CAFC to Decide Important Revival Case: Aristocrat v. IGT

Aristocrat Technologies Australia (ATA) v. International Gaming Technologies (IGT) (Fed. Cir. 2008 PENDING)

ATA missed its US national stage filing by one day. The PTO granted ATA’s petition to revive the application based on the applicant’s seemingly legitimate claim that the “entire delay” in filing the appropriate papers “was unintentional.” 

During litigation, the district court found that the PTO lacked authority to revive unintentionally late national stage applications.  Rather, according to the court, the PTO can only revive such applications when the cause of delay meets the much higher standard of being unavoidable. The Court found its statutory support from 35 USC 371, which requires the PTO to hold late national stage applications as abandoned unless “such failure to comply was unavoidable.” In the process, the court was able to compare other revival statutes within the Patent Act:

• Section 111 allows for revival of original applications unintentionally or unavoidably abandoned due to a failure to submit the oath on time.
• Section 133 allows for revival only of applications unavoidably abandoned for failure to respond to an office action.
• Section 151 allows for revival only of applications unavoidably abandoned for failure to pay the issue fee. 

Thus, according to the Court, applicants can recover from forms of unintentional abandonment but not others.

Now, ATA has appealed — arguing primarily that amendments to the PTO fee statute (35 USC 41(a)(7)) creates statutory authority for reviving unintentionally abandoned applications. Section 41 specifically refers to reviving applications unintentionally abandoned under Sections 133 and 151. As mentioned above, by their terms, neither of those statutes allow for revival of unintentionally abandoned applications. 

In ATA’s view, it does not need to prove that its interpretation is the “correct interpretation.” Rather, according to ATA, the PTO should be given deference in interpreting the Patent Act and thus, any reasonable interpretation of the Statute should be upheld. 

ATA also makes an argument that the court’s invalidation of the patent for “improper revival” does not fit within any of the four defenses listed in 35 USC 282.  That argument seemingly fails if the court simply held the patent invalid for failure to comply with Sections 371 or 133. (Section 282 allows for a finding of invalidity based on failure to meet a “condition for patentability” found in the Patent Act). On the other hand, ATA does have some caselaw supporting this position. Ferguson Beauregard v. Mega Sys., 350 F.3d 1327 (Fed. Cir. 2003). Ferguson and other similar cases are easily distinguished as dealing with administrative implementation of the revival standard rather than the broader question of whether revival for unintentional abandonment is legally allowed under the statute.

Impact: If the CAFC affirms, a large number of patents will instantly lose their value. I expect the AIPLA to file a strong Amicus brief supporting ATA. IGT’s brief supporting the lower court’s decision is expected soon.

Prediction: I expect that the CAFC will reverse — holding that the PTO does have statutory authority to revive these unintentionally abandoned applications (but not giving any deference to the PTO’s interpretation of the law).

Notes:

• Read the case [LINK]
• Read ATA’s Brief [LINK]
• Read my prior discussion of the case [LINK]
• Statutory provisions for revival due to unintentional abandonment:
  • 35 USC 111: Failure to submit fee and oath of a patent application;
  • 35 USC 41: Fee schedule for revival of unintentionally abandoned applications. This section provides a specific fee for revival of unintentionally abandoned applications as an explicit alternative to revival of unavoidably abandoned applications; and
  • 35 USC 122: Abandonment due to failure to rescind nonpublication request.
• Statutory provisions that only refer to revival due to unavoidable abandonment:
  • 35 USC 133: Abandonment due to failure to respond to PTO notice (Normally a 6–month deadline, but may be less);
  • 35 USC 151: Revival for failure to pay issue fee; and
  • 35 USC 371: Failure to comply with national stage filing requirements.
• PTO Rules:
  • 37 C.F.R. 1.137(b) provide for revival of applications based on an applicant’s unintentional delay in replying. Under the rule, abandoned applications, reexamination prosecution terminated under §§ 1.550(d) or 1.957(b) or limited under § 1.957(c), or lapsed patents may all be revived under this standard.  The PTO rules are, however, subordinate to statutes.
• Caselaw:
• Lumenyte v. Cable Lite (Fed. Cir. 1996): Patentee revived case as unintentionally abandoned. The CAFC affirmed the ruling without questioning whether such revival is ever permissible.
• Morganroth v. Quigg (Fed. Cir. 1989): Affirming that the Director does not have authority to revive an unintentionally abandoned patent application “that resulted from the applicant's failure to appeal from a final district court judgment that upheld the Commissioner's prior refusal to issue a patent.”
• New York Univ. v. Autodesk, Inc., 2007 U.S. Dist. LEXIS 50832 (SDNY 2007): The court found that the delay in reviving was not even unintentional. The court explicitly did not reach the question of whether revival for unintentional abandonment due to failure to respond to an office action is even permitted. (Remember, 35 USC 133 only allows for revival of unavoidably abandoned applications.)
• Field Hybrids v. Toyota (D.Minn 2005).

Comments

[anon]

It does seem important (not the best facts to bring up the issue). Why hasn't the USPTO moved to intervene - no activists in the legal group? Where are the patent bars in this?

[metoo]

This case reminds me of the small entity debacle in Canada several years ago.

[windycityip]

Ultimately, the interpretation of the Patent Act is up to the federal courts, so it is unlikely that the USPTO will intervene.

The District Court's decision does seem harsh. However, 35 USC 371 seems clear. Perhaps Congress should further review 35 USC 371, and other revival statutes of the Patent Act.

-Ben at http://www.windycityip.com/

[Kevin E. Noonan]

Of course, how does this tie into the question of whether the PTO has substantive rulemaking authority? It seems that the plain meaning of the statutes are clear - "unavoidably" is not the same as "unintentionally" (even the patent regulations distinguish between the two, requiring a higher showing to satisfy the "unavoidable" requirement). How can the PTO be allowed to expand the plain meaning of the statute without acknowledging that the Office has substantive rulemaking authority? In that case, doesn't it make is harder for Judge Cacheris to decide against the PTO in the GSK v. Dudas case? This case could have significant impact either way the CAFC decides it.

[metoo]

Keep in mind that this case is not just about 35 USC 371 and delays in complying with national stage requirements. The district court also held that 35 USC 133 provides the only standard for reviving an application that goes abandoned for failure to reply to any action within 6 months - namely, unavoidable delay. Thus, if this case were to be affirmed, the PTO would not be authorized to revive applications which went abandoned for the unintentional failure to respond to an office action within 6 months - thousands of patents would become invalid overnight!

Of course the district court got it wrong and this decision will be reversed.

[metoo]

This case has little to do with PTO rulemaking authority. The primary issue is not whether the PTO can decide on its own to allow for the revival of unintentionally abandoned applications. Rather, the case turns on whether or not the patent statutes, particularly 35 USC 41(a)(7) (at least for non-PCT applications) provides for the revival of unintentionally abandoned applications.

[metoo]

ATA's brief provides a good discussion of the legislative history for 35 USC 41(a)(7). One of the more notable aspects is the fact that this section was enacted in 1982 and specifically referenced the revival of applications using the unintentional standard. It was not until 1994 that the unintentional revival standard was specifically mentioned anywhere else in the patent statute. In other words, the decision of the district court means that the fee specified in 41(a)(7) for reviving unintentionally abandoned applications was utterly meaningless for 12 years!

[MS]

meetoo:

Your last post says it all!

From 1982 to 1994 the only reference to "unintentional" was in 41(a)(7). If this were merely a "fee statute" as the District Courts contends, it means that the "unintentional" clause is plainly inoperable and serves no purpose.

Shockingly, ATA has buried this potent and clearly dispositive argument in a single paragraph on page 39 of its brief. In fact, it’s written as a mere afterthought. (plainly shocking!)

Other than this argument, I do not find any other arguments by ATA to be very persuasive. Their argument regarding sec. 282 is very tenuous and is unlikely to garner any sympathy from either the CAFC or the patent bar at large.

As to legislative history, one thing is clear, that after all is said and done - there is no question that the statute and legislative history is conflicting and confusing. This is just one of many screw-ups by Congress.

Bottom line, however, the argument you point out that the Court rendered 41(a)(7) utterly meaningless for 12 years - is in essence the winning argument. Has ATA proffered this argument at this at the District Court level – they would not be appealing right now.

Note that the District Court opinion includes a lengthy analysis of the legislative history (including a half-page footnote). Seemingly, the court takes for granted that there are "other" sections in 35 USC that had "always" included the "unintentional" standard. Unfortunately, ATA's lawyers failed to correct the court's misperception.

Kudos to IGT's lawyers for successfully making a mountain out of a mole hill!

[TJ]

Dennis, might pay to note that the CAFC has several conflicting cases (at least apparently conflicting cases) on whether the PTO gets Chevron deference. Given the recent trend (Garner burying Dethmers), this might be a question that the court will choose to revisit.

[anon]

MS, I think there's more nuance here. Reading 41(a)(7) to be merely operative in some fashion doesn't seem dispositive of all the issues regarding the PTO's rule and practice. 41(a)(7) needs to be read in a way that not only makes it operative to at least some applications from 1982 to 94, but also specifically applicable to applications that went abandoned for failure to prosecute under 133.

Whether the CAFC picks this case to say anything about deference should be interesting. They probably don't have to though to resolve this one.

Either way, doesn't seem like much if any thought was ever given to the design of these statutes.

[DVM]

Curiously, the district court decision does not discuss the interplay of 35 USC 2(b)(2). The additional ability to revive a case for unintentional abandonment is not inconsitent with the specifically provided for permissive (i.e., the director "may" revive) revival for unavoidable abandoment.

[PLOSITA]

"Whether the CAFC picks this case to say anything about deference should be interesting. They probably don't have to though to resolve this one. "
True. It would be nice if they would explain the amount of deference the PTO should get when interpreting title 35 (Skidmore, if you ask me), and then make the decision on that basis. But I fear they will skip that issue.

[JimD]

This case must be keeping a lot of patent attorneys on edge: If scores of presently valid patents are suddenly vaporized, I imagine quite a few law firms will find themselves liable for missing those dates.

Which would raise an interesting statute of limitations question.

[me]

The problem with 133 which is why this case is presented is that since the amendments to 35 USC 154 went into effect the USPTO has violated the language of 133. Remember when you would get 30 from receipt of an advisory action to respond if the previous reponse was filed within two months of a date of a final office action? 133 makes clear that the USPTO shall give no less than 30 days to respond to ANY ACTION (which includes an advisory action) The USPTO has been violating that LAW routinely by setting the expiration of the time to respond on the date of mailing of an advisory action. Therefore, the USPTO is at risk of losting tens of millions of dollars in illegally acquired fees. Well to get the bar to shut up about this they place each practitioner at risk who revived under the unintentional standard. The fact is that many of the abandonments would not have occurred had the USPTO adhered to the LAW as set forth under 133.

[Kavon]

How about 35 U.S.C. 111? It provides for both an unintentional and unavoidable standard? 35 U.S.C. 111 reads "FAILURE TO SUBMIT.-Upon failure to submit the fee and oath within such prescribed period, the application shall be regarded as abandoned, unless it is shown to the satisfaction of the Director that the delay in submitting the fee and oath was unavoidable or unintentional." Granted 111 applies to national applications ("original applications") originating in the U.S. So it could be argued that 111 does not apply. However, 35 U.S.C. 372 clearly reads "(a) All questions of substance and, within the scope of the requirements of the treaty and Regulations, procedure in an international application designating the United States shall be determined as in the case of national applications regularly filed in the Patent and Trademark Office." The PCT application in this case is an "international application designating the United States" thus it seems to me that the discretion that the PTO has to revive under the "unintentional" standard is clearly given to it under both 111 in connection with 372. Why was this argument not presented???

[David Henry]

35 U.S.C. 133 provides that failure to respond timely will result in abandonment UNLESS....unavoidable. I would assume that a petition to revive presupposes that the application IS ABANDONED (which 133 says it is not, if the delay was unavoidable and one demonstrates this to the Commissioner).

Too simplistic an approach?

If I have missed an earlier post that addresses this already, pardon the redundancy.

[Leopold Bloom]

"Too simplistic an approach?"

No. Too formalistic.

[random person that posts here often]

"In that case, doesn't it make is harder for Judge Cacheris to decide against the PTO in the GSK v. Dudas case?"

Could be why the pto hasn't stepped in to have its say, they want to let it go down whatever way it will and then cite it if it helps them, but ignore it if it doesn't.

[somebody]

"Could be why the pto hasn't stepped in to have its say, they want to let it go down whatever way it will and then cite it if it helps them, but ignore it if it doesn't."

Do you often post such randomly incorrect nonsense?

LOL

Nothing can help the PTO in GSK. They are toast.

[random person that posts here often]

It's a good thing we have expert "somebody" on the case! Tell me "somebody" did you attend Harvard or Yale in order to obtain such a keen insight into a case that clearly could be at least partially reversed?

[somebody]

Neither.

So your position is if the case is decided one way that theoretically supports the PTO's position in GSK, they can cite it in their brief to the Fed. Cir. and say, "See judges, this case helps us!!!!! So you should overrule J. Cacheris!!!!"

But if the case is decided another way, that is theoretically not helpful to their position in GSK, the PTO can just ignore it.

Where did you go to law school?

ROFLMAO

BTW e6k, there is no case currently on any court's docket that can help the PTO in GSK.

[AllSeeingEye]

Seems to me that if ATA submitted something they happed to proffer as what they considered proof of what they happened to call "unintentional delay" and the PTO, in its discretion under the statute, viewed the proffer as supporting a finding of "unavoidable delay," then it truly is a mountain out of a molehill. While "unintentional" delay might not reach the level of "unavoidable," "unavoidable" can certainly include "unintentional."