District Court Dismisses USPTO December 2015 Holidays Case

20 December 2016 PharmaPatents Blog
Authors: Courtenay C. Brinckerhoff

On December 2, 2016, Judge O’Grady of the U.S. District Court for the Eastern District of Virginia granted the USPTO’s motion to dismiss the complaint brought by Elm 3DS Innovations, LLC over the “holidays” declared December 22-24, 2015 when the USPTO experienced a power outage that impacted its electronic filing systems. The decision may leave other stakeholders wondering whether Elm was not the best party to challenge the USPTO’s action, or whether the action is simply unreviewable under the APA.

The December 2015 “Holidays”

As noted in this article, the USPTO’s operating status webpage provides the following information on the December 22 power outage and subsequent computer failures:

On December 22, 2015, at approximately 7:00 pm, the United States Patent and Trademark Office (USPTO) experienced a major power outage at its headquarters in Alexandria, Virginia, resulting in damaged equipment that required the subsequent shutdown of many USPTO online and information technology systems. ….

On the same webpage, the USPTO explains the decision to treat December 22-24, 2015 as “Federal holiday[s] within the District of Colombia”:

In light of this emergency situation, the USPTO will consider each day from Tuesday, December 22, 2015, through Thursday, December 24, 2015, to be a “Federal holiday within the District of Columbia” under 35 U.S.C. § 21 and 37 C.F.R. §§ 1.6, 1.7, 1.9, 2.2(d), 2.195, and 2.196.

As a result, “[a]ny action or fee due on these days will be considered as timely for the purposes of, e.g., 15 U.S.C. §§ 1051(b), 1058, 1059, 1062(b), 1063, 1064, and 1126(d), or 35 U.S.C. §§ 119, 120, 133, and 151, if the action is taken, or the fee paid, on the next succeeding business day on which the USPTO is open (37 C.F.R. §§ 1.7(a) and 2.196).”

Elm’s Complaint

Elm challenged the USPTO’s authority to declare that a day was a “Federal holiday within the District of Colombia” when that day was not treated as such by any other Federal agency. In particular, Elm asserted that only Congress can declare a “Federal holiday within the District of Colombia.”

Elm asserted that it was harmed by these “holidays” because the PTAB accepted IPR petitions filed against its patents on December 28, 2015, even though the statutory deadline for the petitions expired December 24, 2015.

The District Court Decision

Judge O’Grady gave three main reasons for granting the USPTO’s motion to dismiss:

  1. The IPR statute (35 USC 314 § (d)) precludes judicial review of “any direct challenge to the institution of the IPR proceedings.”
  2. The declaration of holidays was not a “final agency action” reviewable under the APA, because it is “[a] merely procedural rule, which does not impose harm.”
  3. Elm has an alternative remedy via appeal to the Federal Circuit once there has been a final decision in the IPR proceedings.

On the second point, the court noted that for purposes of APA review, “final agency action” has been defined as “action … by which rights or obligations have been determined, or from which legal consequences will flow.” The court found that none of Elm’s alleged injuries were “concrete and immediately felt” when the holidays were declared, but rather were “contingent on events independent of [the USPTO’s holiday] actions,” namely, those of the IPR petitioners and the PTAB. The court also stated that while the “holidays” changed the mechanism by which petitioners were permitted to file the IPRs, it did not expand their substantive rights. That is, because of the “holidays” petitioners could file their petitions electronically on December 28 instead of having to request permission to file by mail by December 24, but the substantive IPR requirements were not affected.

Is The USPTO’s Action Unreviewable?

If Elm’s patents are invalidated in the IPR proceedings, it may raise its claim against these “holidays” again in an appeal to the Federal Circuit. If so, it will be interesting to see whether the Federal Circuit will review this USPTO action, or will agree with the district court that it is unreviewable under the IPR statute and/or the APA. If the Federal Circuit renders a decision under the IPR statute, that could leave open the door for challenge by a party harmed in the ex parte context, such as a party who would have been a “first inventor to file” but for the acceptance of an application that took advantage of the additional time conferred by the “holidays,” or in the infringement context, such as a party accused of infringement of a patent that would be invalid but for the additional grace period provided by the “holidays.”

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