Fed Circ. Refuses To Nix Injunction On USPTO Rules

By Erin Coe

Law360, New York (November 13, 2009) -- Bringing an end to the drawn-out case over the U.S. Patent and Trademark Office’s now-rescinded set of rules for patent applicants, a federal appeals court has dismissed the agency’s appeal, but it refused to vacate a lower court’s ruling that barred the USPTO from imposing the divisive rules package.

The U.S. Court of Appeals for the Federal Circuit on Friday agreed with the USPTO and GlaxoSmithKline PLC that the appeal was moot and needed to be tossed in light of the agency’s move to rescind the rules last month, but denied their request to nix the district court’s injunction.

Glaxo and inventor Triantafyllos Tafas sued the USPTO over its rules, and the U.S. District Court for the Eastern District of Virginia in April 2008 struck the regulations down after finding that the agency did not possess the proper authority to make them.

The Federal Circuit held that vacating the district court’s judgment would be improper, pointing to the 1994 U.S. Supreme Court decision in U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership that determined vacatur 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.

“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have been overridden by a statutory change; instead, it is a case in which the agency itself has voluntarily withdrawn the regulations and thus set the stage for a declaration of mootness,” Chief Judge Paul R. Michel wrote in the order. “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 ruling was a boost for Tafas, who had joined in the parties’ motion to dismiss the appeal, but objected to vacatur, arguing that it conflicted with Supreme Court precedent and would preclude him from recovering his attorneys’ fees.

Steven J. Moore, an attorney representing Tafas, said his client appreciates the withdrawal of the proposed rules by USPTO Director David Kappos and is extremely pleased by the new direction he is undertaking.

“In Director Kappos' short term, he has made dramatic changes to the positive that Dr. Tafas believes will greatly benefit the inventor community," Moore said.

The USPTO declined to comment, and an attorney representing Glaxo was unavailable for comment.

The rules, which were published by the USPTO in August 2007 during the Bush administration, sparked outrage from many patent applicants and prosecutors as being unduly restrictive.

They were intended to get the patent application backlog under control, and put new limits on the number of continuation applications, requests for continued examination and claims that an applicant could file.

But before the rules could take hold, they were challenged by Tafas and Glaxo in the Eastern District of Virginia and invalidated.

The USPTO appealed, and the Federal Circuit in a 2-1 ruling revived all of the rules except for the continuations rule. However, the appeals court decided in July to vacate its decision and grant a rehearing en banc.

On Oct. 8, Kappos signed a new final rule withdrawing the regulations, a move that was welcomed by many in the patent community.

GlaxoSmithKline is represented by Kirkland & Ellis LLP and Sidley Austin LLP.

Tafas is represented by Kelley Drye & Warren LLP.

The case is Tafas et al. v. Doll et al., case number 08-1352, in the U.S. Court of Appeals for the Federal Circuit.