Chapter §1.07 Government Entities in the Patent System
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§1.07 Government Entities in the Patent System
A number of different administrative and judicial entities render decisions in patent matters. To summarize, the USPTO examines patent applications and grants patents, which may then be enforced (or challenged) in the U.S. federal courts. Figure 1-2 depicts the adjudicatory framework that is further described in the text below.
[A] The U.S. Patent and Trademark Office
Created in 1836, the U.S. Patent Office [today the U.S. Patent and Trademark Office, or USPTO] is one of the oldest U.S. federal agencies.149 As of March 2020, the USPTO had granted about 10.6 million utility patents.150 In fiscal year 2019, 665,231 patent applications were filed with the USPTO and the agency issued 370,434 patents.151 In 2018, about 52% of U.S. patent applications were filed by non-U.S. applicants.152
The USPTO's patent examining corps comprises groups or "art units," each charged with examining patent applications claiming inventions related to a particular category of technology or science.153 The USPTO in 2019 employed 9,614 patent examiners, each of whom has an engineering or science degree.154 Patent examiners need not have a law degree, although some examiners are also attorneys.155
The process of obtaining a U.S. patent is usually not easy, inexpensive, or rapid. As described in further detail elsewhere in this treatise,156 the process begins with preparing and filing a patent application in the USPTO.157 The application will be assigned to an appropriate art unit within the Office.158 A patent examiner will review the application, compare it to the prior art, and typically issue one or more rejections against most of the application's claims.159 For example, the examiner may determine that the prior art anticipates the applicant's claims under 35 U.S.C. §102, or that it renders them obvious under 35 U.S.C. §103. The applicant has an opportunity to respond to the rejections, which may or may not require amending the claims (usually by narrowing their scope) so that they define "allowable" subject matter.160 If the patent examiner issues a second rejection of the claims, this is typically a "final" rejection.161
When a patent applicant receives a second or final rejection of his application, he may file an internal appeal with the USPTO.162 The appeal will be taken to the Patent Trial and Appeal Board (Board), formerly known as the Board of Patent Appeals and Interferences.163 The Board is an administrative body within the USPTO that hears appeals from patent examiners' decisions in a variety of USPTO proceedings discussed in later chapters of this treatise,164 including refusals to grant patents in ex parte patent examination,165 ex parte reexamination proceedings,166 or refusals to reissue patents,167 as well as appeals from examiner decisions in inter partes reexamination proceedings.168 The Board also renders decisions in USPTO inter partes proceedings for determining time-wise priority of invention between rival claimants, known as interferences.169 The AIA expanded the Board's responsibilities to include jurisdiction over the new post-grant review proceedings and derivation proceedings created by the Act.170
Chapter 11 of this treatise provides additional detail about the process of patent prosecution in the USPTO. A number of other reference texts offer in-depth treatment of the mechanics of patent prosecution.171
[B] U.S. Federal Courts
[1] U.S. District Courts
In accordance with 28 U.S.C. §1338, the U.S. District Courts have original subject matter jurisdiction, exclusive of state courts, over cases that are considered "arising under" the patent laws, in whole or in part.172 In Christianson v. Colt Indus. Operating Corp.,173 the Supreme Court set forth the "well-pleaded complaint rule" for patent cases. The Court held that §1338 "arising under" subject matter jurisdiction extends only to those cases in which a well-pleaded complaint establishes that (1) federal patent law creates the cause of action, or (2) the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.174
The federal district courts lack §1338 jurisdiction, however, " 'if there is a theory of liability for each of the asserted claims for which it is not necessary to resolve an issue of federal patent law.' "175 Thus, lawsuits that may raise, but do not turn on, patent issues may be brought in state court. For example, a state court might adjudicate a dispute over a patent license, which is a type of contract.176 However, the Federal Circuit takes the view that federal courts have exclusive jurisdiction over legal malpractice actions, even though these are traditionally brought in state court, "when the adjudication of the malpractice claim requires the court to address the merits of the plaintiff's underlying patent infringement lawsuit."177
Standard patent infringement lawsuits brought by a patent owner against one or more accused infringers, as well as declaratory judgment actions in which a party threatened with infringement liability seeks a declaration of non-infringement and/or patent invalidity,178 clearly fall within category (1) of the Christianson well-pleaded complaint rule. More problematic are cases such as Christianson, an antitrust lawsuit that raised patent law issues.179 In such cases, courts must decide whether the dispute falls within category (2); that is, does the plaintiff's right to relief necessarily depend on resolution of a patent law issue, even though the complaint does not assert a patent law cause of action per se.180
[a] Eastern District of Virginia
The America Invents Act of 2011 (AIA) assigned to the U.S. District Court for the Eastern District of Virginia exclusive jurisdiction over civil actions to obtain a patent under 35 U.S.C. §145.181 In these proceedings, parties who have had their patent application claims rejected by the USPTO in ex parte prosecution may bring a lawsuit against the Director of the agency in the U.S. District Court for the Eastern District of Virginia. Should the plaintiff prevail in the civil action, the district court will issue an order authorizing the USPTO to issue a patent. If the plaintiff does not prevail, he may appeal the district court's decision to the Federal Circuit.
Although the Section 145 civil action route is generally more expensive and lengthy than a direct appeal from the USPTO to the Federal Circuit under 35 U.S.C. §141, the advantage provided by the civil action is that the plaintiff can introduce new evidence before the federal district court that was not considered by the USPTO. The civil action is essentially a trial de novo of patentability with the opportunity for pre-trial discovery. In contrast, new evidence cannot be presented in a direct appeal to the Federal Circuit; this type of appeal must be "on the record" that was before the USPTO in accordance with 35 U.S.C. §144.
In its 2010 decision in Hyatt v. Kappos,182 the Federal Circuit went en banc to resolve questions concerning what, if any, limitations exist on introduction of evidence in a Section 145 civil action. The Federal Circuit rejected the USPTO Director's position that only "new evidence that could not reasonably have been provided to the agency in the first instance" should be admissible in a Section 145 action.183 Rather, based on the plain language of Section 145 (directing that a district court may "adjudge that [an] applicant is entitled to receive a patent for his invention . . . as the facts in the case may appear") as well as the extensive legislative history pertaining to the remedy that would ultimately be codified as Section 145 in the 1952 Patent Act,184 the Federal Circuit agreed with patent applicant Hyatt. The appellate court read Congress's intent as ensuring that patent applicants would be free to introduce new evidence in Section 145 proceedings, subject only to the rules applicable to all civil actions, the Federal Rules of Evidence, and the Federal Rules of Civil Procedure. When such evidence (not previously considered by the USPTO) concerns disputed questions of fact, the federal district court presiding in the Section 145 action will need to make "a de novo finding [in order] to take such evidence into account together with the evidence before the [USPTO] board."185
After granting the USPTO's petition for certiorari in Hyatt,186 the Supreme Court unanimously affirmed the Federal Circuit in the 2012 decision Kappos v. Hyatt.187 Guided largely by its earlier decision in Butterworth v. United States ex rel. Hoe,188 the Supreme Court agreed with the Federal Circuit that
there are no limitations on a patent applicant's ability to introduce new evidence in a §145 proceeding beyond those already present in the Federal Rules of Evidence and the Federal Rules of Civil Procedure. Moreover, if new evidence is presented on a disputed question of fact, the district court must make de novo factual findings that take account of both the new evidence and the administrative record before the PTO. 189
In light of these conclusions, the Supreme Court held that the Federal Circuit correctly vacated the district court's judgment, which had excluded Hyatt's newly presented affidavit under the mistaken belief that the court need not consider " 'evidence negligently submitted after the end of administrative proceedings.' "190
[2] U.S. Court of Appeals for the Federal Circuit
The U.S. Court of Appeals for the Federal Circuit plays a unique and powerful role in the American patent system.191 The court has nationwide jurisdiction over appeals in patent cases. Created in 1982, the Federal Circuit is located in Washington, D.C.192
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