374 Patent issued from a nonprovisional U.S. patent application. The nonprovisional U.S. patent application, serial number 08/652,280, listing Mr.
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Schmirler as inventor, was filed on 22 May 1996, by a first law firm—Pennie and Edmonds. (See Administrative Record (the “Record”) (Dkt. 10) at A1-A88)
The prosecution of the application progressed generally normally at the outset, including a preliminary amendment (id. at A89-A92), an information disclosure statement (IDS) (id. at A93-A95), a restriction requirement (id., A96A104) and response thereto (id. at A105-A110), a supplemental IDS (id. at A111A112), a reformulated restriction requirement (id., A113-A125) and response thereto (id. at A126-A131), and a first action on the merits (id. at A132-A138). A change of attorney then occurred and the patent application was allowed. As permissible under the rules governing representation of others before the Office (37 C.F.R. §§ 10.1 et seq.), the firm of Pennie and Edmonds requested withdrawal from representation before the office. (Record, A139-A148.) After Pennie and Edmonds withdrew, a second prosecuting attorney, Mr. Arthur Gardner, timely filed an extension of time (id. at A160), a CPA request (id. at A156-A157), and a preliminary amendment (id. at A158-A160). On 12 July 1999, the Office issued a Notice of Allowance and Issue Fee Due, setting a due date for 12 October 1999 for the payment of the issue fee. (Id. at A161-A163.) This deadline was not extendable. 37 C.F.R. § 1.311(a).
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The issue fee, evidently, was not paid by the October 1999 deadline. On 30 December 1999, the Office issued a Notice of Abandonment for failure to pay the issue fee. (Id. at A164.)
On 11 October 2000, the second named inventor, Mr. Edward M. Portman, attempted to revive the application by filing a first Petition for Revival of an Application for Patent Abandoned Unintentionally under 37 C.F.R. § 1.137(b). (Id., at A165-A180.) This petition authorized payment of the outstanding issue fee and petition fee to Mr. Portman’s American Express credit card. (Record (as supplemented by Dkt. 12) at Dkt. 12-1, 2.)
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The Office dismissed the first petition for failure to include signatures from all inventors. (Record at A181-A184.) A second attempt was made by Mr. Portman, on 23 October 2000, to revive the application. (Id. at A185-A193.) This second attempt again authorized payment of the outstanding issue fee and petition fee to Mr. Portman’s American Express credit card. (Record (as supplemented by Dkt. 12) at Dkt. 12-1, 3.) Presumably due to the inventors’ difficulty in getting the application revived, a third prosecution firm—Andrus, Sceales, Starke & Sawall, LLP (“Andrus”)—took over the prosecution of the patent application. (Record at A208-A211.) On 17 November 2000, Andrus filed a Substitute Petition to Revive Pursuant to 37 CFR 1.137(b) (id. at A194-A203), and a request for reconsideration of the first petition filed by Mr. Portman (id. at A204-A207). In the Substitute Petition, Andrus explicitly indicated that the petition and issue fees were accepted by the U.S. Patent Office. (Id. at A195.) Furthermore, Andrus asked that the Office “kindly charge any additional fees under 37 CFR §§ 1.16, 1.17 and 1.18 incurred in connection with this Petition and response” to a Deposit account. (Id.) In the request for reconsideration,
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Andrus again asserted that Petitions Examiner “indicated that the issue fee and the petition fee to revive the application were received from the applicant by credit card. Therefore, the applicant is now believed to have addressed all of the issues identified by the Examiner such that the applicant’s Petition should be granted.” (Id.) After receiving the submissions from Andrus, the Office notified Applicants that the recently submitted power of attorney had been accepted. (Id. at A212.) Andrus then transmitted formal drawings in compliance with the requirement of the 12 July 1999 Notice of Allowability. (Id. at A213-A224.) On 21 December 2000, the Office granted the petition to revive the abandoned application. (Id. at A225A226.)
On 10 April 2001, pursuant to 35 U.S.C. § 100(d), since all fees had been paid appropriately, all procedures had been followed and petition granted, the Office correctly issued U.S. Pat. No. 6,214,374, thereby rendering Mr. Schmirler no longer a patent applicant, but a patentee. (See Exhibit B to Complaint, Dkt. 1-5.)
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More than three weeks after the ‘374 Patent issued, American Express, through the Card Support Services at the Mellon Client Service Center, informed the Office that, on 27 April 2001, seventeen days after the ‘374 Patent properly issued, a chargeback in the amount of $1,370.00 was debited from the Office in connection with the subject file. (Record at A227.) Despite no refund request having been filed with the Office, the Office did not dispute this chargeback, and the Office failed to notify Mr. Schmirler or his attorney of record of same.
On 7 June 2004, more than three years after the grant of the patent, the Office sent to the attorney of record a Notice of Unsettled Issue Fee Payment and of
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Withdrawal of Petition Decision – Patent may be Vacated. (Id. at A228-A233.) While setting out the approximate timeline above, the Office indicated that [o]n May 4, 2001, the Office received a communication from Card Support Services, Mellon Client Service Center, Room 154-0910, Pittsburgh, PA 15262, that a chargeback in the amount of $1370 was processed on April 27, 2001, for the credit card charge, including the issue fee payment received on October 12, 2000. Accompanying the communication of May 4, 2001, was an American Express ‘Service Establishment Claim Form,’ dated December 17, 2000, stating that the cardholder, Dr. Edward M. Portman, claimed that ‘this service was never rendered.’ (Id. at A229.) The Office continued on to admit that the disputed “services were clearly rendered.” (Id.) Citing to 35 U.S.C. §151, the Office pointed out that the grant of a patent is dependent upon the payment of the requested issue fee. (Id.) According to the Office, however, “[s]ince the credit card charge for the issue fee was disputed by applicant [sic, only one of three inventors], the issue fee was never paid, and the Office’s publication on April 10, 2001, of a patent document purporting to be a patent was in error.” (Id.) Thus, according to the Office, the grant of the petition under 37 C.F.R. 1.137(b) to accept late payment of an unintentionally delayed issue fee, which occurred more than four months prior to the erroneous refund, needed to be withdrawn. (Id. at A230.) Unbeknownst to Mr. Schmirler, on 13 January 2005, the Office vacated U.S. Patent 6,214,374, which issued on 10 April 2001. (Id. at A234-A236.)
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In an attempt to protect his patent rights, Mr. Schmirler filed a petition on 16 October 2007, under 37 C.F.R. § 1.182, in the PTO requesting reinstatement of the Patent. (See Exhibit C to Complaint, Dkt. 1-6) (the “Petition”). All required fees, including issue fees and maintenance fees, were included with the Petition. (Id.) After nearly six months, having received no response from the PTO and being unable to verify whether the Petition was ever received by the Office of Petitions, a copy of the Petition was hand delivered to the PTO on 11 April 2008. (See Exhibit D to Complaint, Dkt. 1-7.) After another few weeks, having received no response from the PTO and being unable to verify whether the Petition was ever received by the Office of Petitions, a copy of the Petition was hand delivered directly to an Office of Petitions attorney at the PTO on 28 April 2008. (See Exhibit E to Complaint, Dkt. 18.) Additionally, on 5 September 2008, an executed power of attorney was sent to the PTO. (See Exhibit F to Complaint, Dkt. 1-9.) Nearly eleven months after the Petition was filed, on 11 September 2008, the PTO sent a “Decision Returning Improper Papers” to the attorney of record, and to the attorney that submitted the Rule 182 petition. (Record at A238-A245 (the
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“Decision”).) In the Decision, the PTO recognizes that the patent “applicant” consisted of more than one person. (Id. at A240.) The PTO rejected the submitted power of attorney as improper because it was not signed by all persons that formed the applicant. (Id. at A240-A241.) The Decision invited a reply within a two-month time period. (Id. at A244.) On 4 November 2008, Mr. Schmirler replied to the PTO. (Id. at A246-A261 (the “Reply”).) In the Reply, Mr. Schmirler argued that he was not an “applicant” but was rather a “patentee,” that the Rules (37 C.F.R. § 1 et seq.) do not provide instructions on how to change power of attorney after issuance, and that Mr. Schmirler, as patentee, had the right to unilaterally protect his patent rights. (Id. at A247-A248.) Nine months later, on 5 August 2009, the PTO issued its final agency action related to the Petition. (Id. at A262-A282 (the “Final Action”).) In the Final Action, the PTO “interpreted” the 4 November 2008 response as three separate petitions, alleging that fees for such petitions (totaling $1,200.00) were authorized by Mr. Schmirler’s statement in the Reply that “If any fees in addition to those already provided, are required to reinstate the erroneously withdrawn patent, the Office is hereby authorized to satisfy such requirement with funds from Deposit Account Number 06-2360.” (Id. at A263 (emphasis added).) Such withdrawals were not used “to reinstate” the Patent. (See id.) Also in the Final Action, the PTO denied all relief sought by Mr. Schmirler in his Petition, (see id. at A271-A280), indicating that the
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Final Action was designated as final agency action under 5 U.S.C. § 704 (id. at A281). Mr. Schmirler then filed this action claiming that the withdrawal of the ‘374 Patent was contrary to 37 C.F.R. § 1.313(b), and subsequent denial of reinstatement of the Patent constituted agency action that was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Mr. Schmirler also claims that any refund in this matter was made contrary to the Office rules governing refunds; therefore, such refund constituted agency action that was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
Legal Standards “Summary judgment is required ‘if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.’” Acs Consultant Co. v. Care, No. 08C0803, slip op. at 3 (E.D. Wis. 2011). Generally, in actions under the Administrative Procedure Act, there is no genuine dispute as to any material fact because “the focal point for judicial review should be the administrative record already in existence[.]” Camp v. Pitts, 411 U.S. 138, 142 (1973). In all cases brought under the Administrative Procedure Act, “agency action must be set aside if the action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[.]” Citizens to Preserve Overton
Park, Inc. v. Volpe, 401 U.S. 402, 414 (1971). Agency action is
arbitrary and capricious if the agency has relied on [unintended considerations], entirely failed to consider an important aspect of
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the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.
See Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983). For the following reasons, the Office’s action in this case was arbitrary and capricious, at least because the Office offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Furthermore, the Office’s action was not in accord with the law, namely 35 U.S.C. § 151.
Argument I. Mr. Schmirler has the right to protect his personal property interest. As an initial note, the rules promulgated by Defendant (at least 37 C.F.R. Part 1) do not provide guidance for changes to powers of attorney after issuance of a patent, and Mr. Schmirler, as patentee and owner of an undivided interest in an issued patent, has the unilateral right to protect such interest. There is a distinction between a patent applicant and a patentee. “Unless the contrary is indicated the word ‘applicant’ when used in [the Rules] refers to the inventor or joint inventors who are applying for a patent[.]” 37 C.F.R. § 1.41(b) (July 1, 2009) (emphasis added). On the other hand, the term “patentee” refers to the person to whom the patent was issued and his or her successors in interest. 35 U.S.C. § 100 (2010). Even the Office, in its own Rules, makes a clear distinction between an
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“applicant” and a “patentee.” See 37 C.F.R. § 1.110 (stating “the Patent and Trademark Office . . . may require an applicant, patentee, or owner to identify the inventive entity of the subject matter of each claim in the application or patent.”) (emphasis added); see also id. at §§ 1.175 & 1.251 (both sections using the terms “applicant” and “patentee” to deliberately distinguish status). Accordingly, the Rules do not provide procedures to change powers of attorney after patent issuance, which event creates a property interest in each patentee. The Office’s refusal to consider Mr. Schmirler’s petition filed under 37 C.F.R. § 1.182 constituted agency action that was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
A. Mr. Schmirler is a tenant in common with the right to protect.
“Subject to the provisions of [U.S.C. Title 35], patents shall have the attributes of personal property.” 35 U.S.C. § 261, 1st Paragraph. “Questions of patent ownership are distinct from questions of inventorship.” Ethicon Inc. v. U.S.
Surgical Corp., 135 F.3d 1456, 1465 (Fed. Cir. 1998). Indeed, “each co-inventor
presumptively owns a pro rata undivided interest in the entire patent, no matter what [his or her] respective contribution[.]” Id. “[A] co-inventor as to even one claim enjoys a presumption of ownership in the entire patent . . . [; t]hus, where inventors choose to cooperate in the inventive process, their joint inventions may become joint property without some express agreement to the contrary.” Id. at 1466. Therefore, at the moment a patent issues, “applicants,” “inventors,” or their
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respective assigns become joint owners of personal property—patentees—each having an undivided interest in and to that property. The most analogous relationship to patentee co-ownership is a tenancy in common. See Blackledge v. Weir & Craig Mfg., 108 F. 71 (7th Cir. 1901) (citing
Vose v. Singer, 4 Allen 226 (Mass. 1862)). It has long been held that the co-owners
of a patent do not have “any right to control the action of the other [co-owners, nor] to exercise any supervision over them.” Vose at 232. Unlike a conventional tenancy in common, however, the default rule is that joint patentees do not have a duty of accounting to each other. 35 U.S.C. § 262. Just like co-owners have a “freedom to exploit the patent without a duty to account to other co-owners,” Ethicon Inc. at 1468, it is a fundamental principle of property law that tenants in common have the right to take unilateral action, without requiring permission of any other tenant, to protect the common property, see Kuenzi v. Leisten, 271 N.W. 18 (Wis. 1937). In this case, the ‘374 Patent correctly issued on 10 April 2001. (See Exhibit B to Complaint, Dkt. 1-5.) Therefore, as of that date, Mr. Schmirler became a patentee, a joint owner of that patent, in addition to being one of its inventors. As a joint owner, Mr. Schmirler is not required to seek permission from any other owner of the patent to exploit his patent rights. See 35 U.S.C. § 262. Likewise, Mr. Schmirler is not required, by well accepted property law, to obtain permission from any other owner of the patent to protect his personal property interest therein. As such, the petition as submitted to the Office in October 2007, was proper. The petition should have been considered on its merits and granted.
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Mr. Schmirler is the only known person that has legal rights to act in connection with the ‘374 Patent.
Under Delaware law, a corporation may exist for three years after dissolution
to “enabl[e it] gradually to settle and close [its] business, to dispose of and convey [its] property, to discharge [its] liabilities and to distribute to [its] stockholders any remaining assets, but not for the purpose of continuing the business for which [it] was organized.” 8 Del. C. § 278. In this case, the Office asserts that “the ‘applicant’ is comprised of three joint inventors.” (Record at A240.) Assuming, arguendo, that a power of attorney after issuance is required to be signed by the “applicant,” the Office is incorrect. The erroneously withdrawn patent, U.S. Patent 6,214,374, included three inventors: Dennis L. Schmirler, who is the present petitioner, Edward M. Portman, and Michael S. Christenson. All interests of inventors Edward M. Portman and Michael S. Christenson were assigned to a company called Diversified Pharmaceuticals, Inc. (DPI), a Delaware corporation purportedly having an office in Atlanta, Georgia. (See Record at A253-A255.) Mr. Schmirler never assigned his rights and retains an undivided interest in the patent. However, DPI ceased to exist, at the latest, in 2003. (Id. at A252) (indicating corporate status of DPI as “Void” and status date of 03/01/2000). Therefore, it was impossible to obtain a signature on behalf of the only other real party in interest, the only other patentee, the sole assignee of the entire interests of the other two inventors, DPI. Indeed, even if it were possible to track down persons who once served as representatives of DPI, DPI does not exist as a legal person, and has not so existed for more than eight years (and has been void for
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more than eleven years); therefore, a signature on its behalf could have no legal effect. As a result, Mr. Schmirler is the only person that is capable of acting in this matter to revive the correctly issued and erroneously withdrawn ‘374 Patent. Mr. Schmirler executed a power of attorney authorizing the undersigned to act on his behalf. (Exhibit H to Complaint, Dkt. 1-11 at 19.) Even though it was a long shot, Mr. Schmirler even attempted contact with DPI, the nonexistent corporation, and the attempted communication was predictably returned as undeliverable. (Record at A256-A261.) For these reasons, the petition submitted to the Office, on behalf of the only known person that can submit such documentation, should have been considered on its merits and granted.
Public policy favors protection and use of patent rights.
Where a patent is owned by more than one person, unilateral action by any
one such patentee to preserve patent rights should trump any undocumented unilateral action by any other joint inventor prior to patent issuance, where such purported inventor action results in the destruction of patent rights. The laws and rules surrounding U.S. patents are rife with examples defaulting to, or at least favoring, the protection and use, as opposed to the destruction, of patent rights. As an example of the protection of patent rights, a joint inventor may file a patent application, thus protecting his or her rights, even if the other joint inventor(s) refuse to join in the filing of the application or cannot be found. 35 U.S.C. §§ 116-118. In addition to filing, another example of the
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protection of patent rights as between joint inventors after a patent is issued is the limitation of statutory disclaimers in patent rights to only the extent of a joint inventor’s interest. 35 U.S.C. § 253, 1st paragraph. Yet another example of demonstrated policy to protect patent rights after issuance is that anyone, even without authorization of a patentee, may pay maintenance fees. 37 C.F.R. § 1.366(a); In re Patent No. 4,793,265, 1999 WL 34807445, *5 (Comm’r Pat. 1999) (stating “while a patent remains in force, any person may pay a maintenance fee without the approval of the patent holder”). Additionally, as already discussed above, the use of patent rights is encouraged by allowing a joint patent owner to, unilaterally and without accounting to any other owner, exploit the patent rights.
Ethicon Inc., 135 F.3d at 1468. Accordingly, this Court should reflect the
penumbras and emanations of the protection of patent rights found throughout U.S. patent laws and related regulations and hold that Mr. Schmirler has the right to protect his property interest in the ‘374 Patent.
Defendant’s logic is flawed.
Defendant mechanistically attempts to apply rules not drafted with the
present situation in mind. Generally, Defendant asserts that Mr. Schmirler is not an “applicant” because he is only one of three inventors. If Mr. Schmirler is not a “patentee,” thus conveying the right to protect his property as discussed above, the complained-of agency action in this case caused such change in status. It is implausible that wrongful agency action could change a person’s status from Status
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A (Mr. Schmirler as “patentee”) to Status B (Mr. Schmirler as “inventor”) and then the agency could rely on such post-action status, Status B, to deny review of such wrongful agency action. The logic of this reasoning is flawed. In effect, the Office is indicating that Mr. Schmirler cannot request a review of agency action because of his post-action status, which was caused by the very agency action to be reviewed. Even if Defendant can refuse, on the basis of a person’s post-action status, caused by the very complained-of agency action, Defendant’s reasoning is flawed because it is based on nonexistent evidence and competing definitions of the term “applicant.” Defendant asserts that “the credit card charge for the issue fee was disputed by applicant[.]” (Record at A236.) Such assertion plays fast and loose with the administrative record for two reasons: first, the characterization of the fee as “disputed” has no evidentiary basis; second, the Office appears to rely on two different definitions of the word “applicant.” First, with regards to the characterization of the issue fee as “disputed,” there is zero evidence on the administrative record that Mr. Portman ever disputed fees or requested a refund of fees paid. (See Record.) Mr. Portman never requested a refund from the Office. (Id.) Indeed, the only evidence in the record related to fees and tied directly to Mr. Portman is the payment authorization form, (Record (as supplemented by Dkt. 12) at Dkt. 12-1, 2), and an unequivocal determination to bring the patent to issuance (Record at A166 (Mr. Portman stating “Clearly, I am prepared to pay any additional fees that would be required for the continued prosecution and issuance of this patent”).) The only documentation regarding the chargeback of the issue fee in
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question is documentation from a third party payment intermediary. (Id. at A227.) However, there is no evidence that Mr. Portman even initiated such process. (See Record.) Second, even to the extent that a fee was disputed, it certainly was not disputed by the “applicant,” as that term was used by Defendant in the Final Action. In fact, Defendant’s definition of a patent “applicant” is duplicitous. That is, for its purpose in the Final Action of refusing to consider Mr. Schmirler’s petition, the Office relies on the assertion that, even after patent issuance and subsequent withdrawal, the “applicant” must consist of more than a single inventor. (Record at A271-A281.) Conversely, however, to justify its prior action withdrawing the patent from issue, the Office apparently viewed action by a single inventor to be action by the “applicant.” (Record at A236.) Adapted from the well-known 16th century phrase, Defendant cannot have his cake and eat it too. See Oxford
Dictionary of Phrase and Fable, 321-22 (2d ed. 2005). Defendant should not be
allowed to manipulate the definition of “applicant” in a manner that selfpreferentially suits a given situation. Based on Defendant’s statements, the definition of “applicant” consists of either (1) all three inventors/assigns, in accord with 37 C.F.R. § 1.42, and as asserted by the Office in its Final Action (Record at A271-A281); or (2) any one of the inventors/assigns, as also asserted by the Office (Record at A236). If the former definition applies, the Office’s action with respect to the refund and subsequent withdrawal was arbitrary, capricious, without discretion or otherwise not in accordance with the law. If the latter definition applies, though
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not necessarily rendering proper the refund and subsequent withdrawal, the Office’s refusal to address Mr. Schmirler’s petition on the merits was arbitrary, capricious, without discretion or otherwise not in accordance with the law.
The ‘374 Patent properly issued but the Office later erroneously withdrew it. Upon payment of the sum specified in a written notice of allowance, a patent
“shall” issue. 35 U.S.C. § 151. Indeed, the Office recognizes, in its own rules, that only exceptional circumstances will prevent the grant of a patent once an issue fee has been paid: [o]nce the issue fee has been paid, the Office will not withdraw the application from issue at its own initiative for any reason except: (1) A mistake on the part of the Office; (2) A violation of [37 C.F.R.] § 1.56 or illegality in the application; (3) Unpatentability of one or more claims; or (4) For interference. 37 C.F.R. § 1.313(b). To fall under the first exception, which is the only arguably applicable exception in this case, a mistake on the part of the Office must be a mistake made in the issuance of the patent, such as a failure on the part of the Office to comply with a Supreme Court decision. See Sampson v. Dann, 466 F. Supp. 965, 975 (D.D.C. 1978). Effective 5 June 2000, payment of an issue fee could be made by credit card. 37 C.F.R. § 1.23; see also Manual of Patent Examining
Procedure (MPEP) § 509 (8th ed.) located at
http://www.uspto.gov/web/offices/pac/mpep/documents/0500_509.htm#sect509. A payment to the Office made by credit card is deemed paid when the fee is actually collected. MPEP § 509. While the Office’s interpretation of § 151 and the rules, 37
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CFR part 1, is entitled to Chevron deference, see Blacklight Power, Inc., v.
Dickinson, 109 F. Supp. 2d 44, 47-50 (D.D.C. 2000), Applicants have not found any
authority which would extend the Office’s power to enable the withdrawal of a validly granted patent, much less where withdrawal occurred more than three years after issuance, effected by the purported dismissal of a previously granted petition after an unrequested, unauthorized refund. In this case, the issue fee was paid on 13 October 2000, (Record at A229, n.1); therefore, a patent was to issue, 35 U.S.C. § 151, absent an exceptional circumstance, 37 C.F.R. § 1.313(b). Of the four exceptions listed in 37 C.F.R. § 1.313(b), the only exception remotely related to the present situation, if any, is the first exception; a mistake on the part of the Office. However, the Office did not make a mistake in this case. The ‘374 Patent was properly granted (see Exhibit B to Complaint, Dkt. 1-5) by the Office in accord with statutory and regulatory prescriptions because, as of the petition grant date, 21 December 2000, and the issue date, 10 April 2001, the issue fee requested by the Notice of Allowance was paid and in possession of the Office. (Record at A229, n.1) Unlike the withdrawals in Sampson and Blacklight, which occurred prior to the grant of the respective patents, the withdrawal here occurred after the grant of the patent. The withdrawal in this case had no statutory or regulatory basis, and is contrary to 35 U.S.C. § 151 and 37 C.F.R. § 313(b). Therefore, the Office’s dismissal of a previously properly granted petition which effected an erroneous withdrawal from issue constitutes agency action that
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was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
The Office did not have authority to refund the issue fee. “The Director may refund any fee paid by mistake or in excess of that
required.” 35 U.S.C. § 42(d). Even a change of purpose on the part of the payer does not entitle a party to a refund for such fee. 37 C.F.R. § 1.26(a). A party must request a refund from the Office. See 37 C.F.R. § 1.26(b). A request for refund may be denied by the Office, see 37 C.F.R. § 1.26(a); therefore, a request for refund made to the Office does not and cannot automatically effect a withdrawal of the payment of the requested fee. In this case, a refund was never requested from the Office, and American Express—a third party payment intermediary—apparently unilaterally withdrew payment, contrary to the Rules. The Office appears to be of the opinion that the fee was not properly paid at the time the Rule 137 petition was granted. (Record at A229.) It is the Office’s contention that a request from a patent Applicant to a payment intermediary for a return of fees already paid to the Office is tantamount to a nonpayment of fees to the Office. (Id. at A236) First, there is no evidence that any such request was made by Mr. Portman; second, such opinion is unsupportable. American Express, as a credit account holder to Mr. Portman, was in the position of a payment intermediary to the Office. Payment was received by the Office on 13 October 2000. (Id. at A229, n.1.) Therefore, the issue fee was properly paid.
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Furthermore, there was no request for a refund of that fee, from either Mr. Portman or American Express. (See Record.) Even if the Office considers that a request on the part of Mr. Portman to American Express, if there was one, equated to a request for refund from the Office, there is no basis for granting the request, since the fee was not one paid by mistake or in excess of that required, which are the only situations in which the Director is statutorily authorized to provide a refund. 35 U.S.C. § 42(d). Indeed, upon receiving the purported chargeback notification from American Express, (Record at A227), the Office should have disputed the withdrawal of payment by American Express because the Office admits to having rendered the services (Record at A229 stating “Given the above record, services were clearly rendered.”). If the unilateral chargeback by American Express was allowed under any extant contract between the Office and American Express, such contract should be deemed contrary to the Office’s rules. Therefore, since a request by an applicant to a payment intermediary to refund fees is not a proper request for refund under the Rules, it is not tantamount to a nonpayment of fees to the Office, and a refund of such fees is not authorized, the dismissal of a petition previously granted for such nonpayment of fees constitutes agency action that was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
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Conclusion For the foregoing reasons, Mr. Schmirler respectfully requests that this Court hold that the Office’s action in connection with the refund of the paid issue fee, the withdrawal of the ‘374 Patent from issue, and/or the Office’s failure to consider Mr. Schmirler’s petition filed with the Office, individually or collectively, constituted agency action that was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. As a result, Mr. Schmirler requests the Court to issue an order compelling the Office to accept late payment of the issue fee, which acceptance is authorized under 35 U.S.C. § 151, which would reinstate U.S. Patent 6,214,374 on U.S. Patent Application Serial Number 08/652,280, having a filing date of 22 May 1996 and an issue date of 10 April 2001, subject to the payment of all fees, if any, due to the PTO. Additionally, Mr. Schmirler requests that the Court grant any such other and further relief as may be just and equitable. Respectfully submitted, Date: 31 March 2011 By: Ryan Kromholz & Manion, S.C. s/Garet K. Galster
Joseph A. Kromholz (State Bar No. 1002464) email@example.com Garet K. Galster (State Bar No. 1056772) firstname.lastname@example.org RYAN KROMHOLZ & MANION, S.C. P. O. Box 26618 Milwaukee, Wisconsin 53226-0618 Attorneys for Plaintiff
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CERTIFICATE OF SERVICE
I hereby certify that I have this day caused copies of the forgoing document to be served on the parties and counsel of record noted below by Court email and First Class Mail: By First Class Mail: Frances M Lynch United States Patent & Trademark Office PO Box 15667 Arlington, VA 22215 Thomas W Krause United States Patent & Trademark Office PO Box 15667 Arlington, VA 22215 By Court Email: Matthew V Richmond United States Department of Justice (ED-WI) Office of the US Attorney 517 E Wisconsin Ave - Room 530 Milwaukee, WI 53202 Christian R Larsen United States Department of Justice (ED-WI) Office of the US Attorney 517 E Wisconsin Ave - Rm 530 Milwaukee, WI 53202
Date: 31 March 2011
s/Peggy Pechulis Peggy Pechulis
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